Boundless Bio Inc

NASDAQ:BOLD

Earnings Call Transcript 2018-Q2

[Operator]

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Audentes Therapeutics Earnings Call and ASPIRO update. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s program is being recorded.

And now I would like to introduce your host for today’s program, Andrew Chang, Director of Investor Relations. Please go ahead.

[Andrew Chang, Director of IR]

Thank you, operator, and good morning, everyone. Just before market opened today, we issued a press release with earnings and operating results for the second quarter 2018 and also updates on ASPIRO, our phase 1/2 clinical study of AT132 in patients with X-Linked Myotubular Myopathy or XLMTM. The press release and live webcast access are available on the Investors and Media section of the Audentes website at www.audentestx.com. The slides and webcast link will be available for approximately 30 days.

Joining me on the call today are Matt Patterson, Chief Executive Officer; Natalie Holles, President and Chief Operating Officer; Dr. Suyash Prasad, Senior Vice President and Chief Medical Officer; and Tom Soloway, Senior Vice President and Chief Financial Officer.

Before we begin with prepared comments from our team, I’d like to remind callers that the information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that the company’s management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business.

These forward-looking statements are qualified in their entirety by the cautionary statements contained in today’s press release and the company’s SEC filings. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 7, 2018. Audentes undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of today’s call except as required by law.

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

[Matt Patterson, President and CEO]

Thanks, Andrew, and good morning everyone. Thank you for joining us today, and particularly those of you joining from the West Coast at this very early hour.

The second quarter was highly productive for Audentes and while today's call follows on our quarterly earnings cadence, we wanted to also take advantage of the opportunity to provide important updates from ASPIRO. For today's agenda, I will get things started by providing an overview of progress on our pipeline programs. After that I will ask Natalie to provide a brief update on the great advances we continue to make with our internal manufacturing capabilities, and why we believe we are an industry leader in this important discipline. Thereafter, Suyash will review the clinical update, biopsy results and next steps in ASPIRO.

So beginning with a quick review of the progress of our other pipeline programs. First we remain excited about the prospect of Crigler-Najjar Syndrome as a promising target for AAV gene therapy. As we reported last quarter in our phase 1/2 VALENS study, we were pleased to have established initial proof of concept in a 12-year-old patient at the starting dose of 1.5x1012 vector genomes per kilogram, evidenced by a rapid and meaningful but temporary decline in total serum bilirubin levels, a result that was mirrored in our preclinical dose ranging studies at sub-efficacious doses.

Importantly, AT342 is showing an excellent safety profile in this sentinel patient. Other than a transient elevation in one liver enzyme there have been no other treatment related adverse events or serious adverse events today. With this promising start in hand, we agreed with our data monitoring committee to dose escalate and treat the next patient at the protocol specified dose of 6x1012 vector genomes per kilogram and plan to provide our next interim update for the VALENS study in the fourth quarter.

Turning to our Pompe program. Earlier this year we announced that we selected our clinical candidate AT982 and that our clinical plan had expanded to include phase 1/2 studies for both the infantile and late onset Pompe disease patient population, and that to enable this broader vision we expanded our pre-clinical program to include a non-human primate study, which we initiated earlier this quarter.

Recently we observed a dose-dependent safety signal that resulted in our decision to terminate this study. A thorough analysis of the study data is ongoing and in parallel we have initiated additional non-clinical studies to continue to advance the program and ensure that we minimize delays to the IND timeline.

With this in mind, we are updating our guidance for the submission of an IND to 2019. We continue to believe that our approach of utilizing AAV8 to [transvect] and express GAA directly in the tissues affected by the disease is best in class, and stands in contrast to approved enzyme replacement therapies and liver directed investigational gene therapy candidates that rely solely on uptake of GAA from plasma.

We also remain committed to our vision of conducting a broad phase 1/2 program in both infantile onset and late onset Pompe, and like in our MTM and Crigler programs plan to initiate our clinical development with a prospective natural history run-in study in [indiscernible], for which we are targeting enrolment to begin in the first half of 2019.

We are optimistic about our path forward in Pompe, and I look forward to providing additional updates on the progress of the program as this year progresses. Before I turn the call over to Natalie I would like to highlight an important area of growth opportunity for our company, which we are actively pursuing. With the organizational capabilities we have developed to support our current portfolio of programs, we are well situated to direct our efforts more aggressively towards pipeline expansion.

As always, we remain disciplined in our selection criteria with a focus on serious life-threatening diseases with significant unmet medical need that we believe are good targets for the science. But also as we have now clearly demonstrated the therapeutic potential of our platform with the ASPIRO results to date, we are interested in disease targets that provide the potential for our work to make a broader impact in larger patient populations.

With this in mind we have an active research initiative underway focused on the design and development of a novel AAV-based therapeutic for a neuromuscular disease that meets all of these criteria. We are tremendously excited about this effort and I look forward to providing updates as our work progresses.

With that overview, I’ll now hand the call over to Natalie to cover the manufacturing update. Natalie?

[Natalie Holles, President and COO]

Thanks, Matt. Good morning, everyone and thank you for the opportunity to provide an overview on the substantial progress we have made with regard to advancing our internal GMP manufacturing capabilities.

