Three months after eliminating 23% of its staff in a restructuring, the CEO of Passage Bio says the gene therapy developer will maintain the current size of its workforce while it works to deliver clinical progress on its lead programs.
A month after William Chou, MD, was appointed the company’s chief executive, Passage announced a restructuring that eliminated 22 jobs, leaving the company with nearly 100 employees. Passage Bio’s co-founders include gene therapy pioneer James M. Wilson, MD, PhD.
The job cuts marked the second round of job-cutting carried out by Passage last year. The company eliminated 17 jobs in March 2022, an 11% reduction that shrank the workforce from the 133 employees with whom Passage rang in 2022, according to a regulatory filing.
“We are absolutely committed to this level of workforce. This is the right size of the company to deliver on the programs that we have now,” Chou told GEN Edge in an interview during the recent J.P. Morgan 41st Healthcare Conference.
Those programs are led by two clinical-phase efforts that are both expected to generate data this year: PBGM01, Passage’s gene therapy candidate designed to treat GM1 gangliosidosis; and PBFT02, a gene therapy candidate for frontotemporal dementia (FTD).
Chou added that the workforce is not likely to grow during 2023.
“Our focus right now is on delivering on the milestones. We promised clinical milestones in both GM1 and in FTD, so the first focus is on execution,” Chou said. “I’m somebody who wants to crawl before we run, so we’ve got to execute for 2023. That’s our primary focus right now.”
Chou joined Passage Bio last October, succeeding interim CEO Edgar B. (Chip) Cale, who remains general counsel and corporate secretary. Cale replaced president and CEO Bruce Goldsmith, PhD, who stepped down last May by “mutual agreement” with the company’s board.
Chou joined Passage from Aruvant Sciences, a rare disease gene therapy developer, where he was CEO. He previously held executive positions at Novartis—including vice president, global disease lead for the company’s Cell and Gene Therapy unit, where he oversaw the global commercial launch of Kymriah®, approved by the FDA in 2017 as the first CAR-T cell therapy.
“I learned at Novartis that sometimes you have to prioritize to make sure you can deliver on the core fundamental values of the company,” Chou said. “At Passage Bio, we needed to make some hard decisions so that we could prioritize. It’s been a bit of a storm out there in the markets. And we needed to hunker down so that we could deliver the most value to patients.”
Investors appeared to support the restructuring, as Passage’s stock rose 23%, from $1.20 to $1.48 a share, in the three trading days after the job and pipeline cutbacks were announced. But at $1.59 a share as of January 23, Passage’s stock has lost most (92%) of its value since it went public in 2020 at $20 a share, a year after the company’s launch, through an initial public offering (IPO) that raised $227.5 million in net proceeds.
Some analysts, however, are less bullish than the CEO on Passage. Shortly after the restructuring was announced, Citigroup analyst Neena Bitritto-Garg cut the firm’s price target on Passage stock from $7 to $5. Last month, Geulah Livshits, PhD, a senior research analyst with Chardan covering biotech companies, lowered the firm’s price target to $11 from $18.
Through the job and pipeline cutbacks, Passage extended its financial “runway” from the second quarter of 2024 at least six months, to the first half of 2025, based on cash, cash equivalents, and marketable securities of $213.758 million as of September 30, 2022, down 32% from $315.073 as of December 31, 2021.
By restructuring operations, Passage hopes to stem years of losses resulting in an accumulated deficit of $465.33 million as of September 30, up 31% from $356.28 million as of December 31, 2021.
Passage finished the first nine months of 2022 with a net loss of $109.05 million, compared with a net loss of $134.23 million in Q1–Q3 2021. During the third quarter of 2022, the company cut its net loss by nearly half, to $26.7 million from $46.91 million a year earlier.
Philadelphia-based Passage Bio develops gene therapies for rare, monogenic central nervous system (CNS) disorders through a strategic collaboration and licensing agreement with the University of Pennsylvania’s Gene Therapy Program (GTP)—under the leadership of Wilson—to conduct discovery and IND-enabling preclinical work.
Even after restructuring, Passage Bio is continuing programs to develop three preclinical candidates—PBAL05 for amyotrophic lateral sclerosis (ALS), targeting ALS patients with a gain-of-function mutation in the C9orf72 gene; a program for Huntington’s disease that targets the HTT gene and an undisclosed gene; and a temporal lobe epilepsy (TLE) program acting on an undisclosed gene. Passage hasn’t said publicly when any of these programs will advance into the clinic.
However, Passage has halted development of two other pipeline gene therapy programs—PBKR03, designed to treat Krabbe disease by using an AAVhu68 viral vector to deliver a functional GALC (galactosylceramidase) gene; and PBML04, a treatment for metachromatic leukodystrophy (MLD) and mutations in the enzyme ARSA gene, which encodes the lysosomal enzyme ARSA.
Passage said last fall it will explore strategic alternatives for both programs that could include sell offs or partnerships—a process that Chou said the company is continuing to pursue. “We have a lot of confidence that these programs will benefit patients,” Chou said. “We’re looking forward to getting these programs to patients. We’re looking for the right opportunity to do that.”
