Good afternoon and welcome to the REGENXBIO Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Ms.

Sara Garon Berl, Vice President of Law and Policy for REGENXBIO, you may begin..

Good afternoon and thank you for joining us today. With us today are Ken Mills REGENXBIO’s President and Chief Executive Officer, Dr. Steve Pakola, our Chief Medical Officer and Vit Vasista, our Chief Financial Officer. Earlier this afternoon, REGENXBIO released financial and operating results for the 3 months ended June 30, 2019.

The press release reporting our financial results is available on our website at www.regenxbio.com. Today’s conference call will include forward-looking statements regarding our financial outlook in addition to regulatory and product development plans.

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted and can be identified by words such as expect, plan, will, may, anticipate, believe, should, intend and other words of similar meaning.

Any such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties.

These risks are described in the risk factors and the Management’s Discussion and Analysis sections of REGENXBIO’s quarterly report on Form 10-Q, for the quarter ended June 30, 2019, which is on file with the Securities and Exchange Commission and available on the SEC’s website.

Any information we provide on this conference call is provided only as of the date of this call August 7, 2019 and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events or otherwise. Please be advised that today’s call is being recorded and webcast.

In addition, any unaudited or pro forma financial information that may be provided is preliminary and does not purport to project financial positions or operating results of the company. Actual results may differ materially. I would now like to turn the call over to our REGENXBIO.

Ken?.

Thank you, Sarah. Good afternoon, everyone. And thanks for joining us on today’s conference call, we will provide a recap of our recent progress, advancing and expanding our NAV Technology Platform. Steve will provide an update of our internal clinical programs, and that will provide an update on financial results for the second quarter of 2019.

We’ll then open up the call for questions. Over the course of the past decade, REGENXBIO’s mission has remained clear to improve lives through the curative potential of gene therapy based on our proprietary NAV Technology Platform.

We believe a single administration gene therapy treatments can significantly alter the course of disease in many patient populations. And we are committed to our work with these patients in mind. The past several months have been highly productive at REGENXBIO.

We’ve advanced our internal programs on two treatment modalities, AV mediated antibody delivery, and monogenic gene replacement. Both modalities utilize our NAV Technology to develop treatments for those suffering from rare genetic diseases, and expand treatment options for diseases broadly affecting public health.

With clinical development programs across three distinct therapeutic areas, including ophthalmology, central nervous system, and liver directed, we have a broad and deep pipeline that leverages our NAV Technology, which consists of over 100 novel AV vectors.

Our gene therapy product candidate, RGX-314 administered as a onetime treatment can potentially help treat millions of patients. And today, we’re excited to announce further positive interim results from our ongoing RGX-314 Phase I/IIa study trial for Wet AMD, which Steve will address in his remarks.

We’re encouraged by these data and look forward to sharing more new interim data from all five of dose cohorts in October. Our licensee partners continue to make important progress as well. In May the FDA approved the first gene therapy based on REGENXBIO’s NAV Technology Platform.

The approval of Novartis’ Zolgensma marked a significant milestone for NAV Technology, gene therapy, and patients and families facing spinal muscular atrophy, a debilitating and potentially deadly disease.

REGENXBIO’s formula for success has always been driven by breakthrough science, talented people, sound capital and disciplined execution of our plans.

Our decade of commitment to making gene therapy reality for patients has transformed us into a global leader in developing gene therapies that have the potential to transform the way diseases are treated. Today, we’re driving an expanding pipeline of internal programs for chronic and rare diseases.

It’s an incredibly exciting time and we’re as motivated as ever to realize the fullest potential of the NAV Technology based gene therapy. So with that, I’d now like to turn the call over to Steve for a clinical and regulatory update..

Thanks, Ken. I’m pleased to share advances in our internal programs across optimal logic, CNS and delivered directed therapies. I’ll begin with RGX-314 program for the treatment of wet AMD, a disease that affects more than 2 million patients in the U.S., Europe and Japan.

Patients with wet AMD usually require anti-VEGF therapy as frequently as every month indefinitely to prevent vision loss.

Continuing a long-term therapy with intraocular anti-VEGF injections is a burden to patients and families and many patients struggle to comply with the recommended therapeutic regimen, for current anti-VEGF therapies, leading to under treatment, and ultimately vision loss overtime.

