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Edited Transcript of NTLA earnings conference call or presentation 1-Aug-19 12:00pm GMT

Q2 2019 Intellia Therapeutics Inc Earnings Call

CAMBRIDGE Aug 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Intellia Therapeutics Inc earnings conference call or presentation Thursday, August 1, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Glenn G. Goddard

Intellia Therapeutics, Inc. - Executive VP & CFO

* John M. Leonard

Intellia Therapeutics, Inc. - President, CEO & Director

* José E. Rivera

Intellia Therapeutics, Inc. - Executive VP & General Counsel

* Laura Sepp-Lorenzino

Intellia Therapeutics, Inc. - Executive VP & Chief Scientific Officer

* Lina Li

Intellia Therapeutics, Inc. - Senior Manager of IR

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Conference Call Participants

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* Geulah Livshits

Chardan Capital Markets, LLC, Research Division - Senior Research Analyst

* Huidong Wang

Barclays Bank PLC, Research Division - Research Analyst

* Madhu Sudhan Kumar

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

* Maurice Thomas Raycroft

Jefferies LLC, Research Division - Equity Analyst

* Max Smock

* Rick Stephen Bienkowski

SVB Leerink LLC, Research Division - Associate

* Steven James Seedhouse

Raymond James & Associates, Inc., Research Division - Research Analyst

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Presentation

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Operator [1]

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My name is John, and I will be your conference operator today. Welcome to the Intellia Therapeutics Second Quarter 2019 Financial Results Conference Call. (Operator Instructions) Please be advised that this call is being recorded at the company's request.

At this time, I would like to turn the call over to Lina Li, Associate Director of Intellia. Please proceed.

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Lina Li, Intellia Therapeutics, Inc. - Senior Manager of IR [2]

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Thank you, operator. Good morning and thank you all for joining us today to discuss Intellia's second quarter 2019 operational highlights and financial results. Earlier this morning, we issued a press release outlining our progress this quarter and the topics we plan to discuss on today's call. This release can be found on the Investors section of our website at www.intelliatx.com. This call is being broadcasted live and a replay will also be archived on our website.

Before we get started, I would like to remind you that during this call, we may make certain forward-looking statements and ask that you refer to our SEC filings available through the sec.gov and our website for a discussion of potential risks and uncertainties. All information in this presentation is current as of today and Intellia undertakes no duty to update this information unless required by law.

Joining me on today's call from Intellia are Dr. John Leonard, our President and Chief Executive Officer; Dr. Laura Sepp-Lorenzino, our Executive Vice President and Chief Scientific Officer; Glenn Goddard, our Executive Vice President and Chief Financial Officer; and Jose Rivera, our Executive Vice President and General Counsel. For today's call, John will begin by discussing the company's highlights. Laura will provide an update on our R&D progress, and Glenn will review our financial results from the second quarter of 2019. Then following our prepared remarks, we will all be available for your questions.

With that, let me turn the call over to John.

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [3]

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Thanks, Lina, and thank you all for joining us today. Here at Intellia, we're pursuing a full spectrum genome editing strategy to rapidly develop a diverse pipeline of life saving therapies for patients. Our in vivo approach delivers CRISPR/Cas9 components as a therapy, and our ex vivo approach uses CRISPR/Cas9 as an essential tool to create engineered cell-based therapies. With the CRISPR based platform, we have the potential to cure genetic diseases with a single administration and to create novel engineered cell therapies that target various cancers and autoimmune diseases.

We're proud of our innovative science and strong platform capabilities at Intellia. But we believe that the extent of our effort as well as our progress across both these areas position us well to deliver on our mission. Today, we built a robust set of preclinical data that demonstrates we can use systemic delivery of our CRISPR/Cas9 lipid nanoparticle or LNP to either selectively knock out the disease-causing DNA sequence, an important approach in treating autosomal dominant genetic disorders or introduce a targeted insertion of DNA to make therapeutic proteins normalizing levels, which we believe is a breakthrough approach to treating autosomal recessive genetic disorders.

With these in vivo capabilities, either knocking out disease-causing genes or to target insertion of normal gene, we believe we have unlocked the treatment of genetic disorders that have their origin on the liver. And furthermore, we believe that these achievements serve us a foundation for targeting genetic diseases in other tissues. In addition to our in vivo effort, our ex vivo effort focuses on engineering lymphocytes that retain normal cell physiology while targeting various hematopoietic and solid tissue cancers. Our approach to engineering lymphocytes is designed to overcome the limitations of most currently available cell-based therapies.

Moving to our pipeline. We've made substantial progress in advancing our lead programs towards the clinic for transthyretin amyloidosis and acute myeloid leukemia which we will highlight on today's call. Additionally, we have expanded R&D leadership with 2 key appointments to our management team.

