Homology Medicines Reports Fourth Quarter and Full Year 2021 Financial Results and Recent Highlights

- Formed New AAV Manufacturing and Innovation Business with Oxford Biomedica to Leverage Homology's Process Development and Manufacturing Capabilities -

- Received $130 Million Non-Dilutive Capital that Significantly Extends Cash Runway -

- Launched pheEDIT Gene Editing Trial for PKU and juMPStart Gene Therapy Trial for Hunter Syndrome; Program Updates Expected by Year-End -

- Company Updates Guidance on pheNIX Gene Therapy Trial for PKU -

BEDFORD, Mass., March 23, 2022 (GLOBE NEWSWIRE) -- Homology Medicines, Inc. (NASDAQ:FIXX), a genetic medicines company, announced today financial results for the fourth quarter and full year ended December 31, 2021, and highlighted recent accomplishments.

"We recently closed our deal with Oxford Biomedica to form a new company that incorporates Homology's expertise in AAV process development and manufacturing capabilities, team and GMP facility," stated Arthur Tzianabos, Ph.D., President and Chief Executive Officer of Homology Medicines. "Months ago, we made a strategic decision to find the right opportunity to leverage these internal capabilities that supported three successfully cleared INDs and our pipeline. We believe the structure of this partnership with a global leader in viral vector manufacturing is unique in allowing us to retain an ownership position in what we have built over the years. It also enables us to benefit from preferred customer access to the same high quality, innovative manufacturing capabilities and team, as well as any future value creation. In addition, the $130 million in non-dilutive capital and the resulting cost-savings from the deal significantly extends our cash runway in support of our three clinical programs and pipeline."

Albert Seymour, Ph.D., Chief Scientific Officer of Homology Medicines, added, "Initiating the pheEDIT gene editing trial was a major accomplishment as this is a novel approach to treat PKU that utilizes a different arm of our AAVHSC technology platform. Launching our juMPStart gene therapy trial for Hunter syndrome represents the first program to enter the clinic with a one-time systemic administration that is designed to address peripheral and CNS components of the disease, which is a highly differentiated approach. We will continue to work with our clinical sites and the patient communities to execute on both trials, and plan to provide program updates by year-end 2022."

Consistent with Homology's prior announcement of a clinical hold on its pheNIX gene therapy trial for phenylketonuria (PKU), the Company received the anticipated letter from the U.S. Food and Drug Administration (FDA) detailing the information requested for elevated liver function tests (LFTs) observed in the trial and modified clinical-mitigation measures with nothing related to Homology's other two clinical programs or its CMC/manufacturing capability. In patients who experienced elevated LFTs, all have resolved and no hospitalizations were required. Among the risk-mitigation methods that Homology intends to propose is a new, more targeted immunosuppressive regimen that is shorter in duration and includes a T-cell inhibitor used in combination with a steroid-sparing regimen that may improve patient compliance. The Company has already incorporated this regimen into its pheEDIT gene editing trial for adults with PKU. The use of T-cell inhibitors has been shown to be effective in dampening the anticipated immune response to AAV capsids, which are commonly employed to deliver genetic medicines. Homology also noted that interest in the pheEDIT study is steadily increasing with 15 clinical sites already selected to participate, several pending site initiation visits expected shortly, and more clinical trial sites on the horizon. A program update on pheEDIT is still expected by year-end 2022.

With the additional information requested by FDA on the pheNIX trial and the planned conversion to a more specific steroid-sparing immunosuppressive regimen, Homology estimates that it will require more time to submit and receive feedback on its proposed clinical risk-mitigation strategy. This also includes time needed to amend the pheNIX study protocol. As a result, the Company now expects to provide a program update when the path forward is established with FDA.

