Jeff Marrazzo - CEO Kathy High - President and Head of R&D Stephen Webster - CFO John Furey - COO Ryan Asay - Head, IR

Phil Nadeau - Cowen and Company Martin Auster - Credit Suisse Gena Wang - Barclays Capital Cory Kasimov - JPMorgan Michael Yee - Jefferies Mohit Bansal - Citigroup Raju Prasad - William Blair Vincent Chen - Bernstein Steven Breazzano - Evercore ISI Matthew Luchini - BMO Capital Markets Elemer Piros - Cantor Fitzgerald

Good day, ladies and gentlemen, and welcome to the Q2 2018 Spark Therapeutics, Inc. Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Ryan Asay, Head of Investor Relations. You may begin.

Thank you, Gigi. Welcome everyone to the Spark Therapeutics second quarter 2018 conference call. With me today from the company are Jeff Marrazzo, Chief Executive Officer; Dr. Kathy High, President and Head of Research and Development; John Furey, Chief Operating Officer; and Stephen Webster, Chief Financial Officer. Please note that this conference call will include forward-looking statements regarding our products, programs and product candidates. Because such statements deal with future events and are subject to many risks and uncertainties, actual results may differ materially from those in the forward-looking statements. For a full discussion of these risks and uncertainties, please review our annual report on Form 10-K and our quarterly report on Form 10-Q that are filed with the U.S. Securities and Exchange Commission. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 7, 2018. Spark undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. The conference call is being webcast and will be archived on our Web site for approximately one week. Earlier this morning, we released financial results for the quarter ended June 30, 2018, and recent business progress. This news release is available in the Investors section of our Web site at sparktx.com. I'd now like to introduce Jeff Marrazzo, Spark's CEO.

Thanks, Ryan. Good morning everyone and thank you for joining us. On this morning’s call, I will provide some introductory remarks before asking John to share an update on the LUXTURNA launch, Kathy to provide details on the significant progress we have made with our hemophilia programs over the past few months and Stephen to review our second quarter 2018 financial results. I will then have some brief concluding comments before opening the call up to your questions. As the only fully integrated commercial gene therapy company, our product portfolio continues to mature with one product on the market, a second asset SPK-9001 for hemophilia B now in Phase 3 development with our partner Pfizer and today we announced that we plan to move a third asset SPK-8011 for hemophilia A into Phase 3 testing starting later this year. In addition, we have a robust pipeline of several other clinical and preclinical programs that we are excited about. The LUXTURNA launch is proceeding well, as is the important groundwork we are laying in this early commercial period, particularly with innovative pricing and distribution models. These market access initiatives are significant not only for LUXTURNA but also for the success of future gene therapy assets coming out of our pipeline. With 9001 for hemophilia B, the data continue to be robust showing further evidence of safety, efficacy and durability. We are seeing near elimination of bleeds and infusions further supporting the factor levels we have targeted and strong evidence of consistent long-term durability. We are also seeing a favorable safety profile. We are delighted both to have completed the transition of the program to Pfizer and that Pfizer has initiated a pivotal Phase 3 study. With SPK-8011 for hemophilia A, the totality of the clinical data we have generated to-date supports moving into Phase and we plan to initiate a run-in study later this year. Specifically, as in hemophilia B, 8011 is driving dramatic clinical outcomes with near elimination of bleeds and infusions across all three doses studied. Further, initial long-term follow-up data provide preliminary evidence of long-term durability for the two participants out at least one year looking similar to the sustained expression in efficacy we have seen in hemophilia B and with LUXTURNA for that matter. 8011 is also showing a dose response and at the dose of 2e12 vector genomes per kilogram, 8011 can achieve the targeted potency as demonstrated by factor levels that are similar to what we’ve seen in 9001 in hemophilia B. And finally, the safety profile looks favorable including no evidence of persistent transaminase elevations. As we move forward towards initiation of Phase 3, we do expect to make an adjustment to further enhance the profile of 8011. Specifically, two of the 2e12 dose participants responded to treatment but did not maintain factor levels greater than 12%, because of an immune response. Importantly, we understand the ideology driving this and have a plan in place to address it going forward by moving to a prophylactic steroid regimen in all participants. This is something that we and others have instituted in other gene therapy trials and we believe a more standardized preventative approach is not only supported by strong scientific rationale but is optimal as we contemplate a larger number of trial sites for Phase 3 and especially as we prepare for the eventual use of 8011 in a commercial setting. We’re excited with what we have with 8011 hemophilia A and the fact that our data are resonating with clinical trial participants, principle investigators and regulators gives us great confidence in our path forward. Kathy will speak to the data as well as other program updates in more detail in a moment. But first, let me turn it over to John to discuss LUXTURNA.

