Orchard Therapeutics plc

Good day and welcome to the Orchard Therapeutics Q4 2021 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session and instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to CEO and co-founder, Bobby Gaspar. You may begin.

Hello, and welcome to Orchard Therapeutics' fourth quarter and year-end 2021 financial results and corporate update webcast. I'm CEO and co-founder Bobby Gaspar. Before we get started, I want to remind everyone that this presentation contains forward-looking statements. Please refer to this slide and our latest SEC filings for more information. Three colleagues will be joining me on today's call. Braden Parker, our Chief Commercial Officer who many of you know from prior events, is here to discuss early launch execution with Lumaldi and our overall commercial strategy. Frank Thomas, President and Chief Operating Officer, is also with us, and I'm pleased to announce Frank has extended his transition through at least the end of the year to help oversee this next phase of our development and ensure Orchard is in the strongest possible position operationally and financially. This continuity will will be important as we progress our business and implement some of the changes to our portfolio that will be discussed today. Additionally, Fulvio Movilio, who recently joined the Orchard team as Chief Scientific Officer, will be available for Q&A following our prepared remarks. I've known Fulvio for many years, going back to his early career as a co-founder of the San Rafael Telethon Institute for Gene Therapy. He is a gene therapy pioneer, having made several contributions in the field and was most recently Senior Vice President of Translational Science at Odentos. As we'll outline during this webcast, our HSC gene therapy platform, including the research programs intended to treat larger indications, is a key component that will drive our growth and value creation strategy. So we felt now was the right time to introduce Forvio to the investment community. The business environment that we're operating in today has changed tremendously. as compared to just a few years ago. Within biotech, valuations have come down substantially, and the gene therapy space has been impacted even more dramatically, given factors such as the regulatory environment and commercial and reimbursement landscape. At Orchard, we are not standing still. We are responding to the current environment by ensuring our portfolio, our organization, and our strategy align to support our vision of bringing these incredibly valuable medicines to patients around the world. It is against this backdrop that we announced in this morning's press release our decision to strategically narrow the focus of our platform to synergistic indications where we believe HSC gene therapy is scientifically and clinically differentiated to deliver the most value. Importantly, the decision to narrow our portfolio and focus on the MALDI, our clinical stage MPS programs and key research programs is expected to extend our runway into 2024 and enable us to reach several critical value-creating milestones. For Ludmilde, this runway extension will give us more time to grow revenues in Europe and establish the appropriate commercial model. You'll hear from Braden later of some of the recent accomplishments that give us confidence that this is the right strategy. Also, we need to ensure our runway takes us well through the regulatory approval process in the US in 2023. An increased focus will allow us to continue to support and even increase our investment in diagnostics, newborn screening, and to expand into new markets in Europe and around the world. The runway extension also provides more time for our pipeline to mature and to continue to demonstrate why HSC gene therapy is the right modality for the programs we are advancing. For the research programs, the additional runway enables us to generate exciting data that could support the move into the clinic on our own or with partners. So we still have an ambitious set of programs, but with a more therapeutic focus that can provide leverage with manufacturing, distribution, and commercialization. We now have a deep body of evidence that demonstrates the potential durable effects of HSC gene therapy for the treatment of certain severe genetic diseases, including MLV and MPS disorders. Across our platform of current and former programs, we have generated data from more than 160 patients across seven diseases. All told, that is collectively more than 750 years of patient data that now stretches back to more than a decade of follow-up in the earliest treated clinical trial patients. The insights we gleaned from having one of the most extensive, if not the most extensive, data sets in the field of gene therapy are the foundation for our go-forward strategic focus and underpins our vision of ending the devastation caused by severe genetic diseases. By executing and delivering on a mission that has guided us from the start, we're confident we can create significant near-term value for our shareholders and the many other communities we serve. Now let's take a deeper dive into why we think our platform is best positioned to address certain rare neurometabolic conditions and why we're encouraged that we can ultimately translate the clinical outcomes observed to date into regulatory and commercial success. I'll now turn the call over to Braden to highlight our near-term neurometabolic milestones and the Maldives commercial progress.