As a reminder, we manufacture all of our products in our 38,000 square foot state-of-the-art GMP facility located in South Francisco. We are currently running at 2x500 liter bioreactor scale, which we believe is among the largest capacity mammalian suspension culture AAV manufacturing operations in the world today. And at our current yields is sufficient to meet the commercial demand for our MTM and Crigler-Najjar programs, as well as clinical supply demands across our current portfolio.

We have the space to add up to an additional 5000 liters of capacity within our existing lease footprint, which we would expect to do as our pipeline expands. Importantly, from the very beginning of our efforts to build this facility we have made parallel investments in supporting functions, including process and analytical development, fill finish, and QC testing providing a fully integrated internal platform to design, manufacture, fill and release our product candidates for clinical and eventually commercial use.

We demonstrated that our process is scalable all the way from bench top to large-scale bioreactor, consistently reproducible from run-to-run and applicable across all of our programs with minimal to no additional process development needed as we move from vector to vector making it an incredibly powerful platform for pipeline expansion, and as I will discuss in a moment rapid advancement to commercial readiness.

As we have advanced the technology, we are reproducibly generating excellent yields providing us with confidence in our capacity and utilization projections, as low as our eventual commercial cost of goods. We have also invested since the beginning in robust process optimization, product analytics and critical materials qualification to ensure that we produce vectors with excellent [PRE] profiles. And from the beginning, we have designed and commissioned our facility to support global licensure.

Importantly, we have used substantially the same process in the same facility at the same scale for the production of all clinical material since the inception of both our MTM and Crigler-Najjar programs. This is the first in the neuromuscular gene therapy field and positions us well vis-à-vis the recent FDA gene therapy guidance, which clearly emphasizes the agency’s directive to minimize significant process or facility changes during clinical development.

Based on the promising ASPIRO data to date we have initiated our BLA validation activities in earnest and believe we are well positioned for manufacturing commercial readiness on timelines consistent with our clinical progress towards registration in MTM. We are very proud of the accomplishments of our CMC team and the progress they have made to advance not just our internal capabilities, but to demonstrate the potential of the AAV manufacturing field more broadly.

We believe strongly that maintaining our leadership role in AAV science and manufacturing will be an important driver of growth and value for our shareholders as we aim to commercialize our existing product candidates, add new pipeline programs and explore new uses of AAV.

With that overview, I will now turn the call over to Suyash to walk us through the details of today’s ASPIRO update. Suyash?

[Suyash Prasad, SVP and CMO]

Thanks, Natalie. I am very happy to be here this morning to share with you a number of exciting updates on our MTM program, including some incremental new clinical data, the results from the week 24 biopsies in patients 1, 2 and 3 and our plans regarding next steps in ASPIRO.

So, I will begin with the clinical data update. Let us start with a quick review of the ASPIRO protocol. I will focus your attention on the right-hand side of the slide where you can see a summary of enrolment and follow-up data availability to date. As a reminder, patients 1 to 4, the three active treatment patients and the one delayed treatment control indicated in pink were enrolled in the original cohort 1 group.

We made the decision to expand the first cohort, the [8x14] vg/kg dose, patients 5, 6 and 7 were enrolled. All patients were enrolled into ASPIRO from [indiscernible], our perspective natural history run in study, which allows these patients to serve his own longitudinal baseline control. Also note that the control patient is as yet untreated, and will roll over to treatment once the optimal AT132 dose has been established.

And in the bottom half of the slide, you can see a summary of the study assessment schedule through the 12-month time point. To orient you to the data you will be seeing today, I will remind you that during the ASGCT annual meeting in May we presented week 24 data for the first two patients treated, as well as the control patient, patients 1, 2 and 4 respectively as well as week 12 data of patient 3, and earlier time point data for the expansion cohort patients.

The new data we have presented today include week 24 functional assessments for patient 3, and based on the week 24 biopsies for patients 1, 2 and 3. So for clarity, the following slide showed the full efficacy data set for patients but the only new data since ASGCT is the week 24 data for patient 3. Importantly, with regards to safety there are no new treatment related SAEs in any patient since our last update.

On Slide 9, we highlight the significant improvements in neuromuscular function as assessed by CHOP INTEND in all treated patients. Once again patient 4 is the untreated control patient and is represented by the charcoal-colored dash line. You will note that patient 3 continues to make significant gains reaching a CHOP INTEND score of 48 at week 24, a 41% improvement over baseline.

To contextualize these results, it is important to remember that in our discussions with clinicians they cite an improvement of as few as 5 points in the CHOP INTEND to be clinically meaningful. So all patients are showing encouraging gains.

On Slide 10, we turn to respiratory function and here we are looking at MIP or maximal inspiratory pressure, an assessment we use as a measure of diaphragmatic strength. Once again you can see the untreated controlled patient represented by the dash line. We are encouraged to see that MIP score for patient 3, the orange line on the plot rise to 70 cms of water at week 24, a level which is now approaching the low end of the normal range, and represents a 170% improvement over baseline.