RGX-314 utilizes the NAV AAV8 vector to deliver a trans gene, encoding an anti-VEGF antibody fab to potentially halt the proliferation of blood vessels in the retina. As we previously announced, we completed dosing for the Phase 1/2a clinical trial of RGX-314 and wet AMD which included the dosing of 42 subjects in five cohorts at eight leading U.S.

retinal surgery centers, and reported durable treatment response from cohort 3 at one year after a single administration of RGX-314. 50% of patients and cohort 3 required no intro vitriol anti-VEGF injections at one year. We announced today, that these patients continue to be injection free through 18 months.

We are particularly encouraged by these results given the subjects in this study were difficult to treat, and had that received frequent anti-VEGF therapy prior to enrollment in the trial. We also are pleased to report that at one month, we see dose dependent increases in RGF-314 protein expression levels across all doses.

We expect to report clinical data from cohort 3 out to 18 months and interim data from cohorts 4 and 5 in October of this year. Month, we also had a Type B meeting with the FDA to discuss our plan Phase 2b trial. We are pleased with the outcome of this meeting, which keeps us on track to initiate a Phase 2b trial in wet AMD by the end of this year.

Progress continues toward our plan filing of a new IND for a Phase 2 trial, evaluating RGX-314 in subjects with diabetic retinopathy in the second half of this year. Phase 1/2a safety data from the ongoing or RGX-314 wet AMD trial will be used to support those selection.

Manufacturing is in process to support enrollment in RGX-314 trials for both wet AMD and DR. Next I’ll turn to our gene therapy programs for the treatment of monogenic diseases, including liver directed and CNS directed programs.

In our liver directed program or RGX-501 for the treatment of homozygous familial hypercholesterolemia, we have re initiated screening and enrollment of subjects in cohort 2 of the Phase 1/2 clinical trial. We expect to report interim data from cohort 2 with corticosteroid prophylaxis in the second half of this year.

Turning to our CNS programs, for RGX-121 for the treatment of MPS II, screening dosing and activation of additional study sites continues. And the first step to dose cohorts in the Phase 1/2 clinical trial. We expect to present an interim update in the second half of this year.

For RGX-111, for the treatment of MPS I, subject recruitment and additional site activations are ongoing and the Phase 1 clinical trial. For RGX-181, for the treatment of CLN2 disease, we expect to file an IND or foreign equivalent for the first first-in-human clinical trial in the second half of this year.

We will continue our diligent work to drive these programs forward. And we look forward to providing you with updates on our progress. With that, I turn the call back over to Ken..

Thank you, Steve. We’re very encouraged by these updates and especially the new interim data for RGX-314.

REGENXBIO has an extensive footprint in the gene therapy space and our scientific in – for scientific innovation could potentially bring many breakthrough gene therapy treatments to market through not only our own product candidates as well but also product candidates developed by our licensee network.

And as of June 30, 2019, our technology was being applied in more than 20 partnered product candidates in development by NAV Technology Licensees.

15 of these partner product candidates are an active clinical development and as I mentioned earlier, Novartis' ZOLGENSMA which uses the NAV AVV9 vector has been approved by the FDA, it’s currently marketed in the U.S.

Last month, we announced that we added a new NAV Technology Licensee with a new worldwide license with Pfizer for the development and commercialization of gene therapy for the treatment of Friedreich's ataxia, the most common hereditary ataxia.

This License agreement further validates the strength of our intellectual property portfolio, and we continue to be encouraged by NAV Technology in the treatment of movement disorders.

As licensee programs progress and achieve efficacy and safety milestones, they further validate the broad application of the NAV Technology Platform and provide additional data that collectively drive the advancement of the AAV gene therapy space. You can refer to our press release issued earlier today for specific updates on other external partners.

And finally, to touch on one other update from me, we announced our plan to construct the cGMP production facility in Rockville, Maryland.

The new cGMP production facility will be integrated into our previously announced new headquarters and construction is underway and land completed will allow for production of NAV Technology based vectors at scaled up to 2000 leaders using our platform suspension cell culture process.

