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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Good morning, everyone, and welcome to the Freeline Second Quarter 2023 Financial and Business Update Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded.
At this time, I'd like to turn the floor over to Naomi Aoki, SVP of Investor Relations and Corporate Communications. Ma'am, you may begin.
Thank you, operator, and thanks to everyone for joining us on the call. Earlier today, we issued a press release and filed our quarterly report on Form 6-K with our second quarter 2023 financial results and business updates. The release and the 6-K are both available on the Investors section of our website.
We will begin the call with prepared remarks by Michael Parini, our Chief Executive Officer; Pamela Foulds, our Chief Medical Officer; and Paul Schneider, our Chief Financial Officer. Rose Sheridan, our SVP of Research is also on the call and will be available for Q&A.
Before we begin, I would like to remind everyone that we will be making forward-looking statements. which may include our plans and expectations with respect to our research and development pipeline, clinical trials and financial projections, all of which involve certain assumptions and risks beyond our control that could cause our actual developments and results to differ materially from those statements. A description of these risks is in our most recent annual report on Form 20-F and other periodic reports filed with the SEC. Freeline does not undertake any obligation to update any forward-looking statements made during this call.
I'd now like to turn the call over to Michael.
Thanks, Naomi, and thank you, everyone, for joining us today. At Freeline, our goal is to bring life-changing gene therapies to people with chronic debilitating diseases. We strive to do this by optimizing all components of our gene therapy candidates to truly unlock with a potential in this modality.
We have taken important steps towards that goal with the dosing of the first 2 patients ever treated with FLT201, our AAV gene therapy for Gaucher. The dosing of these patients represents a significant milestone for FLT201 for Freeline and most importantly, for Gaucher patients who need and deserve better treatment options.
As previously announced, we dosed the first patient in our GALILEO 1 Phase I/II trial of FLT201 in late June. Following the stagger between patients that is built into the trial protocol, we dosed the second patient in the trial last week, marking the completion of dosing in the first cohort and putting us squarely on track to report initial clinical data this quarter.
This initial data will focus on assessments of safety and enzyme activity in these first 2 patients. I will have more data on the first patient in a second, we expect to have enough data on both patients to provide meaningful insights into safety and enzyme activity to help inform FLT201's emerging product profile as a potential best-in-class therapy.
FLT201 is a highly differentiated gene therapy candidate that delivers a novel transgene developed by our scientists for a rationally engineered longer-acting variant of GCase, the enzyme deficient and people with Gaucher disease.
We believe FLT201 has the potential to be life changing for people with Gaucher disease type 1, which is the most common type of Gaucher with approximately 18,000 patients in the U.S., U.K., EU4 and Israel.
Many Gaucher patients continue to experience serious symptoms despite treatment with currently approved therapies. Current therapies also carry a heavy lifelong treatment burden. Earlier this month, we hosted a virtual KOL with Dr. Reena Sharma, a Gaucher disease specialists at the software Royal Hospital in the U.K. Dr. Sharma highlights the ongoing unmet need in Gaucher disease, the rationale for gene therapy in Gaucher and the opportunity to dramatically reduce both disease and treatment burden.
We believe that FLT201 has the potential to do just that by providing better efficacy than current treatments with a onetime therapy. Furthermore, we believe FLT201 is the opportunity to be first-to-market gene therapy negotiated in type 1 with a best-in-class profile compared to other gene therapies in development. Advancing FLT201 clinical development is our greatest strategic priority, and we are extremely pleased with our progress and with the momentum we are seeing in the trial.
Turning now to our early stage pipeline. We are building on our work in Gaucher disease,
to extend the impact of our innovation around our longer acting GCase variant into GBA1-linked Parkinson's disease. As negotiated disease GBA1 mutations lead to a deficiency of the GCase enzyme. GBA1 mutations are present in 5% to 15% of Parkinson's disease patients, making them the most common genetic risk factor for developing Parkinson's, and they're associated with earlier onset and more severe disease.
