PresentationUnknown Analyst Good afternoon. Thank you for coming to the Morgan Stanley Healthcare Conference. My name is Rock [indiscernible]. I'm a Managing Director in the Investment Banking division at Morgan Stanley. I just have a brief disclosure to read. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representatives. So today, we have the pleasure ...

Avidity Biosciences FY Conference Summary Company Overview - **Company**: Avidity Biosciences (NasdaqGM:RNA) - **Industry**: Biotechnology, focusing on neuromuscular diseases Key Points and Arguments Pipeline and Upcoming Catalysts - Avidity has transitioned from a preclinical company to having three late-stage clinical trials within five years since going public [4] - Anticipates three Biologics License Applications (BLAs) within a 12-month period, starting with Delzeta for Duchenne muscular dystrophy (DMD) exon 44 by the end of 2025, with a launch expected in 2026 [5] - Additional BLAs for Delzeta in myotonic dystrophy and Delbrax for facioscapulohumeral muscular dystrophy (FSHD) are expected in the second half of 2026 [5] Clinical Trial Data and Efficacy - Upcoming data readouts include: - Functional data from the Delzeta trial this month, focusing on participants who have been on the drug for 12 months [5] - Data from the Marine Long-Term Extension (LLE) trial for participants on the drug for 24 months in Q4 2025 [6] - 30-week efficacy data from the Harbor trial for myotonic dystrophy in Q2 2026 [6] - Avidity is currently dosing approximately 30 patients per week across its platform, with over 250 patient years of data collected [10] Product Design and Safety - Avidity's AOC™ (Antibody Oligonucleotide Conjugate) platform is utilized across its clinical programs, with siRNA used for FSHD and myotonic dystrophy, and PMO for DMD [9] - The company has learned that more frequent dosing is necessary for efficacy, with current dosing intervals set at every six to eight weeks [11] Regulatory Strategy and Market Engagement - The Harbor trial is the first global phase three study in myotonic dystrophy, with endpoints designed based on extensive input from the patient and physician communities [15] - Avidity is actively engaging with patient advocacy groups to enhance awareness and diagnosis rates for the diseases it targets [28] Commercial Strategy - Avidity has built a commercial organization in preparation for the launch of Delzeta, including patient services and a sales force targeting specialists who treat these rare diseases [44] - The company plans to leverage relationships developed during the Delzeta launch for subsequent launches of Delbrax and other products [46] Financial Position - Avidity has a strong cash position of $1.4 billion, providing a runway to mid-2027, with expectations to reach profitability quickly post-launch of Delzeta and Delbrax [48] Additional Important Insights - The company is focusing on a biomarker approach for FSHD, with a circulating biomarker (CDUX) identified that correlates with disease severity [30] - Avidity is preparing for a global launch strategy, initially targeting the U.S., Europe, and Japan, with significant enthusiasm from the patient community [29] - The company emphasizes the importance of demonstrating functional benefits alongside biomarker data to support its BLA submissions [43]

Company Overview - Avidity Biosciences is currently experiencing a significant period of growth, particularly in the execution of three muscle disease programs [2]. Leadership - The company is led by a strong executive team, including Sarah Boyce as President and CEO, Steve Hughes as Chief Medical Officer, and Kat Lange as Chief Business Officer [1].

Core Insights - The company aims to significantly enhance lives through RNA therapy delivery, reflecting a strong commitment to innovation in the healthcare sector [1] Company Development - Since its IPO five years ago, the company has progressed from having no clinical programs to currently having three programs in late-stage development, indicating substantial growth and advancement in its research and development efforts [1]