“From everything we’ve seen so far with the GM1 program, the preclinical data has translated very well,” Chou added.
The restructuring is not affecting Passage’s approach to manufacturing. The company continues to lease lab space in Hopewell, NJ, where it oversees analytical capabilities, assay development and validation, and clinical product testing to support both viral vector manufacturing and clinical development. Passage still contracts out its clinical-scale GMP manufacturing to Catalent:
“It’s a nice hybrid arrangement,” Chou said.
Positive early data
Last December, Passage announced positive interim safety, biomarker, and clinical development results from the first three cohorts dosed in the Phase I/II Imagine-1 trial (NCT04713475). Each cohort consisted of two patients: Cohort 1 included late infantile GM1 patients given a low dose of PBGM01; Cohort 2, late infantile, high dose; and Cohort 3, early infantile, low dose.
The trial is a global, open-label, dose-escalation study of PBGM01 delivered by intra-cisterna magna (ICM) injection in four cohorts of pediatric subjects with early and late infantile GM1. The rare, fatal lysosomal storage disease is characterized by very low activity of beta-galactosidase (β-Gal) due to mutations in the GLB1 gene.
Passage reported that PBGM01 led to dose-dependent increases in cerebrospinal fluid (CSF) β-Gal activity, with both Cohort 2 patients who received the high dose showing increases in enzyme activity well above baseline. The first Cohort 2 patient showed enzyme activity increases of 4.7-fold over baseline at 30 days and 3.6-fold after six months. The second Cohort 2 patient showed an enzyme activity increase 5.2-fold over baseline at 30 days.
Patients treated with the low dose, by contrast, showed responses in enzyme activity that ranged from 1.2-fold over baseline at 30 days to 2.8-fold at six months.
Dosing with PBGM01 also led to dose-dependent decreases in CSF GM1 ganglioside levels, with both Cohort 2 patients showing decreases in substrate levels from baseline. The cohort’s first patient showed decreases of 30% from baseline at 30 days and 75% at six months, while a 21% decrease at 30 days was reported for the second patient. Low-dose patients showed variable levels of response.
Chou said the early data showed success in establishing safety, identifying a subset of patients that show better clinical response than others, and demonstrating dose response. Passage trumpeted positive results in the first two PBGM01 patients last year.
“Our next steps are to go to an even higher dose,” Chou said. “We do have the room from our previous clinical toxicity data. We also plan on modifying our inclusion criteria such that we target patients who we think can benefit the most.”
PBGM01 is designed to treat GM1 gangliosidosis by targeting the lysosomal enzyme β-galactosidase (GLB1). PBGM01 delivers a codon-optimized gene sequence encoding functional beta-gal enzyme, using an AAVhu68 viral vector. The vector is delivered directly to the CSF by a single ICM injection, with the goal of increasing beta-gal enzyme activity levels in both the CNS and periphery.
Passage’s early clinical data gives the company an additional competitive advantage over two GM1 gene therapy developers that have run into trouble over the past year: Sio Gene Therapies (formerly Axovant) agreed to dissolve and liquidate its assets, which include GM1 and GM2 candidates whose development the company halted in April.
On January 6, Lysogene asked a French commercial court to convert a “safeguard” or receivership proceeding launched last month into a reorganization, allowing the company to search for buyers or investors. Lysogene’s pipeline includes LYS-GM101, which uses the AAVrh10 vector to deliver a functional copy of the GLB1 gene to the CNS. An adaptive Phase I/II trial of LYS-GM101 (NCT04273269) stopped recruiting patients last year.
“I really think we are going to be the only therapy for GM1 gangliosidosis,” Chou said. “There’s a very high likelihood that it might just be us to deliver benefit to patients.”
PBFT02 uses an AAV1 viral vector to deliver a modified DNA encoding the granulin gene (GRN) to a patient’s cells. The vector is designed to be delivered directly to the CSF via ICM injection. The vector and delivery approach is intended to provide higher-than-normal levels of the progranulin protein (PGRN) to the CNS to overcome the progranulin deficiency in GRN gene mutation carriers.
PBFT02 is under study in the Phase I/II upliFT-D trial (NCT04747431) evaluating the FTD candidate for frontotemporal dementia with granulin mutations. That study dosed its first patient in August, and is recruiting patients, with the first data expected this year and a primary completion date estimated at August 2024.
Once Passage is able to resume growth, Chou said, it will do so in the greater Philadelphia region where it was established. Chou grew up outside Philadelphia and graduated from Lower Merion High School in Ardmore, PA, where Kobe Bryant led the school’s basketball team to a state championship in 1996.
“I think being founded from Penn and being part of the Greater Philadelphia business environment is a key part of Passage’s identity,” Chou said. “So, we look forward to continuing to be a key part of the Philadelphia healthcare community moving forward. It’s nice to actually come home and be a part of that.”