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Edited Transcript of BOLD earnings conference call or presentation 27-Feb-19 9:30pm GMT

Q4 2018 Audentes Therapeutics Inc Earnings Call

SAN FRANCISCO Mar 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Audentes Therapeutics Inc earnings conference call or presentation Wednesday, February 27, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew H. Chang

Audentes Therapeutics, Inc. - Director of IR

* Matthew R. Patterson

Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO

* Thomas P. Soloway

Audentes Therapeutics, Inc. - Senior VP & CFO

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Conference Call Participants

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* Anupam Rama

JP Morgan Chase & Co, Research Division - VP and Analyst

* Aspen Mori

BofA Merrill Lynch, Research Division - Analyst

* Christopher Joseph Raymond

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Dae Gon Ha

SVB Leerink LLC, Research Division - Associate

* Difei Yang

Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research

* Earl DeSouza

H.C. Wainwright & Co, LLC, Research Division - Associate

* Matthew W. Luchini

BMO Capital Markets Equity Research - Analyst

* Mohit Bansal

Citigroup Inc, Research Division - VP and Analyst

* Raju Yashaswi Prasad

William Blair & Company L.L.C., Research Division - Senior Research Analyst

* Subbu Nambi

Cowen and Company, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the Audentes Therapeutics Fourth Quarter and Full Year 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the call over to Andrew Chang, Director of Investor Relations at Audentes. Please go ahead.

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Andrew H. Chang, Audentes Therapeutics, Inc. - Director of IR [2]

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Thank you, operator. And good afternoon, everyone. Just after market closed today, we issued a press release with earnings and operating results for the fourth quarter and full year 2018.

The press release and live webcast access are available on the Investors and Media section of the Audentes website at www.audentestx.com. The webcast link will be available for approximately 30 days.

Joining me on the call today are Matt Patterson, Chairman and Chief Executive Officer; Natalie Holles, President and Chief Operating Officer; and Tom Soloway, Chief Financial Officer.

Before we begin with prepared comments from our team, I'd like to remind callers that the information discussed on the call today is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that the company's management will be making forward-looking statements.

Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business.

These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and the company's SEC filings. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, February 27, 2019.

Audentes undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of today's call, except as required by law.

I would now like to turn the call over to Matt Patterson, Chairman and Chief Executive Officer. Matt?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [3]

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Thank you, Andrew. And good afternoon, everyone. I'm pleased today to recap the significant accomplishments of our team over the course of an outstanding 2018 as well as to share with you the important milestones we are looking forward to this coming year.

For Audentes, the last 12 months have been transformational. It was in January of 2018 that we first shared the earliest data from ASPIRO, a Phase I/II clinical study of AT132, our lead product candidate being developed to treat XLMTM.

Since that time, results from ASPIRO continue to exceed expectations. The latest data set, which was presented at the annual Congress of the World Muscle Society in October 2018 demonstrated that all 6 treated patients in Cohort 1 and the sentinel patient in Cohort 2 showed meaningful improvements in neuromuscular and respiratory function, with follow-up ranging from 4 to 48 weeks.

We are particularly pleased that 3 of our Cohort 1 patients have achieved ventilator independence, an unprecedented result for children with congenital myopathies who have been ventilated since birth.

Additionally, week 24 muscle biopsy data for the first 4 treated patients showed robust tissue transduction, protein expression and histological improvement. And importantly, AT132 continues to be generally well tolerated at doses up to 3 x 10 to the 14th vector genomes per kilogram.

In the fall, we completed dosing of Cohort 2 for the original protocol, which included 3 patients and 1 delayed treatment control. And as we recently announced, we plan to dose an additional 3 to 5 patients as part of a Cohort 2 expansion, which is ongoing.

Our next clinical data update for AT132 is scheduled to occur at the 2019 Annual Meeting of the American Society of Gene and Cell Therapy, starting in late April in Washington, D.C.

2018 also brought significant progress with regulatory agencies for AT132, including the receipt of RMAT designation from the FDA, PRIME designation from the EMA, each of which are awarded to products intended to treat serious or life-threatening diseases, where preliminary clinical evidence indicates a potential to address significant unmet medical need.