We're excited to welcome Dr. Walid Awni, who joins us as Senior Vice President, Preclinical and Clinical Sciences. He brings with him over 2 decades of highly relevant drug development experience that is especially rich in early-stage work, most recently as Vice President of Clinical Pharmacology and Pharmacometrics at AbbVie. During his tenure in AbbVie, he was instrumental in multiple drug approvals, including in biologics and small molecules such as Humira, Kaletra and Venclexta to name a few. He also advises the FDA on new medicines serving on 2 of their advisory committees. Walid will oversee all aspects of early development and will continue to build out our clinical development capability.

And as we announced in May, Dr. Laura Sepp-Lorenzino has joined us as Executive Vice President and Chief Scientific Officer. Laura brings decades of experience in research and development, most recently as Vice President in Head of Nucleic Acid therapies and as a member of the external innovation team at Vertex Pharmaceuticals. Earlier during her tenure at Alnylam and Merck, Laura was a champion of nucleic acid therapies and a pioneer in advancing RNAi as a novel therapeutic modality. She would be leading our platform in drug research organization and we're already benefiting greatly from her leadership. I'm pleased to have this opportunity to introduce her today. Laura?

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Laura Sepp-Lorenzino, Intellia Therapeutics, Inc. - Executive VP & Chief Scientific Officer [4]

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Thank you, John, and good morning. Intellia's position to advance multiple programs from research to clinical development. This is a very exciting time for us as we evaluate our novel therapeutic modality and progress our initial programs into the clinic. I was drawn to Intellia by the breadth of the modular platform which we're using to build a robust pipeline. The decision to pursue a chemical LNP based delivery system to establish Intellia as the leader in systemic genome editing. Similarly, the application of our editing capabilities in ex vivo setting positions us to bring forth differentiated engineered cell-based therapies.

As I got into work with the team and had the opportunity to dig into the science, I've been impressed with the talent of the team and the quality of the science. My enthusiasm has only grown and my expectations exceeded. Today, I'll be updating you on our R&D progress and pipeline beginning on the in vivo side. As you know, our first in vivo candidate, NTLA-2001, is in development for the treatment of transthyretin amyloidosis or ATTR, a disease caused by the position of TTR protein fibril in peripheral nerve parts and other organs leading to diverse disease manifestations including peripheral neuropathy and/or cardiomyopathy.

The goal of NTLA-2001 is to reduce expression of TTR protein by knocking out the TTR gene. For reference, a delay in the clinical progression of the disease is seen with the TTR reduction of 60% or more from baseline level. As you may recall, we demonstrate an average reduction of greater than 95% of circulating TTR in nonhuman primates at 100 days plus a single administration of our lead LNP formulation targeting [similar] TTR. Today, we're pleased to present additional durability data showing sustained circulating TTR protein with actions through 6 months of observation in ongoing study.

We're very encouraged by these results as they show that we can achieve significant level of TTR protein reduction expected to be clinically efficacious. As anticipated by genome editing with CRISPR/Cas9, once we've reached these levels of protein knockdown, the effect is sustained. This data continues to underscore the power of CRISPR/Cas9 to develop single administration curative treatments for patients. The most recent data is consistent with earlier NHP studies in which we observe durable liver editing and concomitant TTR reduction through 10 months of observation following a single dose. We're, of course, eager to move this program to the clinic as soon as possible.

To that end, as John mentioned, we have taken several important steps towards the clinical evaluation of NTLA-2001. Most recently, we conducted our pre-IND meeting with the FDA and surely thereafter initiated IND-enabling toxicology studies, both of which will form our IND package under the sign of our Phase I study. In addition, we established supply chain operations to support manufacturing Phase I materials expected to commence by the end of the year. Altogether, this enables us to refine our prior guidance as we now expect to submit our IND application for NTLA-2001 in mid-2020. As a reminder, we're the lead party for the development and commercialization of this program for which we have a 50-50 co-development and co-commercialization agreement with Regeneron.

Let's now turn to our targeted insertion efforts in the liver. You may recall as presented at ASGCT in April and as discussed on last quarter's call, we demonstrated the first CRISPR/Cas9-mediated targeted transgene insertion in the liver of nonhuman primates using Factor IX inserted into the albumin locus. As a reminder, Factor IX is called the blood clotting protein that's missing or defective in hemophilia B patients. The study use our proprietary hybrid delivery vehicle which combines our CRISPR LNP delivery system with an AAV vector including the Factor IX gene.

