Sometimes called the Woodstock or the Super Bowl of biotech, the J.P. Morgan Healthcare Conference is where companies, researchers, investors come to talk about the most exciting new developments in health and medicine. In today's episode of Industry Focus: Healthcare, Kristine Harjes interviews CEOs from three companies at the conference.

Alnylam's (ALNY 0.19%) Barry Greene talks about patisiran and RNAi and what this drug can mean for hereditary ATTR amyloidosis patients. Arena Pharmaceuticals' (ARNA) Amit Munshi explains how the company is moving past its Belviq mishap, and the exciting new drugs it's developing today. Jeff Marrazzo from Spark Therapeutics (ONCE) talks about what its gene therapy approval meant for the company and for healthcare as a whole, as well as some promising new research Spark is doing in hemophilia treatment.

A full transcript follows the video.

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This video was recorded on Jan. 10, 2018.

Kristine Harjes: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. It's Wednesday, January 10th. I'm your host, Kristine Harjes, and I'm reporting from San Francisco this week from the J.P. Morgan Healthcare Conference, colloquially known as either the Super Bowl of biotech or the Woodstock of biotech, depending on which high school stereotype you were. You might think there would be a heck of a lot more hippie types here in SF, but after attending an event two nights ago called Burgers and Beers, in which about 200 men and 10 women packed into a single bar to watch football, I'm really not so sure. Anyway, today's episode is going to feature clips from interviews with various CEOs of biotechs that presented at the conference. The first interview you'll hear is with Barry Greene, the CEO of Alnylam.

Barry, thank you so much for joining me!

Barry Greene: Kristine, thanks so much for having us!

Harjes: I would love to set the stage for our chat by discussing first a little bit about the scientific platform that you guys are working with, which is RNAi. Can you give us a little bit of background on what that is and how it works?

Greene: Absolutely. Alnylam, which is now 15 years old and on the cusp of becoming a commercial stage company, was actually found it on this breakthrough discovery in biology called RNA interference, which is a natural process in all of our cells that manipulates the genome. What does that mean in plain English? Today's drug works by binding to protein and stopping protein action. We stop the protein from being made in the first place. If you had a leaky faucet in your kitchen, today's drug works by mopping up the floor, we shut off the spigot. And we can leverage RNA interference to create an entirely new class of innovative medicines.

Harjes: That's awesome. How does this differ from something like antisense?

Greene: Both RNAi and antisense target the message. DNA makes RNA, which encodes protein, and both work by cleaving message and stopping protein from being made in the first place, shutting off the spigot, as I said before. RNAi, though, is a natural process that is catalytic. What does that mean? That means, and we're demonstrating this with our drugs today, very small amounts of drug can work for long periods of time.

Harjes: Very cool. So, you mentioned that this is the year, hopefully, assuming everything goes according to plan, Alnylam will become commercial stage. As you prepare to launch the drug Patisiran later this year, what are the greatest areas of focus, and how are you transitioning to a commercial stage company?

Greene: We're entirely ready to be a commercial stage company. In fact, when we founded the company 15 years ago, retaining important medicines in major markets, U.S., Western Europe, was always part of our strategy. We're here on purpose, this is not a mistake. We did not by happenstance get into this position. And we've been preparing to be commercial from the very beginning. We filed both the NDA and MAA for Apollo, a really spectacular set of data demonstrating the ability to reverse hereditary ATTR in a majority of patients, data unseen in this patient population up to this point. And with regulatory approval mid-year in the United States and end of year in Europe, we'll be launching Patisiran. What we've been able to do in the meantime is set up our supply chain. It's always important to get drug to patients. And we're really building out our medical affairs, patient access and patient hub capabilities so that the day we get approval, we're ready to ship drug to patients.

Harjes: For background, can you tell us a little bit about the indication?