The early preclinical data looked promising with our GCase variant, demonstrating at least 20 fold greater activity and wild-type enzymes in various cell lines, including brain and neuroblastoma cell. We are now optimizing the GCase variant for distribution in the brain and conducting in vivo steps, and we aim to move this program forward expeditiously.
The GBA1-linked Parkinson's disease program also represents our first step toward our broader research strategy of moving gene therapy into larger disease areas. We have made tremendous progress this year. We are focused on working on programs that we believe are highly differentiated with the potential to address serious ongoing unmet needs for patients and drive significant value for shareholders.
With the momentum in the GALILEO 1 trial of FLT201, initial clinical data this quarter and the natural extension of our work in Parkinson's disease, I firmly believe that Freeline is poised for both near- and long-term success.
I will now turn the call over to Pam to provide a more detailed overview of FLT201.
Thanks, Michael. We're very proud of the progress we're making in the GALILEO 1 trial of FLT201. As many of you know, we spent the last 1.5 years laying a strong foundation for the trial, opening up 15 sites across the U.S., the U.K., Europe, Latin America and Israel, and we are seeing that investment pay off in the current pace of enrollment. Investigator and patient interests are strong. We have line of sight into multiple additional patients, and we're executing against our time lines to deliver meaningful initial data this quarter and continue to efficiently advance the trial.
As we look ahead to the initial clinical data readout, I want to take this opportunity to help set the stage by highlighting the rationale for gene therapy in Gaucher disease, reviewing the compelling preclinical data supporting FLT201 and explaining why we believe these initial data will provide important insights into safety and potential efficacy.
Gaucher disease is a rare genetic disorder, characterized by a deficiency of glucocerebrosidase or TKAs, an enzyme needed to metabolize a certain type of lipid. As a result, harmful substrates known as GB1 and Lyso-Gb1 built up in multiple organs, including the spleen, liver, bone and lung.
Enzyme replacement therapy is the standard of care and has made a significant impact on the disease. Despite treatment with ERT, however, many patients continue to have symptoms, particularly those associated with deeper tune, including bone and lung.
ERT also carries a heavy lifelong treatment burden requiring lengthy biweekly infusions and packing decisions about work, way to live, ability to travel and overall quality of life. Additionally, the wild-type GCase delivered by ERT to short half-life, meaning patients experience troughs and enzyme levels in between infusions, giving harmful substrates the opportunity to build backup, potentially contributing to disease progression.
As Dr. Sharma outlined during our KOL event, both the success and shortcomings of ERT support the rationale for gene therapy in Gaucher disease. ERT has shown that introducing GCase into the bloodstream leads to efficacy, supporting the case for a gene therapy that does the same. Unlike ERT, however, a gene therapy has the opportunity to deliver a continuous level of enzyme with a onetime infusion.
In addition to potentially delivering continuous enzyme, FLT201 delivers a longer-acting GCase variance. Because the variance is more stable than wild type, we believe it has the potential to reach the deeper tissues that ERT poorly addresses and to stay in tissues longer, more effectively clearing harmful substrates and improving clinical outcomes.
This potential is borne out in our preclinical data, which show that FLT201 induced high case expression at low doses, increased uptake of GCase and disease-affected organs, including bone and lung and Gaucher might compared to ERT and reduced pathological substrates in disease-affected organs, again, including bone and lung and Gaucher compared to ERT.
The initial data readout this quarter will focus on safety and plasma GCase levels from the first cohort of GALILEO 1, which is assessing a dose of 4.5e11 with later data readouts looking at substrate reduction in various clinical parameters.
As a reminder, GALILEO 1 is a dose-finding multicenter international study assessing the safety and efficacy of a single dose of FLT201 in adults with Gaucher disease type 1. Each dose cohort has 2 patients with a stagger between patients and the flexibility to expand the number of patients in any dose cohort.
