This is Keay Nakae. I'm the Director of Research and one of the Senior Biotech Analysts here at Chardan. Joining me on the panel are executives from our participating companies: Dr. Steve Pakola, CMO of REGENX; Dr. Amber Salzman, CEO of Epicrispr; and Dr. Michael Flanagan, CSO of Avidity. Thank you all for joining us today. For this panel, we wanted to focus on muscular dystrophies. The development of new genetic medicine-based treatments for muscular dystrophies is an area of high interest. DMD itself is already a multibillion-dollar market and projected to grow to $3 billion by 2033. Other dystrophies, such as DM1 and FSHD, currently have no approved therapies, but there are some very promising ones in the clinic. When we think about DMD and the current treatments, these include first-generation PMO exon-skipping therapies for patients with specific mutations, a new gene therapy that can address a slightly broader population, and new steroids. Nevertheless, there still remain significant unmet needs, particularly for non-ambulatory patients. Additionally, access to these high-cost therapies is restricted by regulatory hurdles outside the U.S. and also challenges with respect to reimbursement, also primarily outside the U.S. Because of all this, we believe this is a battleground state and want to talk about some of the new therapies that will be coming forward. Michael, let me start with you and maybe level set the discussion with respect to DMD and describe how the FDA approval of the first PMO skipper exons for DMD kind of set what most would argue is a relatively low regulatory bar, certainly at the FDA, and the implications for that currently. Yeah, I'd be happy to. I think when you go back and look at it, really, I think it was a watershed moment for DMD. If you look at it, Janet Woodcock basically opened up the floodgates for investment in the space. Whether she meant to or not, or whether the FDA meant to or not, I think it did provide that kind of watershed moment where investment started to flow in. You could argue whether it was the right amount of dystrophin, was it the right decision or not. I think you're seeing decades later that despite what you think about the decision, it really has moved the whole space forward. I don't think we would probably be sitting here without the decision. Now, the decision itself, I think it has been identified as probably the lowest level of a protein ever made that got accelerated approval or any approval without showing basically anything. For those that are scientists, they're doing western blots. I mean, for anyone who's done a western blot, trying to look at 0.7% or even lower on a western blot, it's not easy. At the same time, you also have to hand it to the patient advocacy groups. If I were a parent with a DMD boy, I would be fighting like hell to get those kind of things. Whether you thought it was going to be a cure or not, I think it's still reasonable for those patient advocacy groups to be fighting for it. I think that kind of sets the stage for the tremendous amount of investment and focus that each of us on the stage and others have made in this space. A low bar? I would say based on some of our technology using antibody delivery, we've seen much better dystrophin production. I think some of the AAVs that others will talk about have seen a lot more microdystrophin production. I think we're going to see in the future that those are going to lead to functional benefits. Even for us, we're starting to see those functional benefits with the dystrophin we're making. That bar, while the accelerated approval, you need to have a likelihood of predicting clinical benefit. I think dystrophin provides that. It's likely that making dystrophin is going to be good if you don't have very much. I think that's a bar. That is the bar. I think what you're seeing is that people are making dystrophins that are now resulting in what we see is that we see dystrophin that's nearly full length. We make a lot of it. We're starting to see CK levels, so creatine kinase, which is a measure of muscle damage, go down precipitously and back down to normal for half our patients. Half the patients don't have CK levels in the normal range. What does that mean for patients that are being treated with steroids? How is that going to look in the future? These things matter. We're getting feedback from parents that you talk to and you go to meetings and patient advocacy where their kids are just doing so much more than before. Those are exciting times. I think it only started because Janet Woodcock and others at the FDA said, this is enough. We believe that dystrophin is going to be important. Whether they meant it or not, they allowed that investment to occur. Yeah, so subsequent to that first approval, four other PMO exon skippers have been approved for different mutations amenable to skipping. For all of them, the amount of protein produced is pretty low. What I like, and I think investors appreciate about your data, is that the results we see all progress in a logical manner. Talk to me about your platform that allows you, with your conjugate, to have more drug delivered, more is uptaken, more dystrophin is produced, and then we're actually seeing the functional benefit in the CK you talked