We turn to critical updates related to ventilator use. As a reminder, respiratory failure is considered the primary source of morbidity and mortality in MTM. Thus a key goal of the program is to reduce dependence on mechanical ventilatory support if possible.

We have been extremely encouraged to see reductions in ventilator use by as early as the week 4 time point in the majority of treated patients. Here again, the dash line represents the untreated control patient and the new data on the slide is the week 24 time point for patient 3. You can see that his ventilator dependence has dropped within 24-hour of continuous invasive ventilation at baseline to just 8 hours of night-time ventilation at week 24.

As we reported previously, patient one has been weaned off the ventilator completely for about 13 weeks now and continues to do well. As we have also reported previously, the patient 2 started at about 22 hours per day at baseline and dropped rapidly to just night-time ventilation, for 12 hours per day.

I'm very pleased to report the exciting update today that patient 2 has recently undergone a sleep study and has now been completely weaned off his ventilator as well. While still early in the study and only represented by a small number of patients these unprecedented results are another demonstration of the transformative potential of gene therapy and the treatment of MTM and continues to drive our sense of urgency to rapidly progress the development of AT132.

And now on to the results of the 24 week muscle biopsies in first three patients dosed in ASPIRO. I want to start by taking a moment to provide a summary of the data we generated during the preclinical evaluation of AT132. We believe this background is important as it helps to contextualize the muscle biopsy results that we will share in a moment. We were fortunate to have benefited from two excellent models of XLMTM to guide our progress towards clinic, including a genetically engineered murine model and a naturally occurring canine model.

Both models present with disease symptoms similar to those of humans, including severe muscle weakness, respiratory failure and early death. The muscle histology is similar to humans as well with both mice and dogs displaying the [indiscernible] nuclei of variable fiber diameter and hypotrophy that we will talk about in a few minutes in the context of the clinical biopsies.

In both the mice and dog models, AT132 demonstrated dose-dependent improvement in all measures, including patient expression levels, muscle and respiratory function and survival. And the results have proven to be durable. In two dogs treated in one of the earlier studies, these effects have lasted over five years to date, and the dogs continue to thrive. Studies in both models also showed dose-dependant improvements in muscle histology with 100% correction achieved at the highest doses. This result is an important consideration as we evaluate the human muscle biopsy and determine next steps for ASPIRO. Finally, we also conducted a toxicology and biodistribution study of AT132 in non-human primates.

In this study, animals are dosed at [8 x 1014 vg/kg]. We saw robust and broad tissue transduction evidenced by 6 to 20 vector copies per diploid genome in skeletal muscle and myotubularin protein expression of 8 to 25 fold over endogenous levels as measured by Western Blot. And importantly AT132 is determined to be safe and well tolerated at this [8 x 1014 vg/kg] dose. The totality of these non-clinical data informed our dose selection and design of the ASPIRO protocol, and again provide context for our interpretation of the muscle biopsy data in particular.

When we think about key learnings from the biopsies we are focused on several important elements, including the bio-analytical data, which reflect the degree of muscle tissue transduction and myotubularin expression achieved for the vector and the histology, which shows the degree of structural correction we are able to achieve with treatment.

We measure the ability of a vector to transduce a cell by calculating the vector copy number or VCN, which is a ratio of the number of vector copies in a given sample to the number of diploid genomes, which can be considered a proxy for the number of nuclei in a multi-nucleus cell such as a myocite. As you can see in the table, vector copy numbers of biopsies from patients 1, 2 and 3 are 6.2, 7.1 and 2.7 respectively.

We believe these results are unprecedented and that we have established the most robust transduction ever shown after systemic injection of AAV gene therapy for a neuromuscular disease. So, from here we want to look at the level of myotubularin and protein expression driven by our vector in the biopsy tissue.

Turning our attention to western blot, we are pleased to see that protein expression levels correlate well with what we are seeing in the transduction data. With myotubularin levels of approximately 120%, 250% and 80% of normal in samples from patients 1, 2 and 3 respectively. We use the word approximately here because we are still in the process of titrating our standard and extending the linear range for the assay. So it is possible these numbers may change slightly in future presentations.

Nonetheless, directionally the protein levels we are seeing in these samples is highly encouraging particularly in view of the consistency across the functional, bio-analytical and as you will see in a moment histological results that we see in these three patients.

I now will turn our attention to the histological analysis of these biopsy samples. As a context, I will share that all of these tissue samples were reviewed by a panel of independent pathologists on a blinded basis. And that the results we are presenting today represent the summary of the findings as presented to the data monitoring committee.

To orient you to the images in the following slides I'll first highlight some of the key histological features of healthy skeletal muscle and what we hope to see pre and post-treatment with AT132. XLMTM belongs to a broader family of diseases called central nuclear myopathies characterized by small muscle fiber size mislocalization of cellular organelles and nuclei found in the center of the myofiber rather than in a normal position along the periphery.

As we review the histology we look for these disease hallmarks pre and post-treatment and to do so we use two different types of stains. The hematoxylin and eosin stain or H&E stain and the nicotinamide adenine dinucleotide stain or NADH stain.