Fourth Quarter 2021 and Recent Accomplishments

• Formed a new Manufacturing and Innovation Business with UK-based, global viral vector manufacturer Oxford Biomedica (OXB), which incorporates Homology's leading internal technical and manufacturing operations and is led by Homology's former Chief Operating Officer, Tim Kelly, as Chief Executive Officer and Board Chair. Key benefits to Homology include:
  • Received $130 million from OXB, which will support the advancement of the three clinical programs and genetic medicines platform;
    • Non-dilutive capital and significant reduction in manufacturing expenses that extends cash runway into 2H 2024;
  • 20% ownership and a Board seat in the new company;
  • Access to the AAV ‘plug and play' process and platform, which met CMC requirements for Homology's three INDs, as a preferred customer;
    • Continuing to work with AAVHSC experts within the state-of-the-art manufacturing facility built by Homology; and
  • $50 million investment from OXB in the new company that aims to leverage OXB's existing client base and commercial expertise.
• Initiated the pheEDIT trial, a Phase 1 dose-escalation study in adults with PKU evaluating HMI-103, a one-time, in vivo product candidate that utilizes a nuclease-free gene editing approach for PKU. A program update is expected by year-end 2022.
• Presented data supporting the recently launched juMPStart trial evaluating a one-time, systemic administration of HMI-203 investigational gene therapy for Hunter syndrome. Presentations at WORLDSymposium™ included:
  • Clinical trial design, select eligibility criteria and planned endpoints for the Phase 1 dose-escalation trial. A program update is expected by year-end 2022;
  • Incorporated patient, caregiver and key opinion leader feedback into the clinical trial design, which related to unmet medical need and expectations for a one-time gene therapy that has the potential for enzyme replacement therapy (ERT)-independence; and
  • Homology's gene therapy approach to Hunter syndrome and other lysosomal storage diseases, including metachromatic leukodystrophy (MLD), which is developed to target both the peripheral as well as the central nervous system (CNS) manifestations of these multi-organ disorders.
• Received orphan medicinal product designation (OMPD) and advanced therapy medicinal product (ATMP) classification from the European Medicines Agency (EMA) for both HMI-203 for Hunter syndrome and HMI-103 for PKU.
• Continued to advance HMI-104, a C5 antibody development candidate for paroxysmal nocturnal hemoglobinuria (PNH), which is currently in IND-enabling studies. The Company's GTx-mAb platform is designed to deliver one-time in vivo gene therapy to produce antibodies from the liver and secrete them throughout the body.

Fourth Quarter 2021 and Full Year Financial Results

• Net loss for the quarter ended December 31, 2021 was $(33.6) million or $(0.59) per share, compared to a net loss of $(29.8) million or $(0.62) per share for the same period in 2020. Net loss for the year ended December 31, 2021 was $(95.8) million or $(1.73) per share, compared to a net loss of $(128.7) million or $(2.80) per share for the same period in 2020.
• Collaboration revenues for the three and twelve months ended December 31, 2021 were $0.8 million and $34.0 million, respectively, as compared to $1.0 million and $2.7 million for the comparable periods in 2020. Collaboration revenues consisted primarily of revenue recognized as a result of concluding the Company's collaboration with Novartis. Also included in collaboration revenues is revenue recognized under the Company's stock purchase agreement with Pfizer.
• Total operating expenses for the three and twelve months ended December 31, 2021 were $34.4 million and $129.9 million, respectively, as compared to $30.8 million and $133.0 million for the comparable periods in 2021, and consisted of research and development expenses and general and administrative expenses.
• Research and development expenses for the three and twelve months ended December 31, 2021 were $23.6 million and $93.1 million, respectively, as compared to $23.2 million and $100.4 million for the comparable periods in 2020. Research and development expenses decreased in 2021 due to a reduction of direct research expenses for HMI-102 due to the completion of manufacturing of drug product in the prior year for the Phase 1/2 pheNIX clinical trial. Additionally, the continued optimization of Homology's ‘plug and play' manufacturing process and platform has created efficiencies across all of programs that directly reduced spend for clinical trial and other materials and limited reliance on outside contract manufacturing organizations. Further, direct research expenses related to our HMI-202 program decreased over the prior year as the Company was applying the learnings from the IND-enabling studies to further optimize a vector with a better therapeutic profile. Partially offsetting these decreases were increased direct research expenses for HMI-103 and HMI-203 as Homology advanced both programs into the clinic in 2021, as well as increased personnel costs to support ongoing development programs, research initiatives, technology platform and manufacturing capabilities.
• General and administrative expenses for the three and twelve months ended December 31, 2021 were $10.8 million and $36.8 million, respectively, as compared to $7.6 million and $32.6 million for the comparable periods in 2020. General and administrative expenses increased due to personnel costs as a result of new hires and increased legal costs and other professional fees.
• As of December 31, 2021, Homology had approximately $155.9 million in cash, cash equivalents and short-term investments. Based on current projections, Homology expects current cash resources, including the $130.0 million received from Oxford Biomedica in March 2022, to fund operations into the second half of 2024.