In the fourth quarter of 2018, we completed a productive meeting with the FDA. And recently, we completed a meeting with the Scientific Advice Working Party of the EMA. Interactions with both agencies were productive and provided a potential path for BLA and MAA submissions, respectively.

As a reminder, we plan to select the optimal dose in the second quarter of 2019 after the evaluation of the 6-month biopsy results from the first 3 patients dosed in Cohort 2.

After determining the optimal dose, we plan to provide an updated data package to regulators to facilitate final agreement on license application pathways in the third quarter.

Turning to manufacturing. As a reminder, we began our ASPIRO program with our planned commercial manufacturing process for all AT132 clinical material, a first within the neuromuscular gene therapy field.

This, combined with the significant investments we've made in process and analytical development, fill finish and QC testing means that we are uniquely well situated to be BLA ready on time lines consistent with our clinical progress.

Our facility has been designed and commissioned to support global licensure. And thinking ahead towards global launch, we are reproducibly generating excellent yields, providing us with confidence in our capacity and utilization projections as well as our eventual commercial cost of goods. Our AAV manufacturing leadership position continues to be the foundation of our strategy for long-term value creation.

As we look ahead towards commercialization of AT132, we recently expanded our leadership team with the addition of Eric Mosbrooker as Senior Vice President and Chief Commercial Officer. Eric has a demonstrated track record of building global commercial organizations and successfully launching rare disease products.

He most recently joins us from Origin Biosciences, after serving in commercial leadership roles at Jazz, Onyx, Enobia, Alexion, Raptor and Horizon. We look forward to introducing Eric to the broader investor community as his work progresses.

Before we leave AT132, I would like to take a moment to thank our internal team, medical and scientific collaborators and most importantly the patients and families that have supported and participated in INCEPTUS and ASPIRO for the years of efforts that have gone into advancing the program to this point. We are privileged to be working with and alongside the XLMTM community and remain single mindedly focused on advancing this important therapy to market as rapidly as possible.

We look forward to collaborating with regulators in the coming months to reach final agreement on the license application pathways and to updating all of our important stakeholders as the program advances.

Turning now to our Pompe disease program. We remained highly encouraged by the progress of our ongoing preclinical studies and continue to guide to an IND submission for our optimized construct, AT845, in the third quarter of this year.

Importantly, we continue to believe that our differentiated approach of utilizing AAV to transect and express GAA directly in tissues affected by the disease, including skeletal muscle, heart and the CNS, is best-in-class, which can be contrasted with enzyme replacement therapies and liver-directed gene therapy candidates that rely on updates of GAA from plasma. We look forward to sharing the continued progress in our Pompe disease program over the coming months.

Moving on to AT342 for Crigler-Najjar syndrome. During 2018, we established initial proof of concept in the sentinel patient of VALENS and made the decision to dose escalate for the treatment of subsequent patients.

In late 2018, as shared in previous updates, we experienced unexpected screen failures in several patients. And to date, we have not yet dosed a new patient.

While we are disappointed in these delays, we continue to believe that Crigler-Najjar syndrome remains a highly promising target for AAV gene therapy and expect to provide the next program update in the second quarter.

Finally, a key priority for Audentes is to leverage our development expertise in neuromuscular diseases and our industry-leading AAV science and manufacturing capabilities to expand our pipeline into additional neuromuscular indications that provide the potential for our work to make a broader impact for patients.

To that end, we are encouraged by progress with our new program candidate, AT720, and are on track to provide a program overview in the second quarter of 2019.

Additionally, our plans extend beyond AT720. To enable our vision of becoming a global leader in AAV-based genetic medicines for neuromuscular diseases, we continue to work internally on new and differentiated approaches to challenging disease targets and externally with collaborators, who are accelerating our understanding of the field of generic medicines. We're tremendously excited by the breadth and depth of our pipeline expansion efforts and look forward to sharing further news as our work progresses.

