AVROBIO, INC. You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q
and our audited consolidated financial statements and related notes for the year
ended
Overview
We are a leading clinical-stage gene therapy company with a mission to free
people from a lifetime of genetic disease. Our Company is focused on developing
potentially curative ex vivo lentiviral-based gene therapies to treat patients
with rare diseases following a single dose treatment regimen. Our
investigational gene therapies employ hematopoietic stem cells that are
harvested from the patient and then modified with a lentiviral vector to insert
the equivalent of a functional copy of the gene that is defective in the target
disease. We believe that our approach, which is designed to transform stem cells
from patients into therapeutic products, has the potential to provide curative
benefit for a range of diseases. Our initial focus is on a group of rare genetic
diseases referred to as lysosomal diseases, some of which today are primarily
managed with enzyme replacement therapies, or ERTs. These lysosomal diseases
have well-understood biologies, identified patient populations, established
standards of care yet with significant unmet needs, and represent large market
opportunities with approximately
Our initial pipeline is comprised of four lentiviral-based gene therapy
programs, including AVR-RD-01 for the treatment of Fabry disease, AVR-RD-04 for
the treatment of cystinosis, AVR-RD-02 for the treatment of Gaucher disease and
AVR-RD-03 for the treatment of Pompe disease. AVR-RD-01 is currently being
studied in an investigator-sponsored Phase 1 clinical trial and a
Company-sponsored Phase 2 clinical trial, which we refer to as FAB-201. Five
patients have been dosed in the investigator-sponsored Phase 1 clinical trial of
AVR-RD-01, and enrollment is complete. Four patients have been dosed in the
Company-sponsored Phase 2 FAB-201 trial. AVR-RD-04 is currently being studied by
our collaborators at the
Since our inception in 2015, we have devoted substantially all of our resources
to organizing and staffing our company, business planning, raising capital,
acquiring or discovering product candidates and securing related intellectual
property rights, conducting discovery, research and development activities for
our programs and planning for potential commercialization. We do not have any
products approved for sale and have not generated any revenue from product
sales. To date, we have funded our operations with proceeds from the sales of
preferred stock and our initial public offering, or IPO, and we have raised
additional capital through an underwritten public offering that closed in
Since our inception, we have incurred significant operating losses. Our ability
to generate product revenue sufficient to achieve profitability will depend
heavily on the successful development and eventual commercialization of one or
more of our current or future product candidates and programs. Our net losses
were
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As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations with proceeds from outside sources, with a majority of such proceeds to be derived from sales of equity, including the net proceeds from our IPO, follow-on offerings, and our ATM Facility. We also plan to pursue additional funding from outside sources, including our expansion of, or our entry into, new borrowing arrangements; research and development incentive payments from the Australian government; and our entry into potential future collaboration agreements for one or more of our programs. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of
Clinical Update - AVR-RD-01 for Fabry disease
AVR-RD-01 is currently being studied in two ongoing clinical trials. A Phase 1
investigator-sponsored clinical trial of AVR-RD-01 is being conducted by the
The primary efficacy endpoint of our Phase 2 FAB-201 clinical trial is the change from baseline in the average number of globotriaosylceramide, or Gb3, inclusions per peritubular capillary, or PTC, as measured in a patient kidney biopsy one year (48 weeks) after treatment with AVR-RD-01. In addition to safety, the Phase 2 and Phase 1 clinical trials are also examining additional secondary efficacy endpoints including biomarkers such as plasma lyso-globotriaosylsphingosine, or lyso-Gb3, alpha-galactosidase A, or AGA, enzyme levels measured in plasma and leukocytes, as well as certain parameters of organ function. In addition, vector copy number, or VCN, is being measured in these trials to assess the potential durability of the gene therapy. Safety and tolerability parameters are also being assessed in these trials.