Greene: We've studied Patisiran in hereditary ATTR amyloidosis. It's a rare orphan disease that's caused by the misfolding of a very specific protein called transthyretin. This is a protein that's made in the liver, which is where our drug works. And when this protein misfolds, it deposits to peripheral tissues, so, nerves, heart, and gut, creating major dysfunction and major disability in patients that, for the most part, becomes fatal in two to 15 years. By providing Patisiran on an every three-week basis, we've seen significant reduction in the TTR protein, so knockdown of TTR, which in fact has resulted in regrowth of nerves. In fact, a beneficial effect across a wide range of the endpoints of neurological dysfunction, cardiac dysfunction, and autonomic dysfunction. So, people's stomachs get better, and other autonomic dysfunction gets better as well. It's been pretty remarkable, and very satisfying for this patient population.

Harjes: That's awesome. Given that it's a very rare disease, how are you thinking about pricing?

Greene: We, from the beginning, have believed that if we deliver extreme, innovative value to the healthcare system, we should demonstrate and document that value. This is a disease that costs the healthcare system a significant amount of money. People become disabled and therefore can't work. Their caregivers can't hold full-time jobs. They're often hospitalized and consume a significant amount of healthcare dollars from the system. So, by bringing forward innovation, we think we should get paid for it. That being said, we launched patient access principles last year. One of the principles was to provide value-based pricing. So, we'll have orphan like pricing, which are hundreds of thousands of dollars of drug, but our agreement with payers and countries that want to get into these value-based agreements is, we're going to put our money where our mouth is, and structure agreements so that people pay for outcomes.

Harjes: What does that actually translate to for you guys? Are you offering rebates? What does that look like?

Greene: We're still working through exactly what the value-based agreements look like, but it can range anything from trying the drug to make sure it works, and you have TTR knockdown, to measuring sets of endpoints out to 12 months, to ensuring that we have the beneficial effects that the overall population has seen on a specific patient by patient basis, and if so we get full payment, and if not, there could be a level of discount or return for that patient going forward.

Harjes: Very cool. Something that you mentioned in yesterday's presentation that I wanted to dig into a little bit is that you think that many analysts are overestimating the near-term value of Patisiran, and underestimating the long-term value. What do you mean by that, and how can investors act accordingly?

Greene: Great question. There are different kinds of orphan diseases. Obviously, orphan diseases are rare, and there aren't a big set of numbers. There are some orphan diseases, like cystic fibrosis, for example, that are not hard to diagnose. So, while they're rare diseases, if your son has cystic fibrosis, he can get diagnosed pretty quickly. There's other kinds of orphan diseases, and historically diseases like PNH or HAE have fallen into this category. In our case, hereditary amyloidosis, falls in the case of hard to diagnose disease because it's a multisystemic disease that, frankly, physicians just don't look for. So, while there are a significant number of patients out there, we have to put significant effort in place to find those patients. They're often in the healthcare system, but may have been misdiagnosed with a different kind of neuropathy, a different gastroenterology issue, or even a cardiac issue that's not in fact appropriate. It could be hereditary ATTR. So, what we're doing is disease awareness, physician and patient education, patient finding initiatives. For example, we've put something in place called Alnylam Act, which is free genetic testing for physicians and patients if the physicians suspect the patient might have this mutation of TTR. By providing free genetic testing, we're helping the healthcare system identify patients much more rapidly than they might have on their own.

So, that's a long answer. It's going to take significant work to find the patients, get them on drug, and get them on paid drug. A ramp potentially slower than some of the analysts projected. But in the long-term, we have an opportunity for not only hereditary ATTR, but asymptomatic carriers, and in fact, wild-type ATTR amyloidosis, particularly with our next drug, ALN-TTRsc02, where there's hundreds of thousands of patients.

Harjes: And how far along is that one?

Greene: We have committed to start a Phase III for ALN-TTRsc02 later this year, and we committed at this conference that we will be developing that broadly for all TTR amyloidosis.

Harjes: Great. Continuing talking about the pipeline a little bit, I'm always interested in the strategic decisions about trial design. Something that stood out to me was you'll be using a surrogate endpoint for approval for Givosiran in porphyria. What are the risks in using that sort of accelerated pathway?