Braden. Thanks, Bobby. Since Lameldi's approval and launch in Europe, we continue to build commercial momentum with positive engagement with health technology assessment bodies and payers throughout the region, as well as treating the first patients in a commercial setting. As Bobby and I will highlight in the next few slides, we are investing in the European launch of Lameldi to ensure we're identifying as many treatment-eligible patients as possible. And in the United States, we are working urgently to submit our BLA to the FDA in late 2022 or early 2023. Our experience with Lomeldy is what fuels our confidence in maturing our next wave of programs for neurodegenerative disorders. By the end of the year, we plan to initiate a pivotal trial for OTL203 and MTS1 Hurler syndrome and report data from the OTL201 proof of concept trial for MTS3A or Sanfilippo syndrome. These additional indications represent exciting commercial opportunities that can leverage much of the investment we are making in LaMeldie today. Since the launch, we've invested in priority activities and initiatives we believe will generate the most value for LaMeldie patients and providers. First, we activated five specialized treatment centers with relevant transplant and neurometabolic expertise in geographically important countries throughout Europe to administer LaMeldie. These same centers would be utilized to support future potential launches in similar indications. Second, on the access and reimbursement front, discussions with health technology assessment bodies and payers continues to progress well. In February, we announced a historic agreement with the National Health Service securing reimbursement for all eligible MLD children in England and Wales. In Germany, we received the highest possible therapeutic benefit rating in presymptomatic patients by the Federal Joint Commission. We're continuing to advance reimbursement discussions in the region, including Italy and France, and we are on track to secure an agreement in at least one additional market in the first half of the year. So we believe the progress in Europe and the value recognized by payers has differentiated this product and our team and demonstrated a willingness to ensure access for MLD patients across the continent. We hope to build on this success in additional European markets and eventually in other parts of the world. In order to help ensure we are identifying as many eligible patients as possible, support for early diagnosis through newborn screening continues to be an area of focus. We have four studies ongoing in Europe and one in the United States. These studies are intended to generate data to advance screening and diagnosis at birth and support the adoption of regular screening at the state, national, and regional levels as appropriate. These programs could also identify MLD patients to be treated commercially if reimbursement is in place at the time of diagnosis. While our near-term focus is on Europe and the United States, we're also assessing how to best expand our geographic footprint over time into other areas, including Latin America and Asia Pacific, in a way that's scalable, sustainable, and supports our long-term vision for value creation. Our partnerships with Genilac and GenPharm in Turkey and the Middle East, respectively, are examples of how we have expanded our geographic footprint in a capital-efficient manner. These partnerships are already bearing fruit as we previously announced the patient from the Middle East has been identified and referred for reimbursed international treatment abroad at OSR, our qualified treatment center in Milan, Italy. I'll hand it back to Bobby to discuss our U.S. regulatory plans and the rest of the portfolio.

Thank you, Braden. In the U.S., regulatory discussions for LIBMLD OTL 200 continue to advance. After experiencing some regulatory delays in 2020, we have steered the program back on track for near-term filing. This has been accomplished through several key interactions with the FDA in 2021 to clarify the data required and the path forward for a BLA. We believe we have the data package to move forward with a submission and the team is now in execution mode, working with our clinical site and CDMO partners to prepare the package. We plan to have a pre-BLA meeting with the FDA in the second half of this year in advance of a file which we expect to submit in late 2022 to early 2023. A key reason we are placing renewed emphasis and focus on our neurometabolic portfolio, and in particular our next in line MPS programs, is because our experience with MLB provides validation that we can translate early signals of potentially transformative clinical outcomes into regulatory and commercial success. Moreover, the infrastructure we are building to support the Maldi launch is synergistic and directly applicable to OTL203 in MPS1 hurlers, as well as our early stage program for the treatment of MPS3A OTL201. Specifically, we are confident that the same capabilities we have built and continue to advance in clinical, regulatory, manufacturing, distribution, patient identification and referral, as well as treatment delivery, can be utilized for potential future neurometabolic launches. Importantly, newborn screening is already established in some geographies, including in the U.S., for MPS I. So some of the groundwork is already laid and provides a roadmap that can be reproduced in other key countries and regions. Similar to MLD, MPS1H is a devastating inherited neurometabolic disorder. Current treatment options are associated with significant limitations and do not adequately address some of the more severe manifestations of the disease. Based in part on the strength of the proof of concept data which was published in the New England Journal of Medicine, we are working to obtain the necessary regulatory clearance in mid-2022 to enable the initiation of a global registrational study by year end. Slide 11 helps further illustrate the potentially transformative impact HSC gene therapy can have for patients. Here we see two children with MPS1 hurlers who are participants in our proof of concept study. Both clearly exhibit symptomatic manifestations of the disease, including severe skeletal deformities as well as joint contractures and stiffness. The photos on the left were taken prior to the treatment with OTL203. On the right, you can see the same two children, one and one and a half years post-treatment with OTL203, respectively. In addition to the improved facial features and other physical manifestations, patients with approved concept trials have also demonstrated stable cognitive function, improved motor function, and resumed longitudinal growth in line with healthy children. Importantly, All patients also showed prompt and sustained engraftment of gene-corrected HSCs and achieved superphysiological blood IDUA activity, which is the deficient enzyme which causes this disease, by one month post-treatment. This really illustrates the power of our approach to deliver gene-corrected cells to difficult-to-treat areas of the body and make a potentially transformative and lasting impact for young children affected by devastating fatal diseases. Having discussed the promise of our clinical stage neurometabolic programs, let's now shift our attention to how we plan to utilize our deep understanding of HFC gene therapy and the compendium of evidence we've generated to date to fully unlock the curative potential of our approach and create even greater value for the communities we serve. Before we dive in, let's highlight a few key attributes that we believe make our approach so powerful. Our platform utilizes a person's own hematopoietic stem cells, or HSCs, which are responsible for the lifelong sustained production of all blood cells and have three characteristics that make them ideal for personalized gene therapy. First, they are capable of self-renewal. Second, they are able to differentiate into multiple cell types in the bloodstream. And third, they naturally migrate into various tissues and organs, including the brain, lung, and intestines, enabling broad distribution of gene-corrected cells and localized delivery of the therapeutic enzyme or protein. We believe the key to expanding this approach is to apply the insights generated from our decades of experience in the field to specific conditions and areas where HSC gene therapy has unique advantages over other modalities. Taking a deeper dive into one of our priority research programs in NOT2 Crohn's disease, we've been able to see and understand how HSC gene therapy can correct colitis in a very rare disease such as chronic granulomatous disease due to the migration of gene-corrected cells into the gut wall. And this understanding has now led us to develop a preclinical program known as OTL-104 in a more common form of colitis, the NOD2 form of Crohn's disease, which affects 7% to 10% of all Crohn's disease patients or an estimated 200,000 patients in the US and EU. Nod2 Crohn's is also generally characterized by a more severe and refractory form of the disease. To date, in vitro data suggests our approach could correct the immunological defect in Nod2 deficient cells. We're now moving into in vivo models of disease in the murine model, and our objective for this year is to demonstrate preclinical proof of concept in that disease model. OTL 104 also demonstrates the capabilities of our research team to generate novel and proprietary programs that can be leveraged within Orchard or serve as the basis for new ideas that may come from outside partners interested in using HSCs for treating genetic disorders. In addition to our research programs in nod to Crohn's and the progranulin form of FTD, we're also advancing a program in hereditary angioedema in partnership with Farming. which has extensive experience, including commercially, in this indication. The partnership looks to bring together our expertise in HSC gene therapy with a collaborative, unique knowledge of the condition and treatment journey for HAE patients. But beyond these key research programs, we've also identified ways to broaden and extend the application of our platform to other areas we believe to have significant value. These applications, including using HSC-generated antigen-specific regulatory T cells for the potential treatment of certain autoimmune diseases, such as multiple sclerosis. In addition, we can use gene-modified HSCs to vectorize monoclonal antibodies, which could enable gene-modified HSCs to deliver those monoclonal antibodies to difficult-to-reach tissues or organs. And this may allow us to address disorders of the CNS as well as brain tumors. And underlying these efforts we're looking at a few core technologies that could facilitate greater, more efficient access to larger indications, including manufacturing innovations, such as stable cell lines and automated cell processing, as well as reduced toxicity and brain-specific conditioning. I'd now like to turn the call over to Frank to discuss the path forward and how some of the portfolio and organizational updates we're making will enable us to build a sustainable business position for future success. Frank.