In closing, our ability to meet these important upcoming milestones is supported by a strong balance sheet. Our year-end 2018 cash position of $418 million is expected to fund operations into 2021. And with over 2 years of cash runway, we are well positioned to make meaningful progress towards our goal of providing transformative therapies to patients living with devastating neuromuscular diseases.

We are excited by the multiple 2019 milestones ahead and look forward to sharing these updates with you over the course of the year.

That concludes our prepared comments for today's call. Operator, you may now open the line for questions.

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Questions and Answers

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Operator [1]

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Our first question will come from Ritu Baral with Cowen.

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Subbu Nambi, Cowen and Company, LLC, Research Division - Analyst [2]

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This is Subbu Nambi on for Ritu Baral. I had one basic question. What is the quantification method you used to measure vector copies? And I have a follow-up.

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [3]

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The quantification method for vector copy number. To make sure that's an accurate response, I want to make sure we -- I get the right people on the line, and they're not on the line today, so I apologize for that, but I don't want to misspeak, so we will be happy to follow-up with you just after the call with the answer.

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Subbu Nambi, Cowen and Company, LLC, Research Division - Analyst [4]

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Okay, sounds good. And with the hiring of Eric, can you provide any high-level color on commercial efforts you are undertaking for XLMTM? Any market research you have done so far?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [5]

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Well, there's a range of activities that have actually been ongoing for some time prior to Eric joining, which have been focused on characterization of the burden of MTM as a disease on patients and families and the health care system, largely with the vision of developing a very thorough analysis for future conversations with payers. And then not surprisingly, we've also put in a significant amount of effort to begin patient identification efforts. And with Eric joining, those efforts will ramp up significantly. And of course, Eric will be hiring a team of leaders to help advance that work specifically. So looking forward to investing further in that area of the business as the regulatory discussions progress.

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Operator [6]

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Our next question comes from Anupam Rama with JPMorgan.

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Anupam Rama, JP Morgan Chase & Co, Research Division - VP and Analyst [7]

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Maybe just quick -- 2 quick questions here. Maybe -- what is sort of the final gating factors on the preclinical side for the Pompe program to get to that IND filing? And then second question, maybe -- can you talk about what would be like your ideal scope of the update for Crigler-Najjar syndrome in 2Q with some of the enrollment dynamics that you've kind of outlined?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [8]

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Sure, thanks, Anupam. So on the Pompe preclinical, we are in the process of finishing a robust set of activities in the mouse model. And that analysis is particularly valuable given the more informed perspective we have on the disease and this approach to treating Pompe based on our experience in 2018, which is, of course, why we're filled with confidence about next steps. Specific next steps will include going ahead and manufacturing the AT845 at the large scale and performing our nonhuman primate toxicology study as the final piece of the puzzle for the IND filing. We expect that's a 12-week study, and allowing time for full analysis and paperwork and filing preparation, that gets us into the Q3 time line comfortably. For the second question, difficult to answer that with too much specificity. As we made it clear in my opening remarks, of course, we're disappointed by some of the delays we've seen in enrollment in the study, but study operations are ongoing, and we're looking forward to seeing how things progress. And so we'll just -- we'll give as fulsome an update as makes sense at the time. I don't really know how to predict it much more than that at this time.

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Operator [9]

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And the next question comes from Ying Huang with Bank of America Merrill Lynch.

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Aspen Mori, BofA Merrill Lynch, Research Division - Analyst [10]

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It's Aspen on for Ying. First, on XLMTM, could you guys talk maybe broadly on what some of the biopsy metrics look like in the Cohort 2 beyond that first patient? I guess, are you seeing higher rates of improvement in neuromuscular -- or higher -- better improvement rather in neuromuscular and respiratory function? And then on Crigler-Najjar, could you just remind us again what's driving some of these failures?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [11]

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So in MTM, your question starts to get to what will be included in our next data update. So let me just remind people. As we said in the release and opening remarks back in October, we shared data that included out to 48 weeks in Cohort 1 and just 4 weeks in the first patient enrolled in Cohort 2 with a higher dose. And the next data update will be at ASGCT, and that data update will be very robust. It will include longer-term data in all patients, and that will include out to full year data and all patients in Cohort 1 as well as, as much data as we can get in Cohort 2 patients, which we hope will be full 24-week data, but it's very tight on the biopsy time line in particular. So we'll see how that progresses. We're hopeful we can get those data included in the update. But I won't be able to answer your questions about how things are going in the first patient in Cohort 2 at longer time points or the additional recent-treated patients until that time.