about. Yeah, so for those of you who maybe don't know very much about Antibody Oligonucleotide Conjugates (AOCs), it's really the marriage of two technologies that are well proven. One, antibodies. There's well over 100 antibodies that are currently on the market, and they're specific for specific receptors or proteins and otherwise. The other part of it is a PMO, well used in the space. What we've done is to marry those two together and provide the ability to deliver specifically to a receptor, in this case, transferrin receptor, to be able to get the PMO in more effectively. Transferrin receptor is a professional transporter of iron. It constitutively recycles through, and muscles are a high use iron use, along with cardiac tissue and other tissue. You get this delivery. Basically, the antibody binds the receptor, acts like a Trojan horse, and brings in a PMO. Obviously, cells have been evolved for millions of years to keep nucleic acids out of the cells because that's basically a virus. We've utilized the transferrin receptor to bring it in. What we see is that we get delivery. We get high levels of delivery. We see 200 nanomolar of a PMO going inside the cell. That's really important because of the mechanism of action of the way you skip. Basically, skipping is a mass action balance. You're competing for splicing, splicing machinery that recognizes a sequence. Your PMO has to go in there, bind that sequence, and basically mask that sequence so it's invisible to the splicing. Then you splice over that bad exon. We are able to demonstrate that. We see exon skipping that's around 40%. We see dystrophin levels that have increased by 25%. We see CK levels that go back to normal for many of the patients. We're starting to see functional improvement now a year later for these kids. It's that ability to connect the dots from the technology, the delivery, the exon splicing, the dystrophin production, the functional benefit that we're starting to see with these new technologies moving through the pipeline. Talk a little bit more about the data you have for CK because I think, you know, again, as you're producing a nearly full-length dystrophin, it speaks to the quality of that. Yeah, I think, you know, as a scientist, when I looked at the data first, I was like, oh, look at the exon skipping. That's awesome. Oh, look how much dystrophin we're making. I can't believe it. The MDs, and Steven probably would, the MDs are like, what are you talking about? Look at the CK. They're used to seeing CK levels that are 10,000, where a normal level might be around 250. The CK really is, if you think about the way dystrophin works for those of you who don't know, it basically prevents the muscle from tearing every time you flex your muscle. When you flex your muscle, you put stress across it, and it'll break those muscles, and you leak CK into the plasma or in the blood system. You can measure it. It's an easy measurement. All the clinical labs can do it. It's an easy thing to do. Kids that are Duchenne kids, they're generally on steroids to kind of reduce that muscle damage. That's based on CK levels. What we see is when you make that dystrophin, you repair that muscle, you prevent it from being ripped open, and you start seeing CK levels go down. You know, a scientist like myself, who's a PhD, you're like, I don't know, CK, doesn't it come from other stuff? You're looking at the molecular level, but the MDs were kind of blown away by that. Great. Steve, you know, let's switch to gene therapy. Fast forward from Janet Woodcock's decision. We get another controversial decision by Peter Marks about Elevidys, Sarepta first gene therapy. The data, ok, iffy, all right, but it gets approved. Frankly, it comes out of the gate pretty strong. While the efficacy could be argued is not that great, why do you think the uptake was so strong initially? Yeah, I think long story short, it really shows how much of an unmet need exists here. As you said, Mike, it's not hard to imagine why families and patient advocacy groups are really pushing for something because otherwise, this is really an inexorable decline for these children and what the families go through. You're right. This turned into a blockbuster opportunity and was actually moving in that direction before the unfortunate safety events. As you said, if you talk to clinicians in the space, the general view was modest efficacy and really just confined in the clinical trials to a pretty narrow age range. For us, when we think about potential best in class or advance in terms of gene therapy, there's a lot of room to try to improve on both safety and efficacy. Our approach, and I think a big way to achieve that, is to really think holistically about the molecule that you take forward, the overall product purity, and the overall immune regimen that you use. We've made advances in all these spaces. From a construct basis, Mike nicely summarized the issue of full length and the benefits of that. For us, we always felt, ok, you can only fit so much in an AAV vector. Make sure what you put in there is giving you the best bang for your buck. What we've designed is a microdystrophin that's closest to naturally occurring dystrophin. You can think of it as whatever percent of expression you get of your