Homology Medicines Reports Third Quarter 2019 Financial Results and Recent Highlights

Expects to Report Initial Clinical Data from Phase 1/2 pheNIX PKU Gene Therapy Clinical Trial by Year-End

Presented Preclinical Data Demonstrating Progress in MLD Gene Therapy and PKU Gene Editing ProgramsBEDFORD, Mass., Nov. 12, 2019 (GLOBE NEWSWIRE) — Homology Medicines, Inc. (Nasdaq: FIXX), a genetic medicines company, announced today financial results for the third quarter ended September 30, 2019, and highlighted recent accomplishments.“We presented natural history data that concluded current treatment options for PKU are not sufficient in managing Phe to achieve target levels and underscored the need for new options for patients and their families,” said Arthur Tzianabos, Ph.D., President and Chief Executive Officer of Homology Medicines. “Our Phase 1/2 pheNIX gene therapy trial for adults with PKU is enrolling patients at multiple clinical sites, and we are on track to share initial clinical data from the first few patients by the end of the year.”Dr. Tzianabos added, “Our human gene editing development candidate for pediatric patients with PKU is also progressing, with preclinical data presented that showed molecular confirmation of precise, selective and efficient in vivo editing that meets a therapeutic threshold in a disease model. For our MLD program, we presented human ARSA protein levels confirming crossing of the blood-brain-barrier and blood-nerve-barrier in non-human primates after a single intravenous administration. Importantly, our internal manufacturing platform is established with a commercial process and scale featuring 500 liter capacity and expanding, and it is now supplying the pheNIX clinical trial.”Third Quarter 2019 and Recent AccomplishmentsContinued to advance the Phase 1/2 pheNIX clinical trial with investigational HMI-102 gene therapy for adults with phenylketonuria (PKU) at multiple sites in the U.S. Presented preclinical proof-of-concept data of investigational gene therapies for PKU and metachromatic leukodystrophy (MLD) at the American Society of Human Genetics (ASHG) Meeting:
— HMI-202 gene therapy achieved therapeutic levels of human arylsulfatase a (ARSA) enzyme in a murine model of MLD and improved other disease-relevant biomarkers, and confirmed HMI-202 crossed the blood-brain-barrier and blood-nerve-barrier in non-human primates.
— HMI-102 for PKU normalized blood phenylalanine (Phe) levels for the lifespan of a PKU murine model and increased downstream metabolites indicating metabolic pathway restoration; no adverse findings in a toxicology study in the murine model to the maximal feasible dose tested.Shared new preclinical data at the European Society of Gene & Cell Therapy (ESGCT) Meeting from Homology’s investigational nuclease-free PKU gene editing program and manufacturing platform:
— HMI-103 human gene editing candidate demonstrated human cell-specific editing with molecular confirmation of genome integration, precision, and lack of insertions, deletions or inverted terminal repeats at edited alleles in a humanized murine model.