The H&E stain is a standard histological stain that allows the evaluation of a cell morphology, positioning of the nucleus and myofiber size. The NADH stain is a specialized histological stain that we primarily use to evaluate the degree of organelle mislocalization including the mitochondria and the sarcoplasmic reticulum.

In front of us now on the first panel at the far left of the slide, we are looking at these two stains from a sample of healthy skeletal muscle of a one-year-old child. In H&E panel we can see myofibers with a largely consistent range of myofiber sizes and their nuclei stained purple found along the periphery of the cell. In the NADH panel we find a normal mix of darkly stained oxidative or slow fibers and the lightly stained glycolytic or fast fibers. In both types of fibers we see an even distribution of mitochondria and other cellular constituents without aggregation or regions devoid of these organelles.

As we begin the histology discussion with patient 1 who is nine months older treatment let's focus our attention on the upper middle panel; the baseline H&E stain. This panel is typical of the baseline presentation we see with all XLMTM patients showing significant variation in myofiber size and center nucleation. By week 24 both myofiber size and stain nucleation are greatly improved. On the NADH stain we see a similar pattern of variation in myofiber size but by week 24 we see the organelle mislocalization is almost completely corrected.

Patient 2 is treated shortly after his fourth birthday and it is important to show age-matched normal muscle histology as context since as you can see in comparison to the last slide the muscle fibers here are larger than those seen in the younger children. The H&E panels for patient 2 show significant improvements in myofiber size and the central nucleation and on the NADH stain we see complete correction of organelle mislocalization at week 24 versus baseline.

Finally, when we turn to patient 3 who is two-and-a-half years old when treated we see the H&E stain showing significant improvement in myofiber size and center and nucleation and the week 24 NADH panel shown near complete correction of organelle mislocalization.

To provide some context and how we interpret these findings you'll recall in both the murine and the canine disease models treatment of the highest doses resulted in 100% histological correction suggesting that normal may be achievable and one of the histology improvements we are seeing in these three patients are significant and their tissues are approaching normal in appearance there may be opportunity for further improvement.

Additional gains could come over the course of time or maybe achievable with higher doses and this factored into our thinking about how to progress the study based on these remarkable data.

So to wrap up today the ASPIRO update we're excited about the clinical progress we are continuing to see across all treated patients in the trial both I've assessed by CHOP INTEND as the key neuromuscular endpoint and by the strong gains we are seeing in respiratory measures, in particular the reductions of ventilator used by 24 weeks.

We are very pleased with the new data showing continued significant functional gains for patient 3 and the fiber patient 2 has recently achieved a ventilator independence. We are also encouraged by the emerging safety profile of AT132. I've highlighted by the fact that there have been no new treatment related serious adverse events since our last update in May.

Finally the muscle biopsy results we shared today show unprecedented transduction of skeletal muscle, robust protein expression levels and significant improvements on histopathology and importantly are largely consistent with and corroborate the significant improvements we are seeing on the clinical measures.

So this leads us to next step in ASPIRO. In mid-July we met with our data monitoring committee to review the results that we have shared with you today. Given the totality of data we have seen to-date we are convinced that the best path is to follow our original plan to evaluate more than one in ASPIRO. This allows us to address the possibility of getting these [voice] even closer to normal at a higher dose and also to maintain the studies rigor and best position it as a potential pivotal study.

The DMT unanimously agreed with our recommendation and as such we are going to proceed further predefined ASPIRO protocol and open cohort 2 as a dose of [3x1014 vg/kg]. We are currently in the process of finalizing preparations to dose the [indiscernible] patient cohort two and anticipate that to occur in the coming weeks. And we look forward to providing our next update at the annual meeting of the World Muscle Society in early October and with that I wrap up my portion on the call today. I hand the call back over to Matt.

[Matt Patterson, President and CEO]

Great. Thank you very much Suyash and congratulations on the data and the continued progress with this bureau. In the interest of time I'll direct you to the press release that we made available before market open today in which we have summarized our second quarter 2018 financial results. Of note we finalized the quarter with a strong balance sheet that included $314.4 million of cash, cash equivalents and marketable securities which we expect to fund the company into the second half of 2020.

Just before opening the call for questions I'd like to highlight and re-emphasize a few of the important upcoming 2018 milestones for our Audentes including in Crigler-Najjar program looking forward to providing the next interim data update in the fourth quarter.

In our Pompe program we are continuing with the preclinical development of 1892 and now plan to file 9d in 2019 and to initiate ASPIRO our prospective natural-history run-in study in both infantile and late onset Pompe disease in the first half of next year.

We also look forward to providing you with updates on the progress of our pipeline expansion efforts and finally we're excited to have had the opportunity to share the terrific interim clinical data and biopsy results from ASPIRO with you today and look forward to providing our next safety and efficacy update as Suyash mentioned at the World Muscle Society meeting in Mendoza, Argentina in early October and with that all thank you for dialing in this morning and for your continued interest in our work and our progress.

That concludes our prepared remarks for today. Operator you may now open the line for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of in Hungjen Wang - from Bank of America Merrill Lynch. Your question please.