• Kidney biopsy / Gb3 PTC reductions. The primary efficacy endpoint of our
Phase 2 FAB-201 clinical trial is the change, from baseline to one year
post-treatment with AVR-RD-01, in the average number of Gb3 inclusions per
PTC, as measured in a patient kidney biopsy. Gb3, also referred to as GL-3,
is a type of fatty substrate that builds in the cells of Fabry patients,
resulting in damage to organs such as kidneys and heart. PTCs, also
referred to as kidney interstitial capillaries, or KICs, in Fabry clinical
trials, convey blood after filtration in the glomeruli, enabling the blood
to eventually exit the kidney and return to the circulatory system.
In
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• Kidney and cardiac function stability. Secondary endpoints of our Phase 2
FAB-201 clinical trial include measurements of kidney function, as measured
by estimated glomerular filtration rate, or eGFR, and measured glomerular
filtration rate, or mGFR, as well as measures of cardiac function, as
assessed by Left Ventricular Mass Index, or LVMI. eGFR is determined using
the Chronic Kidney Disease Epidemiology Collaboration, or CKD-EPI, formula
and mGFR is determined using plasma clearance of iohexol. The left
ventricular mass, or LVM, is assessed by cardiac magnetic resonance
imaging, or cardiac MRI, which is an imaging technology that
enables non-invasive assessment of the function and structure of the heart.
In general, for a patient with Fabry disease, an increase over time in LVM
could potentially be expected. Improving patient outcomes by slowing or
halting the progression of organ damage is a key mission of our Company and
our investigational gene therapy programs.
As shown below, data from the third patient in our Phase 2 FAB-201 clinical trial indicates kidney and cardiac functions remain stable and in the normal range at one year following administration of AVR-RD-01, with a 19.8% increase in both LVM and LVMI observed from baseline to one year post-treatment.
Phase 2: Patient 3 kidney and cardiac function
[[Image Removed]]
The following figure summarizes eGFR data for all enrolled patients in the Phase 1 and Phase 2 clinical trials, which has remained stable for eight out of nine patients. Patient 2 in the Phase 1 trial, who entered the trial with moderate chronic kidney disease and an eGFR below 50 mL/min/1.73m2, has not stabilized his kidney function, which is expected given the low initial eGFR. This patient has remained on ERT throughout the course of the clinical study.
Phase 1 and Phase 2: Estimated glomerular filtration rate
[[Image Removed]]
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• Plasma lyso-Gb3 reductions. The substrate, Gb3, and its toxic metabolite,
known as lyso-Gb3, are considered surrogate markers for disease activity
and treatment response for Fabry disease. In the case of ERT-naïve patients
and patients who have discontinued ERT, we believe that reductions in Gb3
levels following treatment with gene therapy are likely driven by the
therapeutic effect of gene therapy.
The first patient in our Phase 2 clinical trial had an 86% reduction in plasma lyso-Gb3 as of 22 months post-treatment with AVR-RD-01; the third patient had a plasma lyso-Gb3 reduction of 49% as of 12 months post-treatment; and the fourth patient had a plasma lyso-Gb3 reduction of 59% as of six months post-treatment. Plasma lyso-Gb3 data are also available for the second patient in the Phase 2 trial, up to 18 months post-treatment with AVR-RD-01. This patient has an N215S genotype, which is associated with a late-onset cardiac variant phenotype and lower plasma lyso-Gb3 levels.
The figures below summarize the plasma lyso-Gb3 data observed in the four enrolled patients from our ongoing Phase 2 FAB-201 clinical trial.
Phase 2: Plasma lyso-Gb3
[[Image Removed]]
Note: Lyso-Gb3 plasma reference value: 2.4 nM
In each of the five patients in the Phase 1 clinical trial of AVR-RD-01, we have observed plasma lyso-Gb3 at post-treatment levels that are lower or similar to the levels observed when the patient received only ERT prior to administration of AVR-RD-01, which we refer to as baseline ERT levels. We define baseline ERT for these Phase 1 patients as the mean of the plasma lyso-Gb3 values reported prior to initiating mobilization.
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The following figure summarizes the plasma lyso-Gb3 data observed in all five patients from the ongoing Phase 1 clinical trial of AVR-RD-01, as well as each patient's ERT status and the change in plasma lyso-Gb3 levels from baseline.