Thank you, Bobby. We hope our prepared remarks have helped to shed additional light on the rationale behind the portfolio updates we announced this morning. All told, the changes we plan to implement will extend our runway by an additional year into 2024 while maintaining operational focus on several value-creating milestones. The reduction in our burn rate is expected to take a couple quarters to fully realize but we should exit 2022 with a significant reduction in our quarterly operating expenses from today's levels. While we will be a smaller organization, we believe the changes will make the company more nimble, more focused, and better equipped to execute on the programs in our portfolio. As Bobby referenced at the onset of the call, given the immense pressure facing the entire industry and the challenges that we and others have experienced, We must now operate in a way that learns from the past and appreciates the opportunities in front of us. As you can imagine, these changes and the 30% impact on our workforce are extremely difficult. However, by focusing on areas with the potential for commercial and other synergies across our neurometabolic and research programs, we believe the company's HSC approach will have the greatest potential for differentiation and long-term success. Let me spend a minute on the programs that Orchard does not expect to put new investment dollars behind. We are planning to discontinue investment in and seek alternatives for our rare primary immune deficiency programs, namely OTL-103 for Wiskott-Aldrich syndrome, or WASP, OTL-102 for XCGD, and Strimvelis, which is marketed in Europe for ADA SCID. For eligible patients currently in the treatment referral process, we intend to help them receive therapy before taking any further action on the respective program. Now, seeking alternatives could mean a number of outcomes, and we've already been pursuing many of these options. It could mean partnering the programs or the entire franchise with another commercial company. It could mean working with our licensors to find an alternative solution to allow continued progress towards commercialization. And it could also mean winding down the programs and returning them to our licensors. While the MAA regulatory package for OTL 103 for WASP is submission ready, we do not intend to file ourselves so that any potential partner could take it forward with a properly aligned regulatory strategy. Regarding the regulatory status of the program in the US, Orchard believes the path to a potential BLA filing remains unclear and may require significant further investment in the treatment of additional patients after a functional potency assay is developed. And today, in this environment, we're now prepared to take on those additional financial commitments. We hope to be able to find a solution that recognizes the program's value while offloading much or all of the near-term financial commitments to Orchard. I want to thank the many Orchard employees who have committed their time and energy to our mission. especially those who are directly impacted by the decisions announced today. I also want to acknowledge the efforts of so many outside Orchard in helping these programs define the tremendous impact HSC gene therapy can have for patients impacted by rare genetic diseases. Now looking ahead, we have a number of anticipated milestones for the next 12 to 18 months that represent significant value creation opportunities for Orchard. We've been very pleased with the commercial momentum building for LaMeldie so far in 2022, particularly in the area of reimbursement, where we expect additional progress as negotiations conclude. We expect to see clinical and regulatory milestones for our MPS programs and also U.S. regulatory milestones for MLD while advancing our commercial operations for LaMeldie in Europe. We also look forward to reading out preclinical proof of concept data in our exciting research program in Nod 2 Crohn's disease later this year, ahead of a potential IND filing in 2024. In summary, based on the portfolio and organizational updates outlined during this call and in our press release this morning, we feel fully aligned with the strategic anchors of our business plan. We have the potential to drive near-term value creation and long-term growth, and we intend to do that with our employees, our partners, and the broader community. So with that, I will turn the call over to the operator for questions.