While the initial clinical data are an early look, we believe they will provide informed insights, not only into safety but also into potential efficacy. We are using the same capsid we used in our earlier programs. And based on our experience in nearly 20 patients we would expect meaningful increases in plasma case levels within 4 to 6 weeks of dosing.
Based on what we see preclinically with FLT201 as well as what we know from ERT, there's a strong correlation between plasma GCase levels and substrate clearance and subsequently between substrate clearance and clinical outcomes. As we look towards these initial data, we believe that a good safety profile and plasma GCase above the normal level would constitute a positive early clinical signal of FLT201 potential.
With that, I'll turn the call over to Paul to review our financial results.
Thank you, Pam. In addition to our clinical and research progress, we have also made significant strides to build a leaner, more focused and sustainable organization. We review operating costs on an ongoing basis to ensure all spending is focused on high priority activities aligned to our strategic focus.
Our 6-month results of operations and cash flows reflect the actions taken to prioritize the portfolio, downsize the organization, finalize the sale of our German subsidiary, settled the arbitration with Brammer and execute the ADS ratio change to regain NASDAQ compliance. Even with onetime charges related to these actions, our total operating expenses decreased 34% in the first half of 2023 compared to the same period last year.
With that, I'll turn to an update on our cash position and runway guidance. All figures are reported in U.S. dollars. In the second quarter, our cash and cash equivalents totaled $38.8 million compared to $55.4 million as of March 31, 2023. We expect our current cash and cash equivalents to enable us to fund our planned operations into the second quarter of 2024.
Our R&D expenses for the 6 months ended June 30, 2023, were $19.7 million compared to $38.8 million for the same period in 2022. The 49% decrease was primarily attributable to a decrease in expenditures related to the company's deprioritized FLT180a and FLT190 programs, including CMC costs and related capacity fees and reduced headcount-related costs.
Our G&A expenses for the 6 months ended June 30, 2023, were $17.6 million compared to $16.3 million for the same period in 2022. The increase was primarily attributed to $2.2 million in costs associated with the sale of our German subsidiary and $2 million associated with depository fees paid in connection with the ADS ratio change.
These increases were offset primarily by reduced G&A headcount-related costs. The company also recorded a gain of $2.2 million due to the mutual release and settlement agreement with Brammer Bio announced in May. This agreement resulted in the release of approximately $4.5 million of discharge net liabilities, offset by a settlement payment of approximately $2.3 million.
Our net loss was $14.8 million or $0.23 per ordinary share for the 6 months ended June 30, 2023, compared to a net loss of $51.1 million or $0.95 per ordinary share in the same period in 2022.
With that, I'll now turn the call over to the operator for Q&A.
[Operator Instructions] Our first question today comes from Patrick Trucchio from H.C. Wainwright. Please go ahead with your question.
This is Luis Santos for Patrick. We're curious about a little bit more detail on the baseline characteristics of the patients in the first cohort. And which data can we expect from that first data cut?
Luis, it's Michael Parini. I appreciate the question. Maybe we'll take the second part first, and I could take that, and then I'll turn it over to Pam to talk about the patient entry criteria and baseline characteristics. In terms of data expectations, as we mentioned in our release, we've dosed the second patient to complete the first cohort for the GALILEO 1 trial. That was in early August. We previously reported that we dosed the first patient back in late June.
So we're really excited about the opportunity to generate and share some data later this quarter on both patients. We expect to share, obviously, safety data for both patients and we'll have more on patient 1 than patient 2, but also enzyme activity levels given our experience with the ABS II capsid from prior programs. We do expect to see enzyme activity improvements during this early phase of the trial, and they should be meaningful as we look to see what's the future development plan for the program in terms of dosing. And ultimately, the goal is to really find the Phase III dose for FLT201. And so we should have meaningful insights on those questions as a result of this first data cohort.
In terms of the patients already enrolled in the trial, maybe Pam, do you want to talk a little bit about just generally speaking, the entry criteria and the baseline characteristics of the patients?