Greene: Just to back up on Givosiran. Givosiran is an RNAi therapeutic target at the treatment of acute hepatic porphyria. This is a bunch of orphan diseases that are characterized by extreme abdominal attacks that create a significant amount of other symptomatology, such as psychosomatic issues, and in fact chronic pain and disability between attacks. What we've seen with Givosiran is, we dampen this toxic pathway of ALA and PBG by targeting the top of the pathway. And that has resulted in about 75% lowering of attacks. Really amazing for these patients that have pain and live between attacks. What we've been able to demonstrate this far, and it's really been a remarkable clinical effort, is that by lowering ALA, we demonstrate a lowering of attack rates. So, our Phase III design is in fact set up to show a differential in attacks between placebo and drugs, so we do have that hard and point of attacks. But, what the USFDA has agreed to is an interim analysis where 30 patients have reached three months on urinary ALA only. And we've shown so far that ALA lowers when we treat with Givosiran. So, we feel really good about the surrogate endpoint. But in fact, we will have the complete data trial results showing a difference in attack rates on drug vs. placebo as we market and sell the drug in the U.S. and Europe and the rest of the world.

Harjes: Great. And how are you thinking about the risks that are associated with taking that pathway?

Greene: The interim analysis is a pretty good pathway, particularly in the United States, where we've already reached agreement on showing ALA reduction as an accelerated approval, and then we'll submit the full drug, showing a full Phase III trial, showing a reduction in attacks as a full beneficial data set. Outside of the United States, we may, in some countries, in fact wait for the full data set, because you really only have one chance to set pricing. So, that full dataset outside the United States will probably be even more important.

Harjes: OK, interesting. Before we sign off, I want to give our listeners at taste of the conference itself, since we are here in San Francisco. As a CEO that's presenting and being a part of all of these discussions and meetings day in and day out, I'm sure your schedule has been even more hectic than mine has been. I've pretty much been mainlining caffeine just to keep up. [laughs] Yeah, I can see your coffee mug, you've been doing the same thing. But, every year, this conference draws more and more people. I think it has something like 10,000 attendees this year. What makes it so special?

Greene: J.P. Morgan, and frankly, H&Q, for those of us who were around back then and remember it, it was really the healthcare kickoff meeting of the year. I see more people that work down the street in Cambridge out here than I do in Cambridge. It really is the center of the universe this week when it comes to healthcare. Everybody's here. And everybody's grateful for J.P. Morgan for hosting the week, but frankly, every bank and every analyst and every investor is out here, so it's a really efficient way of meeting hundreds of people, in one location, one spot. And there's always a great buzz around J.P. Morgan.

Harjes: There certainly is. Well, thank you so much for taking time out of your very busy schedule to meet with me today.

Greene: Thanks for having us! I appreciate it.

Harjes: Next up, I sat down with the new-ish CEO of Arena Pharmaceuticals. You may remember the name as the maker of Belviq, an obesity drug that commercialized, quite frankly, terribly, leaving the stock in the dust. The company abandoned the drug and replaced its management team. The Arena of today bears little resemblance to the Arena of a few years ago. Here's my conversation with CEO Amit Munshi.

We're here today at the J.P. Morgan Healthcare Conference with the CEO of Arena Pharmaceuticals, Amit Munshi. Amit, welcome! Thank you for joining me today!

Amit Munshi: Great, thank you!

Harjes: Many of our listeners know Arena from the Belviq days. Can you talk about that turn around a little bit? What happened with Belviq, and where is the company at today?

Munshi: Absolutely. This management team joined about 18 months ago. We were brought in by the board to essentially hit the reset button on the company. Belviq was, of course, approved by the FDA, it was commercialized by our partner, Eisai Pharmaceuticals, but commercially did not have the success that was originally anticipated. The board still believed there was tremendous value in the company, and so did we, as the management team coming in. And the fundamental thesis is quite simple. While Belviq was the focus of the company going forward, historically, the company raised a tremendous mother Capital, they never turned the spigot off on the research efforts inside the company. At one point, they had 300 research scientists developing a basket really, really exciting compounds. So, our fundamental thesis was, can we come in and reset the company back to being a biotech company, essentially skinny the focus of the company back to really being a development-stage company? Our first six months at the company are really focused around, I'll broadly call it clean up, but it was essentially rebooting the company to being a biotech company. We took the company back down to about 38 people. We divested the Discovery Research platform. We renegotiated and got out of all of our future Belviq obligations with our partner, Eisai, and really began to rebuild the clinical development efforts inside the company.

