Q2 2023 Orchard Therapeutics PLC Earnings Call
Okay.
Good day, and thank you for standing by and welcome to the Orchard Therapeutics second quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one.
On your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded.
Now I'd like to hand, the conference over to your speaker today, Bobby Gaspar, our CEO and co founder.
Hello, everyone I'm Bobby Gaspar.
And co founder of Orchard Therapeutics.
Welcome to our second quarter 2023 conference calls.
We are especially delighted to share with you some important regulatory and business updates as well as provide our quarterly financial results.
Before we get topic I want to remind everyone that throughout this call we will be making forward looking statements.
Please refer to the supplemental presentation materials, and our latest SEC filings for more information.
I was little highlights on today's call Orchard continues to successfully execute across all aspects of our business, including commercial regulatory R&D as well as operational management.
News, we announced this morning reinforces <unk> leadership position in the HSC gene therapy field.
I have two members of the leadership team joining me on today's call.
Following my remarks, Frank Thomas President and Chief operating Officer will provide a summary of our commercial momentum in Europe as well as an overview of our financial results for the quarter.
Brady Parker, our Chief commercial officer will also be joining for Q&A.
We will keep our prepared remarks focused on three primary topics first you'll hear about the continued progress we are making to advance <unk> hundred toward a potential U S approval.
Second we will share updates regarding the commercial momentum we are building in Europe .
And third we will provide a general business update and outline our quarterly financial results.
Let's start with an update on the regulatory status of <unk> 200 in the U S, which is intended for the treatment of early onset metachromatic lipodystrophy or M. L D.
The most severe form of MLD babies develop normally.
Late infancy don't to rapidly lose the ability to walk talk and interact with the world around them.
These children may require 24 hour care and the majority passed away within five years of disease onset, creating an enormous burden on patients their families and health care systems.
The medical need is significant and we are seeing the value of our gene therapy for MLP being recognized by pad throughout Europe , where it has been approved since late 2020.
As we announced in this morning's press release, we have completed rolling submission of our BLA to the U S. FDA for OTI 200, which previously received but rare pediatric disease and automat designations from the agency.
Which it has requested priority review, which if granted would put OTI 200 on track for a potential U S approval of first half of 2024.
Reflecting on the tremendous progress we've collectively made in the seven months since that I'd be clinical meeting with the FDA.
I want to take a moment to express my sincere gratitude to the orchard team as well as our clinical collaborators and external partners, who contributed to the achievement of this milestone.
There's still work to be done today, we have one significant step closer to bringing this important therapy to children and their families in the U S living with MLD, who currently have no treatment options beyond supportive care.
We're looking forward to working with the agency throughout the filing and review process and expect to hear from the FDA regarding acceptance.
Of the BLA in the third quarter of this year.
We're also planning to present, the full OTR 200, BLA clinical data.
<unk> more than 30 years of patient experience at an upcoming medical meeting.
It's very important because they demonstrate consistent outcomes using an endpoint discussed and agreed with the FDA as being clinically meaningful.
Before we discuss our commercial and financial update let's take a moment to highlight some notable data. We recently presented from across our HSC gene therapy portfolio, which underscored the transmitted potential of our approach and continues to demonstrate the ability of gene modified hsp to Mike.
Great into multiple organ systems, including burn CNS and Gi tract.
Delivered therapeutic enzymes and proteins locally to affect disease correction.
Several presentations demonstrating leadership in your metabolic and CNS disorders were featured at <unk> in Los Angeles.
This included new data from the ongoing proof of concept study of <unk> for patients diagnosed with her level of NPS, one which demonstrated extensive metabolic correction in the skeletal system of patients, resulting in normal growth rates.
It'll remodeling improvements and joint function and progressive acquisition of motor skills.
The current standard of care NPS one is.
In allogeneic hematopoietic stem cell transplant, which does not adequately address the growth in skeletal manifestations of the disease among other clinical outcomes.