Phase 1: Plasma lyso-Gb3
[[Image Removed]]
Note: Lyso-Gb3 plasma reference value: 2.4 nM
• AGA enzyme activity as measured in plasma and leukocytes. We believe, based
on years of observations of Fabry patients prescribed ERT, that even
partial plasma AGA activity is associated with improved outcomes in Fabry
patients. AGA enzyme activity is able to reduce Gb3 levels in multiple
cells and tissues. For our gene therapy, functional AGA is in part produced
by the pool of circulating leukocytes derived from genetically-modified
CD34+ hematopoietic stem cells, which may directly contribute to clearance
of accumulated Gb3 in cells. Functional plasma AGA enters cells and travels
to the lysosomes, where it can degrade Gb3. This process is referred to as
cross-correction. Genetically-modified leukocytes are the progeny of
transduced cells from the gene therapy. As a result, we believe that
assessing leukocyte AGA activity provides a potentially improved measure to
assess the durability of the gene therapy than plasma AGA enzyme activity
alone.
All nine patients in our Phase 2 and Phase 1 clinical trials have exhibited sustained AGA enzyme activity in both the plasma and leukocytes. The following figures summarize the plasma and leukocyte AGA enzyme activity reported from the ongoing Phase 2 and Phase 1 clinical trials of AVR-RD-01.
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Phase 2: Leukocyte and plasma enzyme activity
[[Image Removed]]
Note: leukocyte AGA activity reference Range: 24-56 nmol/hr/mg protein; plasma
Phase 1: Leukocyte and plasma enzyme activity
[[Image Removed]]
Note: leukocyte AGA activity reference Range: 24-56 nmol/hr/mg protein; plasma
• Vector Copy Number. Vector Copy Number, or VCN, which is expressed as VCN
per diploid genome, refers to the average number of copies of the
lentiviral-vector inserted gene that are integrated into the genome of a
cell, and is another measure that can be used to help assess the durability
of a gene therapy. We believe that different diseases may require varying
levels of VCN based on the underlying condition, and therefore VCN
measurements across different diseases should be assessed separately. For
example, a VCN of 0.1 may represent 5% to 10% of all nucleated circulating
blood cells carrying one to two copies of the inserted gene, which we
believe may be sufficient to result in clinically meaningful AGA enzyme
activity in the case of Fabry disease, as suggested by our emerging interim
data from our ongoing clinical trials of AVR-RD-01.
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The following figures summarize the VCN observations from the ongoing Phase 2 and Phase 1 clinical trials of AVR-RD-01. The fourth patient in the Phase 2 FAB-201 clinical trial was dosed using our plato platform.
Phase 2: VCN activity
[[Image Removed]]
Note: 0.1 VCN is indicative of approximately 5-10% of all nucleated circulating blood cells having an average of 1-2 copies of the transgene.
Phase 1: VCN activity
[[Image Removed]]
Note: 0.1 VCN is indicative of approximately 5-10% of all nucleated circulating blood cells having an average of 1-2 copies of the transgene.
• Skin Biopsy. Skin biopsies have been performed on the four enrolled
patients in the Phase 2 trial and evaluated by two independent blinded
readers using a standard scoring system for Gb3 accumulation and clearance.
The scoring system has a range of zero to three, with a score of zero
representing none or trace accumulation, and a score of three representing
severe accumulation. At six- and 12-months post-treatment with AVR-RD-01,
skin biopsy assessment revealed that the first patient scored a three at
baseline, a two at six months post-treatment with AVR-RD-01 and a one at 12
months post-treatment. The second patient in the Phase 2 trial, whose
cardiac variant phenotype does not typically result in Gb3 accumulation in
the kidney and skin, scored a zero at baseline and at six- and
12-months post-treatment with AVR-RD-01.
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The third patient in the Phase 2 trial scored a two at baseline, a two at
six months post-treatment with AVR-RD-01 and a two at 12 months
post-treatment. The fourth patient in the Phase 2 trial scored a two at
baseline and a two at six months post-treatment with AVR-RD-01.