Harjes: Looking back on that decision to hand the rights back to Eisai, was that the right decision for the company?

Munshi: Absolutely. We were on the hook for a tremendous amount of money, and it wasn't something we would be rewarded for in the public markets. So, we really tried to create a new value proposition around the pipeline of product candidates that was essentially sitting on a shelf.

Harjes: So, looking at the pipeline now, what are you most excited about?

Munshi: As we started 2017, we began a tremendous amount of focus on what we consider our lead compound at that point, which is Ralinepag. Ralinepag is a drug for pulmonary arterial hypertension. PAH is an interesting disease. It's a fatal disease, it's a rare disease. It causes the blood vessels in your lungs to become narrow or blocked, and it gets harder for blood to flow through them, blood pressure increases, the heart has to work harder, and eventually these patients die of right heart failure. The drugs that have been approved to have worked miracles to date, but are insufficient in many ways. We thought we had a potentially best-in-class compound, so we focused really hard on getting that study enrolled for the first part of 2017. We got the study enrolled and reported out data in approximately the middle of '17. The data was unprecedented. We showed an effect size over background therapy that hadn't been seen before. That really set us on this trajectory, and it validated our thesis that there were some great compounds sitting on the shelf.

Harjes: Can you talk a little bit about competition in that space, and what differentiates your drug?

Munshi: Sure. The way our compound works is through a pathway called prostacyclin. It's a predominant pathway in the treatment of PAH for these patients. The current compounds really fall basically in two buckets in the prostacyclin category. One is intravenous prostacyclin, which requires patience to be on a pump, and the other is oral. We're an oral agent. The current oral agents, which are of course preferred to intravenous, but they have a very short half-life and are not quite as potent as our compound. And intravenous is the preferred therapy. It's the only drug that has ever shown activity in terms of long-term effects on mortality. So, the idea with our compound was to have a once a day oral that began to look like intravenous prostacyclin. Our product has a 24-hour half-life, and it's roughly 6.5 to tenfold more potent than what's currently considered the gold standard for oral prostacyclin, it's a drug called Selexipag, which is commercialized by Johnson & Johnson. We're really excited. We think this is a breakthrough in the prostacyclin category, and we think this has the opportunity to redefine how patients are treated.

Harjes: Very exciting. When can patients hopefully look forward to seeing it in the market?

Munshi: We haven't put up any guidance yet. We have to work through the regulatory pathways. We're currently preparing for a Phase III program. We expect to be in a Phase III program by the second half of 2018. As you know, there's a long path to starting a Phase III program, including a tremendous amount of ongoing correspondence and activity with the regulatory agencies in the U.S. and Europe.

Harjes: Absolutely. Turning to another drug in the pipeline, I want to talk a little bit about APD371, which is a cannabinoid drug. Is it fair to call Arena a pot stock because of this one compound?

Munshi: We get that a lot. Before we go to 371, we have a critical milestone between here and 371, which is Etrasimod. Etrasimod is a drug that has a broad clinical utility across, we think somewhere between 80 and 100 autoimmune conditions. It works on a pathway called S1P modulation. We expect Phase II data from that compound in the first quarter of 2018. Then, right behind that is APD371, our CB2 receptor agonist. It's interesting. We get that question a lot, around whether we're a pot stock or not. The target here isn't a derivative of cannabis, it's not an extract. We're simply targeting one of the many receptors that are indigenous in our body, they exist already in our body. CB2 is widely considered one of the key inflammatory pain regulators in the body. We produce natural compounds in our body that actually hit that receptor, and what we've done is create a fully synthetic compound, has no overlap, no homology, we call it The Two Cannabis, and it targets the CB2 receptor in a very, very selective way. It's also designed to be peripherally restricted, which means that it does not cross the blood-brain barrier, it does not cross any psychotropic activity. So, our focus is really on the science of the receptor rather than being a cannabinoid.