If you'd like to ask a question, please press star then 1. If your question has been answered and you'd like to move yourself in the queue, press the pound key. Our first question comes from Kevin DeJeter with Oppenheimer. Your line is open.

Hey, great. Yeah, thanks for taking our questions. I guess just starting off with the restructuring, Bobby, can you just comment or clarify kind of the why now component of this? Is this driven just by financial realities primarily, or was there some specific regulatory feedback with regard to loss that made this the right time to really evaluate a more substantial portfolio repositioning?

Thanks a lot, Kevin. Thank you. I mean, I think this is a very important question, and it's really about a number of factors. Firstly, it is about the environment that we find ourselves in, and I think many other biotech and gene therapy companies find themselves in as well, in that there is capital constraints, and we now need to think about using our resources in the best possible way. And so when we look at our portfolio, We've seen extraordinary momentum with Liv Meldy on the neurometabolic side. We talked about the commercial momentum that we're getting in Europe. We now have a path to file in the U.S. as well. And so we feel that that demonstrates where our HSC gene therapy platform can be best differentiated. It addresses a very high net need. there is positive reimbursement engagement in that area. So, LeMaldi spearheads that neurometabolic franchise, and then we can build on top of that with other MPS programs. And of course, we've got MPS1 hurlers, we've got MPS3A. And there's a synergy that we can, the commercial infrastructure that we're building with LeMaldi, these other programs are synergistic too. In addition to that, Our early stage portfolio doesn't consume huge amounts of research dollars, but can have significant value for us. We've already seen with our HAE program a significant BD partnership with farming, and we think there are opportunities for partnerships with some of our other larger cell indications with our early research, or we can take those forward on our own. And I think importantly, we can't do, in the current circumstances, although we would like to, we can't do everything. And that's why we've made this very difficult decision to divest and stop our investment in these primary immunodeficiencies. Now, that is a tough choice to make. We think there's great clinical value in these programs. There is potential for partnerships, and we have had a look at that so far. But ultimately, we're not going to take these forward, and we'll have to seek other alternatives. So that's really what's driven our decision. There are still regulatory hurdles to overcome with colorectal syndrome, but that's not the only factor. It's really this bigger background and landscape upon which we made this decision.

No, great. Thank you for that. And then just maybe a follow-up on MPS3A. Can you just give us your current thoughts as to how to think about the profile to support a go-no-go decision on a potential registration study following the perfect concept. Should we think about that as really being a biomarker-driven decision, or is there a certain level of neurocognitive improvement that you hope to be able to gather with longer follow-up to inform that decision?

Yeah, again, a good question. On MPS3A, I mean, I think the important thing here is, you know, let me just kind of take a step back. We've got five patients in a proof of concept study. We've shown great biomarker data. So all of these patients have been grafted. They've all got super physiological levels of SGSH, the enzyme that is deficient expression in the periphery. We've got reduction in the heparin and dextran sulfates, both in the periphery and in the CNS. But I think we all recognize that those biomarkers are not good correlates of clinical outcome. And so we really need to see for this program, so stabilization of the cognitive outcome before we make that no-go decision to advance into a registration or study. And the important thing there is to see that a stabilization of cognitive outcome relative to the natural history. And what we understand from looking at the natural history is that there is a plateau and then a decline in cognitive function from about three to four years of chronological age. And so we need to allow some of our patients to get to that time point to see if there's a differentiation from the natural history. So that's really why we want to wait for that kind of clinical cognitive data before making that go, no-go decision.

Our next question comes from Yaron Werber with Cohen. Your line is open.

Great. Thanks for taking a couple of questions. Maybe the first one may be Frank or Bobby. give us a sense when you're treating the, you've treated two patients, you have one more coming up, do you record revenues that same quarter? How does that work? And then what does the pipeline look like in your view for the second half of the year? And then secondly, can you give us a sense, have you started having potentially partnering discussions relating to WAS and CGB or not yet? Thank you.

Okay, maybe I'll hand that over to you, Frank, first of all, and then Brad.

