Good afternoon and welcome to the REGENXBIO fourth quarter and full year 2018 earnings conference call. 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. As a reminder, this conference is being recorded. I would like to turn the call over to Mr. Patrick Christmas, Senior Vice President and General Counsel for REGENXBIO. You may begin.

Good afternoon and thank you for joining us. With us today are Ken Mills, REGENXBIO's President and Chief Executive Officer and Vit Vasista, our Chief Financial Officer. Earlier this afternoon, REGENXBIO released financial and operating results for the three months and full year ended December 31, 2018. The press release reporting our financial results is available on our website at www.regenxbio.com. Today's conference call will include forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted and can be identified by words such as expect, plan, will, may, anticipate, believe, should, intend and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties. These risks are described in the Risk Factors and the Management's Discussion and Analysis section of REGENXBIO's quarterly report on Form 10-K for the year ended December 31, 2018, which is on file with the Securities and Exchange Commission and available on the SEC's website. Any information we provide on this conference call is provided only as of the date of this call, February 27, 2019 and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events or otherwise. Please be advised that today's call is being recorded and webcast. In addition, any unaudited or pro forma financial information that may be provided is preliminary and does not purport to project financial positions or operating results of the company. Actual results may differ materially. I would now like to turn the call over to Ken Mills, President and Chief Executive Officer of REGENXBIO. Ken?

Thank you Patrick. Good afternoon everyone and thanks for joining us. On today's conference call, we will provide a recap of our recent progress and an update on our product candidates and financial results for the fourth quarter and full year ended 2018. We will also review anticipated upcoming milestones for REGENXBIO and then open the call to questions. At REGENXBIO, our mission is to improve lives through the curative potential of gene therapy based on our proprietary NAV technology platform. Our AAV gene therapy product candidates are designed to deliver genes to cells to address genetic defects or enable cells in the body to produce therapeutic proteins that are intended to impact disease. Through a single administration, our AAV gene therapy product candidates are designed to provide long-lasting effects, potentially significantly altering the course of disease. We believe gene therapy treatments can transform the lives of those facing serious and life-threatening diseases and we aim to progress our research with these patients in mind. Our proprietary NAV technology platform, which leverages the curative potential of gene therapy, consists of over 100 novel adeno-associated viral vectors or AAV vectors, including AAV7, AAV8, AAV9 and AAVrh10. Our vectors are the results of research efforts aimed at discovering and developing safer and more effective gene therapy vehicles than earlier generation AAV vectors. Our NAV technology platform has significant differentiating attributes as compared to earlier generation AAV vectors. Higher expression and increased durability, broad and novel tissue selectivity, reduced immune response and improved manufacturability. Our goal is to utilize these vectors to enable the development of single administration therapies that deliver genes to cells to address genetic defects or that enable cells in the body to produce therapeutic proteins that are intended to impact disease. Our current product candidates are designed to provide…

Thank you Ken. REGENXBIO ended the year on December 31, 2018 with cash, cash equivalents and marketable securities totaling $470.6 million, compared to $176.4 million as of December 31, 2017. Cash, cash equivalents and marketable securities as of December 31, 2018 include $180 million received in 2018 in connection with amendment to our license agreement with the AveXis for the development and commercialization of treatments for SMA, as well as $189.1 million of aggregate net proceeds from our follow-on public offering of common stock completed in August 2018. Revenues were $40.8 million and $218.5 million for the three months and year ended December 31, 2018, respectively, compared to $2 million and $10.4 million for the same periods in 2017. The increases were primarily attributable to $176.1 million of revenue recognized in 2018 under our amended license agreement with AveXis for the development and commercialization of treatments for SMA, as well as $35.6 million of revenue recognized in the fourth quarter of 2018 under our license agreement with Abeona for the development and commercialization of treatments for various diseases. Due to the nonrecurring license revenue recognized under these licenses in 2018, REGENXBIO currently expects 2019 revenues to be substantially lower than 2018 revenues. Research and development expenses were $24.3 million and $83.9 million for the three months and year ended December 31, 2018, respectively, compared to $14.2 million and $57.2 million for the same periods in 2017. The increases were primarily attributable to personnel costs as a result of increased headcount, laboratory and facilities costs and expenses associated with conducting clinical trials and externally sourced manufacturing related services. General and administrative expenses were $11.1 million and $36.9 million for the three months and year ended December 31, 2018, respectively, compared to $4.8 million and $27.2 million for the same periods in…