Harjes: And the great thing about not crossing the blood-brain barrier is that you don't get that euphoria, hopefully this drug, if it were on the market, could reduce some of the reliance on opioids. So, given that there is this -- very tangential, as you explained, but still -- relationship to marijuana, are there any complications that you have with this drug in particular with the regulatory sense, or even just getting the clinical trials up and rolling, that you wouldn't find with other drugs?

Munshi: There's two parts to that question. First is, on the regulatory side, we don't know yet. We're in a Phase II A pilot study, we're a long way from having very detailed regulatory conversations about being able to measure reliance, or how this compares to opioids in terms of addiction. The second part of the question, in terms of enrolling these studies, the studies that are ongoing now are at looking at pain associated with Crohn's disease. We're actually quite astounded, as we went out and did a lot of feasibility work, how many patients, depending on state by state, but how many patients are actually on cannabis in Crohn's disease. It's actually quite stunning. Of course, we can't have a patient on cannabis when they're taking our drug. So, that does pose a challenge, in terms or recruiting patients. However, understanding that cannabis alone is not a solution, and these patients have lingering pain, and cannabis is a partial receptor agonist to CB2, which means it only partially blocks the receptor, whereas we're a full agonist. So, we think we have the opportunity to create even greater pain relief for these patients.

Harjes: Very interesting. One question that I want to ask has to do with the broader business strategy. When you look at the company, would you consider a buyout a good outcome? Is that something that, as an executive, you would like to see?

Munshi: Again, that's a question we get routinely. What's your game plan, are you looking to get sold. I don't think a company ever looks to get sold. I think what you do is attempt to build the best company you can, you remain as capital efficient as you can, you progress the compounds in as diligent away as you possibly can. And the game plan is always control what you can control. You can never control if someone wants to acquire the company. We're publicly traded, everyone knows what the value of the company is. Our focus internally has nothing to do with that. Our focus is just to build the best company we possibly can, and create as much value for shareholders and patients as we can.

Harjes: That's a good answer, it's very similar to what we tell investors, which is, don't buy a company because you hope that it gets acquired. Buy a company because you think it's a good company. And if it gets acquired, that just means somebody else also thought it was a good company.

Munshi: Absolutely. We talk internally just about controlling our own destiny, and making decisions that allow us to build a long-term game plan for the company. Again, as a public company, we have fiduciary responsibilities to our shareholders. If someone came knocking, we have an obligation to listen and evaluate the appropriate value of the company. But our focus is absolutely to build out these compounds. And between Ralinepag readout last year, we're getting ready for Phase III in '18, the Etrasimod readout in the first quarter of '18, APD371, and we've publicly, now, stated that we anticipate bringing additional products online in the back end of 2018. So, we have a really deep and rich portfolio. And our responsibility is to progress them, so we can create value for shareholders and patients.

Harjes: Perfect. Since we're here at J.P. Morgan, I want to give our listeners a little bit of a taste for the conference. As somebody that will be presenting at the conference, what are your main goals? What has this conference been like for you?

Munshi: The main goal for the week is first and foremost to stay awake, and get through the gauntlet of meetings. We've had tremendous investor interest as a company. I think we're looking down the barrel of about 80 or so investor meetings this week. So, getting through the investor meetings, being able to continuously tell a cogent story, respond to investor inquiries. This is a fantastic start to the year. It's a catalyst to the year, and it leads to a lot of follow-up conversations. As we go through the year, a good chunk of these investors that we talk to this week, there will be follow-up conversations. We're constantly looking for investors who haven't heard the new Arena story, who remember, as most of your listeners do, the original Belviq story around the company. And we've had tremendous success in getting new people interested in the equity. So, we want to continue to talk to new investors, we're going to continue to use this meeting as a catalyst for the rest of the year.

Harjes: Perfect. Thank you so much for joining me here today!

Munshi: Thank you so much! Take care.

Harjes: Last but not least -- in fact, this was the company I was most excited to talk to -- is Spark Therapeutics CEO, Jeff Marrazzo.

I am here with the CEO of Spark Therapeutics, Jeff Marrazzo. Jeff, how's it going?

Jeffrey Marrazzo: I'm doing great! Thank you!