The facility will be designed to meet global regulatory requirements and is expected to be operational in late 2021. The creation of this additional manufacturing capacity utilizing our platform process will allow us to more efficiently, advance our development programs from research stage to the clinic and ultimately to patients.

This has been a priority for us to develop excellent people plant and systems and we hold ourselves to the highest standards of quality in the development of our gene therapy product candidates. We expect our manufacturing network to be capable of supporting early and late stage programs which may require large scale vector supply.

With that, I’d like to turn the call over to Vit, for review of the financials.

Vit?.

Thank you, Ken. REGENXBIO ended the quarter on June 30, 2019, with cash, cash equivalents and marketable securities totaling $449.7 million compared to $470.6 million as of December 31, 2018. Cash, cash equivalents and marketable securities, as of June 30, 2019, included $32.1 million of marketable equity securities in Prevail Therapeutics.

REGENXBIO is a co-founder Prevail, and currently owns 2.43 million shares of Prevail common stock. Prior to Prevail's IPO in June 2019, REGENXBIO's equity interests in Prevail had a carrying value of $400,000 and were included in other assets on the consolidated balance sheet.

Upon the completion of Prevail's IPO, the securities were reclassified to marketable securities, and subsequently remeasured at fair value.

The decrease in cash, cash equivalents and marketable securities during the six months ended June 30, 2019, was primarily attributable to $53.0 million of net cash used in operating activities during the period, partially offset by the unrealized gain of $31.7 million related to the marketable equity securities of Prevail.

Revenues were $7.9 million for the three months ended June 30, 2019, compared to $40.0 million for the same period in 2018. The decrease was primarily attributable to $40.0 million of non-recurring license revenue recognized during the second quarter of 2018 under our amended license agreement with AveXis.

The decrease was partially offset by revenue recognized during the second quarter of 2019 resulting from license options, exercised and development milestones achieved by licensees during the period, as well as royalties on net sales of Zolgensma.

Commercial sales of Zolgensma commenced in the second quarter of 2019, and we expect royalties to increase in future periods. We are also eligible to receive a milestone payment of $80.0 million from AveXis upon the achievement of $1 billion in cumulative net sales of Zolgensma.

Research and development expenses were $29.5 million for the three months ended June 30, 2019, compared to $21.5 million for the same period in 2018. The increase was primarily attributable to increase personnel costs, laboratory and facilities costs and external expenses associated with conducting clinical trials and manufacturing-related services.

General and administrative expenses were $13.4 million for the three months ended June 30, 2019, compared to $8.3 million for the same period in 2018. The increase was primarily attributable to increase personnel costs and professional fees for advisory and other services.

Net loss was $1.5 million, or $0.04 basic and diluted net loss per share, for the three months ended June 30, 2019, compared to net income of $10.6 million, or $0.33 basic and $0.30 diluted net income per share, for the three months ended June 30, 2018.

Net loss for the three months ended June 30, 2019, includes the unrealized gain of $31.7 million on REGENXBIO's marketable equity securities of Prevail recognized during the period.

Based on its current operating plan, REGENXBIO expects its balance in cash, cash equivalents and marketable securities to be at least $350 million as of December 31, 2019. With that, I will bend the knee and turn the call back to Ken, to provide final thoughts and review our upcoming 2019 milestones..

Thanks, Vit. That was a good update also, although I like Steve’s update better. To summarize what we discussed today, the past quarter mark two highly productive period for the company. We continue to advance RGX-314 through clinical development for the treatment of wet AMD and DR.

Today, we shared additional positive interim update on the RGX-314 program for wet AMD in which we reported RGX-314 continues to be well tolerated. We observed those dependent increases in RGX-314 for protein expression across all five dose cohorts. 50% of the subjects treated in cohort 3 continue to remain free of anti-VEGF injections at 18 months.

And we plan to share more new interim updates from all five dose cohorts in the trial in October. In addition, we remain excited about the anticipated start for the Phase 2b trial in late 2019. We’re also on track to file a new IND for our Phase 2 trial of RGX-314 in diabetic retinopathy in the second half of this year.

Our regulatory and clinical progress also includes continuing enrollment for RGX-501 and RGX-101 are expanding research pipeline includes new programs for the treatment of hereditary angioedema, which we are developing in collaboration with neuro immune.