Thanks Vit. As usual, that's very exciting and well done. To summarize what we have discussed today, our expanded Phase 2 trial for RGX-314 for the treatment of wet AMD is underway with dosing completed for Cohort 4 and recruitment ongoing for subjects for Cohort 5. We expect to present topline data from the Phase 1/2a clinical trial by the end of 2019 and are on track to initiate a Phase 2B study for wet AMD in late 2019. We continue to advance development of RGX-314 in additional chronic retinal conditions that respond to anti-VEGF therapy and are progressing towards a new IND for a Phase 2 trial in an additional retinal condition in the second half of 2019. At the end of 2018, one subject has been dosed in the first of two expected dose cohorts in the Phase 1/2 clinical trial for RGX-121 for the treatment of MPS II. Additional recruitment and site activation is ongoing. And we expect to present interim data update from the Phase 1/2 clinical trial in the second half of 2019. Subject recruitment also continues in the Phase 1 clinical trial for RGX-111 for the treatment of MPS I. Enrollment in the clinical trial is anticipated in mid-2019. For RGX-501 for the treatment of HoFH, we submitted to FDA amendment to the Phase 1/2 clinical trial protocol to allow for enrollment of additional subjects at the Cohort 2 dose using corticosteroid prophylaxis and subject recruitment has resumed. We expect to present interim data from the Cohort 2 with corticosteroid prophylaxis from the Phase 1/2 clinical trial in the second half of 2019. And for RGX-181 for the treatment of CLN2 disease, we have initiated the IND enabling studies and expect to file an IND in the second half of 2019. So at REGENXBIO, our mission is and remains to improve lives through the curative potential of gene therapy based on our proprietary NAV technology platform. With our innovative science, inspired employees and partners and strong cash position, we feel well-positioned to achieve future milestones as we advance therapies for patients with significant unmet medical needs. With that, I will turn it back over to the operator and open the call for questions.

[Operator Instructions]. Our first question comes from Gena Wang with Barclays. Your line is now open

Hi. This is actually Xiaobin, dialing in for Gena. Thank you so much for taking our questions. So maybe to start with ZOLGENSMA. So with the approval, can you help us understand or give us more granularity regarding the regulatory milestone and also that your royalty rate? And then for the second question, I just want to get your view about your CLN2 program versus Spark's program and also it's a currently approved therapy. Thank you so much.

Hi Xiaobin. This is Ken. Thanks for the question. So with respect to the launch of the Novartis product, we will be expecting to single-digit million regulatory milestones based on approvals that we will record, I guess, in the quarters that those events occur. Otherwise, the $80 million commercial milestone fee that we are referring to is achieved when aggregate sales of the product reach $1 billion. And that would be cumulative. So that also will be an event driven process. With respect to the CLN2 program, RGX-181 stand on top of the science and clinical implementation of the 111 and 121 program where we are using our AAV9 vector with an intracisternal administration and a one-time treatment to repatriate gene function within the brain for patients with CLN2 disease. We think is highly differentiated from existing therapies that requires obviously repeat dosing and administration of exogenous protein and we are encouraged by the fact that, as it is, those exogenous protein products sold by others for the treatment of CLN2 seem to be showing clinically meaningful effect. We think that sets us up very well for a gene therapy approach. With respect to other programs that are going on in the gene therapy space. We think that we have an advantage in terms of how we are executing right now and we are looking forward to getting this into the clinic as quickly as possible.

Got it. Thank you so much.

Thanks Xiaobin.

Our next question comes from Ying Huang with Bank of America Merrill Lynch. Your line is now open.

Hi. Good afternoon. This is Chen, on for Ying. Thank you for taking my question. So my first question is regarding the MPS II program that you are going to update in second half. I am just wondering whether you can tell us how many patients are in line there for treatments and what is the baseline characteristics out there, for example, regarding age of severity. And in addition, how many patients or biomarker data or even neurological improvement data can be expected in the second half? And I have a follow-up.