In a nice demonstration of the modularity of our platform, the CRISPR LNP delivery system is the same as the one used in our ATTR program with a sole change being the guide RNA. We believe our targeted insertion approach provides key advantages in both safety and efficacy. Targeted insertion should reduce the risk of mutagenesis due to random integration of retroviral vectors. In addition, targeted insertion should provide durable efficacy with a single course of treatment and potentially cure the disease.

Today, we're pleased to share results from the now complete single administration NHP study showing that the circulating human Factor IX protein levels observed at day 14 were durable through the 2 months of the study period. Importantly, these protein levels were within the reported range of normal circulating Factor IX protein levels in humans. The durability of serving NHPs is consistent with the relevant study in which circulating Factor IX protein level were sustained throughout 12 months of observation.

Our targeted knockout and insertion approaches continue to validate Intellia's CRISPR/Cas9 platform in the in vivo setting, significantly expanding the scope of addressable genetic diseases well beyond our initial indications. We're actively working with Regeneron to progress the Factor IX program. In parallel, we're also independently evaluating several other transgenes of interest as part of our wholly owned in vivo strategic development efforts. We look forward to updating you in our progress and we expect to present additional data on targeted insertions at upcoming scientific conference.

Let's move to our engineered cell therapy strategy. Here we're similarly leveraging in modular platform-based approach to design engineered cells to treat a range of hematological and solid tumors. Our focus today will be on our T-cell receptor or TCR replacement approach for our wholly owned acute myeloid leukemia or AML program. As a reminder, Intellia's TCR replacement approach knocks out the endogenous TCR by eliminating the alpha and beta chains, and inserts the therapeutic TCR in locus.

We believe our TCR replacement approach should provide key advantages over CAR-Ts in both safety and efficacy; first, by preserving normal T cell physiology; second, by enhancing and stabilizing the expression of the inserted therapeutic TCR; and third, by reducing the risk of graft versus host disease that could result from mispairing between endogenous and inserted TCRs.

Further, T cells broaden the range of addressable tumor types because they can recognize a much wider repertoire tumor antigens and CAR-Ts. This TCR replacement approach is the basis for our initial engineered cell therapy program for AML. AML is a cancer of a blood and bone marrow with significant unmet medical needs. The disease is relatively fatal without the immediate treatment with a less than 30% 5-year overall survival rate. In 2018, there were approximately 20,000 new cases in the U.S. alone. Over the past 2, 3 decades, there only had been limited advances in the treatment options for AML patients.

For our lead TCR based therapy for AML, we're targeting Wilms' Tumor 1 or WT1. WT1 is overexpressed in greater than 90% of AML blast as well as in enormous other hematological and solid tumor types. As outlined on last quarter's call, we identified multiple lead WT1 TCR candidates that recognize the primary WT1 epitope of interest. We also have generated in-vitro data showing successful and simultaneous knockout of the endogenous TCR with insertion of various WT1 TCR candidates.

The resulting engineered cells were fully functional and capable of specifically and efficiently healing a panel of patient-derived AML blast. Today we're pleased to announce that we had initiated functional testing of these lead TCRs in patient derived xenograft models including studies with our collaborators at Ospedale San Raffaele. The studies will inform the nomination of our first engineered cell therapy development candidate which we previously guided will be by the end of this year and for which we remain on track.

In addition, we're establishing contractual relationships or manufacturing capability to support clinical evaluation. As WT1 is overexpressed in numerous other tumor types, we believe our AML program will be the foundation to pursuing a broad array of cancers including solid tumors. Furthermore, as we evaluate our TCR replacement approach, we expect to unlock significantly new oncology opportunities to further expand our pipeline.

With that, I would like to turn the call over to Glenn who will go through the second quarter's financial statement. Glenn?

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Glenn G. Goddard, Intellia Therapeutics, Inc. - Executive VP & CFO [5]

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Thank you, Laura, and hello, everyone. Intellia remains in a strong financial position as we advance multiple programs into development. Our cash, cash equivalents and marketable securities as of June 30, 2019 were approximately $276 million compared to $314 million as of December 31, 2018. The decrease was mainly due to cash used to fund operations of approximately $59 million, which was offset impart by approximately $8 million of net proceeds raised from the company's At The Market offering, $7 million of funding received under our Novartis collaboration, $4 million of ATTR cost reimbursements made by Regeneron, and approximately $2 million in proceeds from an employee-based stock plan.

Our collaboration revenue was $11 million for the second quarter of 2019 compared to $8 million for the same period in 2018. As a reminder, our collaboration revenue is related to our partnership agreements with Novartis and Regeneron. Once again Regeneron has obligated to fund approximately 50% of the development costs for the ATTR program. Our R&D expenses were $26 million for the second quarter of 2019 compared to $24 million for the same period in 2018, as we continue to expand both our in vivo and engineered cell therapy efforts and advance our pipeline programs.