Sure. Happy to. So while we haven't announced specifics about the individual patients, I can share the entry criteria. And so for the trial, it is for Gaucher disease type 1 only, males and females above the age of 18, no upper age limit. Patients do come in on stable doses of ERT or SRT coming in, and they can have -- clearly have also the confirmed diagnosis of Gaucher. There's multiple other inclusion, exclusion, but those are the key criteria for entry.
And what would you want to see -- what would you like to see in a safety and tolerability perspective in the gene therapy space, it's differentiated. And so are we expecting that the doses that were required to get to that normal range of GCase’s expression are going to reach any toxicity?
Maybe, Pam, you want to talk a little bit about what our expectations are for data from this cohort, including a bit about the normal range for GCase levels and Gaucher patients?
Sure, of course. So first off, this is clearly predominantly a safety study. So that's going to be a major component of our assessments as we go along within this cohort and with any subsequent cohorts that we have. We can only -- we will only be speaking to the safety of these 2 patients when we have the data. So we can't say about future doses, but we can talk about these here. Importantly, we'll be looking not only at general safety, like you would in any clinical trial, but clearly also those that are relevant within the gene therapy space, especially with long-term safety, whether that's any liver enzymes, we'll be assessing all of that. And we hope to have -- we'll certainly have some safety data when we present in and end of Q3.
In terms of sort of expectations, again, hard to say, we'll follow the data. But importantly, when we look at GCase levels, plasma case levels specifically are a marker for us for how our liver is expressing the gene basically that we have given. So that's going to be a really important and key component of our endpoints and we'll be sharing that data.
The normal range for plasma GCase is about 1, if you will. It depends on the different labs. It can be between 1 and 1.5. So we're looking at those levels compared to what would be normal within our labs as well. So we will be presenting all that data.
[Operator Instructions] Our next question comes from Dae Gon Ha from Stifel. Please go ahead with your question.
This is [indiscernible] on for Dae Gon. One of the key advantages of FLT201 was really the expression of in key unmet tissues like the lung and the bone marrow. Can you speak to any measurements that you're taking, either -- maybe not even in this next alts next readout, but just going forward, that will kind of help further build on preclinical findings that show that there was expression of these other tissues?
Thanks for the question. Maybe Pam, you want to talk a little bit about what data we'll be collecting during the trial? Obviously, it's early days in this first cohort, and I think there's a very strong correlation between plasma GCase activity and clinical outcomes. I think your question is a bit more specific about other parameters of efficacy.
And so Pam, maybe you could shed a little bit of light on that.
Sure, of course. And so as Michael mentioned, we have with strong nonclinical data demonstrating the correlation between plasma GCase and Lyso-Gb1 reduction. Lyso-Gb1 is a toxic substrate, which has a very clear correlation to in humans to clinical outcomes. In terms of what data we will be collecting or we are collecting in this study not only are we collecting, if you will, the usual suspects of hemoglobin and platelets will be looking at liver and spleen size. Getting a sense of expression or activity in those deeper tissues like lung and bone marrow, we have multiple assessments planned. We will be looking at pulmonary function tests. We'll be looking at chest x-rays as well. We will be assessing bone density. We'll be looking at bone MRs, MRIs. And so those are some of the key components. We'll be also assessing things such as fatigue, pain, quality of life. There's a Gaucher disease severity scale that we will be assessing as well. So we'll be utilizing multiple clinical outcomes to get some picture of efficaciousness of our product over the longer term.
And ladies and gentlemen, at this time, I'm showing no additional questions. I'd like to end today's question-and-answer session and turn the floor back over to Michael Parini for any closing remarks.
Thanks, and thank you all for your time and participation in today's call. With the momentum we have going in FLT201, the exciting initial clinical data readout later this quarter and the promising research projects that we've announced, in particular, the GBA1-linked Parkinson's disease, I truly believe we are well positioned for near- and long-term success.
But before closing, I did want to thank the Freeline team for all their hard work as well as our study investigators and the patients who are participating in our trials. Thank you all, and have a good day.
Ladies and gentlemen, with that, we'll be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.