— Evaluated effect of full to empty capsid ratios and showed no significant differences in infectivity or therapeutic correction using HMI-102 in a PKU murine model at all preparations tested; and
— AAVHSC15 packaged with the PAH gene corrected a PKU disease model across all empty to full ratios tested. AAVHSC15 reduced serum Phe by 94% while the AAV5 vector only reduced  serum Phe by 25%.  Additionally, AAVHSC15 demonstrated increased mRNA and DNA compared to AAV5 at the ratios tested.Began to produce clinical material for the pheNIX trial in Homology’s internal GMP manufacturing facility.Successfully  produced more than 240 lots of vector, ranging from the 2 to 500 liter scale on Homology’s manufacturing platform; additional 500 liter bioreactors are planned to be up and running in the internal facility in early 2020.Third Quarter 2019 Financial Results
Net loss for the quarter ended September 30, 2019 was $(29.6) million, or $(0.67) per share, compared to a net loss of $(14.1) million, or $(0.38) per share, for the same period in 2018.Collaboration revenue for the quarter ended September 30, 2019 was $0.4 million, compared to $1.6 million for the quarter ended September 30, 2018, and consisted of revenue recognized under the Company’s strategic collaboration with Novartis. The Company recognizes revenue over time consistent with the pattern of performance of research and development activities under the collaboration agreement. Homology and Novartis continue to work together on ophthalmic programs and seek to identify new targets for the collaboration based on its exploratory research component.Total operating expenses for the quarter ended September 30, 2019 were $31.7 million, compared to $17.2 million for the same period in 2018, and consisted of research and development expenses and general and administrative expenses.Research and development expenses for the quarter ended September 30, 2019 were $25.7 million, compared to $13.4 million for the same period in 2018. The increase of $12.3 million was due to a rise in direct research expenses, including contract manufacturing costs related to our HMI-102 program and other costs associated with our Phase 1/2 pheNIX clinical trial, increased direct research expenses related to HMI-202 and HMI-103 external development costs as we advance through IND-enabling studies, increased personnel costs to support ongoing development programs, research initiatives, technology platform and manufacturing capabilities, as well as increased expenses related to laboratory supplies, research materials and services for the further advancement of early-stage research programs.General and administrative expenses for the quarter ended September 30, 2019 were $6.0 million, compared to $3.8 million for the same period in 2018. The increase of $2.2 million was due to increased consulting costs, increased personnel costs as a result of new hires and increased costs associated with expanded operations.As of September 30, 2019, Homology had approximately $269.7 million in cash, cash equivalents and short-term investments, which the Company expects will fund operations into the fourth quarter of 2021.Upcoming Events
World Orphan Drug Congress Europe 2019: November 13 at 4:45 p.m. CET in Barcelona
Presentation: “Homologous Recombination: A Precise and Nuclease-Free Approach to Gene Editing”WORLDSymposium 2020: February 10 – 13, 2020 in OrlandoAbout the Phase 1/2 pheNIX Clinical Study in PKU
Homology’s proprietary suite of human hematopoietic stem cell-derived adeno-associated virus vectors (AAVHSCs) enabled the selection of AAVHSC15 to efficiently deliver a functional copy of the phenylalanine hydroxylase (PAH) gene to the liver cells, where there is a missing or mutated PAH gene. This in vivo gene therapy approach is intended to enable the production of the PAH enzyme responsible for metabolizing Phe. People with PKU are not able to metabolize Phe properly, resulting in significantly elevated and potentially toxic levels of Phe, and if left untreated, PKU can lead to severe neurological impairment. Phe reduction is an established clinical endpoint for PKU registrational trials. Homology is conducting a Phase 1/2 gene therapy study of HMI-102 in adults with PKU, called pheNIX. Additional information about the pheNIX study can be found at www.clinicaltrials.gov.Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding our expectations surrounding the potential, safety, efficacy, and regulatory and clinical progress of our product candidates; plans and timing for the release of clinical data; our beliefs regarding our manufacturing capabilities; advancing our novel platform and pipeline; our goal of delivering potential cures to patients; beliefs about preclinical data; our position as a leader in the development of genetic medicines; the sufficiency of our cash, cash equivalents and short-term investments; and our participation in upcoming presentations and conferences. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: we have and expect to continue to incur significant losses; our need for additional funding, which may not be available; failure to identify additional product candidates and develop or commercialize marketable products; the early stage of our development efforts; potential unforeseen events during clinical trials could cause delays or other adverse consequences; risks relating to the capabilities and potential expansion of our manufacturing facility; risks relating to the regulatory approval process; our product candidates may cause serious adverse side effects; inability to maintain our collaborations, or the failure of these collaborations; our reliance on third parties; failure to obtain U.S. or international marketing approval; ongoing regulatory obligations; effects of significant competition; unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives; product liability lawsuits; failure to attract, retain and motivate qualified personnel; the possibility of system failures or security breaches; risks relating to intellectual property and significant costs as a result of operating as a public company. These and other important factors discussed under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and our other filings with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.*The Company revised its condensed consolidated financial statements as if Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606) had been effective for such periods, consistent with the full adoption methodology. The references “as revised” refer to revisions of data for the three and nine months ended September 30, 2018 and the year ended December 31, 2018 as a result of the adoption of ASC 606 on January 1, 2019.