Rocket Pharmaceuticals, Inc. (RCKT) Earnings Call Transcript

All right. Good afternoon. I'm Eric Joseph, senior biotech analyst for JPMorgan. Our next presenting company this afternoon is Rocket Pharma, and bringing us to the story, it's my pleasure to welcome the CEO, Gaurav Shah. After the presentation, there's a Q&A session. [Operator Instructions]. So, with that, Gaurav?

Thank you, Eric. Thank you, JPMorgan, for having us. It's always great to be here. And San Francisco is ever-changing and never changing at the same time. Good experience together. So, the key message today is that a one-time therapy that potentially cures a fatal and devastating disease of childhood because it addresses the disease as at the most fundamental level possible, the DNA. This is such a profound change in the way we've thought about medicine in the history of our species, and it could change the future of our species as well. And I'm going to show you this in several different disease types that Rocket has been working on, and it applies to many, many future disease states as well. Our mission at Rocket Pharma, we're a gene therapy company, is to develop first-in-class and best-in-class curative gene therapies for patients with devastating diseases. We start with rare, but we can expand beyond rare at the right time. I'm pleased to announce this year for the first time that we are now a fully integrated commercial-stage gene therapy company. Our therapeutic areas include bone marrow and heart. Rocket is the only company with safety and efficacy data for gene therapy targeting the heart. At the end of the last quarter readout, we had $437 million in cash. This is sufficient to fund operations into 2026. So, here's the pipeline. And many of us come from or have worked in larger pharmaceutical companies. This is starting to look like the pipeline of a major business unit in a pharmaceutical company. In this case, rare disease, obviously, we have 6 programs now, 5 are in the clinic, and the sixth one to enter later this year. And also, that's not to mention Wave 2, which is always mysteriously lurking under the surface. When we go through some of these programs, Rocket has an in vivo platform of AAV-based therapies that target the heart and potentially other therapeutic areas in the future. We have an ex vivo cell therapy platform, a genetically modified cell therapy platform that addresses bone marrow-derived disorders. So, each rare disease may be rare, but rare disease is not rare. There are 400 million people in the world with a rare disease. Half of them are children. And 80% of these diseases are monogenic in origin means 1 gene is faulty and is responsible for the entire spectrum of disease. The costs are high. In fact, the cost of a cardiac transplant in the U.S. can be way north of $1 million. So there is a market, there's an unmet need, and each of these therapies can address the diseases at a route level that is potentially completely cured. Danon disease is the first disease I'll talk about. It is a multi-organ disease that primarily affects the heart, but can also affect the skeletal muscle of the CNS. It's X-linked. There's something that all of us have as a process for normal homeostasis called autophagy. It's not a diet. It can also be a diet, but autophagy is the way that our cells clean out debris, it's the recycling center, the garbage take-out of our cells and the on-switch for that recycling center or vacuum cleaner is the LAMP-2 gene and protein. Without LAMP-2, debris builds up in the heart, it builds up in the muscle, it builds up in the CNS. And because it's X-linked, it affects boys more frequently and earlier than females, and boys unfortunately only live until the age of 19 or 20 without a transplant. And even with the transplant, there's about a 50% 10-year mortality with transplants, so, a great target for gene therapy for sure. There are 15,000 to 30,000 patients in the U.S. and Europe combined who have Danon disease. So, again, it is rare, but also not so rare. These are the data from Phase I. As I'll explain, these are completely transformative for Danon disease. We treated 6 patients whom we followed long-term and are now evaluable. The ages were from around 11 to 21. Some of these patients have now been followed for 4 years and this is a disease state which you can map the journey of the gene through multiple tissue, biomarker, lab, imaging, and clinical endpoints as we've done here. First of all, we showed in all these patients, adequate protein expression, meaning grade 1 or higher in all 6 patients. This was associated with a profound drop in troponin, which is the marker of cardiac injury, equally a drop in BNP, which is the marker of cardiac failure, heart failure. This was accompanied by decreases in LV mass. So, Danon is a disease of large hearts, shrinking the heart in as little as 3 months in some cases, but certainly around the year is really unheard of in the field of cardiology. What's happening is that the gene therapy is pulling out these vacuums, these debris from the cardiomyocytes, and really shrinking the heart. And that translates also to improvements in clinical outcomes, including NYHA class. Most of these patients drop from 2:1, from symptomatic to asymptomatic, and increase in KCCQ scores, which are quality of life scores, in some cases, 25 or 30 points. Again, pretty rare in the world of heart disease. Now, this is a very precious slide to us. The top left here shows increasing protein expression out to month 6 brown. The brown dots are actually LAMP-2 protein that's been restored. And in the second panel from the top, these are H&E stains and you can see the large vacuums in the left disappearing over time. You can actually see and you can count the number of vacuums that decrease, in some cases, 75% or so in the patients who have been treated, again, associated with improvements in clinical outcomes. So, very rare in the history of medical development or medicine development, can you trace