Thank you, Jeff. Good morning, everyone. The early LUXTURNA launch indicators have been very positive and we are confident that we are on the right path to drive the long-term success of this strategically important product. In the second quarter, we shipped 12 vials of LUXTURNA which is an increase from the six vials in the first quarter. We have nine treatment centers fully trained and importantly patients are now being treated in six of them. From a commercial payer perspective, as of the end of the second quarter, approximately 80% of commercial lives had satisfactory medical policy coverage. This metric continues to track ahead of internal prelaunch expectations as well as ahead of other rare disease products that have recently entered in the market. Ongoing discussions with commercial payers are positive as we work to further expand coverage. In addition, Spark PATH, our innovative payment and distribution model, continues to gain traction with commercial payers. Achieving broad medical coverage is an important first step that is necessary to finalize Spark PATH contracts with payers. Last quarter, we indicated that finalizing these contracts which are unique for this type of novel payment approach will be an important task for the balance of 2018. We made good progress in the second quarter. We now signed PATH contracts with two of the largest national health plans and with three important Blues plans, which collectively represent over 30% of commercial lives and we are actively finalizing a number of contracts with other large and strategically important payers. Our proposal to CMS to enable us to offer an installment payment option and to offer more substantial outcomes-based rebates than possible is under review by the federal government. We are advancing on ongoing discussions with CMS, HHS and others to align on this proposal and expect more clarity later this year. In addition to the ongoing launch in the United States, we are continuing to advance the regulatory review by the European Medicines Agency. We now expect a CHMP opinion in September and formal action by the European Commission shortly thereafter. Novartis and we are pleased with the direction of these discussions and we’ll look forward to transitioning this product over to Novartis next quarter. In closing, over the last quarter, we have made significant progress with the launch of LUXTURNA in the United States, but we recognize we have more work to do to fully realize the value of both LUXTURNA and this type of innovative one-time therapeutic approach. Now let me turn it over to Kathy.