And on Crigler-Najjar, as I mentioned, the challenge that we observed in Q4 with the screen failures was a surprise. It was a surprise to us and even to Crigler experts, given that there wasn't a belief that there was much liver damage in patients over the years. But when we tried to enroll several patients who were a bit on the older side, in their teenage years, in the screening process, we found evidence of some baseline liver damage. Now to be clear, we think those patients would probably benefit greatly from this treatment, but we also feel strongly that they're not appropriate to be the first patients treated in a Phase I/II clinical trial. So our entry criteria are strict for a reason, and so we stick with that. So that's why those patients weren't eligible, and those were disappointing delays. But as I said, operations are ongoing, and we still remain very upbeat about the potential for AAV gene therapy for Crigler.

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Operator [12]

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Our next question comes from the Chris Raymond with Piper Jaffray.

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Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [13]

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Just to clarify, not to keep hitting on the Crigler program. But I think last month your guidance was for a Q1 update. Just to be clear and just to clarify, is that delayed to Q2? Is that all around patient identification? Or is there some other aspect to the program that's sort of driving that? And then, also on Pompe, you mentioned a pretty decent body of preclinical data that you guys are generating. Is there a publication plan or some idea that maybe you would get that in front of us either as you work towards filing or after you file?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [14]

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Chris, thanks for the questions. Look there's a lot of details that go into advancing clinical protocols, and Crigler is no different than that. We didn't expect much would happen in the way of enrollment over the holidays. And there's quite a few steps involved with that process, whether it's identification of patients, which we feel good about, but scheduling and screening and all the things that go into that. So we weren't sure how things would progress in the first 2 weeks of the year, and we're not there as we had maybe hoped just yet with another patient treated, but that's okay. The program is moving along. And we'll promise to continue to keep everyone updated as early -- as we said, we're frustrated by those delays. We appreciate frustration from others. But like I said, we still believe in this approach in Crigler. So we'll do our best to execute and keep everyone posted. As far as Pompe, as we've talked about late in the year, we're sensitive to the very interesting competitive dynamic that's developed in Pompe gene therapy. And to that end, we feel it's best that we don't overshare on what we've learned because we do feel that it's really important and strategic and gives us an advantage in that program going forward. So -- but we certainly appreciate also the value and importance of providing some information to investors and the science community when possible. So I don't know a perfect answer for you on when we'll share additional details. I do think that we'll share information and when we do that we'll share information that's most relative to our program -- our product AT845, it's advancing into the clinic, rather than looking backward too much because I feel like the backward stuff might be what really educates others. And so I would hope that we'll get to the point sooner rather than later, that we can share that information. And it may very well be that the fall is the right time for that as the IND is in and we're in relevant scientific conferences.

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Operator [15]

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Our next question comes from Joseph Schwartz from SVB Leerink.

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Dae Gon Ha, SVB Leerink LLC, Research Division - Associate [16]

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This is Dae Ha. I'm diving in for Joe. So Matt, just a couple of questions on MTM program. So you mentioned the dose selections coming up in 2Q after you see the biopsy data. So I just wanted to know -- can you frame for us your internal expectations on that particular biopsy data that may or may not be presented at the ASGCT conference? So if we go back to, I think, 2Q, you previously stated normalization as sort of the intention behind the higher dose. Is that still the bar? Or is anything greater than 1E14 good enough given that functional data are already strong on the respiratory and CHOP-INTEND? And the second part to my MTM question is, since reviewing the meeting minutes, I'm guessing that's where you got the updates, since the early Jan update you provided to the community. Just wondering, have the regulators set any expectations on either CHOP-INTEND or pulmonary function improvements they would like to see for a gene therapy?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [17]