We’re excited by a new strategic direction to include AV mediated delivery of antibodies to treat diseases affecting larger populations also advancing gene therapy programs to treat important rare monogenic diseases.

The recent FDA approval of Novartis' ZOLGENSMA based on our NAV Technology Platform was an exciting milestone that further validates NAV Technology. After a decade of steadfast effort and focus, we remain dedicated and committed to improving lives through the curative potential of gene therapy.

Before we go to Q&A, take this last moment to recognize the excellent work of our employees, partners, clinical trial investigators, and of course, our especially every patient and family who chosen to participate in our clinical trials.

With our innovative science inspired people in partners and strong cash position, we’re well positioned to achieve future milestones, advanced therapies for patients with significant unmet medical needs. With that, we’ll turn the call over the operator for questions..

Thank you. [Operator Instructions] Our first question comes from Mani Foroohar with SVB Leerink. Your line is now open..

Hey, guys, thanks taking the question. Have a quick financial one around how to think about the royalty stream from Novartis. You guys are awarded license and royalty revenue not breaking out? Could you break out the royalty revenue either gross royalty or royalty net of what you guys go out to you pan for sales of Zolgensma Fas far.

And if you’re not comfortable doing so can you tell us at what bar of total royalty revenue? You say – you think it would you would reach the materiality threshold where you would break that royalty revenue out as a single independent line item?.

Hey, Mani. Thanks for the question. Yeah, this quarter, obviously, we’ve recorded as we – as Vit described, revenues received on the basis of Zolgensma sales by Novartis in the licensing royalty category of our profit and loss statement.

And the was not a material gap reason to break out that sale number for this period, because we really had just a fraction of the quarter that involved the ramp up of those sales, I think we’ll have better guidance based on what we see in terms of the ramp over the next several quarters for when that breakout will occur, and also when that breakout will occur in parallel for the cost of sales or cost of product line item associated with that..

Great.

And as a quick follow-up, how many, like how many patients a day should we expect to see at the first HoFH data release approximately?.

Well, we’re currently operating on a re-enrollment schedule for the dose Cohort 2 with corticosteroid prophylaxis that has an NF3. And we will have a better sense towards the end of the year of what our progress has been. But we’re hopeful to have data on that cohort at the end of the year..

Great. Thanks, guys. I’ll back with you..

Sure. Thanks..

Thank you. And our next question comes from Gena Wang with Barclays. Your line is now open..

Thank you for taking my questions, I have two regarding wet AMD program? Can you mention that cohort 4 and 5, you should a dose dependent increase in protein expression? Just wondering was that proportionally correlated with the dose increase?.

Gena, to us dose dependence means you know, increasing from the previously reported cohorts proportional to the doses that have been used in cohort 4 and cohort 5..

Okay, so like say if double the dose, then you saw double the protein level?.

Yeah, across all five cohorts will be able to show mean values from patients at one month, by the time we report data that will show that those dependency..

Okay. And then another question is you said three patients ahead of 18 months injection free.

So could you just remind us of what is the criteria for rescue injection? And then also, can you remind us the injection rate 12 months prior to this interview for these three patients?.

Hi, Gena, Steve here. Thanks for the question. So it is a key question what criteria you use in a trial when you’re looking at rejection rates of anti-VEGF therapy. In this Phase 1/2a trial, we had very liberal re-injection criteria.

So basically, if a principal investigator sees any decrease in visual acuity due to presence of fluid, or an increase in fluid leading to a decrease in visual acuity, they at their discretion can give a re-injection.

So I think it’s important to note that – that’s a very low bar for re-injecting compared to some other studies that have been done or later stage studies, where do you have what’s called a tougher criteria where you’d need, for example, 75 micron increase, and or decrease of a certain amount of best corrective visual acuity letter decrease.

So that’s part of why we’re so encouraged by these results. Not only is it 50% of the subjects in cohort 3 that have not needed any re-injection through now 18 months, it’s in the face of these very low bar for re-injection for these subjects.