Thanks, John, and good morning, everyone. Today, I will provide an update on both of our hemophilia programs. I want to begin by describing the framework through which we view our development efforts and priorities in hemophilia. I will then provide a brief update on our hemophilia B program before moving on to discuss three important updates relating to our hemophilia A program. First, top line Phase 1/2 data; second, our transition to a suspension manufacturing process; and third, our plans for moving SPK-8011 into Phase 3 development. As we have described in the past, an optimal treatment approach in hemophilia would provide a durable level of factor expression at levels high enough to prevent bleeding while eliminating dependence on clotting factor concentrates or other chronic episodic treatments in a person with an active lifestyle. The ideal treatment would have a positive benefit-risk profile, be durable and demonstrate predictable clinical outcomes. That is every person treated would be reasonably expected to achieve these outcomes. We believe gene therapy provides a potentially ideal approach for meeting these treatment objectives and has the potential to be a disruptive and a special treatment for hemophilia. We continue to view safety as critical and to get the safest product we believe that the best approach is to adhere to a basic principal of drug development, that is to use the lowest effective dose necessary to achieve the desired clinical outcomes. Using the lowest effective dose minimizes the risk of introducing any new or unintended side effects [indiscernible] therapeutic class is complex AAV gene therapy, variability in factor levels will naturally exists due to differences in biology across the patient population. But the goal of achieving zero bleeds without introducing new risks is made possible by maintaining a minimum target threshold of at least 12% and staying below a maximum threshold of approximately 100%. Our experience to-date in hemophilia A and in hemophilia B as well as robust natural history data all point to this target factor profile accomplishing the goal of eliminating bleeds, providing a safe approach for patients to achieve positive outcomes and preserving the potential for a durable response. With respect to hemophilia B, we provided an updated on SPK-9001 at the World Federation of Hemophilia conference in May. The Phase 1/2 data continued to be highly encouraging showing a 98% reduction in annualized bleeding rate and a 99% reduction in the annualized infusion rate based on assessments beginning four weeks after vector infusion for both metrics. Factor activity levels in this trial range from 14% to 77% with a mean of approximately 36%. We now have over 21 years of cumulative follow up with these participants and importantly have demonstrated long-term expression at stable levels well beyond two years consistent with our experience with other Spark designed vectors. These results are a clear indication that the target factor levels and overall profile we have described and now achieved in hemophilia B should lead to dramatic and long-lasting improvements in patient outcomes. The hemophilia B update at the World Federation of Hemophilia included five participants in a bridging study who were dosed using SPK-9001 generated from a modified manufacturing process designed to support commercial manufacturing. The update successfully demonstrated clinical comparability of the modified process to the original process. Importantly, last month, Pfizer and we announced the completion of the transition of the SPK-9001 program to Pfizer and the initiation of a registrational Phase 3 program. Moving on to hemophilia A, I will only be sharing top line interim results today as we desire to preserve our ability to share the full dataset at the American Society of Hematology meeting in December. As of July 13, 2018 data cutoff, we had enrolled 12 participants, two at a dose of 5x1011 vector genomes per kilogram, three at a dose of 1x1012 vector genomes per kilogram and seven at a dose of 2x1012 vector genomes per kilogram. With more participants in a longer duration of follow up, we can make several important conclusions. First, SPK-8011 is driving dramatic decreases in annualized bleeding rates and annualized infusion rates across all doses tested. Second, we are seeing preliminary evidence of long-term durability. Third, there’s a dose response with a higher dose leading to higher factor levels across the three dose cohorts. And fourth, a favorable safety profile is being demonstrated. In terms of efficacy, in all 12 participants across the three dose cohorts beginning four weeks after vector infusion, we’ve seen a 97% reduction in the annualized bleeding rate and a 97% reduction in the annualized infusion rate. These are very compelling outcomes. As I mentioned, our data indicate expression of SPK-8011 appears to be durable similar to what we’ve previously observed with our SPK-9001 program in hemophilia B. Importantly, both participants who have follow-up periods greater than one year have shown stable factor activity levels up to 66 weeks with observation ongoing. Five of the participants in the 2e12 cohort, which is the dose we plan to move forward into Phase 3, had no immune response or response that was readily controlled with a course of oral steroids administered in response to specific triggers. From time points beginning four weeks after vector administration, these five participants as of July 13 cutoff have had 100% reduction in the annualized bleeding rate and 100% reducing in the annualized infusion rate. Their factor activity levels ranged from 16% to 49%. Based on average factor levels from 12 weeks on, the mean is 30% with follow-up ranging from 12 to 30 weeks. We choose 12 weeks because typically for AAV-mediated expression in the liver, patients reached plateau by that time. These results further validate the profound impact on patient outcomes that result from factor activity levels above 12%. The other two participants of the 2e12 dose had an immune response that reduced their plateau factor level and that were not optimally controlled using a reactively administered course of steroids. These participants saw an initial positive response to vector infusion but did not achieve sustained factor activity at levels sufficient to meet a 12% minimum threshold. Both participants received a tapering course of steroids based on one or more of a following pre-specified triggers. Declining factor VIII activity levels rather than transaminase levels compared to the patient’s baseline or positive interferon-gamma ELISPOTs to capsid peptides. While the participants have factor levels below 5%, they both move from prophylactic factor use to on demand and have seen meaningful improvements in their ABRs and annualized infusion rates. One of these participants was begun on a course of oral steroids because of a rise in ALT and a decline in factor VIII level. He failed to respond promptly to this regimen and the investigator decided to move to IV methylprednisolone, an option specified in our protocol and one that we’ve used in the past. Because the patient lived at a significant distance from the medical center, he was admitted to the hospital for these two infusions. This fulfills criteria for a serious adverse event. His ALT is now within normal limits and his factor level currently is in the moderate hemophilia range. Our assessment of our data is as follows. Based on this and other trials we have conducted, we know that the occurrence of these capsid-directed immune responses is dose dependent. Moreover, most patients, five of seven, at the 2e12 dose needed steroids. Treatment with oral steroids instituted after the immune response was clinically detected, led to normalization of transaminase levels and ELISPOTs in all participants. However, at this 2e12 dose, by delaying initiation of steroids until a clinically detectable signal was observed, the immune response in two of these individuals got enough a head start that steroids failed to arrest declines in the factor levels as quickly as we would have liked. Preventing an immune response before it becomes clinically detectable is a better approach with this strong scientific rationale. This approach has been successfully utilized in a number of other trials where AAV is administered systemically, including for hemophilia, spinal muscular atrophy and Duchenne muscular dystrophy. As you may know, we administered steroids prophylactically in our LUXTURNA trials. We plan to incorporate a course of prophylactic steroids going forward in our development program. Importantly, the safety track record of SPK-8011 has been excellent with no development of inhibitors. Three of 12 participants showed at least one transaminase level above the upper limit of normal. All of these were transient and all have resolved. None of the other nine participants showed transaminase elevations above the upper limit of normal. I want to take a moment to put all of these data in context. The development of the gene therapy that drives a persistent level of clotting factor activity adequate to prevent bleeds in people with a normal active lifestyle has been a goal of our work here at Spark since the company’s founding and I can say for myself for much of my career as a hematologist. I always believed that the genes for factor VIII and factor IX held the key to better therapies for people with this terrible disease. It has taken years of laboratory and clinical research to arrive at the current juncture. And while there is more to do, I am excited about what Spark has achieved in both hemophilia A and hemophilia B and I have no doubt now the gene therapy for hemophilia will within a few short years be a reality for people with this disease. And I expect Spark to be leading this effort. In support of that effort, I’ll move now to a manufacturing update for hemophilia A. With our suspension process, we have successfully scaled up from bench-top proof-of-concept to our target capacity level of 200 liters. At this level, we have the ability to meet demand not only for Phase 3 clinical development but also for expected commercial requirements. We will be manufacturing trial material at Brammer Bio and we have recently amended our agreement with Brammer to secure a dedicated suite in their Cambridge facility. As we finalize our preparations for the initiation of our Phase 3 program, we will in parallel be confirming the comparability of the adherent process to the suspension process including as part of our open Phase 1/2 study. Finally, moving on to our Phase 3 planning, based on the totality of the results we’ve seen to-date, we intend to initiate enrollment in the run-in portion of a Phase 3 study in the fourth quarter of this year. As a result of our breakthrough designation, we have had initial formal interactions with the Food & Drug Administration this summer which have been positive and the final designed details and sizing will be determined following discussions with the FDA and the EMA which we expect to have in the fourth quarter. We continue to be excited about our hemophilia A program and the progress we’re making. In addition to the ongoing work I’ve just described, we’ve initiated plans to expand the program to include additional target patient populations as part of our hemophilia A product line extensions. We will share additional details about these expanded patient populations at an appropriate time. Let me now turn it over to Stephen for an update on our second quarter 2018 financial results.