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Okay. Thanks for the questions. Yes, so on MTM biopsy expectations, as you recall, and you just said, in the 1E14 dose group, we were thrilled to see not just the results across the various end point -- clinical end points but also the biopsy data that showed a significant improvement in the histology along with, of course, robust protein expression and vector copy number in fact approaching normal in all patients. But not quite normal. And I do want to be clear that it was never our intention to try to get all the way to normal. And that is a remarkable bar to hold yourself too, and that was never our intent. But when we got those data and we appreciated the importance of doing what we felt was best for patients, which is to see if we could get closer to normal, if possible. But also as I said before, recognizing the value of evaluating more than 1 dose in the clinical protocol and how we believe strongly that, that will and already is resonating with regulatory authorities as a part of our strong program. We chose to go up in dose, and so we'll see. We'll see. We don't have the data in hand to answer that question today. As I mentioned, we're hopeful that we'll get to that data in time for ASGCT. But even if we don't have it for the conference, we'll have it shortly right around that time, and we'll rapidly do the analysis and see did the higher dose actually have any impact on histology or not and what does the totality of the data tell us about what's the better of the 2 doses to propose for our BLA. So we'll see. We're looking forward to those data as much as everyone else. As far as the regulatory conversations, these first interactions with both the FDA and the Europeans, as I mentioned, were highly productive in different ways. I suppose the 2 most interesting areas of discussion included discussion around end points and emphasis on certain end points and then, secondly, of course, the ever-interesting topic of how many patients should be treated at the optimal dose and for how long should one monitor them before filing a BLA. And with regard to the first category and the end points, it's clear to us that the authorities appreciate all the different end points that we've evaluated. But when it comes to neuromuscular function, they seem a little more interested in motor milestone achievement than CHOP-INTEND. And so their suggestion was to emphasize that aspect of efficacy a bit more in our statistical analysis plan. And on the respiratory side, not a surprise to us. We're really pleased to see the reduction in mechanical ventilatory requirements for the kids, and they suggested that we emphasize that change in their care over maximum inspiratory pressure, or MIP. So that wasn't surprising feedback to us, especially knowing some of the history of other programs in our space. And we're totally comfortable with that feedback because, thankfully, we have robust results across all those end points. And so it's really a matter of emphasis and positioning and analysis for the eventual BLA. Just with regards to the other point that I made, of course, everyone is interested as we are to hear final agreement on patient numbers and how much time you need. And while we were encouraged by the discussion around that part of the story, that's the part that's not final. And we expect it will be final once we have the updated data set and come back to the authorities to share that and reach that final agreement. So that's the piece of the puzzle, along with the choice of dose that I think will be most interesting to all of us, and that'll come in the Q3 time frame.

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Dae Gon Ha, SVB Leerink LLC, Research Division - Associate [18]

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If I can just squeeze in one more question. Given the advancement of your gene therapy programs, can you maybe remind us what are your plans for scaling up your current capacity given that MTM is edging closer to potentially regulatory filing? But also you now have 845 IND filing in 3Q, which is a pretty sizable population, and then 720 update in 2Q that could also be pretty sizable. So any thoughts you could provide there?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [19]

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Sure. We feel extremely well positioned on the manufacturing side. Our current capacity of the 1,000-liter scale is enough to meet the global commercial demand for MTM, no matter what the dose. And in addition, in parallel with launching that drug globally, the same capacity is enough to support the ongoing clinical development of our lead programs. Now if those larger indications, of course, progress, then we'll eventually want to add capacity. And thankfully, we have the space and ability to do that in our existing facility. We just need to decide when the time is right to invest in that expansion.

So we're very well positioned based on all the work we've done and process development, in particular, over time and reaching the productivity and yields that we have today. So manufacturing is in excellent shape both in terms of MTM supply but also the regulatory process, as I mentioned, and continuing to supply the time lines we have in mind for Pompe and AT720 and other things in mind that we hope for in the future.

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Operator [20]

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Our next question comes from Whitney Ijem with Guggenheim Securities.