Harjes: Thanks for being here with me today. Your first drug was approved almost a month earlier than expected by the FDA, and I'm kind of interested from a human angle, how was that day in the office? How did it all go down?

Marrazzo: It was a fabulous day. It was a day where, there's few moments, certainly in your professional life, that will rise to that moment. It was first and foremost a day where we all took a step back and realized how special it was for patients first. This is a group of diseases, inherited retinal diseases, where patients before that moment, had had no treatment options available to them pharmacologically. So, it was a really special day for patients. I dare say it was a historical moment for medicine, because you're talking about a first-ever gene therapy for a genetic disease approved in the United States. And it was certainly an incredibly proud day for all of us at Spark to not only see what had been days, weeks, months, years, decades of hard work, depending on who you're talking about in the organization, all come together as a team and get to that moment of an approval, it's an amazing moment, one that you don't soon forget.

Harjes: I'm sure it was incredible. And congratulations to you and your team on that approval!

Marrazzo: Thank you.

Harjes: As you look to pivot to commercial stage, can you talk me through some of the challenges, and what you're doing to meet those?

Marrazzo: Sure. One of the things we announced last week was not only our wholesale acquisition cost, but I think just as importantly, three novel payment and distribution models that we think are important in establishing access for patients that might be eligible for Luxturna, as well as, we think, beginning to set some of the principles for how other one-time gene therapy treatments could be available and be accessible for patients going forward. So, we announced these three novel models, and the principles behind those models are, first and foremost, we want to make sure that we are demonstrating that we stand behind our product. We've shown through an agreement in principle with Harvard Pilgrim an outcomes-based arrangement where we are not only standing behind the short-term efficacy of the product, but the long-term durability of the product, which of course is a major premise of gene therapy as a promise and a technology.

Secondly, we've developed an innovative contracting model that would really eliminate some of the markups that payers see on traditional provider administered drugs. It would also allow treatment centers to not have to shell out the dollars that they need to acquire these products, and ultimately, to the benefit of patients, ensure that patients have broad coverage and access as well as rapid access, as well as try to minimize the cost out of pocket for patients. So, we think a model like that is also important in establishing a new way to distribute a drug like Luxturna. Then, third, we are in discussions with the centers for Medicare and Medicaid services, CMS, about an alternative way that we might be able to make Luxturna available to people, including through an installment payment option, where payers might be able to pay over time. All these things, I think, together are about trying to bring the same type of innovation to how we insure access for patients, as we have in the lab, as well as in the clinic, in terms of what we do at Spark.

Harjes: How do you think that future gene therapies might compare in both price and pricing model to Luxturna?

Marrazzo: I think each gene therapy, or each therapy in general, needs to be taken in the context of the particular disease, and what effect you're really talking about. I think it all starts with the value of the therapy. The value of the therapy, you've heard us speak to over the preceding couple of months before we were even approved, we think was inherent when we looked at the pharmacoeconomic consequences and value associated with changing the course of someone's sight. But in other drugs, the pharmacoeconomic argument might place a different value on it. Maybe that's because it might be offsetting existing therapeutic expenses, like in the case of our hemophilia product candidates, or in other disease, it might be offsetting the cost of major consequential medical expenses related to surgeries or long-term care expenses. So, I think each product needs to be put into the context of the disease and the value the therapy can bring to that disease in that context. In terms of how it ultimately gets paid for, I think some of the steps that we've taken to try to develop novel payment and distribution models, I think those do become ways, and create a pathway by which other types of one-time gene therapy treatments could be able to be also availed to the market, and provide balance between the access concerns of patients, budgets concerns of payers, and the need for companies like ours to be able to develop a path toward sustainability.

Harjes: Great, makes a lot of sense. As investors look out over the next couple of quarters, or more importantly, the next couple of years, what would you advise us to look out for, in terms of the actual launch of the product? Do you think the sales figures will be particularly bumpy? And what would you expect to be a smooth state? How far along will it take to get past that initial sales bump?