transgene protein with a microdystrophin, the closer it is to natural dystrophin, the more potency you're going to get. You might also even get longer half-life of the microdystrophin itself. You may get higher expression plus more effect on a molar basis. The other aspect is the overall vector that you're going to use and advances that you can make. Elevidys came off a shelf over a decade ago. Since then, we've been able to do construct optimization, pick AAV8, because we believe at these higher doses, that's a better approach where you're less likely to have things like complement activation. The other aspect is not just the molecule, the overall manufacturing. How pure can you make it? These are very large vector loads that are needed. We advanced on that front, taking the manufacturing in-house so that we take it out of the hands of the CDMO. We use suspension cell bioreactors, state-of-the-art production, to have high yield, but also industry-leading purity. We have over 80% full to empty ratio. We also have a proactive immune regimen to help limit in a targeted way complement activation and also liver injury with sirolimus. We have actually seen zero cases of liver injury, which is quite different than even what's in the label for Elevidys at 40%. There is already differentiation on the safety side. It is interesting, the more you follow this indication and others, you see that the benefit, risk, safety, efficacy, they intertwine in that at the end of the day, a family and a patient, what do they ultimately want? They want as optimal a dose that you can get to safely because after all, they literally have one shot at gene therapy. They want the optimal chance. By optimizing our safety regimen, we are able to go to 2E14 and to date safely. We are seeing that translate in the clinic with safety and very good microdystrophin expression levels and seeing that consistently. Because of the construct and these other improvements, we are actually seeing high expression levels even in the eight and older boys that traditionally that's been very hard to achieve. We are seeing that also translate into functional benefits in our phase two study, even in those older boys. I guess one way to think about this in discussions I had with people after the Sarepta safety data is, you know, while PMO 2.0 that you're developing, Mike, we know they're going to be better than the naked PMOs. For the gene therapy guys, even though it's an AAV-based gene therapy, we shouldn't necessarily fear that the safety issues, and especially the non-ambulatory, is a class effect, number one. Number two, if you can get there because of the low bar of efficacy of Elevidys, simply being safer may allow you to have a significant gain of market share. Tell me your thoughts on that. Yeah, you know, I'd say it's fair to say that any AAV is going to have some immunogenic potential. We shouldn't use a broad brush and paint all AAVs the same or all these other factors. It's not just the AAV. It's these issues of purity that would have imparted on safety findings that have been seen, and also the immune regimen. I think it's fair to say each program you have to look at individually. Ultimately, the clinical data will speak for itself. How are you really differentiating on safety and efficacy? Ok, great. Amber, let's talk about your epigenetic approach in 331 to address the lack of dystrophin protein and talk about the advantages you see with your approach. Yeah, just as a backdrop, because we're much earlier, the reason we pursued Duchenne muscular dystrophy is that we have the experience and success going into the skeletal muscle. We looked at what are the superpowers that epigenetics can bring to the table. We looked at our ability to activate a gene and do so persistently. As we know, there are a lot of dysfunctioning genes that have compensatory genes. Dystrophin happens to be one of them. We also have utrophin endogenously, and utrophin is about 80% homologous with dystrophin, so much more similar to dystrophin than the microdystrophins out there. There is a lot going on in the field and patients are grateful for all the work that's been done, but there's still a huge unmet need. We thought, wouldn't this be great if we could upregulate utrophin? It's not a foreign protein to the body, and it's so much closer to dystrophin. We know from previous experience that we can deliver it. The idea behind it is to really use the compensatory gene rather than a microdystrophin. It's just using kind of the newer technologies that we've been able to validate firstly through facioscapulohumeral muscular dystrophy. We're much earlier on. OK. We'll get to your FSHD program now. Let's open up the aperture a little bit of this discussion. Mike, you know your delivery for FSHD, again, showing some really nice clinical data thus far. Maybe talk about, number one, your clinical path with the FDA. Yeah, we're happy to talk about FSHD. FSHD is a devastating disease that generally hits people in their 20s, late teens to 20s, and really kind of at their prime with their life and looking forward to the rest of their life. It's devastating. It's a gain of function target in the sense that you're making DUX4. DUX4 is a transcription factor. It's usually expressed at the