Upcoming Events

• H.C. Wainwright Gene Therapy and Gene Editing Conference: Available on-demand March 30 at 7:00 a.m. ET
• 21^st Annual Needham Virtual Healthcare Conference: April 11 at 9:30 a.m. ET.

About Homology Medicines, Inc.

Homology Medicines, Inc. is a clinical-stage genetic medicines company dedicated to transforming the lives of patients suffering from rare diseases by addressing the underlying cause of the disease. The Company's clinical programs include HMI-102, an investigational gene therapy for adults with phenylketonuria (PKU); HMI-103, a gene editing candidate for PKU; and HMI-203, an investigational gene therapy for Hunter syndrome. Additional programs focus on metachromatic leukodystrophy (MLD), paroxysmal nocturnal hemoglobinuria (PNH) and other diseases. Homology's proprietary platform is designed to utilize its family of 15 human hematopoietic stem cell-derived adeno-associated virus vectors (AAVHSCs) to precisely and efficiently deliver genetic medicines in vivo through a gene therapy or nuclease-free gene editing modality, as well as to deliver one-time gene therapy to produce antibodies throughout the body through the GTx-mAb platform. Homology has a management team with a successful track record of discovering, developing and commercializing therapeutics with a focus on rare diseases. Homology believes its initial clinical data and compelling preclinical data, scientific and product development expertise and broad intellectual property position the Company as a leader in genetic medicines. For more information, visit www.homologymedicines.com. 

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, including timing and expectations surrounding communications with the FDA regarding the pheNIX trial clinical hold and related updates from the Company; the potential of our gene therapy and gene editing platforms, including our GTx-mAb platform; our plans and timing for the release of additional preclinical and clinical data; our position as a leader in the development of genetic medicines; the sufficiency of our cash and cash equivalents to fund our operations; 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: the impact of the COVID-19 pandemic on our business and operations, including our preclinical studies and clinical trials, and on general economic conditions; 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 regulatory approval process; interim, topline and preliminary data may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data; 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, including for the manufacture of materials for our research programs, preclinical and clinical studies; 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 incurred as a result of operating as a public company. These and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021 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.

HOMOLOGY MEDICINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
		December 31,
			2021			2020
Cash, cash equivalents and short-term investments		$	155,873		$	217,431
Assets held for sale			28,907			—
Property and equipment, net			2,252			37,002
Right-of-use assets			15,607			5,897
Other assets			9,082			3,407
Total assets		$	211,721		$	263,737
Accounts payable, accrued expenses and other liabilities		$	13,772		$	14,525
Operating lease liabilities			246			2,501
Operating lease liabilities, net of current portion			23,688			12,941
Deferred revenue			4,364			37,775
Stockholders' equity			169,651			195,995
Total liabilities and stockholders' equity		$	211,721		$	263,737

HOMOLOGY MEDICINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
		For the Three Months Ended December 31,								For the Year Ended December 31,
			2021				2020				2021				2020
		(unaudited)
Collaboration revenue		$	802			$	980			$	33,971			$	2,702
Operating expenses:
Research and development			23,646				23,195				93,085				100,392
General and administrative			10,781				7,587				36,835				32,573
Total operating expenses			34,427				30,782				129,920				132,965
Loss from operations			(33,625	)			(29,802	)			(95,949	)			(130,263	)
Other income:
Interest income			42				11				185				1,569
Total other income			42				11				185				1,569
Net loss		$	(33,583	)		$	(29,791	)		$	(95,764	)		$	(128,694	)
Net loss per share-basic and diluted		$	(0.59	)		$	(0.62	)		$	(1.73	)		$	(2.80	)
Weighted-average common shares outstanding-basic and diluted			57,150,079				48,112,174				55,283,318				45,910,787

Company Contacts:

Theresa McNeely

Chief Communications Officer

and Patient Advocate

[email protected]

781-301-7277

Media Contact:

Cara Mayfield

Vice President, Patient Advocacy

and Corporate Communications

[email protected]

781-691-3510