Sure Chen. Yes, thanks for the question about that. So as we mentioned, so we have only enrolled one patient in the trial so far. We are actively recruiting and looking to get an additional patient enrolled in the first dose cohort soon. The data report at the end of year is certainly going to be dependent on patient enrollments and the time that patients have been enrolled in the trial. We will expect to achieve the cutoff date towards the end of the year and be looking to provide information, including biomarker, clinical measures including whatever we can collect about baseline natural history as well as changes in things like cognition and behavior that are going to be measured in part of the secondary endpoints. The first part of this trial, so we are hoping to achieve dose escalation into the second cohort this year and have at least early data on the second dose cohort as well as a longer term data set on the first dose cohort. But we will update across the year as we progress with that enrollments. In terms of the background of the patients, certainly the inclusion criteria require an understanding of their disease and the background of natural history. I think we have an age range in terms of inclusion criteria that can go down to young infants and up to basically younger boys. This is an X-linked disorder. So that's also going to be dependent on enrollments in a case-by-case basis. But I expect that there will be a little bit of a spectrum there, depending on how we enroll.

Okay. Thanks. And I have a follow-up question on the HoFH program. I know you saw some immunogenicity in the earlier part of the study. Now you have the amendment into the protocol. But can you remind us whether you have disclosed what is triggering this immunogenicity? Is it against the vector or it's the transgene protein? Thanks.

We haven't disclosed it. I don't think that we know for certain. I mean, I think our hypothesis is that it's certainly related to treatment. It's presenting itself at time points that I think are familiar to and similar to other transaminase elevations that people are seeing with AAV in intravenous administrations. And I don't know that we know for certain what the component is of sort of the disease background of the patients, the gene transfer or the gene vector itself. I suspect it's probably a blend of all of those three. But I think we are confident that the corticosteroid regimen that we are implementing like what others have mentioned even recently in hemophilia studies for instance or in other programs that people are using for IV administration of AAV is going to be a meaningful step towards abrogating those observations.

Okay. Thank you very much.

Thanks.

Our next question comes from Gbola Amusa with Chardan. Your line is now open.

Hi. Thanks. It's Gbola Amusa at Chardan. Thanks for taking my call. So two questions. First, obviously we have seen a flurry of deal activity or business development activity in the AAV based gene therapy space, whether it's partnerships, acquisitions or equity stakes. And I was just wondering if you are willing to offer some ideas as to what's driving this theme? Why is it happening? And then secondly, you are going to have a decent amount of cash at the end of the year even if you exclude any contributions from ZOLGENSMA. So I was just wondering if you could update us on your strategic priorities for uses of cash if, let's say, you potentially might acquire some capabilities that are external to the organization currently? Let me re-summarize that. What might you do with your cash if you use it for programs that we are not aware of yet?

Sure Gbola. Thanks a lot for the questions. I think stepping back to the broader question about some of the activity that's been going on in the field with respect to business development, collaborations and even acquisitions, I think we predicted since we took REGENX public in 2015 that there was really going to be a lot of new emerging clinical data that we were encouraged by, much of it deriving from the use of the NAV technology platform as it entered the clinic and we saw other of our partners sharing that data. I think that's really been a stimulant. I think it certainly started in 2017 and has continued in 2018. As I mentioned, we have four or five individual company updates as highlights to our NAV technology platform in our press release today. I think different types of companies are starting to understand the importance of gene therapy and how it fits into long-term growth plans and it's something that I know we and others in our space have seen for a long time and we are committed too for a very long time. And that sort of relates to your second question in terms of cash and priorities. You know us. I mean, we have an interest in broadening and deepening the platform and especially including the internal pipeline. Right now, we are focused on retina and neurodegeneration and different metabolic diseases, right now HoFH. But last two years, Olivier has continued to grow out the research and development engine here at REGENX. We identified Batten disease as the first program since we have been public as an additional program to the pipeline. There are certain other things that we are investing in terms of organic programs intramurally that we are excited about. And yes, we continue to look at opportunities for one plus one equals three from a collaboration, partnership and even acquisition perspective. And I think everyone knows, either through the exercise we went through with Dimension originally or otherwise, we think we have great capabilities that can match up with a lot of different things that may be going on in this space. And that's how we have intended to build the company and sustain it for a long time. So use of proceeds, use of cash, from revenues, from ZOLGENSMA, from licensing that we have done, has always intended to sort of reinforce and support the growth, the broadening and deepening of the REGENX pipeline.

Great. Thanks Ken.

Thanks. Take care.

Our next question comes from Reni Benjamin with Raymond James. Your line is now open.

Hi. Good afternoon guys. Thanks for taking the questions. Just a couple, maybe starting off with 314. You talk about the topline data by the end of 2019, Ken. Does that mean that we should be expecting both Cohort 4 and 5 data to be released around the same time, because just my backwards or back of the envelope math would suggest July or August for Cohort 4 six months data?