We are continuing to evaluate the clinical relevance of skin biopsy data as a
secondary surrogate efficacy endpoint in our Phase 2 study of AVR-RD-01. Draft
guidance from the FDA, published in
• ERT Discontinuation by Phase 1 Patients. Three patients in the Phase 1
clinical trial who have been treated with AVR-RD-01 have discontinued ERT
and remain off ERT since such discontinuations. Patient 1 received his last
ERT dose in July 2018 , Patient 3 received his last ERT dose in May 2018 ,
and Patient 4 received his last ERT dose in June 2019 .
• Safety Update. Interim clinical data for all nine patients dosed to date in
the Phase 2 and Phase 1 clinical trials appear to indicate that
our AVR-RD-01 investigational gene therapy has been generally
well-tolerated with no unexpected trends or safety events identified. No
serious adverse events, or SAEs, related to the AVR-RD-01 drug product were
reported as of the safety data cut-off date of April 23, 2020 , for both the
Phase 2 trial and the Phase 1 trial. As of the safety data cut-off date,
six SAEs were reported in the Phase 2 trial and two SAEs were reported in
the Phase 1 trial and were consistent with expectations for the
myeloablative conditioning regimen, underlying Fabry disease,
or pre-existing conditions.
In the Phase 2 trial, the six SAEs that were reported through the safety
data cut-off date of
In the Phase 1 trial, the two SAEs that were reported through the safety
data cut-off date of
Anti-AGA antibody titers have been observed in four patients in the Phase 1 trial and two patients in the Phase 2 trial. We believe none of these are of clinical significance.
COVID-19 Update Clinical Programs
As the global healthcare community continues to respond to the COVID-19 pandemic, many hospitals, including our clinical sites, have temporarily paused elective medical procedures, including dosing of new patients in clinical trials of our investigational gene therapies. While dosing of new patients and data collection from enrolled patients has begun to resume at certain clinical sites, the extent to which clinical activities continue to be delayed or interrupted will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. We continue to closely monitor this rapidly evolving situation and the potential impact on our Company. Set forth below is a summary of updates for each of our clinical trial programs.
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AVR-RD-01 clinical trials in Fabry disease
• Patient recruitment activities for the Company-sponsored Phase
2 FAB-201 trial continue for our clinical sites in Australia , Canada and
the United States .
• Multiple patients have been identified as possible study candidates, and we
anticipate some patient dosing may resume as allowed by hospitals and
travel restrictions. However, further delays are expected as multiple sites
remain impacted by COVID-19-related care.
• Ongoing data collection has continued for dosed patients in both our Phase
1 investigator-sponsored clinical trial and Phase 2 FAB-201 clinical trial.
Although certain data collection is being delayed by the COVID-19 pandemic,
such delays are being remediated and are not expected to impact the
integrity or interpretation of the emerging study results.
AVR-RD-04 Phase 1/2 investigator-sponsored clinical trial in cystinosis
• In July 2020 , we announced that the second patient in the trial has been
dosed.
• Patient recruitment activities continue.
• Ongoing data collection for the two enrolled patients has continued.
Although certain data collection is being delayed by the COVID-19 pandemic,
such delays are being remediated and are not expected to impact the
integrity or interpretation of the emerging study results.
AVR-RD-02 Phase 1/2 clinical trial in Gaucher disease
• In July 2020 , we announced that the first patient in the trial has been
dosed.
• Subsequent new patient dosing and enrollment timelines have been impacted
by the COVID-19 pandemic. However, patient recruitment activities continue
for our clinical sites in Australia and Canada .
• We expect to open new clinical sites in the United States and Israel in the
fourth quarter of the year.
Business Operations
Our internal, cross-functional
Research and Development; Regulatory
Our AVR-RD-03 program for Pompe disease is currently in preclinical development with IND-enabling preclinical studies, including a proof-of-concept study, expected to conclude in 2020. We are also continuing early studies for future potential disease indications.