<unk> plans to initiate a global 40 patient Registrational randomized controlled trial of Oakdale territory compared to standard of care by year end.
Currently working with the clinical sites.
And the centralized lab.
Pat for this first of its kind study.
A presentation highlighting updated <unk> tier one data from the ongoing proof of concept study in NPS three eight patients.
Additional favorable neurocognitive outcomes compared disease natural history with median follow up of two and a half years.
Similar to the MLP <unk> represents a significant medical need given the disease severity and in fact, there are no approved therapies.
Treatment with allogeneic HSBC or enzyme replacement therapy has not been shown to be effective for MTS patient.
Patients enrolled in the ongoing proof of concept trial will be followed for a minimum of three years during which time. The study investigators will continue to report additional biochemical and clinical outcomes.
We look forward to continuing to follow patients in the study to inform the late stages of development for the program.
We also featured the first preclinical data for <unk> four for the programming and deficient for frontal temporal dementia, which highlighted the ability of HSC gene therapy to express pro granular in the CNS modulate neuro inflammation and normalized predictive biomarkers.
At CCT, we also presented preclinical data from two about in House research program, which demonstrate the broad potential of our platform to address larger indications.
This included preclinical proof of concept data showing the therapeutic potential of <unk> 104 for not two crohn's disease severity and.
Im treatment refractory disease.
Additionally, in vivo data demonstrated the development of our.
T Reg cell from Natalie engineered HFC as a potential onetime treatment for autoimmune disorders.
Together, our rich pipeline continues to provide multiple opportunities for near to data and inflection points, both through internal investments and business development.
Moreover, they are all based on the same HSC gene therapy platform, <unk>, providing a roadmap and common infrastructure to help us achieve scientific clinical regulatory and commercial success.
With that let me turn the call over to Frank to discuss the commercial momentum we are building in Europe with Lal D as well as our quarterly financial performance.
Yeah.
Thank you Bobby.
We've always believed in the curative potential of HSC gene therapy for severe and other genetic diseases.
With the approval and launch of <unk> in Europe , we are making that promise a reality for patients with MLD.
Our commercial and medical teams continue to work with all members of the MLD KOL and patient community to identify refer and support treatment of eligible patients.
We also continue to make progress obtaining reimbursed access to <unk> in additional European countries.
So far in 2023, we have secured reimbursement agreements in four additional European countries exceeding our annual goal in just the first half of this year.
Most recently the decision forum for new approaches in Norway agreed to authorize live Mel D for all eligible patients with early onset MLD.
Patients in the country will be referred to the treatment center in Sweden once it's fully qualified.
Reimbursement discussions are ongoing in several European countries.
In addition, we have been successful in expanding our commercial reach geographically through early access mechanisms in France.
Cross border pathways in Eastern Europe and.
<unk> treatment abroad programs in the Middle East, which are important growth drivers. During this relatively early stage of launch.
To date, we have now treated patients from six different countries on a commercial basis at four of our five qualified centers in Europe .
We continue to achieve a 100% success rate and drug product production and are confident we can take this commercial model and successfully apply it to the U S. Following a potential FDA approval for <unk> hundred.
We've spoken frequently about the importance of newborn screening to aid early diagnosis and treatment of MLD patients.
To date nine prospective studies are actively screening newborns for MLD in key regions countries and states.
Four confirmed cases of MLD have identified following the screening of more than 150000 newborns globally as of June 30th and many of these MLD patients identified through newborn screening are expected to be treated commercially with lamellar <unk> in 2023 and beyond.
By the end of the year more than 200000 newborns are expected to have been screened creating an opportunity to identify additional patients and adding to their referrals being generated through early symptomatic diagnosis and family screening.
Furthermore, the data from these studies will provide critical evidence to support applications for universal screening of MLP in the U S and around the world.
On that front recently, the Illinois State legislature passed the newborn metabolic screening act also known as SP 67.
Which requires the state department of public health to screen all newborns for MLD.