Our G&A expenses were $13 million for the quarter compared to $8 million for the same period in 2018, largely due to an increase in legal and intellectual property costs. Finally today, we are updating our previous guidance that we expect our cash balance as of the end of second quarter of 2019 to fund our current operating plans into the second half of 2021.

And now, I'll turn the call back over to John to briefly summarize our upcoming milestones and corporate updates.

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [6]

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Thanks, Glenn. In closing, this is an exciting time in Intellia based on the significant progress we have made on our platform capabilities. We can knock out a disease-causing DNA sequence with high levels of protein reduction. We can introduce a targeted insertion of DNA with effectively normalized protein levels and we can design engineered lymphocytes to preserve normal cell physiology. These platform capabilities along with our world-class team will enable us to deliver on our mission and advance our lead programs for ATTR and AML towards the clinic.

Looking ahead, we anticipate several important milestones including the presentation of additional data from our in vivo and engineered cell therapy programs to upcoming scientific conferences by the end of 2019. Additionally from our ATTR program, we plan to begin manufacturing of Phase 1 materials of NTLA-2001 this year in support of filing an IND in mid next year. And from our AML program, we're on track to nominate a development candidate by year-end.

With that, I'd like to thank you all for tuning in today. We'll now open up the line to any questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) We will now take our first question from Maury Raycroft of Jefferies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [2]

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First question is just if you can provide any additional details on the pre-IND meeting that you had with FDA? And also, if you can provide any guidance as to when we could expect data disclosures from the IND enabling studies that you're currently working on?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [3]

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It's John. Thanks for the question. First, with respect to the pre-IND meeting. As you know, these meetings are about making sure you're putting in place the right assays, plans, materials, et cetera, to put together an IND. And we went through that in great detail with the FDA. They were very thoughtful, responsive. It was a very informative meeting. And what we took away was that we have the right tools and the right materials for doing the right tests. So we felt very enthusiastic about the plan that we've put in place. We think that -- again, they were very thoughtful about what we put in front of them. So onward to the IND, full speed ahead.

With respect to IND enabling study data, I think we'll see that as it plays out. What I think is most relevant right now is looking ahead to some of the durability data that we've accumulated with either knockout or the insertion data with Factor IX. And as Laura said in her comments, the appropriate venue is probably later this year we'll be in a position to share some of that. So as other information becomes available, we'll look at that and if we think it's important to share it, we absolutely will.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [4]

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Got it. That's helpful. And then I had a question on manufacturing for the Phase I materials that you're going to be using. Just wondering if that's going to be done in-house or with the CMO, and any other perspectives you could provide on manufacturing?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [5]

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Yes. We don't give many details, but for the purposes of the tox work and getting in the clinical, it's a collection of different suppliers. We do have some material coming from outside the company and some of it we're assembling ourselves. Again, going back to the pre-IND meeting, the important thing is having the right material, qualifying it correctly, doing it at the high levels of quality so that you're meeting the requirements for these studies and we're checking all these boxes.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [6]

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Got it. Okay. And last question is just on the Novartis collaboration and with the research collaboration ending in December of 2019. How should we think about that? And how should we think about potential opt-in decisions from Novartis?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [7]

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As you point out, the collaboration is scheduled to come to a close at the end of this year. They do have certain decision rights at the end and that is yet to play out. So we're waiting to see some of the things that Novartis expects to carry forward from that program. Remember, along the way, they've expanded the relationship with [work in the eyes], so we're enthusiastic about that playing out, and we're looking forward to some of the other targets that they work on. Moving to the clinic at some point here, obviously we can't characterize that work, but we know they've been very diligently advancing some of the targets that they've been working on. So as we have more clarity, Maury, in terms of what their plans are, we'll share them, but that's the information that lies ahead.

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Operator [8]

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We will now move on to our next question from Martin Auster of Credit Suisse.

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Unidentified Analyst, [9]

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This is [EK] speaking for Marty. I just had a one quick question in terms of the recently interference proceeding that was initiated between UC and the Broad Institute. I understand that is rather early at this point, but could you walk through the expected timeline for the proceedings and the range of potential outcomes?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [10]

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I'll give you a short answer to the entire process. And then if you want more details, maybe Jose Rivera can walk us through some of the timeline things. But the bigger picture is, this is part of a process that was done some time ago. And this is actually the phase where the internship would be determined. Remember earlier -- the earlier proceeding addressed a different but related question, which was whether or not eukaryotic cells were certainly patentable, really had no bearing on exactly what we're doing. So what's happening now really is has no effect on the programs we're doing, the work that we're carrying forward, the rate at which we do it, et cetera. But maybe Jose, if you want to expand a little bit in terms of some of the time points that we could look forward to as this process unfolds.