To the second part of your question, which is also critical, how much anti-VEGF need exists for these patients since if they didn’t need many injections before they got gene therapy treatment, you wouldn’t expect many injections after. And in this case, we have a very anti-VEGF needy population that’s been enrolled in this trial.

So on average, patients have needed 35 injections or more chronically prior to receiving RGX-314. In the last year, well, one point is that as part of the inclusion exclusion criteria, subjects needed to have four injections within the last eight months. So already right there, it’s a fairly injection needy population.

And in spite of having those injections, there was still fluid present at entry into the study. If we look at it a year, we previously disclosed some of this for the early cohorts depending on cohort, it’s anywhere from 6 to 10 injections in the prior year on average.

And we’ll have updates on this as well going forward in October when we update on all the cohorts will certainly put it in the context of how much the anti-VEGF injection rate was for subjects pre prior to getting gene therapy..

Great. Thank you very much. If I can just quickly ask one more question regarding the Phase 2b trial design, you say you in line with FDA.

Could you just remind us what is the final trial designed for Phase 2b?.

Yeah, so we will – later in the year when we give the update on the program after we’ve presented and an update on the actual results that we’ve seen today. The interim results, including all five cohorts will give more details on the actual trial design.

Surprised to say now based on the successful outcome of our Type B meeting, we’re very encouraged on the main elements, main design elements of our Phase 2b study. And we had a very good constructive discussion with the FDA.

So we feel very confident, reiterating our guidance and actually our expeditiously even more than before looking forward to move forward with starting the study by the end of the year..

Thank you very much. Thanks..

Thanks, Gena..

Thank you. Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open..

Hi, this is Costas [indiscernible] on for Matthew. I have a question regarding AMD, could you talk a little bit about the competitive advantages of RGX-314 compared to other gene therapies that are currently in development? Thank you..

Yeah, Hi, this is Ken. I’ll start maybe Steve can provide some additional color.

Steve describe the origination of the product candidate, which I think has several important features that are differentiators including the use of our NAV Technology, of course, the AAV8 factor, which is highly selective for cells in the retina that we want to target for this treatment and wet AMD and other indications that will be responsive to anti-VEGF therapy.

We’re also using the subretinal route of administration and have initiated and have now completely enrolled a trial that – to my knowledge is the largest of its kind, where, however you measure it number of subjects 42 on treatment or number of doses, five doses.

And we’ve also as Steve was alluding to, and his response to Gena, according to our investigators, have enrolled in a population that’s referred to as the hardest to treat wet AMD patients.

So designing a program at this stage for Phase 1/2a that helps us evaluate pharmacology of RGX-314, in a true hard to treat Natural History Background of wet AMD patients.

And advancing what – in my view, is the current good standard of sort of safe and effective routed administration for delivery of AAV to the retina, supported by a lot of preclinical and clinical work ourselves and others have done but also a worldwide product approval, really sets up for, I think a large and important study where we’re collecting a lot of data.

And now what we’re seeing also is first of its kind, I think in the results which is dose dependent response, and sustained protein expression.

We are among the first if not the only company to evaluate a wet AMD population using gene therapy, looking for downstream protein production protein expression, after the gene therapy has been delivered and [indiscernible].

And we’ve demonstrated, we announced today for the first time, those dependent increases in protein expression across all five cohorts, and durability of expression that we previously talked about an hour to 12 months, but durability of effect, clinical effective up to 18 months, and we continue to follow patients. And we’ll have further updates.

Our product candidate, no program is robust. And the product candidate in the route of administration of it, I think, demonstrated to us that there’s an important need to advance this into later stages of development. The engagement with FDA, for us supports our interests.

And, we’re encouraged by the evidence that we’re generating, based on the pharmacology of this product candidate in patients with you know, very clear and well characterized wet AMD..

And I to add that if you think of it in terms of the non-gene therapy based the developmental programs that are ongoing, where – we’re very encouraged that. I think these other programs like from [indiscernible] or delivery system, for example. I mean, these all show and confirm and validate the need for less frequent injection.

But they all still are just incremental advances in terms of, yes, it’s moving in the right direction of less frequent dosing, but you still need indefinite rejection or refills with these different modalities. And that’s where foundational anti-VEGF platform like gene therapy is a potential game changer.