Yes. Reni, we are thinking about everything at once at this point. I think that because it all is going to affect the thinking that's going into the trial design and the dose selection for the Phase 2b and so we see all of those things lining up as we complete that work. And we will share it with everyone. So what we are aiming to do is get, like we did last year when we reported updates on cohorts 1, 2 and 3 is, got all patients. So this would include Cohort 5 out to six months in order to be able to provide that comprehensive update.

Got it. And then the Phase 2b study, I don't know if you have mentioned it before, but can you give us a little bit of a sense as to what that study is going to look like when you initiate it in late 2019 in terms of size and what you are looking for?

Not too much more of a sense than what I said on the call today which is, it's going to be larger, it's going to be controlled. And we are certainly going to be focusing on endpoints that are less about safety and more about things that support distinguishing treatment effect, especially as it relates to visual acuity associated with RGX-314 against those control arm population. So part of the decision that's going to go into the size is going to be the data that we see over the course of the year as we continue to follow Cohort 3 and now Cohort 4 and Cohort 5 patients. But we will be able to update on all that in detail in the second half of the year.

Okay. And then just my last question on the eye and then I have a follow-up is, you are going to be filing an IND for another indication. I think in the Analyst Day, you mentioned four other indications, non-proliferative diabetic nephropathy, proliferative diabetic nephropathy, retinal vein occlusion and diabetic macular edema. Is it fair to say that the IND will be one of those four indications or will it be something else entirely?

It's fair to say.

Got it. Okay.

I mean, I think I would emphasize, Reni, that we are choosing and I think interested in filing an IND for a Phase 2 trial for one of those indications now, but we are interested in all of those indications. So I think the work that we have going on, I would emphasize, is about development of the application of RGX-314 in the entirety of the spectrum of where it will make sense. And we think at least this year we want to file an IND in an additional indication.

Got it. Okay. Thanks for that clarification. And then just, there was the acquisition today of Myonexus by Sarepta and they have the AAVrh74. I know one of the many patent states that you have is for AAVrh10. Can you talk a little bit about the difference between rh10 versus rh74 and what you see there?

Sorry. What do you mean differences?

So I am just, I am sorry, outside of the nomenclature, how different are the two vectors? Are they drastically different in terms of sequence homology or protein homology?

I think that what we have characterized previously is that the sequence identity of rh10 and the vector known as rh74 are quite similar. I think in fact over 98%, maybe on the order of 99% identical in terms of amino acid sequence. So I think that characterization is one thing, Reni. I would say that, notwithstanding that fact, changes to amino acid sequences in vectors biologically change other characteristics of how the vectors function very differently. So I think in the case, rh74, the vector known as and rh10 are not the same vector biologically but their sequence and their characterization of their sequence by amino acid analysis is very similar. And that's kind of, we know that because we study that because at REGENX, we have all of these capsids that have been discovered, amino acid analyzed, sequence analyzed and patents filed on and we focus very much often on the sequence space that is plus or minus 5%, sometimes even plus or minus 10% of capsid identity from an intellectual property perspective, but also to understand biologically what's different. So we have sequence claims covering the rh10 capsid sequence that go beyond its literal sequence, so things like plus or minus 5% of that sequence. It doesn't mean that those other vectors are identical to rh10. It just means that their sequences are identical.

Got it. Okay. Thanks for the clarification. And just one final question regarding the steroid regimen for HoFH, the HoFH indication. Can you just talk a little bit about, is it pretty standard when the steroids are prophylactically administered? Is there any play between kind of when you can administer? How many weeks after the virus has been administered? How are you guys thinking about that going forward?

I think across the field, we have seen variations on a theme. But I think there's been a pretty standard and sort of normal implementation and I think we have gotten input from folks in our partner universe and other physicians who have been involved at sites in AAV studies for input and I think, my view, we are sort of down in the middle of the stairway, the way that most people are with that approach.

Got it. Thanks very much.

Sure.

And our next question comes from Mani Foroohar with Leerink. Your lines now open.

Hi guys. Thanks for taking my question. It was a pretty really informative event. It was really helpful here in New York. Great for us that you are New York based in particular. Talking about the HoFH program, when you think about the appropriate steroid dose to avoid a T-cell response, et cetera, like how do you think about what the right dose is and what's your strategy? And I have a couple of follow-ups.