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José E. Rivera, Intellia Therapeutics, Inc. - Executive VP & General Counsel [11]

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Sure. Generally, these proceedings take about 2 years from beginning to end. We would expect that this proceeding would take a similar timeframe. They're divided into 2 phases; the first phase will take about a year; second phase will take about another year. And the first phase is all about motions and sort of trying to set the framework for the interference, and the second phase is where the board will decide who actually invented first. And that is a party that will be entitled to the patents. So ultimately, when it comes to range of options, the board will make a decision as to who was the first inventor of the use of the technology in eukaryotic cells and that party will be entitled to the patents.

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [12]

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[EK], it's John again. I might direct you to our website where we've laid out in a greater detail more about the process and in fact those particular patents that have been pulled into it. I think the important takeaway is that UC has a number of established patents that have been issued or not affected by the process. There's a substantial number of the patents and the Broad patent state that had been pulled into the interference that are at stake. So we view this situation essentially as almost upside for UC where there is little to lose and much to gain, and I think it's the opposite for the other side.

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Operator [13]

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We will now move on to our next question from Gena Wang of Barclays.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [14]

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John, just wondering for the insertion. Could you please remind us the Factor IX level? And which methodology was used to measure? Was it a chromogenic assay or stage assay for nonhuman primates?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [15]

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The insertion data are -- we're measuring milligrams per ml or actually -- yes, micrograms per ml, I'm sorry, I misspoke. And the normal human range falls between usually 3 to 5 micrograms per ml. I believe the assay that was used is an ELIZA. And this is actually -- the important thing here, Gena, is not the activity of the enzyme, but we're actually measuring the amount of material that's produced in the blood. So we think that's the important takeaway here. And we also think it sets the foundation for the other insertion work that we're doing which is if one can normalize protein levels and not just enzymatic levels, it raises opportunities for a variety of different genes that one would want to insert including structural protein. So we think that for the purposes of this experiment, the really exciting results are not activity so much, but actual amount of the material that's produced.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [16]

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That's very helpful. And then for the same insertion program or the insertion approach, where would be other candidates for this LNP AAV delivery approach on your top list?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [17]

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Well, there is a series of transgenes that we're considering. Remember that in the liver, this is work that we collaborate with Regeneron with. So some of this is part of that collaboration and we're working very diligently with them to line up a series of different candidates. We do have our own reserved set of transgenes. We talked a little bit about alpha-1 antitrypsin in the past. That's certainly a candidate here and we presented data on that. The full range of candidates is not something we've gone through yet, but I would say stay tuned as several of these are moving into the in-life NHP phase. And we're looking for the overall generalizability of these results. And as we collect that information, we'll share it and that will certainly bear on our decisions for moving forward.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [18]

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Okay. Great. And then lastly question regarding manufacturing, I think following Maurice question. So could you remind us for those in-house produced, is that research grade or a clinical grade? And also any request from the FDA regarding the GMP manufacturing, since you have a quite different modality where you have LNP RNA and in the future will be AAV? Any spots there also for the future through the CDMO or you wanted to set up some in-house manufacturing capabilities? Sorry, basically several layers of a question.

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [19]

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So thank you for your question and questions. I guess, Gena, it's true, it kept going. But they're important ones. And I think it goes all the way back to the beginning for us in terms of the actual modality that we were going to choose. And we put a lot of thought into how we were going to deliver CRISPR/Cas9 to the body. As we've shared in other venues, the chemical approach, specifically lipid nanoparticles, we've felt from the beginning bring multiple different advantages; one of which is manufacturability, but we'll get to that in your question here. But remember that the ease of use, the wait in line for 2 years to get to virological manufacturing capabilities, the cost of goods has some influence in this, trends and expression, all of those things related to the lipid nanoparticle choice that we made.

Going to the FDA at the pre-IND meeting, as you point out, it's very important to make sure that the various implements are going to come together into an LNP are the right ones and that they're qualified appropriately, whether it's the nucleic acids, the lipids and then the overall way that they're tested and characterized. That was a very important part of the meeting. And it's essential to establish that those materials are properly qualified for research testing, but importantly for toxicological and ultimately clinical use, and that's what we discussed at the FDA. And we've got a sound plan in place. They saw all of the things we want to do, all the assays. And we think that we're now well-positioned to take clinical-grade material forward that we will manufacture in part ourselves and in collaboration with CMOs on time into the clinic. So we feel very, very good about where we are.

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Operator [20]

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We will now move on to our next question from Mani Foroohar of SVB Leerink.