Financial Data and Key Metrics Changes - The company has progressed significantly since its IPO five years ago, moving from no programs in the clinic to three programs in late-stage development [3][4] - The company plans to file three Biologics License Applications (BLAs) within a 12-month period, starting with the DMD Delzeta program for accelerated approval in the U.S. [4][24] Business Line Data and Key Metrics Changes - The Delzeta program has shown a 25% increase in dystrophin levels in patients, with a significant decrease in creatine kinase levels [11][12] - The company is focused on delivering first-in-class and best-in-class therapies across its product lines, with a strong emphasis on muscle delivery [4][10] Market Data and Key Metrics Changes - There are approximately 900 boys and young men in the U.S. with DMD exon 44, with about 50% of them treated at the same 40 centers of excellence [33] - The company anticipates that its therapies will be the first and best available options for DMD patients [34] Company Strategy and Development Direction - The company is preparing for commercialization with a foundational commercial infrastructure that can be leveraged across all three drug opportunities [9][10] - The company is exploring partnerships and M&A opportunities as it approaches the commercial phase with potential blockbuster drugs [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing their plans and emphasized the importance of focusing on upcoming approvals and launches [9][10] - The company is optimistic about the regulatory landscape and believes its data package will be compelling for the FDA [30][41] Other Important Information - The company has removed biopsy requirements for new participants in the Explore 44 trial, focusing on dystrophin and creatine kinase as key markers for the BLA filing [23][25] - The company is actively working on global trial enrollment for FSHD, with strong community support [46][47] Q&A Session Summary Question: Can you provide an overview of the company's platform and key programs? - The company has three programs in late-stage development and aims to improve lives through RNA therapy [3] Question: What is the commercial strategy and business development approach? - The company is building a commercial infrastructure and is open to exploring M&A opportunities [8][9] Question: Can you discuss the Delzeta program and its data? - The Delzeta program has shown a 25% increase in dystrophin levels and will present functional data ahead of schedule [11][12][16] Question: What is the market opportunity for DMD exon 44? - There are about 900 DMD exon 44 patients in the U.S., and the company plans to target this population effectively [33] Question: What are the key filing requirements for the BLA? - The primary requirements include demonstrating dystrophin levels and safety data, with a focus on creatine kinase as a critical marker [23][25] Question: Will there be a pre-BLA meeting? - Yes, a pre-BLA meeting is planned to ensure the data package meets FDA expectations [44] Question: What are the expectations for the Harbor study's primary endpoint? - The primary endpoint is video hand opening time, and the company is confident in meeting this goal [51]

Financial Data and Key Metrics Changes - The company has progressed significantly since its IPO five years ago, moving from no programs in the clinic to three late-stage development programs [3] - The company is on track to file three Biologics License Applications (BLAs) within a 12-month period, starting with the DMD Delzeta program for accelerated approval in the U.S. [4] Business Line Data and Key Metrics Changes - The Delzeta program for DMD has shown a 25% increase in dystrophin levels, rising from a baseline of 7% to 32%, and a decrease in creatine kinase (CK) to near-normal levels [11][12] - The company plans to present functional data for Delzeta ahead of schedule, indicating strong progress in its clinical trials [16] Market Data and Key Metrics Changes - There are approximately 900 boys and young men in the U.S. diagnosed with DMD exon 44, with about 50% of them treated at the same 40 centers of excellence [33] - The company anticipates being the first and best therapy available for DMD patients, leveraging its established patient services and field force [34] Company Strategy and Development Direction - The company is focused on building a foundational commercial infrastructure that can be leveraged across all three drug opportunities [10] - The strategy includes exploring partnerships and M&A opportunities as the company approaches the commercial phase with potential blockbuster drugs [7][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing the upcoming approvals and launches, emphasizing the importance of maintaining focus on their current programs [9] - The company is optimistic about the regulatory landscape, having aligned with the FDA on the requirements for accelerated approval based on dystrophin and CK data [24][26] Other Important Information - The company has initiated a biomarker study for the Delbrax program, which is expected to provide critical data for the accelerated approval pathway [40] - The company is actively working to ensure global trial enrollment for its FSHD program, indicating strong community interest and support [47] Q&A Session Summary Question: What drove the decision to report the data ahead of schedule? - The company aims to exceed expectations and found that the data was ready sooner than anticipated [16] Question: Can you give us a sense of patient number, follow-up time, and functional endpoints? - The upcoming data will involve 17 patients from the Explore 44 trial, with a focus on various functional measures [18][19] Question: Could you talk about the market opportunity for exon 44 and your go-to-market strategy? - The company sees a significant opportunity in the DMD market, with a well-established infrastructure to support patient access [33] Question: Will there be a pre-BLA meeting, and what will be the focus? - A pre-BLA meeting is planned to ensure the submission package meets FDA expectations [43] Question: What is the expectation for the primary endpoint in the Harbor study? - The company is confident in meeting the primary endpoint and is focused on a comprehensive data package for regulatory approval [52]