And I just second what Ken said is in that regard, and thinking of gene therapy, we – we have the gold standard approach for delivering a vector and getting sustained protein expression that we’ve now shown clinically, and now shown a link between gene expression on a durable basis and anatomic and functional outcome measures over the longer time horizon that is also being seen in the setting of a dramatic reduction in anti-VEGF dosing compared to the prior need of these patients.

So with – we again, are quite encouraged based on these results to move forward..

Yeah, and I probably add one other piece to their profile that’s now emerged clinically, but we establish preclinical with RGX-314 and the route of administration work that we did at Penn and Johns Hopkins, which is, we’ve demonstrated that we have a product candidate and route of administration where we don’t need to rule out patients due to risks of ocular inflammation or preexisting neutralizing the antibodies.

And nor do we need to administer any oral inflammatory or anti-inflammatory or immune suppressive medications, prophylactically or otherwise to address those conditions. So we believe that that provides a much clearer path to understand the pharmacology clinically, but also a clear path in terms of the market opportunity for this product..

Thank you so much. This is very helpful..

Sure, thanks..

Thank you. [Operator Instructions] Our next question comes from Dan Leon [ph] with Raymond James. Your line is now open..

Thank you for taking your questions. And thanks for the updates on the clinical progress.

First one for me, could you update us on the mean number of injections for the other half of cohort 3, I think at 12 months said about 2.3?.

Well, we providing quantitative updates for all the cohorts in October. I’m comfortable saying now that the findings that that we’re seeing based on the data coming in is very consistent with what we’ve seen at our one year readout, but we’ll have quantitative details in our October update..

Okay.

And then can I clarify something from the press release in the comments, in terms of is the follow-up going to be different between co four and five? Or are both cohorts going to have a six month follow-up?.

So we think six month data is very important. So of course, if you march forward from when we announced completion of recruitment of cohort 5, we’re updating in October, it’s just a matter of how many patients in cohort 5, will we have at least six month date on..

Okay, I guess I was asking whether cohort 4 would have a longer follow-up then six months or not?.

Yeah, that those patients will have been enrolled in the study longer than six months by the time we report in October. And certainly the cohort 3 we said we’ve already got patients, on average out to 18 months.

What we want to is dean at the, next announcement of the quantitative data is show those comparisons across cohorts that dose dependency based on one month protein, and as much as possible the six month clinical outcomes, which is, where we started with this whole package for this trial, when we made our first announcement and where we think the best pharmacology and interpretation of the relationship between pharmacology and clinical effect exists..

Okay, and then one on the DME program. It sounds like you’re kind of implying that since you have the dose figured out from the wet AMD study that the DME study should basically accelerate and potentially get on a parallel path with wet AMD which is more of a traditional registration approach for the injectable class.

Is that am I interpreting things right or over interpreting it?.

Well, for our diabetic retinopathy development plan, we’ve discussed our target to start a Phase 2 DR trial. We feel based on the data that will have from the wet AMD study, a separate anti – a separate anti-VEGF driven retinopathy, although it’s a different disease process.

I think we know enough from all the different anti-VEGF programs that have been done across the different retinopathy, that we can utilize that precedent to help us select doses for evaluation in a diabetic retinopathy population, as well as of course, the safety the data that will have and tolerability data.

As far as the actual stage of development, I mean, we can’t we think of them independently. But certainly by having the Phase 1/2 data from wet AMD I think it puts us in a good position to advanced Phase 2 study already with diabetic retinopathy..

Right, Yeah, sorry, my mind to flip the DME for DR.

And then just finally, so into October, this is going to be basically like an event you’re hosting versus a medical meeting, correct?.

Well, I mean, our team, along with our investigators are evaluating a few options for presentation, including an upcoming events and, we’ll plan to announce that when we’ve completed that process and confirmed a final decision date..

Okay, great. Thank you, guys..

Sure..

Thank you. And I’m showing no further questions in the queue at this time, I’d like to turn the call back to Ken Mills for any closing remarks..

Those are great questions, almost better than the updates we had today. Thanks, everyone for participating. Thanks, operator. Thanks for joining us, and we look forward to providing you with further updates. Have a great night..

Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude your program and you may all just connect. Everyone, have a great day..