Sure, I'll take the first question about revenue recognition and maybe the third one on partnering. And then I'll ask Braden to comment on LibMLD. So revenue recognition is going to largely depend on the ultimate deal that gets struck with the payer. I think so far, most of the discussions have focused on a single upfront payment for Lib Mel D patients. On occasion, there may be an outcome-based measure that would be evaluated over time, but I think our expectation based on the patients that we've treated to date is that the vast majority of the revenue will be recognized up front. So for the patients that are receiving drug or therapy in the first quarter, most of that revenue will be recognized in the first quarter and so on. And in the future, if we ultimately end up with Other arrangements that are based on payment over time, we'll certainly have to look at the revenue recognition for those potentially differently. But I'd say to date, especially given the number of patients and the value proposition here, most of the revenue will be recognized up front based on where we are today. On the partnering front for the PIDs, yeah. This is not a decision that we just came to, and it's a process that we started, in fact, in the past several months looking for potential alternatives for the PID program. So, we have been engaged in some discussions. Those obviously have not yet resulted in a transaction. We're going to continue to pursue this front. Obviously, the announcement today may bring forward parties that we hadn't thought about who may have a commercial footprint in the PID space. They may be rare disease companies looking to add some late stage programs to their portfolio. So we will continue the BD process on the PIDs. Ultimately, you know, what we ultimately do with the programs will depend on any progress we make there. So we'll see how it plays out over the next few months. And Braden, do you want to talk about the Melvin?

Sure. Thanks for the question. You're right. We've treated two patients to date. We've got a third in process right now. We've been very pleased with the number of referrals coming into the qualified treatment centers, and we're currently pursuing a number of active leads, I would say. We haven't guided towards the number of patients in the year, just given the uneven nature of patient identification, whether or not they're treatment eligible, as well as kind of their geography, as well as reimbursement if it's in place, or some of the factors that will make I think these early months and years of the launch, somewhat uneven in terms of patient treatment. So we have been guided, but we are pleased with the progress on patient identification, as well as pursuing a number of leads right now. Thank you.

Our next question comes from Pete Stavropoulos with Cantor Fitzgerald. Your line is open.

Good morning, Bobby, Frank, Brayden, and team. Congratulations on the progress, and thanks for taking our questions. So, when you think about the label and who is approved for, you know, in the EU and for whom it's not, does it affect how you're thinking about approaching these additional neurometabolic, you know, indications, specifically in terms of clinical study design, you know, including enrollment criteria and which patients may benefit most from these candidates? And perhaps, you know, would it allow for a more targeted population where greater clinical benefit, you know, may be observed and therefore allow for a more capital efficient program?

Yeah, thanks a lot, Pete, for that question. Very, you know, it's a really, really important point. So, remember the label for LibMaldi in Europe is for pre-symptomatic patients in the late infantile population and for pre-symptomatic and early symptomatic patients. in the juvenile population. And we would be looking for something similar for the US file as well. And the first thing to say is this forms the majority of the MLD population. So what we've understood as we've gone through our clinical development is it's in that early phase, either pre-symptomatic or early symptomatic, where we are having the greatest clinical impact, and really this kind of extraordinary transformational impact, which also leads, I think, ultimately to the commercial potential, because that's where the greatest net net need is, that's where the greatest difference that we're making is, and that is why we've had such positive commercial success so far with the reimbursement agencies. And that informs how we're taking forward our clinical development in MPS I and also in MPS IIIa as well. So for MPS I, again, we are treating patients in the most severe category. We're looking to capture patients at an early stage in the disease so that that will then have the greatest benefit. And similarly, we've also put an age restriction so far in the proof of concept study for MPS IIIa as well, and we're recruiting patients who are under two years of age. So I think all of that speaks to a view that we have that our therapy can have the best impact at the early stages of disease. That will give us the greatest clinical outcome and will also lead to a better commercial profile in the long run. It also informs our diagnostic and screening strategy, and that's why we're investing in newborn screening for MLD For MPS1, remember, screening is already in place in a number of states in the U.S. I think it's about 30 states in the U.S. So by the time we get to launch, hopefully there will be widespread newborn screening coverage in the U.S. and also in the EU. And we are also investing in newborn screening development for MPS3A as well. So all of this speaks to our view that we have enormous impact in these diseases in the neurometabolic franchise. we can change the whole landscape of the disease by implementing report screening and having what is a potentially curative effect in these diseases.

Thank you. And also, you know, can you give us a sense of what progress has been made towards filing, you know, the BLA in the U.S. for OTL 200? And what are the key gating factors for submitting the BLA? And from your interactions with the agencies, you know, to date, you know, Do you get a sense that they appreciate the burden of disease and the potential impact that 200 may have on patients?

Yeah. No, thank you for that question. So this is, you know, a kind of a major point for Orchard now is to advance. And this is one of the reasons why we've, you know, we've done the restructuring that we have so that we can give ourselves a runway extensions 2024. take it beyond the potential approval of the melody in the US in 2023 so on that front remember last year just to recap we had very positive interactions with the FDA both on the clinical package and on the CMC side as well through on that type B meetings on the clinical front we clarified the data package that we would need to submit we also There were questions that the FDA asked on certain tools, for example, the score which we measure motor function by, and they wanted to submit some data on that. They also wanted to have, and I've talked about this before, wanted more clarity on the natural history cohort and whether it was representative of the patient population that we have treated. And again, we're going through that exercise and preparing all of the documentation to submit to the FDA. They were, I think, to your last point, they were, I think, very impressed by the clinical data and the transformational outcome that we have shown upon patients. And I think that's why we've had such constructive interactions to allow us to move forward. On the CMC side, again, this was really about clarification of what needed to be submitted and how it should be submitted, how the analysis should be conducted. So with that level of conversation and clarity from the FDA. We are really just in execution mode and putting everything together and we're working towards a pre-Billet meeting in the second half of this year and then looking to file late 2022, early 2023. All right.