Summary of AVIDITY Biosciences Conference Call Company Overview - **Company**: AVIDITY Biosciences - **Focus**: Development of RNA therapeutics targeting muscle diseases, with three late-stage programs: Dalzosia (DMD), Delbrex (FSHD), and Daldistarone (myotonic dystrophy) [4][5][10] Core Points and Arguments Vision and Strategy - AVIDITY aims to revolutionize the RNA space and significantly impact patients' lives, with a focus on muscle diseases [3][4] - The company is on track to file its first Biologics License Application (BLA) for Dalzosia by the end of the year [4][17] Drug Development Progress - **Dalzosia**: Targeting boys and young men with DMD amenable to exon 44 skipping; enrollment completed, with data readout expected in Q2 next year [4][12] - **Delbrex**: For FSHD, with alignment on primary endpoint for accelerated approval; data readout also expected in Q2 next year [4][12][54] - **Daldistarone**: For myotonic dystrophy, with a focus on significant unmet medical needs [4][48] Delivery Mechanism - AVIDITY's platform allows for high delivery of RNA therapeutics to muscle tissue, achieving 3-5 times higher delivery compared to other methods [7][8][40] - The use of antibody oligonucleotide conjugates (AOCs) targets the transferrin receptor, enhancing muscle delivery [6][7] Market Potential and Commercialization - Anticipated rapid uptake for Dalzosia, with approximately 900 boys and young men in the US eligible for treatment [27] - The company has established a commercial infrastructure, including patient services and payer engagement teams, to support drug launches [22][49] Regulatory Environment - Positive interactions with the FDA, with no significant impact from leadership changes; the same division reviews all three programs, ensuring consistency [20][21] - Plans for BLA submissions for FSHD and myotonic dystrophy in the second half of next year [57] Additional Important Insights - The company is preparing for potential acquisition interest due to the value of its upcoming drug launches, with two drugs expected to be multi-billion dollar opportunities [10][11] - The myotonic dystrophy patient population is estimated at 40,000 in the US, with around 10,000 already diagnosed, indicating a significant market opportunity [45][46] - AVIDITY has secured a global commercial supply agreement with Lonza for manufacturing, ensuring readiness for market demand [49] Conclusion AVIDITY Biosciences is positioned for significant growth with its innovative RNA therapeutics targeting high-need muscle diseases. The company is on track for multiple drug launches, backed by a strong regulatory strategy and a well-prepared commercial infrastructure.

Core Insights - Avidity Biosciences' shares have increased by 36% in the past month due to reports of Novartis' interest in acquiring the company, although discussions are still in early stages with no guarantees of a deal [1][7] - Avidity is a clinical-stage biotech focused on RNA therapeutics, with key programs targeting rare muscular diseases and expanding into precision cardiology [2][3] - Year-to-date, Avidity's shares have surged by 59%, significantly outperforming the industry average growth of 4% [6] Company Overview - Avidity Biosciences is developing RNA therapeutics for conditions such as myotonic dystrophy type 1, facioscapulohumeral muscular dystrophy, and Duchenne muscular dystrophy [2] - The company has established partnerships with major pharmaceutical companies like Bristol Myers and Eli Lilly to develop therapies for cardiovascular and immunology indications [3] Market Context - Novartis is reportedly interested in acquiring Avidity to mitigate potential revenue losses from generic competition affecting its top-selling drugs, such as Entresto, Gleevec, and Diovan [7][8] - The acquisition would enhance Novartis' pipeline in rare muscular diseases and strengthen its position in the cardiovascular market [8]