[Unidentified Analyst]

Hi guys it's Aspen for Hungjen, thanks for taking the questions. Just a couple of quick questions. Is there any theoretical concern with over-expression of MTM1 and can you talk about how that let you into thought process for the dose escalation to the [3x1014] and then can you just remind us what data we can expect what time points or which patients at World Muscle Society? Thanks.

[Matt Patterson, President and CEO]

Sure. I can start and if there's something more Suyash will jump in but we have no data to suggest that too much Myotubularin is a problem and importantly we look to the data from the non-human primate study where Suyash mentioned we dosed as high as [3x1014] vg/kg and saw levels of MTM that were between 8 and 25 fold over normal but yet there was no evidence of any safety problems related to that. So all data suggests that that is not a major concern and so with that context and the other pieces of the puzzle that Suyash mentioned such as our desire to see if we can achieve normal in the histology in particular in the tissue and the safety profile we've observed to-date and with of course the regulatory benefit of evaluating more than one dose we feel it's the right decision for the program and to advance things as quickly as possible.

I'm sorry on the second half your question for World Muscle, we don't have specific things to say as far as X number of weeks per patient but we can tell you that everyone's progressing as per protocol and we do look forward to providing certainly updates across all the patients enrolled. So more data across all the endpoints in all the seven patients treated and perhaps by then initial results for the beginning of cohort 2 as well.

[Unidentified Analyst]

Thank you.

[Operator]

Thank you. Our next question comes from the line of David Nierengarten from Wedbush Securities. Your question please.

[David Nierengarten, Wedbush Securities]

Yes. Thanks for taking question. I maybe hopped down a little bit late but did you mention what the event was has pushed out the timeline a little bit for Pompe disease?

[Matt Patterson, President and CEO]

We just mentioned David that so we observed a dose-dependent safety signal. For today we're not in a position to provide additional details beyond that except that as I mentioned in our -- in my talk we've already begun some additional studies to continue advancing the program and basically end up event what we observed was in that non-human primate study we mentioned that we started last quarter.

So we're still gathering data and doing analysis. So to give any additional details today would be speculative and incomplete. So we certainly looking forward to providing that at a later time but I think around the table here we have a lot of optimism about our ability to learn from those observations and advance the program rapidly and it will push the ID into 2019 but we have a high degree of confidence that we'll solve it and as I mentioned we're eager to get started on our clinical activities such as the natural history run-in study that we planned to start early next year.

[David Nierengarten, Wedbush Securities]

In terms of additional I mean [indiscernible] are you just thinking about the -- the proper dose or you're not going back to think about anything different about the [indiscernible] product?

[Matt Patterson, President and CEO]

Yes, I mean again I appreciate the question and but any more details than what I've shared is just not something we can go into today but certainly look forward to providing a more fulsome view. I wish I could but it's just too early with data rolling in and analysis continuing but based on our early evaluation, we have some ideas and like I said a lot of optimism about next steps.

[David Nierengarten, Wedbush Securities]

Okay. Thank you.

[Matt Patterson, President and CEO]

Sure.

[Operator]

Thank you. Our next question comes from the line of Ritu Baral from Cowen. Your question please.

[Ritu Baral, Cowen]

Hey guys thanks for taking the question. Going back to the dose escalation how much and you've got great expression patterns, great torsion levels, great sector copy numbers; how much of this attempt it gives up is based on any concern about roll-off of effect and how are you thinking about the elevation, the plasma CK that you saw in the patients [indiscernible] that might be affected by dose completion and I have a followup.

[Matt Patterson, President and CEO]

Yes. So I didn't quite hear one of the things. Well, I think in the end Ritu what we're trying to achieve is quite simply what we think is best for patients which we define as finding the best dose and getting it approved as fast as possible and so when we look at our data to-date we are totally thrilled with the results from safety and efficacy perspective.

I have described there seems to be a little bit of room for improvement in the histology and from our perspective if normal as possible why not strive for that and so that's our goal with the increase obviously we do it in the perspective of our existing safety data which is very robust and the regulatory goal of approval is important treatment as fast as possible which we believe is most likely with a robust study as we've designed it including the evaluation of multiple doses.

So all those factors go into play in our decision and like I said and Suyash said we reviewed it with the data monitoring committee and feel very good about the decision and the plan to move forward. So and your followup you said you had one.

[Ritu Baral, Cowen]

Yes. Do you have any remaining process changes at all in your XLMTM program on any changes in [revision] for instance better needed before you get to pull straight up GMP quality.

[Speaker]

To GMP quality absolutely not I mean we are - we started from day 1 with full GMP if you're speculate asking about raw materials and whether they're properly sourced as GMP if they had certain -- always happen. So that's not a concern and as Natalie mentioned there we expect the process for commercialization will be substantially the same as what we started with day one. So any changes are relatively minor and the big picture of biologics manufacturing and that's one of the pieces of our story that we believe is a strength and will resonate strongly with regulators as we go forward and engage in those conversations in the coming month.

[Ritu Baral, Cowen]

Got it. Thank you.

[Operator]

Thank you our next question comes from the line of Chris Raymond from Piper Jaffray. Your question please.