The Bill was signed by the Governor last week and it is expected that Illinois will start the process of implementing statewide screening for MLD. This year.
This represents the culmination of a multi stakeholder initiative working together to support screening for MLP and a very big step forward for newborn screening in the U S where we are actively laying the groundwork for the implementation of MLD screening programs in other states.
Assumptions to the potential addressable worldwide market, the global opportunity for <unk> could reach up to $500 million annually considering countries, where we believe therapies liked the melody will be reimbursed.
This peak opportunity will only be realized if universal newborn screening is in place, enabling the incidents population to be identified prior to the onset of symptoms. While this can take time the momentum we're seeing with the entire MLD community covenant coming together can make it a reality.
The data from these newborn screening studies are still early to draw definitive conclusions. However, preliminary findings suggest that the incidents could be closer to 150000 lie bursts and consequently, the commercial opportunity may be even higher than previously estimated in the literature. This could create a more.
Market opportunity exceeding $1 billion per year globally.
The commercial potential and longevity of Lomeli is further bolstered by its long term durable clinical impact also the high barriers to market entry and the fact that there are currently no other approved therapies or clinical candidates and development. Following the recent news of the discontinuation.
Other programs.
Now turning to our financial performance has been another quarter of solid execution and operational excellence with a strong balance sheet growing lemelle the revenue and it continued reduction in our operating expenses.
The $34 million in proceeds from the second closing of our strategic financing insurers that we are well capitalized to progress U S launch preparations continue investing in initiatives aimed at accelerating revenue growth in Europe .
And to advance our next in line Neurometabolic programs and NPS disorders.
Notably the security's comprising the second closing were sold at $8 per Adf's, which represents a 64% premium to the share price on the date of issuance.
We expect funding from the first and second closing to extend our cash runway to mid 2025.
The company could bring in up to an additional $120 million in proceeds at $11 per share following potential use approval of Ots 200 in 2024, if all the warrants sold are exercised by participating investors.
This would further offset the company's financing needs for the foreseeable future, especially as we expect to grow our revenues to a level that could sustain our business.
Total revenue for the second quarter was seven 3 million comprising $6 $6 million in <unk> sales, representing the highest quarter to date and point $7 million in collaboration revenue.
The cost of product sales was $2 2 million, which primarily consists of manufacturing costs royalties to third parties and non-cash amortization. This resulted in gross margins of approximately 70% for the quarter.
Beyond with melody revenue in Costa product sales you can find the full financial results from the second quarter in this morning's press release.
Importantly, we continue to be good stewards of our capital and are closely managing our expenses.
Total operating expenses declined 22% in the second quarter compared to the same period in 2022, the reductions were realized across our business with both R&D investment and SG&A expenses declining more than 20% from the corresponding period last year.
We ended the quarter with cash and investments of approximately 155 million and runway into the middle of 2025, So approximately two years of cash and a revenue generating product with growing sales.
Our financial goals for the remainder of 2023 are focused on continuing to grow lip melby sales year over year and managing our operating expenses, which we expect will lead to a continued downward trend in our annual burn rate.
I will now hand, it over to Bobby for some final comments.
Thank you Frank.
As we've outlined.
Been an incredible period of progress for which it and we look forward to carrying this momentum throughout the rest of the and beyond.
Over the next 12 months.
<unk> it is well positioned to become the breakout leader and HSE gene therapy.
Ah business continues to get stronger.
Our top line growth coupled with the recent strategic financing puts us on track to become a self sustaining enterprise Greg.
Great progress has been made across many areas of our business, including commercial regulatory political development manufacturing and early research.
We've also learned a lot from the development and commercialization of the melting.
Slide those insights to strategically advanced are HSC gene therapy platform and indications when it has the greatest probability to disrupt current standards of cat.
It's been a difficult environment, so the gene therapy sector.
I'm on a number of other companies continue to face headwinds setbacks. We've emerged from this period, a broader industry contraction Lena more focused while funded and his mission driven as ever.