Thank you, Kathy. In the three months ended June 30, 2018, we recognized 25 million in total revenue, of which 4.3 million was net sales of LUXTURNA and 20.9 million was associated with our agreements with Pfizer. In the three months ended June 30, 2017, we recognized 1.5 million in revenue associated with our Pfizer agreement. Cost of goods sold in the three months ended June 30, 2018 was 0.3 million, which consists of manufacturing, shipping and other costs, as well as royalties. A substantial portion of the production of our current inventory was completed prior to FDA approval and, therefore, was expensed as R&D last year. Cost of contract revenue in the three months ended June 30, 2018 was 4.2 million, which consists of manufacturing and other costs associated with our collaboration agreements. R&D expenses for the three months ended June 30, 2018 were 25.5 million versus 33 million for the year ago quarter. The $7.5 million decrease was due to $6.2 million in internal R&D expenses and 1.3 million decrease in external R&D expenses. The 6.2 million decrease in internal R&D primarily was due to a decrease in salaries and other related costs associated with LUXTURNA, which were allocated to inventory following FDA approval. The 1.3 million decrease in external R&D primarily was due to a $3.9 million decrease in expenses related to LUXTURNA and other clinical programs, offset by an increase of 2.6 million in expenses related to our hemophilia A program. SG&A expenses for the three months ended June 30, 2018 were 29.7 million versus 26.7 million for the year ago quarter. The $3 million increase primarily was due to an increase of 3.4 million in salaries and related costs, including stock-based comp, due to increased headcount primarily to support the LUXTURNA launch and 0.3 million in legal and patent expenses, professional fees and other operating costs, offset by a decrease of 0.7 million in launch expenses. Our net income for the three months ended June 30, 2018 was 80.2 million, or $2.15 basic and $2.07 diluted per common share, respectively, as compared to a net loss of 74.4 million, or $2.40 basic and diluted per common share for the three months ended June 30, 2017. Second quarter results were favorably impacted by the sale of our priority review voucher to Jazz Pharmaceuticals for 110 million. Please see our press release from earlier this morning for additional details on our second quarter and first six months of the financial year results. As of June 30, we had cash, cash equivalents and marketable securities of 656.8 million and we expect these cash, cash equivalents and marketable securities to be sufficient to fund our needs into 2021. We have 37.5 million shares outstanding. I’ll now hand it back to Jeff for his closing remarks.