We currently do not anticipate any material impact on our regulatory activities for our clinical programs.
For additional information regarding the impact of the COVID-19 pandemic on our business, please see the section titled "Risk Factors" in Part II, Section 1.A of this Quarterly Report.
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Other Updates
On
On
In
In
Components of Our Consolidated Results of Operations
Revenue
We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future. If development efforts for our product candidates are successful and result in regulatory approval or additional license agreements with third parties, we may generate revenue in the future from product sales.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses consist of costs incurred in connection with the development of our product candidates, including:
• license maintenance fees and milestone fees incurred in connection with
various license agreements;
• expenses incurred under agreements with contract research organizations, or
CROs, contract manufacturing organizations, or CMOs, as well as
investigative sites and consultants that conduct our clinical trials,
preclinical studies and other scientific development services;
• manufacturing scale-up expenses and the cost of acquiring and manufacturing
preclinical and clinical trial materials and commercial materials,
including manufacturing validation batches;
• employee-related expenses, including salaries, related benefits, travel and
stock-based compensation expense for employees engaged in research and
development functions;
• costs related to compliance with regulatory requirements; and
• allocated facilities costs, depreciation and other expenses, which include
rent and utilities.
We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.
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Our direct research and development expenses are tracked on a program-by-program basis for our product candidates and consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs, and central laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct research and development expenses by program also include fees incurred under license agreements. We do not allocate employee costs or facility expenses, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to oversee the research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and, therefore, we do not track their costs by program.
We have modified the presentation within the following tables to include expenses related to other preclinical development activities outside of our already presented programs in our direct research and development expenses, which were previously included as other unallocated research and development expenses. We have adjusted prior period amounts to reflect the changes in presentation made in the current period. The table below summarizes our research and development expenses incurred by program (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Fabry $ 2,987 $ 2,336 $ 5,484 (1) $ 4,557
Gaucher 1,671 1,742 2,973 (1) 3,808
Pompe 1,563 840 2,682 2,338
Cystinosis 446 (86 ) 806 389
Other 1,831 1,264 4,037 2,048
Unallocated research and development expenses 12,368 6,171 23,158 11,573
Total research and development expenses
(1) These amounts reflect a prior period reclass of $1,003 between the Fabry
and Gaucher programs.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research and development expenses will increase substantially over the next several years, particularly as we increase personnel costs, including stock-based compensation, contractor costs and facilities costs, as we continue to advance the development of our product candidates. We also expect to incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into license agreements to acquire the rights to our product candidates.
The successful development and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of:
• the scope, progress, outcome and costs of our preclinical development
activities, clinical trials and other research and development activities;
• the impact of the COVID-19 pandemic on our preclinical development
activities, clinical trials and other research and development activities;
• establishing an appropriate safety profile with IND-enabling studies;
• successful patient enrollment in, and the design, initiation and completion
of, clinical trials;
• the timing, receipt and terms of any marketing approvals from applicable
regulatory authorities;
• establishing and maintaining clinical and commercial manufacturing
capabilities or making arrangements with third-party manufacturers;
• development and timely delivery of commercial-grade drug formulations that
can be used in our clinical trials and for commercial launch;
• obtaining, maintaining, defending and enforcing patent claims and other
intellectual property rights;
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• significant and changing government regulation;
• launching commercial sales of our product candidates, if and when approved,
whether alone or in collaboration with others; and
• maintaining a continued acceptable safety profile of the product candidates
following approval.
We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. Any changes in the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials for any reason, including as a result of the ongoing COVID-19 pandemic, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate. Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, related benefits, travel and stock-based compensation expense for personnel in executive, finance and administrative functions. General and administrative expenses also include professional fees for legal, consulting, accounting and audit services.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will continue to incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company. We anticipate the additional costs for these services will substantially increase our general and administrative expenses. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and expense as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidate.
Other Income (Expense)
Interest Income
Interest income consists of interest earned on money market funds and other bank deposits.
Other Expense
Other expense consists of foreign exchange gain or loss.
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