Thank you very much and for taking our questions. Thank you. Thank you, Pete.

Our next question comes from Gina Wang with Barclays. Your line is open.

Thank you for taking my questions. I have two. First, regarding the late Mildy, just wondering if you can remind us, number the patients each in England, Germany, France, and Italy, and where do you see the major revenue driver in the remaining of 2022? And the second question is regarding the MPS1H. Just wondering if you can give any latest thoughts on pivotal trial designs.

Okay. Well, let me turn it over to Braden, first of all, to talk about MLD, and then I'll take the question on the MPS1H study design. So, Braden, can I hand it over to you to talk about the patient numbers, et cetera, in Europe?

Sure. Thanks for the question, Gina. We estimate the incidence of MLD to be about 1 in 100,000 live births. When that translates over to Europe, it's roughly in the 50 patients or so a year. And so when you start breaking it down by country, you know, in the UK, I believe we've mentioned four patients potentially per year. And it's similar across the different geographies in terms of a handful of patients across each country. So that's where we would expect the early patients to be identified and treated to your second part of your question. primarily fueled by the main countries for which we have a qualified treatment center, with perhaps some additional treatment abroad opportunities, as we've mentioned previously with the one patient from the Middle East being treated in Italy.

Thanks, Braden. Let me take on the MPS I question about the regulatory. study designed for the registrational study. So just to recap, we have treated eight patients in a proof-of-concept study. The data was presented at World earlier this year, and just all patients engrafted, all patients showed super physiological levels of IDUA expression and reduction in substrate levels, both in the periphery and in the CNS. But most importantly, what we saw was that in terms of clinical outcome, all patients had stable cognitive outcome. They had stable growth parameters, similar to that of a healthy child, and also improvement in range of function as well. So we have been conducting interactions with both the FDA and with the EMA. So we had parallel scientific advice last year, and we've now brought that parallel scientific advice into the design of the registrational study. And remember, we want to conduct a study that is fits for both the EMA and the FDA. So it's really combining both of their comments into the study design. Please say that we are getting to finalizing what our study design should look like. And our goal is to submit and get clearance of the IMD and CTA or CTA by mid-year. Just so that you're aware, I mean, we are, and I think I've talked about this before as well. The important factors here are survival, graft versus host disease, which is obviously a problem with the standard care, which is an allogeneic transplant, graft failure or rejection, and also looking at clinical outcomes such as cognitive outcomes as well, because we know that there is a limitation in cognitive outcome in the standard care, which is an allotransplant. In addition to that, obviously, there are other factors such as growth, such as musculoskeletal problems. So it's really kind of combining those into the endpoints for a registration study, and when we can show that there is a better outcome in gene therapy compared to transplant. So what is the duration of follow-up that we need to have in order to be able to demonstrate that, and the number of patients we need to have in the study to be able to demonstrate that. So these are all the factors that we are working on. I think I've given you a flavor of the kind of things that we'll be looking at And we can give you more detail once the registration study has been cleared by the agency.

Thank you. Our next question comes from Dagon Ha with Stifel. Your line is open.

Great. Good morning. Thanks for taking our questions. To mostly on the regulatory front, you mentioned the deprioritization of the PID focus. So specifically with regards to WAAS program, you know, your prior commentary has been around potency assay development, how it's because of a protein that's not necessarily enzymatic, developing an assay takes time. I guess with the deprioritization, I understand the financial kind of commitment required, but can you maybe broadly comment on sort of the feasibility of gene therapy replacing a non-enzymatic protein going forward Is there some kind of a conclusion that one can make as to what the path forward may be, not just for WAS, but any other proteins that may not have a catalytic function, if you will? And then on second, when we think broadly around just regulatory front again, lentivirus, I mean, we've had the AAV adcom last year in September where the panelists talked about AAV gene therapy, but not lenti. So just trying to get a sense for when you interact with regulators, Do they appreciate sort of the nuances or the differences between different lentiviral constructs, how certain constructs may be more prone to, say, insertional mutagenesis and maybe oncogenic kind of ramifications? Thanks.