Thanks, Stephen. I’ll conclude our prepared remarks by reflecting briefly on the great progress we made in the second quarter. The LUXTURNA launch execution has been strong. We are well on our way to building the commercial foundation needed to drive continued growth and laying the groundwork to our innovative pricing and distribution models for future gene therapy products. Both of our hemophilia programs have reached significant milestones. With hemophilia B, we have fully transitioned the program to Pfizer and a Phase 3 development program has begun. With hemophilia A, the totality of the data support moving into Phase 3. We made great progress with the scale-up of our manufacturing process and are preparing for a global Phase 3 initiation starting in the fourth quarter. We have numerous important near-term milestones ahead. For LUXTURNA, we expect the CHMP opinion in the third quarter and follow-on EMA action in the fourth quarter. For SPK-7001 for choroideremia, we plan to conduct and share additional analyses of both the earlier and later stage disease cohorts in the fourth quarter. For SPK-GAA for Pompe disease, we have initiated IND-enabling studies and are targeting the World Muscle Society in October to present preclinical data. Finally, we are targeting a full review of the SPK-8011 data for hemophilia A at the American Society of Hematology meeting in December. We are very pleased with the work we have accomplished and the meaningful opportunities that remain. We are confident in our ability to challenge the inevitability of genetic diseases and continue to make significant improvements in the lives of patients we serve. We are now happy to take your questions.

[Operator Instructions]. Our first question is from Phil Nadeau from Cowen and Company. Your line is now open.

Good morning and thanks for taking my question. I did want to focus in on those two patients who had the immune reactions. I was wondering if you could give us maybe a little bit more information about them, in particular what time point did they have the immune reactions? So how long will prophylaxis have to last in a pivotal study and commercial setting? And I guess can you talk a little bit more about why you’re confident this is going to work if those patients didn’t have a sufficient response to on demand steroids, why is prophylaxis going to prevent the same issue from happening?