two-cell, four-cell embryo stage and then generally shut off completely. It gets upregulated or aberrantly expressed due to methylation. We'll hear about methylation on that promoter region. Interestingly, while it's inherited, about 20% - 30% of all patients are de novo. They have a mutation that maybe none of their family members ever were recognized. They have FSHD. It's a long path to get diagnosed. Just kind of the backdrop of FSHD. FSHD is a complicated disease because of the aberrant expression of DUX4, which is a transcription factor that's sporadically expressed. What does that mean for the patient? That means for the patient that one day, in fact, we had a patient that has FSHD come in. He was a Division 1 volleyball player. Basically, overnight during his college career, his bicep just kind of dissolved. He went in. They thought it was a pinched nerve because he, you know, hitting for a volleyball, thought it was a pinched nerve. He had surgery on his shoulder to relieve a pinched nerve when ultimately he was diagnosed with FSHD. It's this kind of patient journey because of the heterogeneity of it. What we've done is to use AOC technology, marrying an antibody to transferrin that delivers to muscle, in this case with a silencing RNA. Why did we pick a silencing RNA? Because we want to completely inhibit DUX4. DUX4 is sporadically expressed when it's expressed. Amber has talked about this. When DUX4 is expressed, it's a poison to the muscle. You basically kill muscle cells. It activates a wide range of different genes. What you want to do is completely suppress it and have it suppressed during that time so that it doesn't poison the muscle. What we've demonstrated is, following basically the DMD playbook, connecting the dots from delivery. We can deliver effectively to muscle to have an effect on DUX4. That's measured by looking at gene transcription of a gene signature downstream. We also, in kind of a moonshot, identified a circulating biomarker for DUX4. The reason that we did that is for DUX4, because of the variability, when you do muscle biopsies, it's really hard to get a muscle biopsy and then do the second biopsy and have DUX4 expression. We identified a circulating biomarker that essentially integrates the whole body, all the muscles in the body, and provides a readout for FSHD. We believe that we've disclosed the biomarker. It's KHDC1L. It's a mouthful. We called it C-DUX for a circulating DUX4 biomarker. This biomarker, we hope, will again be a watershed moment for the industry. We hope that if we can get accelerated approval for FSHD using this circulating biomarker, the amount of investment will flow into the space. We're hoping that is going to be the ability to move the science forward and move the field forward. We've demonstrated that delivery. We've demonstrated that we hit DUX4 transcription. We've demonstrated that we have a downregulation of this circulating biomarker. Now we're seeing early signs of clinical benefit and seeing improvements compared to placebo. We're starting to see improvements in those patients already for time up and go, for a 10-meter walk run, for quantitative muscle testing. We're starting to see it for patient-reported outcomes. It's really starting to paint this picture that if you hit the underlying cause of disease, which is what's great about genetic medicine, you're going to have a benefit for patients. Especially, and Amber can talk more about, especially for gain of function diseases. Gain of function diseases, in my sense, you don't need that big a change in the gene product or the poison in this case to see a pretty profound effect for patients. Maybe talk a little bit about your discussion with the regulators at CDER as you propose. You know, hey, we've discovered this novel biomarker. We've got a bunch of data. It shows how it's correlated. You know, how did they respond in terms of, like, what's the level of evidence you needed to provide for them to say, ok, we think what you got here might be a good proxy? Yeah, so the FDA, as you're probably aware, in the rare muscle or rare disease space, is becoming a little, it's seemingly becoming more flexible, right? You have to have biological plausibility is kind of what people have indicated, that leaders in the space have indicated. At the same time, we're following basically the accelerated playbook. What do you need for accelerated playbook? You've kind of heard it already for dystrophin. What you need is that you need to have a link to the disease. For C-DUX, it's linked to DUX4. It has binding sites for DUX4 upstream of its promoter, so you have that linkage. What else do you need? You have a linkage. You need to have some sense that it actually predicts disease progression. If you look at natural history, patients that have upregulated C-DUX also show faster progression of disease, so you have that link to disease. The third thing that you need to have is that you need to have your therapeutic actually affect the circulating biomarker that you're looking at. When we dose with [Delbracks], we see a decrease in C-DUX levels, and as the dosing wanes, we dosed at a 13-week, we started seeing it come back because that wasn't the optimal dosing schedule. Finally, that's generally enough. You just need to have the