Ultimately our approach shown the ability to potentially cure devastating diseases.
With that we'll open the call for questions.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
One moment for questions.
Our first question comes from <unk> tried a pod gave it Guggenheim you May proceed.
Hey, good morning team. This is Robert <unk>, Congrats on will be a link filing.
So on the filing do you anticipate an outcome for O T. L 200.
Thank you <unk> I'll I'll I'll take that question.
I think the the let.
Let me just pull stuff.
Is that going to say that we will be requesting policy review, we have requested products with Ya.
We do have all that designation and.
Hi, I'm might need.
There's a strong likelihood that we will get policy with you as far as the <unk> <unk> <unk>. This is the first.
Just before permission for a a therapy for MLP. So it may well be but we get a call and I think we would quite welcome back to again show the FDA the high level of unmet need the significant difference that we are making.
Oh T L 200, and this devastating disease on the lack of other alternatives for this condition. So if these are focused on those kind of political questions than I think women have very strong position, but obviously will know at the time relatively soon whether we do have a nightclub.
That's great. Thank you and maybe one follow up.
Any color that you can provide on the catalyst for statewide screening in Illinois, and any other things that you can apply to other states.
Yeah. So.
State wide even before the.
The condition is recommended for screening by the panel.
And so there are some of those states and we've been working with those states and so Illinois has passed legislation to mandate screening.
<unk> <unk> and it is a high birth rate states. So we're extremely pleased with the progress that and they may well be implementing by the end of this year or early next year. So that is a <unk> I think I'm very very significant moment in screening for MLP in the U S. Now there are other states.
Which could also start screening before.
The condition is placed on the on the rough panel and so we're working with those states as well now there are also some other states that can do pilot programs.
Studies, rather than you know.
Monday through statewide screening and so those other states that we are working with so there's an awful lot of activity ongoing in other states apart from Illinois.
The way well start screening before disappears on the left tunnel and so that will be working with those types.
That's great. Thank you.
Thank you one moment for questions.
Our next question comes from <unk>.
Stavropol with Cantor Fitzgerald you May proceed.
Yeah. So the the C D. A mode that we're working with is AGC biologics, which is based in Milan. They have been approved for commercial manufacture.
You said the <unk> is which we are commercializing in the E. U is manufactured that Isaiah.
Also commercial manufacturing strobilus as well and I think they have manufactured other products and also they have been through obviously.
Inspections. They haven't previously been through an F D. A inspection and this will be the first FDA inspection. We have worked very closely with AGC bottlenecks biologics, we have performed a mock inspections using SDA path F D. A.
Inspectors, so I'm going through a mock inspection and the way that it may well be conducted by the FDA identifying.
Issues that they may need to be addressed for <unk> inspection capacity to an ear infection and said this has been.
The subject of a lot of activity by us and we are working very closely with them to put everything in place for a successful F D. A inspection.
Alright. Thank you for that and can you also just sort of remind this other patients with melodies approved for in the E. U and you know when you think about it you know U S label do you anticipate if approved it'll be similar label, a broader or more restrictive label well.
Well, let me start that in that I can hand, it over to pray for any extra information, but essentially in the E U.
In the U S. But nowadays is approved for pre symptomatic patients with either <unk>.
Juvenile for disease, and also <unk> early symptomatic patients with the juvenile form of the symptoms by early symptomatic.
Defined as.
Individuals children, who still have the ability to work independently.
Have normal Ikea, we will be applying for a very similar label.
With the F D a.
And some bright and I don't know, whether you want to add anything to what I just said that.
No I think you characterized as well.
Okay. Thank you I hope that answers my questions.
It does indeed and just one last question. If you don't mind you know so you know as you move forward you know and finally I d's for for the larger indications like Crohn's disease, and you know the risk benefit may shift for those indications are relative to you know M O D and other Neurodevelopmental vacations. You currently focused on you know what are some key.