Okay. Thanks for the question. I’ll take these questions. So I will say that in this study across the board, all of the immune responses that we have seen occurred in that window that we have previously described from 6 to 12 weeks after vector infusion. And the two subjects in question were at six and a half and eight weeks after vector infusion. So what happens in this immune response and again we have not seen anything in this clinical program different from what we have described in the past. So the triggers that we pre-specified had to do with ELISPOTs, so looking at the behavior of the lymphocytes; the ALT, looking at what’s happening in the liver and the factor VIII level which is also of course looking at what’s happening in the transduced hepatocytes. And what’s important to recognize is that in addition to these clinical triggers, before that there are a series of subclinical not obvious to us events going on that we know very well involve the proliferation and expansion of T-cells directed to the capsid. And so the point of the prophylactic steroids is simply that what we learned in this Phase 1/2 dose escalation study was that at the top dose we cannot always successfully interfere with the proliferation and expansion of those cells after they have got a running start. And so the strategy is interfere with it earlier at a point beginning at around four weeks after vector infusion, begin the steroids then, use a tapering course of steroids as we have done before but by intervening early we expect to stop the proliferation of the lymphocytes that are the ideology of the problem. Again, we haven’t seen anything here that we haven’t seen before and so that’s why we have confidence this will work.

And just my follow-up question, given that you have these immune reactions, would it even be possible to go to a higher dose? I appreciate that you’re not going to a higher dose and you’ve chosen your Phase 3 dose, but in theory would it be possible should you have chosen to do that over these immune reactions limit the dose to where you are now?

Well, again, I think if you interfere early you are likely to squelch whatever immune response is developing at a series of doses. But as we said earlier, I think it’s important to use the lowest effective dose. That’s important not just for gene therapy but all therapeutics. And so I think this is the right dose.

And I would just add, Phil, that when you look at those five patients in that high dose with a range of 16% and 49% and a mean of 30, they’re strikingly similar to what we’ve seen in hemophilia B both in terms of range and average and most importantly in terms of what that correlates to in terms of clinical outcomes on bleeds and infusions. And if you look at the totality of the data we’ve collected now across both heme B and heme A, you have basically 27 patients and when you see levels above 12% and below 100, which is what we’ve talked about consistently for two plus years as our target, you’re seeing 97%, 98% and 99% ABR reductions that it tells you very clearly that taking a severe patient and giving him gene transfer and converting them into those levels above 12 and below a 100, you get that very clear and dramatic correlation in great clinical outcomes on bleeds and infusions.

Thank you. Our next question is from Martin Auster from Credit Suisse. Your line is now open.

Hi, guys. Thanks for taking the question. Just wondering if you could kind of go back to the 1e12 patients dose that we saw at ASH and wondering if there was any update on that? And curious as you saw those patients kind of going out in time, where the stabilizations occurred and if you saw any more of the – some of the gyrations that occurred post six months at that initial ASH update from last year? Thanks.

So thanks for that follow-up question. And I think it’s important to note that with more time and more data points, what we did see is that I would describe the kinetics of our expression as rising to a plateau and then staying there. And it’s really very much like what we’ve seen with SPK-9001.

Martin, if you’re referring to the specific patient at ASH that had one value that was elevated I think into the 30% range and upon retesting and additional follow-up testing the levels were consistent with what all the prior values are part of that 37%. So that 37% was not repeated on retesting.

Thank you. Our next question is from Gena Wang from Barclays. Your line is now open.

Thank you for taking my questions. I will ask also a few questions regarding the hemophilia A data. Kathy, just wanted to get your thoughts, any differences between the immune response in heme A versus heme B patients? And then why in heme B trial actually was able to manage to control it while in heme A it seems ELISPOTs and all other monitoring methodology was not able to control the immune response? Anything – do you think that you know factor VIII or vector itself play any role here?