Core Viewpoint - Novartis plans to acquire Avidity Biosciences, a leader in the AOC field with a market value of nearly $6 billion, to strengthen its pipeline in the rare disease treatment sector [3]. Group 1: Market Dynamics - The small nucleic acid drugs, including siRNA, ASO, and miRNA, are designed to regulate gene expression for disease treatment, offering breakthrough therapies for genetic, rare, and chronic diseases [4]. - Novartis faces a "patent cliff" with several blockbuster drugs, including Entresto, set to lose patent protection between 2025 and 2030, necessitating the acquisition of new pipeline assets to ensure future growth [5]. - Major pharmaceutical companies, including Sanofi, Pfizer, and Eli Lilly, have been actively acquiring and partnering in the small nucleic acid drug space to capture the potential market [6]. Group 2: AOC Development and Commercialization - AOC (Antibody-Oligonucleotide Conjugates) represents an innovative delivery method for small nucleic acid drugs, combining the targeting ability of monoclonal antibodies with the gene regulation capabilities of oligonucleotides [10]. - Avidity Biosciences is a leading player in the AOC field, with three pipelines in Phase III clinical trials, including a drug for Duchenne Muscular Dystrophy (DMD) that has shown promising results [12]. - The commercialization of AOC drugs is expected to accelerate, with several biotech companies entering late-stage clinical trials, aiming for market entry around 2026-2027 [11]. Group 3: Investment and Policy Support - The Chinese government continues to support the development of RNA and small nucleic acid drugs through funding initiatives aimed at overcoming core bottlenecks in drug creation [14]. - Recent financing activities in the small nucleic acid drug sector indicate growing interest and investment, with several companies securing significant funding [17]. - Novartis's acquisition of Avidity, if completed, would mark a significant milestone in the global AOC drug market, highlighting the increasing focus on innovative therapies [15].

Investment Rating - The report indicates a strong interest in the small nucleic acid drug sector, particularly through acquisitions and partnerships, highlighting the potential for significant growth in this area [3][5][15]. Core Insights - Novartis is focusing on expanding its pipeline in rare disease treatments by acquiring Avidity Biosciences, a leader in the Antibody-Oligonucleotide Conjugates (AOC) field, which is valued at nearly $6 billion [3][11]. - The small nucleic acid drugs, including siRNA, ASO, and miRNA, are gaining traction due to their ability to target traditionally "undruggable" disease-causing genes, offering breakthrough treatment options for genetic, rare, and chronic diseases [4][9]. - The report emphasizes the importance of delivery technologies for small nucleic acid drugs, particularly the need for effective delivery systems to target tissues outside the liver, as 90% of disease-causing genes are expressed in non-liver tissues [8][9]. Summary by Sections Acquisition and Market Dynamics - Novartis has been actively acquiring companies to fill the pipeline gap created by upcoming patent expirations of key drugs, such as Entresto, which is projected to generate $7.822 billion in sales in 2024 [5][6]. - The report outlines several significant acquisitions in the small nucleic acid space, including Novartis's $9.7 billion acquisition of The Medicines Company and a $1.7 billion deal for Regulus Therapeutics [6][12]. Delivery Technology and Challenges - The report discusses the challenges faced by small nucleic acid drugs in terms of delivery, particularly the degradation by nucleases and the difficulty in penetrating the blood-brain barrier [7][8]. - Innovations in delivery systems, such as the FALCON platform by DTx Pharma, are highlighted as crucial for advancing the application of RNA therapies beyond liver-targeted treatments [8][10]. Competitive Landscape - The competitive landscape is characterized by major pharmaceutical companies, including Sanofi, Pfizer, and Eli Lilly, making significant investments in small nucleic acid drug technologies to capture the emerging market [6][10]. - Avidity Biosciences is noted as a key player with multiple clinical-stage AOC pipelines, including a breakthrough therapy for Duchenne Muscular Dystrophy [12][13]. Regulatory and Funding Environment - The report mentions supportive policies from the Chinese government aimed at promoting RNA and small nucleic acid drug development, including funding initiatives for innovative research [14][15]. - Recent financing activities in the small nucleic acid drug sector indicate growing investor interest, with several companies securing substantial funding to advance their research and development efforts [16].