everything from protein expression through clinical outcomes and map the journey in such a predictable way across many patients. So, this led to our choice of a primary endpoint together with the FDA, which includes protein expression and also LV mass index. You can see a drop in LV mass index in all 4 of the low-dose patients, which is a chosen dose in Phase II from 1 year and beyond. And other disease-modifying therapies that have recently been approved in Fabry, amyloid, and hypertrophic cardiomyopathy, are also associated with decreases in LV mass index, as you can see here. And we even see a deeper decrease or improvement in the Danon disease patients treated with gene therapy. In fact, in some cases, down to 50% reductions in harsh size over time. Of course, the patient's stories tell everything. As I mentioned earlier, the patients that were treated in Phase I were treated between age 11 and 21, means that the 21-year-old is now 25. And instead of being in a hospital or at home waiting for a transplant or what's worse, passed away, this patient is actually going to college. Another patient who is also older has a full-time job. These are the stories that we hear. One of these patients walked a 10-K, I can barely walk 1-K. So, really, this is a transformative therapy that's really never been seen. We were so happy in September to reach a conclusion after a long journey with the FDA regarding our pivotal trial design. So pivotal trial will have 12 patients followed for 1 year, like I said, with the co-primary protein expression plus LV mass index reduction. There are several secondary and exploratory endpoints that will support the full approval. So, this first 12-patient 12-month study will support accelerated approval. The same study will be followed longer in agreement with the FDA to potentially convert into full approval. This trial is enrolling, and we've chosen the low dose to move forward like I said, 6.7e13 vg/kg. We're proud to say that all the manufacturing for this clinical trial and also the commercial product will be done out of Cranbury in our own facility, which was a labor of love, but the CapEx is behind only OpEx ahead there. So, this product actually compared with our Phase I product that was outsourced, we worked with a great CDMO on has improved productivity, quality is highly comparable and is more potent in terms of full MD ratio as well versus the Phase I product. So, we look forward to share these results when they come. That's standard disease that's a glimpse of our cardiac gene therapy portfolio. Fanconi Anemia is our lead program on the bone marrow side using ex vivo lenti. Fanconi Anemia was one of the first programs that we started with our colleagues in Madrid at CMAT. In Fanconi Anemia, we actually were lucky to push the field forward in a very big way. For the first time in the history of ex vivo lenti, we were able to get positive results with 0 conditioning. There's no conditioning, no cytotoxic conditioning. Fanconi anemia is a disease of bone marrow where the DNA repair pathway is damaged. So, it affects all the cells in the body, but especially the bone marrow because the stem cells fizzle out over time. So, you actually don't need chemotherapy to wipe out the existing stem cells because they die out on their own over the course of the first decade of life. And if we infuse these patients with enough gene-corrected cells, they will have a selective proliferative advantage over the weak cells that are fizzling out anyway. So some of our colleagues at CMAT and some of our folks at Rocket, the smarter ones than me, realize that you could get this therapy done without conditioning, and we tried it and it worked. 8 out of 12 patients who had this therapy and followed for at least 1 year had positive vector copy numbers, meaningfully positive vector copy numbers. These patients also had improvements in MMC resistance, which is the way that we know that their stem cells are now working. They're not Fanconi cells. In fact, if you put some of these patients' bone marrow side by side with a person without Fanconi anemia, and you compared the mirrors in terms of their response to mitomycin, which should kill the stem cells, both these treated patients and non-Fanconi patients would have the same 50%, 60%, 70%, 80% resistance to MMC that you see here. So you can't even diagnose patients with Fanconi anemia anymore. You wouldn't even know that this is the Fanconi anemia patient after this therapy was given 1 year and beyond. Very excited to state that we're filing our BLA and MAA first half of 2024. Fanconi anemia is eligible for a PRV as is LAD-1. LAD-1 is the heart and soul of a lot of folks at Rocket and some of our partners. When I first started this talk, and I said a one-time therapy that potentially cures a fatal disease of childhood, there's no better example than LAD-1. These are patients who lack a protein called CD18 on the surface of neutrophils. And unfortunately, they have recurrent devastating fungal, pneumonias, other infections. They're frequently in the hospital in early childhood and 2/3 of these patients pass away by the age of 2. This ex vivo lenti gene therapy option restores CD18, and you can see here that over time, in 9 out of 9 patients that were treated on our pivotal Phase II trial, there's restoration of CD18 anywhere from 20 to what has gone, the 90% or so, with an average around 50%. So, these are patients who had less than 2% CD18 at baseline. As one of our investigators say here, these are no longer LAD patients. These are not patients anymore. They are normal people who are walking around just like many of us are. This curve on the left is the dream of any research physician who's engaged in drug development, 100% survival, no deaths out to more than 3 years. And also, this survival was accompanied by a significant reduction in the incidence of hospitalizations. So, when gene therapy works, it works. We're thrilled that this is the first year that we have a PDUFA