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Rick Stephen Bienkowski, SVB Leerink LLC, Research Division - Associate [21]

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This is actually Rick on the line for Mani. So first, I was hoping to get a little bit more visibility into the submission of the IND for 2001. Besides the ongoing nonhuman primate toxicology studies, are there any other major rate-limiting steps that must be completed before the filing of the IND?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [22]

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Rick, thanks for the question. Much of this is the time that's associated with following the animals after they've been tested and those studies have all begun and then the manufacturing and qualifying of the material that ultimately go into patients. So I think that there are few opportunities for missteps. I mean the work is got to be done and obviously we have to do it well, but we think that we're in a good position to do that. But we're not running a steeplechase here. This is well-trod territory and we've started the process. So we feel pretty good about that IND guidance that we've given based on what we know today.

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Rick Stephen Bienkowski, SVB Leerink LLC, Research Division - Associate [23]

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That's helpful. And as a second question, that's a bit more high level. So given some of the developments in the TTR market over the past year, since with the approval of Tafamidis and TTR cardiomyopathy and other competitors entering the clinic, I was just wondering could we have your most recent thoughts on the market opportunity for TTR for gene editing and which patients do you think could be best served by 2001?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [24]

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Yes. I think that it's early days for the TTR market and the modalities have come into play are new ones for physicians. So I think it's going to be a lot of physician education that takes place. This is a market, as you know, that will be developed over time. I think this is one of those instances where it may be good to come in a little after the market has been developed and not do all the hard work that I think some of the early innovators are encountering here. But our view is that there's a large number of patients out there who will benefit from the approach. And the clinical program that we intend to put in place will address both polyneuropathy as well as cardiomyopathy. And it's our belief and I think that it's the belief of the physicians we talk to and the other innovators that are out there that as physicians think differently about heart failure in particular and start looking for those patients, there will be a substantial number of those patients that had been looked past or not identified up until now. So we'll see. And obviously we follow this, but I wouldn't conclude anything from these early days other than there is more to learn.

Just with respect to what the approach is good for with respect to patients, it's our belief that this is equally beneficial to patients with neuropathy or cardiomyopathy because the ultimate therapeutic objective is to lower the protein levels. And I think that's been well established by those that have gone before us. So our clinical program is intended to study both those populations from the get-go.

And just to remind you, and I think this is important to think about gene editing in general and the approach that we're taking, one advantage that I think will be lifelong for these patients is that this is potentially curative therapy, certainly for some conditions. And it's certainly the case that some patients may be treated with a single dose. And over the course of years of therapy or other approaches, lifelong steroids, the economics associated with that, we think that that is an abiding advantage that will stand the test of time.

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Operator [25]

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We will now move on to our next question from Geulah Livshits of Chardan.

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Geulah Livshits, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst [26]

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So for the ATTR program, you touched a bit just now on the physicians' sentiment. Can you give a bit more color on any interactions you may have had with clinicians and potential study investigators in terms of what they are thinking in terms of expectations for the potential trial? And then I have another follow up.

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [27]

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Sure. Thanks, Geulah. We obviously talk to physicians. We want to understand what the unmet medical need is to make sure that we're designing a product that can address it and we start with that in mind. We've interacted with physicians who are very familiar with the current modalities. We've talked to patients -- I'm sorry, physicians who take care of patients with the condition. We met the patients themselves in many cases. And uniformly, what we hear is that there is a opportunity to improve on the existing therapy, that patients have a strong interest in participating in clinical trials. And don't forget, this is -- one thing I've learned from talking to some of the patients is that it is a genetic disease, in some cases patients are very interested and motivated in finding therapies that they believe could be potentially curative for their family members. So we're not concerned that we're not going to be able to do a clinical trial or find patients. And as I said in my earlier comments with respect to the market, I think we're in the very early days of this developing.

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Geulah Livshits, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst [28]

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Great. And then on the WT1 program, again congrats on starting the [PDX] studies. So are these with a targeted insertion of the TCR into the track locus or are these with viral insertion? I think I asked about this last time also. And will we see any data on the targeted insertion before the nomination of the clinical candidate or kind of what are the timelines around that?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [29]

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Geulah, I missed the first part of your -- I didn't hear the first part of your question. If you could just repeat it? I'm sorry, it was a little hard to hear.

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Geulah Livshits, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst [30]

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Yes. No, sorry about that. So the PDX studies that are now ongoing in the WT1 program, are these with targeted insertion of the TCR into the track locus or just a viral insertion of the TCR in line with the data that's been presented in the past?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [31]

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I'm not going to be able to answer for you today that question because I want to make sure I have the correct information. So we can get a follow up to you. The important takeaway is that the ultimate development candidate will have targeted insertion in locus. It's this notion of essentially removing what was the endogenous T-cell receptor and then replacing it with a wild type T-cell receptor that's been unmodified, there's no affinity enhancement. It's inserted in locus, so that one can reconstitute all the physiology. AAV is certainly a way to do that. And we've done that in our laboratories many times with high degrees of fidelity. There are other alternatives as well. And when we get to the point of talking a little bit more about the characteristics of that development candidate, we'll go through all that data with you.