Findings from your platform you know that sort of gives you confidence that the risk benefit profile will remain favorable for these larger indications.
Yeah. Thank you.
An important question one that we've considered very carefully as we thought about selecting which diseases that we that we can target. So for crohn's disease. It is a specific genetic formed crohn's disease and these are individuals with filing mutations in a gene called not too and the.
Literature, and I K O L. Outwith suggests that these individuals have the most severe form of Crohn's disease. So these are individuals who are refractory to biologics and immunosuppressants. They have a high rate to surgery and they have the fifth July single strict screen.
Occupancy so despite what's currently available there is still a high unmet need we also know that many individuals with this for this disease. The survey form the disease, all taking part in trials of autologous transplantation sites, where they need to have chemotherapy conditioning and where.
Unmodified autologous cells, all the way so that kind of intervention is still something that is warranted for those individuals with this severe form of the disease. Now obviously, we will be getting one step further and providing <unk> selecting individuals with not two mutations and providing Jean.
South so we believe it is justified in addition to that we are also working on reduced intensity conditioning regimes, which again.
Make this form of intervention more applicable to a wider population.
Alright, Thank you very much and congratulations again.
Thanks, a lot. Thank you.
Thank you and as a reminder to ask a question. Please press star one one on your telephone one moment for questions.
Our next question comes from your own rubber with T. D talent you May proceed.
Hi, This is Brian on for your own thanks for taking my questions and congrats on your feeling just a quick call from US can can you maybe just walk us through what kind of.
Learnings are synergy that's from the European launch at this point that would help expedite a potential U S lunch or just really trying to understand and your expectations for the cadence of potential use sale later next year I'm really into 2025.
And then I have a follow up.
Okay, well, thanks for that and I'll have that 102 plays and not cheap commercial Sir.
Yeah, and thank you for that question.
In terms of learning from Europe , and how they would apply to the U S launched.
There are very similar.
Approaches in terms of the market in terms of the size of the personnel. The number of qualified treatment centers that we would have you look at the size of the market and applying an incidence rate. They are pretty similar from that standpoint, I think the main differences that you see in the U S vs. Europe is there will not be.
That lengthy period of time, where you're going through health technology assessments in advance of any type of pricing negotiations the reimbursement will come much sooner than the U S than it has in Europe . So as you think about launch and the launch trajectory as you will the number of patients.
Will likely be similar and the ramp will likely be similar but those sales will happen much sooner than they did in Europe . So almost.
Very soon those launch, but we do anticipate given the nature of that analogy and the challenges in identifying patients within that treatment window of opportunity that you will see kind of this uneven name.
Nature of patient as in sales in the early years of the launch as we've seen in Europe as well, if it's a little bit lumpy until you have universal newborn screening in place, which will provide much more predictability of patient identification within that treatment window of opportunity.
Alright, Great and then just one quick follow up sorry, if I Miss It can you just maybe you remind us what's actually left before initiating into bill studying M. P. S. One in your chest and that's a bit but it's a matter of kind of finalizing design with F. D. A or is it really just selecting and getting the site up and running for the <unk>.
A study.
Thanks, I'll I'll take that at the study design is finalised with the FDA. So we don't have to do anything further as far as any kind of regulatory Paul is concerned in order to open. The study. So now it is really just the kind of logistics and practicalities of getting sites ready for what will be a.
Multicenter randomized controlled trial. So you can imagine the work that goes into that and it is just getting all of that in place and we anticipate opening at the study by the end of the year.
Alright, great. Thanks, everyone.
<unk>.
Thank you and I'd like to turn the call back over to Bobby guys far for any closing remarks.
Okay. Thank you very much and so I just want to say thank you very much for your for your questions and your time your attention and your support as we work to realize or transmission to end the devastation caused by the severe genetic diseases at through this this platform approach, which we think has a cure.
A potential that'll the HSE gene therapy. So thank you very much.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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