plausible, the likelihood that your circulating biomarker predicts clinical benefit. We also have functional data, early signs of functional data that kind of links it all together. We believe that we have a strong package moving forward. I think finally, from a regulator's point of view, they want to have safety. We have safety across the platform. I think the other thing that they want to see is that you have stood up a phase three trial so that you actually have a phase three trial ongoing, and that's what we have ongoing. We'll accelerate approval. We'll get that, but we'll also be able to back it up with a phase three. Great. Amber, here's your lead for FSHD. Again, an epigenetic approach looking to remethylate a certain area of the chromosome. Talk to us about your key findings thus far in your preclinical data. Obviously, you've advanced this into the clinic. Sure. I will say my husband's family is affected by FSHD. When Mike says it's a bad disease, I've seen it affect generations. It's horrific. There's nothing for them. We're very grateful for all the work that Mike and his team at Avidity Biosciences have done. I mean, this is a really bad disease that needs attention. There's nothing for them. As a backdrop, we were super excited with our preclinical results. I will say again, we're standing on the shoulders of others who really enabled us to move, I will say, faster than I've seen anyone move. We went from saying we're going to work on FSHD to being in the clinic in three and a half years. That's because there were already available to us, patient myocytes. We could look at muscles from 10 different patients. As we know, part of the challenge when we do research is you get these transgenic models that are all the same. You go to patients, and they're all different. We had this great infrastructure to work on. Therefore, we could show that when we applied EPI-321 to the patient myocytes in all different severity, genetic background, et cetera, in all cases, it was able to methylate the region, suppress DUX4, and downstream markers of DUX4. That was the first big step in vitro. We went into the mouse model. The mouse model we used is you take mice and you, with a toxin, remove their TA muscle and you replace it with human myocytes. Again, from different patients, so you have that variability. When you deliver EPI-321, we could see that, again, in a dose-dependent manner, we were able not only to reduce DUX4 and downstream markers, but normalize apoptosis. As Mike says, I always say that DUX4 is poisoning the muscle. When we stopped that, what a surprise. The cells stopped being poisoned, and they had normal apoptosis. That still wasn't enough for us because that mouse model doesn't have the phenotype because you put in a human muscle into a mouse. We still wanted to see that you could restore the muscle contractility. We worked with a company who's really good at 3D organoids. They've done a lot of work in Duchenne. We sent them patient myocytes, which they grew into 3D organoids. When we treated those 3D organoids with the EPI-321, and not at high doses, only about 22% of the cells were transduced, we saw that muscle contractility was restored. Not only that, when you start accumulating methylation, it got better over time. We saw a rescue of the muscle contractility. That was on the efficacy side. On the safety side, given the novelty of the modality, we had to show that we were precisely going after only the location we intended to and that there was no off-target effect anywhere else. We also needed to show, given that we were doing systemic AAV, that we had a very high margin when it came to safety. Our safety package was huge. We had a lot of wonderful interactions with the FDA. They were excited about the new modality. It was with that that we were able to open the first epigenetic editing IND in the U.S. All right. Great. Again, we call this a battleground state because we know already in DMD we've got multiple approaches. Steve, let me ask you to think fast forward here a few years. We're in a DMD market where we've got perhaps multiple 2.0 PMOs. They're way more effective than the current first generation. We've got a better gene therapy that's safer and more effective. How does market share shake out? Sure. The first thing I'd say is it's really a great time to be in this space from a research and development standpoint. You've heard a lot about some different technologies. Mike, your clinical data, I think, is really, really impressive. I do think there's an opportunity for complementary additive abilities here. Mike and Amber work on, in some cases, certain mutation-specific advancements that have the benefit of a full-length dystrophin or recapitulating in that regard, mutation-agnostic approaches like gene therapy that have a one-time treatment benefit. I think this is really great. If you look at it, even aside from this, we knew with Elevidys from Sarepta Therapeutics' guidance that they were guiding towards they wouldn't be able to address the prevalent population till 2030, 2031. This was before the unfortunate cold water with the safety considerations. You raised a good point of, the non-ambulatory is completely wide open. I think there's room for a lot of players in this space, given