Yeah, no, two very important questions. So the first one on the so let me just kind of just take a step back again. Remember, our reasons for de-prioritizing this program are a number of considerations, including our need to extend our runway in order to focus our resources in the neurometabolic space. So it is not just about a regulatory traction. It is a much broader set of considerations that we had before we came to that decision. Having said that, we have had discussions with the FDA around the path forward, and one of the issues that has been raised is the potency assay. And there is still work to do in order to clarify a potency assay that the FDA would find acceptable. I don't think that's completely out of the question. I think it's something that can be done. But it will require more time and it will require more investment. And as I say, we are looking to invest in our neurometabolic franchise rather than the PID. So it's not that it's not doable. It will just take more time. Having said all of that, it is more difficult when it's an intracellular signaling protein. And in WOS, it is a protein that works intracellularly and is involved in actin polymerization. And actually, it doesn't have a specific role within HSD. So it is difficult. demonstrate within transduced HSCs. You have to differentiate them into immune cells to be able to characterize the function of the risk of orange syndrome protein. So it is very, very different from something like MLD or MPS1 or MPS3A, where there is an enzyme that is breaking down a substrate and can be measured relatively readily in HSCs. So this also informs that the regulation part is clearer on this specific point for the neurometabolic franchise. I think to a broader question that you're asking about these kind of signaling proteins, again, it is understanding that function and being able to demonstrate it effectively within transduced HSCs, and it is slightly more complex than it is for the lysomal storage diseases. I think it's just a different development plan needs to be established and probably needs to be done quite well in advance and right at the beginning of the development program. So I hope that answers your potency question. The second question on the lentiviral vector point, again, a very important point to make here about, and I will just start this by saying not all lentiviral vectors are the same. It is about the construct and the various different elements of the lentiviral vector. And I think this is understood by the regulation agencies, and we will continue to impress that upon them. The problems that have been seen, either using gamma retroviral vectors or lentiviral vectors, are when a viral promoter is used that has enhanced sequences. And what that means is that when these vectors integrate near growth-promoting genes or oncogenes, Those sequences within the promoter have the ability to transactivate or turn on those neighboring genes, and that is what leads to the insertional misogynesis or oncogenesis. And that is why we at Orchard have not used these viral promoters. It's a very, very important point. We chose not to use those kinds of viral elements. We have used human promoters and regulatory elements. They do not have these powerful enhancer sequences. So even if they sit next to an oncogene or growth-promoting gene, they don't have the ability to turn that gene on. And across multiple programs over many years, we've not seen any evidence of proliferation or oncogenesis in these lentiviral vectors that use human promoter sequences. And so we will continue to make that point to the regulators, show them the data that we have on insertional site analysis, the lack of any events thus far in all of the programs that we've taken forward. And I hope that continues to demonstrate the safety profile of our approach.

Just to kind of add on apologies, are you aware of FDA planning on holding any kind of outcome specifically for lentiviral gene therapies at all?

We are not aware of anything like that.

Okay, great. Thank you very much.

Our next question comes from Debjit Japatia with Guggenheim Securities. Your line is open.

Hi, good morning, team. This is Robert. Thank God for Debjit. What do you think the normalized price would be post year one in Germany and the rest of EU? And on the modeling front, would you expect a 30% workforce reduction to correlate linearly with expenses going forward?

Okay, maybe I'll hand that first question to Braden and the second question to Frank.

Yeah, thanks, Bobby, and thanks for the question. We have previously spoken about the list price of 2.875 million euros in Germany. We, of course, are still in the process of the MNOG process and pricing and reimbursement negotiations. So I think it's premature to say right now what a net price might look like coming out of that. And the nature of those conversations are certainly confidential. But certainly in the negotiations and discussions that we've had with health technology assessments, as well as with the pricing and reimbursement negotiations, we've been certainly pleased with kind of the level of understanding and desire for understanding on the disease, on the clinical benefit of LaMeldie, as well as the recognition of the impact that LaMeldie has and therefore the value that it could bring. So we've been encouraging the negotiations, but nothing to to add at this point in time while we're still in the middle of negotiations.

And maybe on the modeling side, just to step back, we started the year with $220 million in cash. We've obviously guided now to runway into 2024. The impact of the proposed restructuring and the program portfolio decisions I think it's a reasonable assumption to assume that OpEx are going to come down by about 30% to 40%. And that's something that will be realized probably over a couple of quarters. So by the time we get to exiting 2022, I think that's a reasonable assumption to make. When you combine the OpEx reduction with, you know, starting to record revenues and realize cash flows from Liv Meldy sales, I think you should be able to get – the models to support runway into 2024 and potentially beyond.

Got it. Thanks, Tim. Thanks.

Our next question comes from Tess Romero with JP Morgan. Your line is open.

Hey, guys. Thanks so much for taking our question. So my first one is on plans for additional site activation. I think you've just activated your fifth site. How are you thinking about that for, you know, the remainder of the year? And any updates on kind of the newborn screening side and kind of what progress you'd like to see, again, over the course of 2022? And then I have just one more on when that will be launched.

Okay. Well, let me hand it over to Brayden to talk about qualified treatment centers and then the expansion, and then I'll follow up with the newborn screening process.

Great. Thanks for the question, Tess. As you mentioned, we have activated and qualified our fifth treatment center. We've taken an approach, a very efficient approach, to focus on one major treatment center per country or region, if you will, that specializes in transplant as well as neurometabolic diseases. And so we've got one in the UK, France, Italy, Germany, as well as the Netherlands. The way we think about expansion beyond that is the way we're thinking about expanding within Europe in terms of the pricing and reimbursement negotiations. So we're looking to activate a qualified treatment center in the Nordics, in Sweden, as well as in Spain. And then we'll take additional expansion from there as we kind of take a stepwise approach to looking at other markets and regions.