date, March 31, 2024. So, we are engaging in a commercial setup and never saw this several years ago, and we're humbled by it and honored by the opportunity to bring this therapy to many patients beyond the clinical trial itself. The largest lenti indication is called PKD, pyruvate kinase deficiency. This is a hemolytic anemia caused by mutations in PKLR. The frequency of PKD is about 32,000 in the U.S. and Europe. The penetrance is about 25%. So up to 8,000 patients have PKD and our gene therapy addresses the more severe or moderate to severe half of this population. These were results that were discussed at ESGCT so nothing new here, but the first time as a company presenting the full Phase I results in 4 patients, 2 adults, 2 pediatric. As you can see on the left, these patients had baseline hemoglobins around 7, and they have a 6- to 7-point increase in the 2 adults here. That was accompanied by improvement in hemolysis markers, including LDH and bilirubin as well. On the right side, the pediatric patients also had very meaningful improvements in hemoglobin between 3 and 6 points. All 4 of these patients are no longer transindependent. So, our plan here, we are starting a Phase II trial. We had a very productive dollar with the FDA at the end of last year in which we agreed to a single-arm 10-patient study, and the primary endpoint would be a 1.5-point improvement in hemoglobin at 12 months. This will support accelerated approval. The second cardiac indication is called PKP2. Last year, at this conference, we announced that this was our fifth program and that we were in ID filing stage back then. This is an arrhythmogenic cardiomyopathic, it used to be called PRVC when the field thought it was more right ventricular-based. But now we know it affects both the right and left and tricks it's called ACM, arrhythmogenic cardiomyopathy. PKP2 is the most frequent cause of ACM. This is now certainly bordering on more common diseases. I think we've all heard of athletes and sportswomen and sportsmen who are running or playing basketball and have some cardiac death. ACM accounts for a large chunk of those patients and PKP is a large chunk of ACM. So, while it's a rare disease, it's starting to come into collective consciousness. PKP2 is a protein that's on desmosomes. It's the junctions that link cardiomyocyte to cardiomyocyte. And this is the most prevalent disease that we're targeting. It's at least 50,000 patients in the U.S. and Europe. Some groups have estimated larger numbers than 50,000 even. So, I'll just show the mouse model here. It's a conditional knockout model, a PKP2 knockout model that we worked up together with NYU, and we treated these mice with an AAVrh74 version of PKP2. We pivoted to AAVrh74 instead of AAV9 because Rh74 has a greater amount of data in higher doses, even E14 to E40 range, Rh74 has not been associated with some of the side effects that AAV9 and that dose range have been and because we believe that in this population, you may actually need to push the dose to get adequate protein expression, we thought rh74 is superior to AAV9, and it was also shown to be superior in our mouse models that we worked that I just showed you earlier versus AAV9. On this model, you can see 100% survival in mice that were treated versus untreated mice and improvements in the right ventricular area on the top right and improvements in arrhythmia on the bottom right, reduction in PVCs, premature ventricular complexes and the PVC point is key because in our Phase I, that's one of the endpoints we're looking at very carefully and may potentially be a primary or part of the primary endpoint cohort for our pivotal Phase II study. But for now, we're starting the Phase I. This trial is enrolling. Our starting dose is 8E13g/kg. This is a very important dose to mention because it's above the dose that worked in mice and similar to the dose that worked in Danon. So it's possible that we may be able to start seeing something even at the lower doses here. But it is a dose escalation program. So we have the possibility of going to the E14 range because it is an Rh74 specifically. And the 6th program last but certainly not least is BAG3. This came through in the acquisition of Renovacor. BAG3 regulates multiple functions in cardiomyocytes, and a mouse model, I've shown this slide before, was positive that led to this collaboration and the acquisition of Renovacor. This will also use rh74, and we plan an IND toward the end of 2024. This has a similar prevalence of 30,000 or so as Danon disease. Together, these 3 cardiac gene therapy assets, if you pull all the patients together, it's more than 100,000. So this is what I was saying earlier. Each rare disease is rare, but if you add them up, you get to 100,000, you can get to $1 million, you can get to $10 million. And we're very proud of the fact that we're just cracking the door open to the possibilities of gene therapy. We have a fully integrated facility in Crandon New Jersey, where we can do everything from discovery to manufacturing to commercialization even some of the commercial folks live down there now. Wave 2 is coming. And like I said, underneath the surface, the iceberg is bigger than above the surface. Wave 2, like Wave 1 will draw from first best and/or only in-class programs with on-target mechanisms of action and clear endpoints in a sizable market to maximize the impact of the number of patients that we can. At least 2 therapeutic areas which are cardiovascular and hematology, but potentially more to come. Very proud to work with some of the smartest people in the world in terms of gene therapy, drug development, and commercialization. And I'm going to invite 2 such folks, Kinnari Patel, our President and Chief Operating Officer; and Jonathan Schwartz, our founding Chief Medical Officer and the one and only first and best-in-class Chief Gene Therapy Officer in the world. So, please come up for a Q&A as well. Thank you so much for coming and listening. Back to you, Eric.