Marrazzo: We're not providing specific guidance on Luxturna sales at this point. What we do believe is, what is important, and why we've taken the approach we've taken with Luxturna, not just on the access side but in general, is to really demonstrate that we can execute against turning on the commercial engine and really delivering, ultimately, the promise of gene therapy, not only from the lab to the clinic, but ultimately now to patients in actual practice. So, the ability for us to, if you rev up that commercial engine, get it at full speed and be able to take patients who we believe are eligible, have been diagnosed and are eligible, and get them to be able to get access to the therapy if that's the choice that they make, we're really going to measure ourselves on how well we're doing on that benchmark, on that measurement. And as we get out and have more experience in the market, and get a sense for the pace, and whether there could be some seasonality in the context of when treatments might occur, then I think we'll be able to provide a little more insight into how we might see things go on a quarter to quarter basis. But right now, we're really thinking about the launch in the context of this quarter being really about establishing and setting up those treatment centers to make the product available, and then starting in Q2, all the way through, frankly, 2019, thinking about it holistically as a period where we're really building that commercial engine and getting it up and running and being successful and prosecuting the opportunity and giving patients opportunities to have access.

Harjes: Got it. Investors and patients alike have been very intrigued by what your company is doing in hemophilia, so I wanted to ask a couple of questions about that. Can you lay out, generally, the opportunity there, and where Spark comes in?

Marrazzo: I think hemophilia is an incredibly exciting opportunity for gene therapy in general. What you're talking about is dramatically transforming the standard of care. Today, we treat the disease through chronic infusions of factor, and yet despite that, we still have regular episodes of bleeding in patients as they try to manage their disorder. And obviously, every patient is different, and the severity is different, but that's a general principle. And gene therapy has the potential to transform that standard of care, with the single-dose having the potential to dramatically, if not eliminate, the risk of bleeds, as well as eliminate the need for infusions. What's been so exciting about the data that we've seen across our hemophilia portfolio so far is, first of all, in different diseases or different subtypes, were earlier than others that were a bit further on. Still in Phase I and II in both. But, what's been so exciting is, one, the safety data has been very good and very encouraging, we've not seen any serious adverse events, we have not seen any thrombotic events, we've not seeing any inhibitors form. Those are all incredibly important steps as a first step in hemophilia gene therapy.

We've also seen dramatic clinical outcomes. We talk about reducing by nearly 100% the bleeding rates in patients who have been in our studies, as well as dramatically almost eliminating, at every instance, the infusion rates that these patients used to have to take once, twice, three times a week. You're talking about totally changing not only the paradigm for a treatment approach in medicine, but importantly, from the patient's perspective, I dare say making them think differently about their disease. And ultimately, not to forget, from a payer perspective, allowing the possibility for cost offsets, really thinking differently about the consequence and the cost to treat this disease in a way that's really transformative and disruptive. It's an incredibly exciting time for the field in general to be applying the technology to hemophilia. We were pleased with the fact that we were able to publish our data from hemophilia B in the New England Journal of Medicine last month. We're incredibly excited and bullish on our progress, albeit early, in hemophilia A. We look forward to providing updates in the second or third quarter of this year as we continue to work toward both planning for a Phase III study while also working to find the optimal dose for that product candidate. But, we're really excited to be a part of the potential solutions in the future for hemophilia.

Harjes: Why is hemophilia A such a different challenge than hemophilia B?

Marrazzo: I don't know that it necessarily is. We have been really encouraged by the early data that we've seen. I think our expectation going in was that we might need to do some dose-finding work. Where, in hemophilia B, I will say, if we sat here only two or three weeks after we dosed the first patient in our hemophilia B trial, we probably thought at that point we might have to do some dose-finding work. It turns out, in hemophilia B, we got it right on the first dose. That's sort of atypical. So, we expected we need to do some dose finding work. We were incredibly encouraged that our low dose, the first dose that we tried in our hemophilia A trial, we saw therapeutically relevant levels. We were getting predictable clinical outcomes in the context of the reduction, 100% reduction in bleeds. So, what we're doing is what you'd normally do in most standard Phase I and II studies, which is, you identify a dose that is having clinical outcomes and is safe, but then continue to push and test whether or not there are ways to drive even greater outcomes by doing dose-finding. And that's what we're doing right now. So, we're very confident about the program and look forward to providing updates in the second or third quarter.