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Unidentified Analyst, [21]

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This is Evan Wang on for Whitney Ijem. The first question I have is, can you compare and contrast your current capabilities in terms of manufacturing process and scale of Spark, especially given you guys are both using mammalian?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [22]

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A little bit difficult to do that because you don't know the intimate details of each other's work, only what other companies have shared publicly. But what I can say is that I believe, unless my recollection is incorrect, that Spark uses a very similar system to ours as far as using 29 -- mammalian cell system, 293 cells, with transient transfection. I don't know for sure whether they were still using an adherent hyper-stack system, which would be perfectly reasonable for ophthalmology or if they had converted to what we are, which is a serum-free suspension culture system, which, of course, is very robust and more scalable and all the more appropriate if you need large quantities of material as one would in larger hemophilia indications or certainly in neuromuscular disease. So I think the answer is, to our knowledge, there's significant similarities in the basics of the approaches, certainly differences in scale though given that we're at a 1,000-liter scale totally -- and serum-free suspension.

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Unidentified Analyst, [23]

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Then I had one follow-up. I guess, could you go into more detail on your interactions with EMA? And is that regulatory package expected to be similar to the FDA?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [24]

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Yes. Good question. We, as I mentioned in the script, we recently had our meeting with the scientific working group, Scientific Advice Working Group, and we were pleased with that discussion and that process and the initial feedback we received. We were interested to learn that their feedback was, in many ways, consistent with that of FDA. So that's particularly comforting because we believe that it's likely that we can move forward with the regulatory process for both regions with the same basic set of information. That may -- we'll see how it progresses to final form, but we're optimistic today that the same fundamental data package could be satisfactory for both regions when the time is right. And that's a very good thing, especially in rare disease drug development to be able to accomplish that rather than have to have different trials and somewhat different programs for each region. So we don't have the final minutes in hand from that meeting, but we feel reasonable enough saying what I'm saying and based on the verbal discussion that we completed a couple of weeks ago.

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Operator [25]

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Our next question comes from Raju Prasad from William Blair.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [26]

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Just a quick follow-up on 132. Have you any sense from discussions with FDA and EMA if either agency has any opinion on the number of patients that need to be treated in that country or that jurisdiction?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [27]

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That has not come up in our conversations. We have a multicenter trial in the U.S. and Europe in MTM. So to some degree, we appreciate that there's value in having patients treated locally in the region and how that may be helpful in the regulatory process, but I think there's still flexibility in those regions as to where you do your clinical trials and those data supporting approval. It's my impression anyway. But in our case, we have multiple centers in the U.S., Europe and Canada, so we hope that, that is helpful. If it matters to them, but it hasn't come up in specific discussions in those meetings.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [28]

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Great. And can you give us a range of the possible number of patients that the 1,000-liter scale would be able to support? Is it in the tens? Is it hundreds?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [29]

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I'm sorry. I cannot give you that answer without talking in greater level of detail than we care to about our proprietary manufacturing operation, but I'm still hopeful that you hear and other's hear our confidence in the fact that we can produce -- easily produce enough material with our current capacity to serve the global market at an acceptable, very acceptable commercial cost of goods and continue clinical development of other programs.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [30]

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Fair enough. And then just one quick one on 845. With the third quarter IND guidance, will that include a monkey study? Or will those just be ongoing by the time the IND is filed, and it'll be mainly kind of preclinical mouse models?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [31]

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I assume we're talking about AT845 for Pompe for the IND in Q3?

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [32]

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Yes. Yes.

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [33]

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I certainly expect we'll complete a nonhuman primate toxicology study prior to the filing of the IND. So completing mouse work as we speak, moving rapidly into the 12-week primate study plus histopathology and other analysis and the paperwork for the IND, that's what gets you into Q3.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [34]

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Great. Any expectation on when you might be presenting data from -- updated data from that product?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [35]

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As I mentioned on Chris's question, we don't have a set vision for that just yet. As I've said before, we're sensitive to balancing the goal of sharing information about the program that's helpful to everyone in the community but also not sharing too much that helps provide -- that gives help to our competitors, of which there now are quite a few in Pompe. So -- but I'm optimistic that we'll be able to do that reasonably soon. And I'm hopeful that later this year even will be an opportunity to share some of our data from the preclinical work with AT845, in particular, and then from there, of course, as the clinical work progresses.