Again, I don't know that we are dosing in response to a T-cell response, Mani, specifically. Again, like as I alluded to with Chen's question, I mean, I think we have got a broad spectrum understanding here of things that may be affecting some of the clinical observations we are having and I think we are borrowing from observations that others have had that are similar. I would not say that we think that we are treating any one sort of specific phenomenon here. And so again, that's what is driving our approach right now for these corticosteroid regimens, including in HoFH. And I think that, I don't know if it's active and up on the trial database right now, but we could follow-up with people as to what exactly the protocol regimen is going to be or will in the near future just to make that more clear. But I think that it's something that, in my view, is very consistent with what others have done with IV administration of all different types of AAVs, not just like our AAV8 vector that we are using in HoFH.

Great. And on the wet AMD, your study today, to my knowledge, have been in patients who are known anti-VEGF responders or anti-VEGF experienced, Lucentis, Eylea, et cetera. Should we expect all participants in your future studies, controlled or otherwise, to be anti-VEGF responders as well? And if so, how do you define an anti-VEGF responder?

Yes. So I guess the first part of your question is, I think as the program expands over time, including into other retinal responsive indications to VEGF therapy, we will be looking for sort of earlier diagnosis in even patients who potentially might be naive to anti-VEGF therapy, although that's more of a challenge these days, given the sort of spectrum of standard of care that's available, especially in the U.S. And with respect to how we consider and how we sort of characterize VEGF response, I think we refer to that based on engagement with the community and in terms of how we have applied our inclusion criteria and it often has been, in this particular trial, it was really a function of looking at the trailing eight months and being confident that there had been not only a diagnosis, but there had been regular administration of an existing treatment either Avastin, Lucentis or Eylea. When you go through that exercise, what you find is most of those patients and I think like we have reported on average for the trial, many of those patients have actually been on treatment for years. And I think that more than reinforces kind of a responsiveness. But the minimum requirement in the case of the trial design that we put together for the Phase 1 and now 2a was a minimum of diagnosis and then four injections in the preceding eight months coming into the trial. I think that we may make some changes to that. There may be some stratification to it. Again, I think as the program expands, we are interested to learn more about what RGX-314 is doing across what we know is millions of patients, so therefore naturally a heterogeneous population so that we can continue to sort of work with the investigators and do our own work to figure out how it can be best used.

Great. That's very helpful. I am going to hop back into the queue to let my colleagues get a chance for some questions.

Queue is done, Mani, if you got another one.

All right. I do have another one. Great. The only other question, the other one I have is on manufacturing. So obviously, you need relatively low doses per patient per organ for ophthalmological indications even though it's a larger population versus systemic or CNS wide administration. How do you think of what should be manufactured in-house on a commercial stage? And what's more appropriate for a CMO relationship? And I guess how is your manufacturing strategy by indication? How do you think about it?

Yes. It's a great question. I think you are right because I think we are among the companies out there, a pretty broad spectrum. Even though our HoFH program right now, the Cohort 2 dose is only 5E12. I mean, that's still much higher per kilogram, that is, of course, in an adult. It's much more than what's required on a per eye basis or even in the CNS indications. So I think we right now have a pretty good sense that we have the systems in place and can bring sort of scale online to support what we would say would be sort of middle to low dose sort of metabolic intravenous type of administrations, route of administration wise. And so that would provide coverage for our CNS indications and any ocular indication. As you start to get into higher dose intravenous administration, whether you are targeting skeletal muscle or different myocytes including skeletal muscle or you just need more in order to drive certain levels of expression through some of the liver-directed gene therapy, it requires a different physical plan. So it can take you from 500 liter scale in a bioreactor up to like 2,000. And I would say, in terms of our planning and our thinking about like the new facility that we are building out couple of doors down here for move-in in 2020, we think that we will have capacity internally and the availability for it, if needed, at that 500 liter scale and that's where we are focused right now. If we had to go much beyond that, we would be sort of looking at sort of sharing in some of the CMO infrastructure that's out there as you get up north of that.

Great. Thank you.

Okay. Thanks a lot for the questions. Operator, I think we are done.

At this time, I am showing no further questions. I would like to turn the call back over for any closing remarks.

Thank you. And thank you, everyone, for joining us today. We are working to realize many significant achievements in 2019 and we are looking forward to providing more updates as the year goes on. Have a great night. And we will see everyone soon.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.