Tess, let me take the point on newborn screening. So just, again, just to set the theme, I mean, we think newborn screening is going to be extremely important to identify patients, babies at birth, and then treat them pre-symptomatically, which is where they'll get the greatest benefit from lip melody. So we've worked very hard with KOLs to develop assays. There are now five NBS pilots that have either launched or are planned, and they are in Germany, Italy, the UK, Spain, and also in New York State as well. And three of those are actively screening babies. There's potential for expansion as well, and we're planning to initiate those, and those will be in other European countries. So there's a lot of activity on that front. We're also working with other U.S. states as well to adopt U.S. statewide screening as well. And we hope that a number of states will be screening at the time of the U.S. launch in the second half of 2023, early 2024. So we're working very hard, I'd say, to get that in place both in Europe and in the U.S., And the data that we generate from these screens will come together to a RUSFAC application. So that is the recommended uniform screening panel in the US. And obviously, that would be a big step to get more states screening for MLB. So this is a mid to long term plan. It's already in place. And you'll hear more about that as we move forward.

That's really helpful. And then my last question is just on any initial learning with respect to the product positioning in kind of this early, early, early time of the launch. Is there a specific patient type that is choosing to go on Lameldi versus standard of care transplant? Thanks so much.

Yeah, no. Well, let me state that because I think this is a really important point that There is not really a standard of care for MLD. Transplant is not used as a standard option for this disease because it is such an aggressive disease. That's different from something like MPS1, where transplant is a standard. But allogeneic transplant is not a standard of care for MLD. So really, for these patients, it's really palliative or supportive care And so that is why this medicine has such a profound impact. You're going from really nothing for these patients other than supportive care to something that is achieving long-term outcome. I think you've seen some of the reports of some of these patients, the pictures of some of these patients who are treated either symptomatically or very, very early in their disease, and they are going to school, they're learning normally, they're playing just like their schoolmates. And it's just an extraordinary outcome that we see. And I think that's why we are getting this kind of commercial momentum because it's not just the physicians that are recognizing this, but also now the reimbursement agencies as well. And that's what we want to capitalize upon here. And that's part of our restructuring strategy is to be able to capitalize on this commercial momentum for MLB bring forward other neuro metabolic programs such as NPS1 because we can see what a difference this therapy makes.

Okay. Great. That's helpful. Thanks for taking our questions.

Thank you.

Our next question comes from David Hong with SMBC. Your line is open.

Hi, thanks for taking the questions. So I just had a couple. First on LibMeldy, assuming you are able to file on schedule and potentially gain an approval in the U.S., can you just talk a little bit about any expectations as to maybe how a LibMeldy launch and speed of commercialization may go in the U.S. market, how that cadence might compare to what you're seeing in Europe? And then secondly, in terms of OTL products, 201 for MPS3A. It looks like you plan to report some additional data from the proof of concept trial by year end. So just wondering, you know, what we can expect there. Would that include cognitive and or clinical outcomes?

Okay. Thank you, David. So let me hand the melody log to the U.S. to Braden, and then I'll take the MPS3A.

Yeah, thanks for the question, David. You know, we will certainly have more to say about the commercial launch and preparation in the U.S. as we get to filing and closer to potential approval. I do think it's safe to assume that we'll follow a similar approach at least in the U.S. as we have in Europe in terms of, you know, efficient field force, limited number of qualified treatment centers to satisfy the early demand. for the product and, you know, a similar kind of pricing and reimbursement strategy where we're able to demonstrate the value of the product given all of the factors that Bobby just mentioned in terms of not an alternative to treatment as well as the clinical impact that we've seen with LaMeldie over time. I think generally speaking in the U.S., you have a tendency to see a quicker uptake than you do in Europe, but I think the challenge again within MLD is really the ability to identify treatment eligible patients within the window of opportunity for them to have benefit from Lib Mel B. So, you know, as we've mentioned previously, and Bobby just mentioned not too long ago, you know, newborn screening pilots in different states is going to be a key factor, as well as kind of a multifactorial approach to identifying patients on time so they can benefit from the treatment. So those are some of the things that we're thinking about with the U.S.

Thank you, Roden. And just on the question you asked about MPS3A, so just to talk again about what the natural history shows for MPS3. So again, there's no treatment for MPS3A. It's just supportive or palliative care. ERT is not an option. Allogeneic transplant is not an option for this disease. And so the natural history here that these patients start to plateau at around about three years of chronological age and then there was a decline in cognitive function from about four years of age onwards. And so what we need to see really in our treated patients is a separation from that natural curve in the natural history population. So we've treated five patients so far. The patients The most recently treated patients only received therapy at the end of 2021. So really, we need to wait for a while for those patients to get to that kind of age that I talked about, between three and four years of age, and to see if they are now different from the natural history curve. And that's what we hope to be able to demonstrate towards the end of the year. It is going to take some time because, as I say, more patients showing that kind of separation will be better, but I think this is the earliest when we can start to see some early data.

Okay. Thanks a lot. Thank you.

There are no further questions. I'd like to turn the call back over to Bobby Gaspar for any closing remarks. Thank you, Raj.

Thank you, Raj. Thank you, everyone, for your time and attention. We look forward to your support as we continue to execute our strategic vision for Orchard and for the communities that we serve. Thank you.