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Operator [36]

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Our next question comes from Matthew Luchini with BMO Capital Markets.

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Matthew W. Luchini, BMO Capital Markets Equity Research - Analyst [37]

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Can we -- when do we expect to start seeing some preclinical Pompe data? We can get some update on that?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [38]

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Yes. As I just mentioned, I think our plan is still coming to get on when we'll share information from the ongoing preclinical work. But I'm hopeful that we'll be in a position to do that this fall, in general consistent, therefore, with submission of the IND in Q3. But like I said, we're trying to strike a good balance between sharing information with the community but also not empowering our competitors. So we'll be certain to provide additional thoughts on that as the year progresses and, of course, keep everyone updated on the milestone achievements. But as the year progresses, we should have better clarity on when we'll have a scientific presentation of interest; and no doubt, that'll be in the context of an appropriate conference or meeting.

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Matthew W. Luchini, BMO Capital Markets Equity Research - Analyst [39]

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And one more follow-up on Crigler. Out of the estimated 12 participants you hope to enroll, how many have you dosed so far? If you can say anything on that.

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [40]

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As we shared in the update, we dosed 1 patient last year, which established initial proof of concept for the approach, but we chose, based on that patient's results to go immediately up in dose. Late in the year, we had several screen failures, which we've talked about in the past. And in today's update, we're sharing that while study operations are ongoing, that we have not yet dosed an additional patient.

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Operator [41]

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Our next question comes from Mohit Bansal with Citi.

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Mohit Bansal, Citigroup Inc, Research Division - VP and Analyst [42]

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Also, I wanted to extend a warm welcome to Eric. In this period, I mean -- a commercial question I'll ask. Is there a Medicaid component in this XLMTM market similar to SME we should know about? And also, the follow-up would be, how do you think about -- so Spark has come up with this idea about this (inaudible) based model there's 50% up front and then 25% each at different time point. Would love to get your thoughts on that -- your gene therapy paradigm.

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [43]

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Sure. So I'm already forgetting the beginning of the question. Medicaid. No, it's fine. I heard it. Medicaid is an important part for this community. These children are severely disabled, and so Medicaid does play an important part of their health care support, and so that is relevant for our commercialization plans as it surely is with the SME population as well. So we have a very -- so we'll be very focused on ensuring that, that part of our commercial planning goes well. And I'm sorry, the second part of the question. (inaudible) yes. This is an evolving subject. I can tell you that we've worked very hard for a number of years already to build the background data story to ensure that when the time comes we have a robust discussion with payers. As far as Spark or others in the community, what I appreciate about the efforts being made by those companies in the effort to be creative with new approaches and to enter into dialogue with various parties to try to come up with new and improved ways of ensuring market access to these products. We simply don't live today in a world that's designed for single time -- onetime curative therapies. And so there's many steps to take to try to improve the system we use for pricing and reimbursement, in particular in the United States. The good news is a lot of those conversations are happening, both in Washington and in private settings. And so I admire those companies for taking creative steps, and we're certainly paying close attention and thinking a lot about these issues as well. I personally am a strong advocate for coming up with a payment over time option for onetime therapies because I do believe that will increase market access for patients in particular. So -- and we'll see how things progress for our work in particular.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [44]

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Great. And then do we know exactly what percentage is Medicaid at this point for products for MTM?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [45]

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I don't have the answer to that off the top of my head today, but we'd be happy to follow-up with you at a later point and talk more about it, Mohit.

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Operator [46]

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Our next question comes from the Debjit Chattopadhyay with H.C. Wainwright.