[Chris Raymond, Piper Jaffray]

Hey thanks. I guess just an another dose escalation question if you don't mind. So just on the decision to go to the 3x1014. So I think you guys had floated the idea of dose escalating but maybe not to that level and I know you've answered some questions on this already but is this driven more by your capacity from a safety standpoint or is there some feeling that that down the line you'd have a better durability picture by taking it higher? I guess I'm just curious given the results you have at this first dose and now some of the discussion I guess you had that maybe you could go up to an interim step, maybe a little bit more color on this move here to go to 3x1014. Thanks.

[Matt Patterson, President and CEO]

Sure, I mean it can just remind you when we started the program we speculated on going starting at 1x1014 with optimism that it would produce benefit but it was unclear whether how robust it would just it would be and then a vision to go to three and a vision to go even further to five. Based on the early results in cohort 1, we have realized that we had a maybe a better dose 1x1014 than we originally thought we would and sure enough that data has continued to play out and the biopsy data just continue that story that that dose is very robust and appears to have a great future but as you know we said well let's get to the biopsy data let's get to this full six month data in those patients and decide whether we should go up and if so to what level and as you've heard us say today based on all these factors in particular what appears to us to be the possibility that you could get to normal or near normal and the histology that just feels right to us for patients for the long term; with the added benefit we believe strongly in which is that from a regulatory perspective we think it's a stronger program and more likely to resonate with regulators if we evaluate more than one dose in at least some patients. So that's the vision.

They are going to three as a specific dose, I mean I think around the table we decided that to increase to something lower than that maybe interacting with difficult to distinguish between from the [1x1014] dose and so it was sort of felt that our original vision that going to three as a comparator was appropriate and so that's why we chose to do it and looking forward to treating patients in cohort 2 and importantly in parallel with that work we will be engaging with the regulatory authorities.

In Europe we've achieved the prime designation which of course will enable dialogue soon with our [indiscernible] and others and in the United States we are of course pursuing RMAT designation and hopefully with that in hand we will then be able to engage with the FDA in robust conversations very soon too.

So that will happen in parallel which will really be educational for all of us as to the time to which we can get to BLA which we believe should be as soon as possible for this disease based on these early data and we look forward to discussing that with the authorities.

[Chris Raymond, Piper Jaffray]

Okay. Thanks very much.

[Matt Patterson, President and CEO]

Sure.

[Operator]

Thank you. Our next question comes from the line of Joseph Schwartz from Leerink & Partners. Your question please.

[Unidentified Analyst]

Hi. Good morning guys. Thanks for taking our questions. This is [Dig] dialing in for Joe. So couple from me as well, so I guess going AT132, I just wanted to get your take on what you've seen in the preclinical observations in terms of the kinetics of MTM1 expression, specifically one of your colleagues in the gene therapy space talked about circularization of the GNA a sort of a hallmark for reaching that stable expression profile. So if we look at the six-month biopsy here, do you anticipate that to be sort of on the earlier side of the circularization or after circularization? And then I have got a couple of followup. Thanks.

[Matt Patterson, President and CEO]

Well, I'm not sure I'm ready or qualified to talk about that aspect of the biopsy today to be honest. I think from our perspective of the initial analysis that we've completed on copy number, protein and histological improvements has shown remarkable immediate improvement in the first six months and that we're optimistic about the durability of that in particular when you compare to the dog data where we did a full analysis and continue to do so on an annual basis showing the dogs benefiting. I think we'd have to go offline and talk to our chief scientific officer about that specific question. So we're happy to followup with you up on that at another point and I think there was a followup or second half of the question or did I?

[Unidentified Analyst]

Yes. So just two quick ones if I may. One are just so sort of on that same line of thinking I know we only have three patients that have the most substantial amount of data, but I was wondering if you can now speak to any correlations to baseline characteristics to the outcomes? So specifically you talked about the vector copy number today and how that led to the muscle histological improvements. So specifically I noticed patient 3 had only 2.7 copies. Anything there in terms of what led to the transduction efficiency discrepancy between the three patients or is that still too early to talk?

[Matt Patterson, President and CEO]

Yes. I would say interesting but probably still too early to talk in detail. Patient 3 as you may recall is our most complicated kid early on battling other viral illnesses, so after treatment. So one could theorize that complicated the equation and maybe led to a slightly lower level of transduction and a slightly lower level of Myotubularin expression, although 80% of normal is still awfully-awfully good and then interestingly you see his histology though is remarkably improved and shows great benefits. So it's interesting, I would say and certainly worth continued evaluation with more data over time in particular for more patients that'll be among of many things an important lesson learned as we have the totality of the data from this program over time great.

[Unidentified Analyst]

Great, Matt just one last one on speaking off the patient number three that was the most troublesome or the most complicated patient here. So any updates that you said no SAE [indiscernible] but any other SAE that are worth noting in the patient number 3? Thank you.

[Matt Patterson, President and CEO]

No. No additional updates to mention today. The most important update there is no new serious adverse event since our May update which includes all patients and of course we look forward to providing a thorough and complete review of all safety and efficacy data with longer-term information at the October meeting which is the next forum we have. So nothing additional to share today and looking forward to continuing data collection in all the patients who are continuing for protocol as planned.

[Unidentified Analyst]

Awesome. Thanks very much for taking the question and congrats on all the progress.