Harjes: Great. Pivoting topics a little bit, there are concerns about the orphan drug tax credit being cut in half. To what extent does that affect your company? And how are you thinking about that? How big of an issue might it be?

Marrazzo: I think it's a relevant issue. And as far as I understand, it did get modified in the legislation that got passed the House and Senate, it was signed into law by the president late last year. Look, I think at the end of the day, the tool of the orphan drug programs in general has been incredibly effective, not just in helping facilitate access in the regulatory process, but also creating incentives for businesses to invest in diseases where there's very few number of patients who are affected. And if you take a step back, there's about 7,000 rare diseases that affect people in the United States. As I understand it, the last figures were that 6,600 of those 7,000 did not have any treatment. So, despite the remarkable progress that's been made in orphan diseases over the last 20 or 30 years, there's clearly a lot more to go.

I think gene therapy as a modality and a technology is an exciting one, because for those diseases where you couldn't try to treat it through a regular or recurrent infusion, whether that might be for example, various central nervous system disorders, where you can't do repeat administrations into the brain, because you can't do repeat neural surgical procedure, gene therapy creates a promise that you can only do that procedure one time and it might have a long-lasting effect. And we have multiple programs going on in our lab, in our research efforts, and central nervous system areas as well. So, I think there's a huge need still there. Anything that changes what has been a program that I think has driven success to get to 400 of those diseases having options, the fact that 6,600 still don't have options means that I think the policy was probably working, maybe frankly should have been accelerated, and certainly should have been decelerated, which is effectively what I think the effect of that tax credit changes.

Harjes: Got it. Before I let you go, I want to give our listeners a sense of the conference. Spark has gotten a lot of attention since last year's conference. How has that changed your experience here at J.P. Morgan?

Marrazzo: I would say that we really appreciate the fact that people in general, whether they be from the investor side of the world, whether it's patients, whether it's healthcare professionals or payers, my view is, all of the stakeholders in the system, we need to find ways to partner with people to develop new solutions whether it be for the development of a new technology or the development of new payment models. I think there's a shared responsibility that a company like Spark has with a lot of other people. We don't get this done alone. We have to partner with people, we have to share in that responsibility with people. So, I certainly welcome the opportunity to people to come up and chat with us and talk about ways that we can work together to make, ultimately, solutions like one-time transformative treatments, which I think are the future, where medicine is going. Not only adopted as fast as it can be, but even faster, if that's possible.

Harjes: Yeah, absolutely. Do you have a favorite moment from the conference so far?

Marrazzo: Some of my favorite moments are when, I've spent a bunch of the last couple of days in meetings with investors. I always certainly appreciate when people come in and begin with that congratulatory remark on the approval. It was certainly an amazing moment, as we spoke about at the beginning of this interview, for us at Spark. And for those investors in particular who have been with us for a long time, I always share with them that they have been very much a partner in that journey, and usually the opportunity to turn around and say to them, "Thank you for the support along that way!" It's a huge part of us being successful. I believe the fact that we've had a number of our shareholders for a long time, stuck with us, and been with us for a long time. So, the success that we had, I hope that they share in that as well.

Harjes: Yeah, and I'm sure they're hoping to stay around as investors for a long time, as well.

Marrazzo: That's my hope, too.

Harjes: Well, thank you so much for your time today!

Marrazzo: Thank you!

Harjes: That's everything I have lined up for the show. It's been an amazing few days here at the conference. I hope you've all enjoyed getting a taste of it. Shameless plug, I now have a Twitter account that I made while I was in my Lyft from the Oakland Airport to my hotel, so it's brand new. You can find me @KristineHarjes. A quick thank you to all the listeners who took the time to meet up with me at the conference. It was amazing meeting you all face to face. An especially big thank you to Austin Morgan this week for stitching together these various clips and not uttering a single word of complaint, despite me still needing to call him for tech support after fully training me back at HQ on how a recorder works. The guy is a real champion! As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Kristine Harjes. Thanks for listening and Fool on!