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Operator [32]

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We will move on to our next question from Steve Seedhouse of Raymond James.

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Steven James Seedhouse, Raymond James & Associates, Inc., Research Division - Research Analyst [33]

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I appreciate that the ongoing interference has no bearing on the R&D. Intellia is doing just given you're sufficiently capitalized right now. And John, you mentioned it's basically all upside for your side in terms of the outcome of the case, but there is a pretty good increase in G&A this quarter up 25% sequentially. So I have 3 small related questions. One, how much is the increase sequentially directly related to legal fees? Two, what percent of your current total G&A is related to legal fees or prosecution of IP? And three, regarding your guidance indicating cash to fund operations into 2 half '21, how much is budgeted for legal fees in that guidance?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [34]

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Glenn, you want to address?

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Glenn G. Goddard, Intellia Therapeutics, Inc. - Executive VP & CFO [35]

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Sure. Yes. So if you look at the quarter-over-quarter increase in G&A, we did indicate in the press release that a large majority of that was due to legal fees. We do have obviously the interference process going on. As you know, we also have arbitration going on with Caribou. So those are things that are driving the expenses up this quarter. In terms of the longer-term view, we don't typically guide on the details of legal expenses, but we could go offline. We can discuss some of the kind of the long-range plans and what goes into the runway that we've guided to.

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Steven James Seedhouse, Raymond James & Associates, Inc., Research Division - Research Analyst [36]

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Okay. I'll follow up offline.

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Operator [37]

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We will now move on to our next question from Madhu Kumar of R.W. Baird.

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Madhu Sudhan Kumar, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [38]

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So I'll keep it pretty simple. How are you thinking about a clinical trial for NTLA-2001 in either ATTR polyneuropathy or cardiomyopathy? What are the kind of key considerations about patient population, trial design, that kind of thing?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [39]

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Well thanks, Madhu. The earliest consideration obviously is getting into the clinic and all of the focus is to do that. And we discussed with the FDA our initial clinical plans and that was part of our pre-IND meeting. So the program would begin with a fairly typical single ascending dose design and then we're discussing options to come back and either redose or multidose to understand a little bit more about the best ways to administer the drug. It's likely that the program would bifurcate into 2 parts, 2 separate indications; cardiomyopathy and polyneuropathy.

And I -- what's driving that in the FDA's mind is that the endpoints measured are not just protein levels, but the physical measurements that come with manifestations of the disease. So the details of how exactly we'll carry out those studies lie ahead. And that's work that we're doing with investigators that we talk to. Obviously, it's influenced by the regulatory input that we've gotten recently.

But I think that we're in a good position to be able to carry that out. One of the things that is attractive to us about TTR is that we know what the targets are physiologically with respect to TTR circulating proteins, and that will give us a very good read of where we are, where we stand competitively. We've set the bar high. We want to represent a significant therapeutic advance for patients in addition to single dose and advantages that come with that. But we'd like to knock down TTR at least as far as the knockdown and hopefully somewhat more And we'll know that very early on. So we'll make judgments based on how we prosecute the program based on some of that early Phase I data that starts to come in, so more to follow.

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Madhu Sudhan Kumar, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [40]

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So then to follow up that, what do we know from -- do you believe in the [in vitro] kind of preclinical and then kind of clinical program gives you a fair way to translate preclinical LNP based drug delivery to a clinical program such that, for example, your Phase I trial, your lowest dose and a dose escalation could be therapeutic?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [41]

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I think that the preclinical work gives us a lot of information until we get into the clinic. We're not going to know exactly how valid all that information is. That's just the nature of the beast here. There is limitations until one starts to accumulate a database. But looking at what the competition has done, looking at we've -- what we've learned going across cell types and across different species, we think we're going to have a pretty good idea of where we need to be.

And then obviously in a Phase I study, one begins at subtherapeutic levels. And that's part of the interesting design challenges here is how far away from therapeutic does one begin within the therapeutic index that we will establish with our tox work. So there's some choices that lie ahead. But I -- our feeling right now and the work that we've done with advisors suggests that we'll have a pretty good information to begin, and of course, we'll see once the Phase I trial begins.

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Operator [42]

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And move onto our next question from Max Smock of BTIG.