[Matt Patterson, President and CEO]

Thank you.

[Operator]

Thank you. Our next question comes from the line of [indiscernible]. Your question please.

[Unidentified Analyst]

Good morning. Thanks for taking my question. This is Taylor on for [indiscernible]. A little bit of followup on the previous question about the stability of expression. Do you have any visibility from your preclinical studies or based on what you've seen thus far in the patients on whether 24 weeks is the peak of Myotubularin expression or might these levels continue to rise with more time?

[Matt Patterson, President and CEO]

We've always been in the camp based on value of preclinical data and our early clinical data that “peak expression” tends to come somewhere between the 6 and 12 week window and at least from our animal data over five plus years on the dogs we've observed a continued expression of the protein that meaningful levels clinically meaningful levels and you see that in the clinical outcomes in the animals and so we would not expect protein levels to go further I guess beyond where they are today but we're certainly optimistic about the durability in skeletal myocytes in particular.

And also optimistic because even if there was some reduction of protein levels over time we know that with Myotubularin that levels as low as 10% of normal can seem to have a therapeutic response and so we've always had that threshold in mind but we just have shown in our preclinical work and now our human work that we are able to get to levels that are closer to normal and that gives us great optimism on the durability of the effect over time.

[Unidentified Analyst]

Great. Thank you.

[Matt Patterson, President and CEO]

Sure.

[Operator]

Thank you. Our next question comes from the line of Raju Prasad from William Blair. Your question please.

[Raju Prasad, William Blair]

Thanks for taking the question. Just a little followup on the decision to dose escalate and maybe if you give a little more color on what you're looking for in the three times in the 14th dose that maybe you haven't seen to-date and when you might be able to make a decision on whether you would stick with one therapeutic dose for another or dose escalate further in the study. Thanks.

[Matt Patterson, President and CEO]

Well, I think based on what we've said today really the only area where we think there may be a differentiation that's key is on the histology and taking it from approaching normal to normal or even closer. So I guess I would say that biopsy data from a number of patients in cohort two which is a six-month time point would be what you need to answer that question. Certainly we would expect to see comparable results in the clinical and then hopefully in safety outcomes to go with it.

So I suppose the biopsy data would be the most important piece just based on as we've talked about the data today why we're going up. I can't say that we're not of the mindset that going up further is likely that we think the evaluation of the 3x1014 dose will be a valuable it has the potential to further increase efficacy in those biopsies and the histology but and be valuable from a regulatory standpoint but it's hard for us to imagine different doses beyond those being appropriate for evaluation study.

So and it of course remains to be seen just how many patients we will treat at [3x1014]. The vision right now for our protocol is to enroll cohort 2 as it was originally envisioned which is treat a patient, see that that patient does well over the early weeks after treatment and then enroll three additional patients to which we'll get treatment and one being untreated control and see what the data tell us.

Recall that that was the original vision for the protocol in cohort 1 of course we expanded it by treating three additional patients based on the promising early data and the desire to see the biopsies before we made a call on next dose. So hopefully that helps great.

[Raju Prasad, William Blair]

Great and just a quick followup on determinations of histology. It's primarily a kind of visual of the structures of the myofiber size in order to the organelle localization or is there some quantitative measure that you'll be able to point to comparing kind of the doses over the time point?

[Matt Patterson, President and CEO]

Sure. Over you to Suyash.

[Suyash Prasad, SVP and CMO]

Sure. So on this initial lockets we have a panel of expert neuromuscular history pathologists who, the samples in the blinded ways. So we've really been very disciplined and how we're assessing these samples and initially it's a subjective expert opinion. We have developed some methodology to quantify this and I think in the scientific meeting we are probably sharing some of that information. So there will be a quantitative element that we are - we have developed and we'll be sharing in the future but at the moment I think it's fair to say we have these expert pathologists. They're looking at things in a blinded manner and it's a very robust thoughtful approach.

[Raju Prasad, William Blair]

Great. And just one last question. Any discussions with at least of the EMA with the plan designation on the increased dose? Are they - it will be kind of the highest vector genomes per kilogram dose in clinical studies to-date. Just any thoughts there?

[Matt Patterson, President and CEO]

Nothing to report today on the dialog with the authorities. Certainly the authorities are all familiar with the protocol as we originally envisioned it and so our expectation is that they would be fully supportive of the evaluation of multiple doses in the study. That was always feedback early on but that was a valuable and important thing to do in clinical development if possible. So we're confident that going to the 3x1014 dose will resonate with them and I hear what you say but our safety profile is outstanding at the 1x1014 does and recall again that we went to size 8x1014 and preclinical and saw nothing of any concern. So I think there's a reason for confidence here and that's why we're doing it.

[Suyash Prasad, SVP and CMO]

Yes. myopathy the recently published gene therapy [indiscernible] from the FDA actually very clearly stipulate that evaluating multiple doses is highly appropriate and really leads to a robust study design. So I think they'll be very appreciative as Matt says.

[Raju Prasad, William Blair]

Great. Thank you.

[Matt Patterson, President and CEO]

Okay.