Thanks, Gaurav. '[Operator Instructions]'. But just by way of getting started, I'm sure a lot of folks in the room are interested in sort of the operational progress in the pivotal death disease program and noting that the trial is now open to, and you can just talk a little bit about sort of how the patient screening process has been and maybe when you might anticipate kind of treating the first patient, the type of disclosure that might surround such an event?

That's a great question. So there is a large list of patients. In fact, we didn't think that we were going to end up with a 12-patient trial. We thought it would be much larger. So we prepared with a much larger list of patients that we reached out to. So there are more than enough patients for the trial. We have not disclosed specifics on enrollment yet, except that we are enrolling. And I think in this case, because it's a pivotal trial and we're working so closely with the FDA, we'll probably want to treat a group of patients and follow them for some time before we actually disclose anything about where we are in the trial or data. And that's probably the best way for the drug itself in the long term.

And forgive me for forgetting but it's stated clearly in the protocol but is there sort of a baseline assessment period for patients participated as a prior to treating them? Or did they kind of have those criteria, those data readily at hand to be eligible to participate in the study?

Yes. So there are a couple of screening visits. One is, certainly, we've got to make sure they don't have neutralizing antibodies to AAV9. And then we want to make sure the ejection fraction is adequate and then they get pretreatment biopsies to ensure that there's no LAMP2. But that process usually takes a month or so. And, yes, there's not much more to disclose there.

Well, there will be a running period for biomarker assessment that each patient will undergo after the baseline assessments that Gaurav just described. So, we'll be able to observe patients for a period of 3 months, in some cases, possibly even a little longer, just to get a gauge as to some of the circulating heart failure and heart injury biomarkers that are often very abnormal in Danon disease and changes in any number of additional clinical parameters that will really help determine patients' baseline and potentially also give ourselves and health greater confidence with respect to the meaning of any stability or decreases post-treatment in any number of the abnormal cardiac blood markers, radiographic markers or other parameters that will be following.

And maybe I'll just add to that a little bit. One of the reasons we're doing that is because this is a single-arm study. While we have natural history activities underway, FDA has really degreed saying, hey, how are the patients' baseline and post-gene therapy at 1 year, how are they doing? So, to really ensure that we have great control of the baseline versus within a year after therapy without having this information being collected allows us more than one baseline endpoint to have multiple endpoints at minus 3, minus 2 months, 1 month, in order to really compare and contrast how well the patients are doing. So, this is really to strengthen our really differentiate clear benefit-risk.

Yes. Each patient serves as their own control. So, this helps fortify that data set.

One of the common questions we get is around the variation in expression that can occur when assessing changes in nosology, really LAMP-2 expression, right? How are you accounting, I guess, or seeking to minimize variation in LAMP-2 expression that could occur across biopsying patients?

So we're not quantifying it precisely anymore. We're just grading it, grade 1, 2, 3 or 4. Even the patients who had Grade 1 protein expression, they all had grade 0 at baseline. But even those patients who just got Grade 1 had essentially the same improvements across every biomarker that we talked about earlier, no better or worse than the patients with Grade 2 or Grade 3. So, you don't need a lot of protein, a little protein here really goes a long way. And if you think about it, once you turn the on-switch for that vacuum cleaner on, over time, the vacuum cleaner will work. So, you give it 3, 6 months, you give it 1 year and all these patients have cleared out their vacuoles. Even the one patient 1001, who had the most amount of expression who was grade 1, but if you tried to quantify it, it was more like 5% to 10% at most, even that patient had a profound drop in troponin BNP and LV mass. So you really don't need a lot of protein. So the variation may be there or may not be there. We assume that the biopsy we do at the 1-year mark will capture that protein if it's there.

And can you talk a little bit about the pivotal program for patients outside the U.S.? If I remember correctly, I think the CTA is still pending there. So I'm wondering whether you similarly expect biomarkers to be used as an approvable endpoint in Europe.

So we have the [indiscernible] study that is going to be serving both U.S. and EU. And we have an agreement with EMA to do that. Though at this point, we're just operationally getting the EU sites up and ready with the CT application because of the IRB clearances. So we expect that to be up and running shortly in the next few months to come. But it's between U.S., U.K., or EMA region, it's going to be to 12 patients with the same endpoint in the same study design.