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Max Smock, [43]

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Just kind of high level one from me here. Can you give an update around the status of the PH1 program? I think when we talked last quarter, you presented data around 2 separate knockout targets. So just wanted to see if any decision had been made there and then what we could expect in terms of timing moving forward?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [44]

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Yes. Thanks for the question and thanks for watching that work. We did present work at a scientific meeting showing that 2 different targets when knocked out individually produced reductions in oxalate levels that would be expected to be therapeutic. And that work was done first as validation of the overall modular approach that we're taking. Remember that it goes back to why LNPs and how do we think about them. What we showed was that we could take essentially the same formulation, swap out a guy that's directed at different target and with no additional manipulation, treat an animal and get a therapeutic effect. So we thought we showed that as we've shown with other targets that we've gone after. That was an important aspect of that.

PH1 itself as a therapeutic target sits in the mix of choices that we have. And it relates to a question that we were asked earlier today. Where we go next is very much a function of the work we're doing with Regeneron. Obviously, they've been partners with Factor IX and have been deeply involved with that program, their choices that they're going through as we further analyze that data and do additional experiments. And then there is a whole set of different targets that lie between the knockouts that we've gotten reproduceably and across a variety of different targets and now new gene insertion on the other end. So I think of those as the book ends of different genetic diseases in the liver. So we've not made a final decision on PH1, but there are other choices that are competing with it. And as we get the data to make that next choice, we expect to share that.

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Max Smock, [45]

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Great. And in a similar kind of manner here, just -- I think last quarter you talked about a 50-50 split between your in vivo program and your engineered cell therapy program. And going back to your point around all the considerations that go into how you think about prioritizing those programs, I guess what do you see in terms of competition especially within some of these hematological malignancies? And how are competitors and other companies moving in their clinic, how is that informing your actions in terms of prioritizing these programs?

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [46]

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Yes. That is a very important question and one that we've been thinking about since the very beginning. And it relates to the collaborations we've struck and the choices we made with collaborators as well as the modalities that we pursued. I mentioned earlier on the in vivo side that we didn't want to pursue a viral delivery approach because we thought the long-term sustainable advantages that come with a chemical delivery lipid nanoparticles were just too substantial to ignore, and so we took that on as our challenge and have built an in vivo program around that. Likewise, on the ex vivo side, we made the determination that CAR-T lymphocytes, although a lot of activity going on in that space 4 years ago when we were thinking about what to do, it was our belief and I think this is being blown out that it's a very crowded, somewhat poorly differentiated space with a modality that can address only a limited number of tumor types.

If one needs to have large proteins that mark cells on their surfaces, the set of tumors that one can go after with CAR-Ts is just naturally limited and we see that. I mean just look at the different antigens that people are pursuing. So we set out on what we think is a much broader platform which is TCRs. And the decision we made was to use naturally occurring TCRs that were selected against proteins that are overexpressed in different tumor types, and that demonstrating activity in humans with that approach would open up a vast array of not only blood-borne tumors, but solid tumors and any number of different epitopes that one could go after. So go back to the beginning here in vivo, ex vivo, that's our full spectrum approach and this is about having lots of choices that we retain under our control. And secondly designing programs, so that there is notes where we get a lot of data that determine where our next moves are. And I -- we see those choices mounting here with excellent choices behind the doors that we're about to pass through. So as this unfolds obviously, we'll be talking about the past that we're going to be doubling and tripling down on.

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Operator [47]

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We will now take our final question from Tash Hasan of Roth Capital.

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Unidentified Analyst, [48]

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[Silvan] for [Tony Butler] here. In light of your comment about Factor IX expression in nonhuman primates, when can we expect some detailed data, if you're able to please speak about this? For example, which conference, that will be very helpful.

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John M. Leonard, Intellia Therapeutics, Inc. - President, CEO & Director [49]

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Thanks for the question. I can't tell you yet which conference that will be only because we don't have those plans in hand, right? But there is a body of work that we're going through with Regeneron with respect to Factor IX. We first of all want to determine the levels and that they were sustainable. And as we've shared today, we've shown that now through 2 months of observation in the in life phase, normal human levels were maintained. We think that is very important, very exciting data. Further analysis of the animals themselves as a result of that insertion are underway. Analysis of the protein, it's behavior, et cetera, is underway. And as we get that collected body of data in a more fulsome story, we intend to share it because we think it's state-of-the-art and very, very exciting.

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Operator [50]

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At this time, it appears there are no further questions. I would like to turn the conference back to Lina for any closing or additional remark.

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Lina Li, Intellia Therapeutics, Inc. - Senior Manager of IR [51]

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Thanks, John. And thank you all for joining today's call and for your continued interest in Intellia. We are excited by what's still to come in 2019 and look forward to updating you on our progress. Have a great day.

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Operator [52]

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Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.