[Operator]

Thank you. [Operator Instructions] Our next question comes from the line of Matthew Luchini from BMO Capital Markets. Your question please.

[Unidentified Analyst]

Good morning this is Stephen Marshall on the line for Matthew. Thank you for taking our questions. On XLMTM could you provide some color and why you think patient 3 has seen acceleration when the prior data seemed to suggest we might be seeing a plateau and if we should expect this to continue? And also what should we be expecting in the next update AT342 in terms of patient numbers, length to followup and so on.

[Matt Patterson, President and CEO]

Sure. Thank Stephen for the questions. Well, a patient 3 I guess I wouldn't say that we've thought of his data as plateauing at an early point. It was just earlier and the May update recall we only had 12 week data on patient 3 and so he just wasn't as far along. We just didn't have the numbers to see how he was doing out to the week 24. We had heard qualitatively that he was doing well until we saw the numbers it wasn't clear.

So that's why it's so great to share it today because of course as we've talked about before historically he's the patient who had a series of adverse events and the biggest challenges early in the study and so I know there was some questions of how he was doing but we're happy to report today that of course he's doing well and there's a clear data to back that up with [indiscernible] and the qualitative assessment. So from our perspective his benefit is clearly increased and hopefully will do so further with more time and his biopsy data was outstanding.

So the second half of your question nothing specific to say today. We just look forward to providing our [indiscernible] update in Q4 sort of work in progress as to how many -- how much data we will have and exactly when but we're confident we'll have an update for you in Q4.

[Unidentified Analyst]

Okay great. Thank you.

[Matt Patterson, President and CEO]

Sure.

[Operator]

Thank you. Our final question for today comes from the line of Difei Yang from Mizuho Securities. Your question please.

[Difei Yang, Mizuho Securities]

Hi, good morning and thanks for taking my question. Just so quick followup on ASPIRO. So would you remind there is how many patients do you have for cohort 2 and then for MTM1 protein expression is there a range you're trying to target or is it the higher the better?

[Matt Patterson, President and CEO]

Sure. Thanks for the question. Cohort 2 is envisioned to enroll a total of four patients; three would get treatment and one would be an untreated control. That is the original design of the protocol and so that's our expectation for the next steps specifically treating as I mentioned this first patient at the 3x1014 dose and then we wait a minimum of four weeks to make sure that he's doing well from a safety perspective and then on a randomized manner enroll the next three two to drug treatment and one to the control.

So that's the plan with cohort 2. As far as the MTM protein I would say based on our work pre-clinically where we observed that we were able to get to near normal levels in the dogs I suppose that when we started this clinical program we were hopeful that we might be able to achieve something similar but with the perspective that again all data tells us that you really only need around 10% to 15% normal to have a therapeutic effect but thankfully we've been able to observe levels that are near or at or just above normal in this first dose group.

So, but as you heard us say I think we're correlating our decision-making mostly around what is the impact that protein level is having on the histology of the disease and it's been a remarkable improvement at this first dose but there may be a slight a bit more improvement that could be made to get to near normal. And so that's our goal. So we don't have a protein number in mind specifically. We're more focused on seeing robust protein expression translate to as normal as possible in the histology of the disease.

[Difei Yang, Mizuho Securities]

Thank you. And then just a quick followup, quick question on the cost of goods sold side. Are you in a position to comment and maybe at first commercialization what is a reasonable range that we should think about the manufacturing cost per patient and then at fully scaled some years down the road what would be when all process are optimized, etc. How should we think about the cost of therapy?

[Matt Patterson, President and CEO]

Well, we don't go into the specific yield levels. We get in our manufacturing operation but I'll reiterate what Natalie said earlier which hopefully is informative for you which is today we manufacture in two 500 liter bioreactors in our facility in South San Francisco. The capacity that that provides us is enough to meet our estimate. The global commercial needs for MTM and Crigler in parallel with the continued clinical development of our other programs.

So we're very well positioned with our existing facility and process to meet the global needs for these programs but with the room to expand when the time is right which would almost certainly be dictated by the progress of the other larger neuromuscular disease programs in our pipeline.

And then you asked about pricing. I think at the end of course it's too early to be talking specifically about pricing. What I can tell you is of course that MTM is a very severe disease with no available treatment and we're very pleased with the early clinical data that shows the impact we can have with this approach in a one-time administration and so the clinical data collection is helping us build a good story about what we can do for these families, these kids. In parallel we continue to gather data about the burden of living with MTM and that information will undoubtedly also be informative for all parties involved when it's time to talk about specific pricing. So but other than that it's difficult to say until we have more information and get to an approval.

[Difei Yang, Mizuho Securities]

Okay. Thank you Matt.

[Matt Patterson, President and CEO]

Thank you very much.

[Operator]

Thank you. This does include the question-and-answer session of today's program. I'd like to hand the program back to Matt Patterson for the further remarks.

[Matt Patterson, President and CEO]

Great. Thanks everyone again for participating this morning. We've appreciated the opportunity to share our exciting ASPIRO updates with you and look forward to providing further information throughout what promises to be a productive remainder of the year. Operator that concludes our call today.

[Operator]

Thank you and thank you ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.