how big the unmet need is. Our estimates from how big the pie is, is if you take into account typical exclusions, there's roughly 10,000 boys just in the U.S. About half of those, let's say, are ambulatory. That's a pretty big opportunity. Then you think of how to expand from there. Our approach is we want to have as wide a label as possible, starting from an ambulatory population setting. One year of age and older in ambulatory. As I mentioned, we're seeing very good results across the age range. Even from a label perspective, under four, there is no approved gene therapy in that space. How does that market get segmented? That's ultimately going to depend on the benefit-risk that's seen with the different treatments and the differentiation that you can show on each of those. That's why for us, it was so important to work on those items I mentioned of differentiation on the construct, the vector you use, the purity of the product, and the overall approach to treating the patient to make sure they're going to be safe from an immune response, where our being able to go to an optimal dose, we think, sets us up down the road, knock on wood, with more data to be in a good position. Great. Amber, while we're using DMD as a proxy for battleground states where we've got multiple genetic medicine options, how do we think about Steve just commented on safety and efficacy. How do we think about the dynamics of one-and-done convenience, but at a much higher one-time price as well, $2 million or whatever, versus a more chronic therapy with an RNA, but lower price, perhaps better safety? How do you guys think about that? How that shakes out market dynamics? I would question two of the statements you made. One in terms of convenience. That's not the big aha with our approach, that it's a one-and-done. The big aha with a one-and-done for FSHD is that you don't want any DUX4 leaking out because even a little bit of DUX4 starts that apoptosis cascade. When you're doing a one-and-done, once you protect those cells, they're protected for life. We've even seen through cell division, the epigenetic mark remains. For the life of the patient, you've protected those cells against DUX4 leakage. We're not going to get to all of those cells. The ones that aren't protected will be at risk of DUX4. However, we know that we will get to enough of the cells that it'll keep the health of the muscle for the life of the patient. When you're dealing with chronic, you will have protection, but you're never going to get 100% of the cells. Every time you dose, there are different cells that are protected and other ones that are at risk. It'll definitely slow progression, but you will never have that persistent protection of cells. It's not just a convenience thing. This is by nature of MOA. You're going to get to the root cause and protect it for the life of the patient. That's why it's not just a convenience thing. The other thing, when it comes to price, I don't know. I'm sure Mike can't remember what they're going to charge. On average, these RNAi's are like $500,000 a year. I don't think it works out cheaper. If you look at the life of the patient, even within a few years, you've paid for itself when you're doing one-and-done. Having said that, I do agree with Steven. They're very complementary. As an FSHD patient, I'd say take both. Do it all. Really protect as much of your muscle cells as you can. The way I view it in terms of the commercial numbers, it makes sense. In terms of persistence, that makes sense. We actually, and I've never done it this early, but just given the feel for cell and gene therapy, we actually had an independent study talk to patients and doctors and say, would you use gene therapy if there was a chronic, potentially safer? We described a generic RNAi type thing chronic. The patients and the doctors said they would. One of the doctors said, oh, you need a big hammer for such a disease. They would look at all of these modalities. Patients and physicians are not afraid of the risks. I mean, to Steve's point, you have to use it judiciously. Anybody that tells you that AAV is safe is digging their head in the sand. You've got to do it with your eyes open. Nobody said chemotherapy is safe, but we still use it because it saves lives. I feel the same way about AAV. Do it with your eyes open, use it carefully, and it can be very meaningful. There is really room for a lot of different modalities and even piling them together for the best outcome for patients. Mike, let me ask you a final question. If you were to predict, how long will the accelerated pathway exist at the FDA, whether it's for particularly DMD, but some of the other muscular dystrophies? I mean, personally, I hope it exists forever, just to make sure there's innovation that continuously flows in. If you just think about the regulations, I think once there's a cure, like once there's a functional, whether it's a functional cure or a complete cure, I think once there's a cure, then you probably won't see accelerated approval. Until that, I think there's always likely going to be accelerated approval. All righty. Great. We're reaching the end of our time here, but I want to thank you all so much for this discussion. Thanks, guys. Thanks. Great having us. Thanks so much.