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Earl DeSouza, H.C. Wainwright & Co, LLC, Research Division - Associate [47]

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This is Earl DeSouza in for Debjit. So we just had 2 questions on our end. The first is on the Crigler-Najjar program. I know you touched on this a bit, and is there a particular maybe number or rough number or estimate of the patients that experienced screening failure? And our second question is on Pompe. Can you address both CNS and musculoskeletal manifestation of the disease via liver-directed gene therapy? And what percent of the administered construct needs to get across the blood-brain barrier to deliver a meaningful effect?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [48]

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As I mentioned in our previous Crigler updates, we saw 3 screen failures -- several screen failures late in the year, so no more to report beyond those. And with regard to your question, I just want to make sure we're clear with regard to our approach to Pompe, and that is that we through systemic administration of our AAV product intend to transect and express the protein directly in muscle and CNS, and we've shown the ability to do that with MTM and in our preclinical work. This can be contrasted with the liver-directed approaches, which attempt to use the liver as a pump, if you will, and then hope that GAA gets take up from the plasma into those tissues that are actually affected by the disease. So our approach, we believe, will be superior in terms of safety and efficacy in the long run. And so we look forward to advancing the program and that approach specifically. As far as -- I think your question was what percentage might get into those tissues. I think we're feeling very optimistic about our ability to transduce those tissues based on our preclinical and clinical work in MTM, in particular the biopsy data that we've shared publicly and in our preclinical work in Pompe, where we've done a robust amount of evaluation in both mouse and nonhuman primates.

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Operator [49]

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Our last question comes from Difei Yang with Mizuho Securities.

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Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [50]

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Just two quick ones. The first question is with regards to the manufacturing facility. So you have been talking about a new neuromuscular indication. So to -- for that particular program, I'm just wondering from manufacturing perspective, how much changes would you need to do to the process? Is it a subtle change? Or is it a process development from scratch? I guess, really, what I'm trying to get to is how much of the expertise that you already have in-house can be leverageable when you move from program to program?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [51]

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Yes. I'm happy to say that the knowledge we have from the MTM program and manufacturing at large scale is completely applicable and will be relevant for these other programs. That's one of the beauties of what we've established is that we believe our process can be applied across multiple programs. And we have shown that internally with our work all the way up to the 1,000-liter scale. So it's basically the same system. It'll just be a slightly different product. And so no fundamental changes will be necessary in the approach that we use for these programs. So our approach in MTM will be replicated to a significant degree for Pompe and for AT720 and future programs. We also believe that this process can be -- capacity can be increased either by increasing the number of bioreactors with our existing system and scale or scaling higher, which is certainly an option for us as well. But even that would not involve any significant changes in our technical approach. So this is a huge strategic advantage for the company, and it's a fundamental reason why it's more straightforward for us to establish new programs and move them forward rapidly. That is one of the great strategic advantages of owning manufacturing at a large scale in-house is that we can do something like add AT720 and do it rapidly and continue to build from there. So I hope that helps.

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Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [52]

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Then a quick follow-up on the ASGCT presentation. Can we expect -- I know you talked about biopsy data for Cohort 2. Can we at least expect to see some level of biopsy data there? Or maybe we'll see none?

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [53]

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Oh, no. You'll certainly have some biopsy data. Recall that the patients get biopsied at 48 weeks in addition to 24 weeks in our study. So when it comes to the Cohort 1 data, which will extend out to 48 weeks, we expect that we'll have the option of sharing biopsy data from those patients, which will be interesting and informative. As far as the Cohort 2 higher-dose patients, as I said, we're doing everything we can to get as much of biopsy data as possible. I am optimistic that we'll have data from at least the first patient treated in that cohort, given that he was treated a bit earlier. And we'll hit the 24-week time point for that patient. For the others, it's very tight, and we'll do our very best.

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Operator [54]

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And this concludes today's question-and-answer session. I would now like to turn the call back over to Matt Patterson for any closing remarks.

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Matthew R. Patterson, Audentes Therapeutics, Inc. - Co-Founder, Chairman & CEO [55]

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Great. Thank you again for your participation this afternoon, everyone. We've appreciate the opportunity to share our updates with you, and we look forward to providing more information throughout what promises to be an exciting 2019. Thanks very much for your time. Talk to you soon.

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Thomas P. Soloway, Audentes Therapeutics, Inc. - Senior VP & CFO [56]

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Operator, that concludes our call today.

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Operator [57]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a wonderful day.