So, first of all, I really don’t think it’s the vector because the manufacturing process for both Spark 100 and Spark 200 were identical. So I don’t think it’s anything about the capsid. There is, Gena, a dose difference. The heme B trial was run entirely at the first dose tested. The heme A reflects three different doses. And so there’s a dose difference. You bring up the point about factor VIII and I do think that the trans-gene can sometimes play a role here. We did not see any immune responses against factor VIII in the study, but I think it’s important to recognize that these immune responses are really a composite of the immune response for the capsid as well as to the trans-gene product. But we don’t think there’s anything about factor VIII that’s pushing the immune response in the data set that we’ve seen.

Okay. My follow-up question is regarding the kinetic. Did you see anything – I know you didn’t share more detail, just wondering – you comment [ph] 12 weeks you think it will reach a peak that will give you a very good sense, but do you see any kinetic very similar for your heme A factor VIII level versus factor IX? I think the reason we are asking we see other competitors’ data or other factor VIII gene therapy data actually kinetic was very different from what we’ve seen for the heme B kinetic and then two years later there was some decline. Just wanted to understand a little bit more in terms of early understanding of a factor level?

Well, so again I think that’s a very important question and I think the best data that we have to address your question are the two first subjects who were infused at the low dose and those people are now well over a year. And you may be certain that based on other responses data, we were looking very carefully to see what happened out beyond one year. But so far these levels have been very steady and they really haven’t changed from the plateau. So again, I think that’s a very important point. The durability and what we have so far would suggest the durable level. But it will be important to watch it going forward.

Thank you. Our next question is from Cory Kasimov from JPMorgan. Your line is now open.

Hi. Good morning, guys, and thanks for taking my questions. Two for you as well. So first one is I wanted to ask you a little bit more about the run-in trial. Is the purpose to establish baseline factor VIII in bleeding levels or is it more for bridging purposes to your scaled up manufacturing process I guess and I’m wondering how long you expect this part of the Phase 3 program to last? And then I have a follow up.

So those are separate activities, Cory. The run-in study is something that you’ve seen people do across all these hemophilia studies so far, including our hemophilia B program. There’s another hemophilia B program that’s conducting a run-in study and obviously another hemophilia A program that recently disclosed that they were also doing a run-in – had a run-in component as well. So it’s to collect information on bleeds and infusions, other quality of life measures for example during a period prior to those patients receiving a dose and that way you establish sort of what their baseline is on their current standard of care for that patient. And so that’s what occurs during that period. And then those patients would convert into the dosing study. The comparability work that we are doing which will include both preclinical, analytical and clinical work on the suspension process, the clinical component of that will be done under the open Phase 1/2 study. So that’s being done in parallel separately not in that Phase 2 run-in. Does that answer your question?

Yes, definitely. And then I also wanted to ask you about the recent FDA draft guidance documents for the development of gene therapies and curious just kind of your overall take there in terms of anything that particularly stood out to you as it relates to your ongoing work in both hemophilia as well as retinal disorder programs?

Well, so we did actually have an opportunity to discuss some of the points in that guidance with the FDA at a recent breakthrough therapy meeting. I think it’s been very helpful because it helps delineate their thinking on a number of issues. And I think to me the most important insight that we gained in those discussions is that their stance is that the very best source of data on what levels will be therapeutic in a severe hemophilia population will come from these trials, because whatever level is chosen as the level that sponsors may seek to identify as a therapeutic level is best supported by the data sets from these studies in which people who have been severe – who have had severe hemophilia their whole lives now transition to a different level of circulating clotting factor and that’s really the best source of answering the question what is a therapeutic level.

Thank you. Our next question is from Michael Yee from Jefferies. Your line is now open.

Hi, guys. Thanks. Good morning. I guess I just wanted to take a step back from a high level perspective think about your view on the prophylactic drug and particularly the competitive positioning. It used to be or has been a view that you would have a predictable outcome like everyone would get above 12%. That wasn’t the case here. Is your view that if you give people prophylactic steroids and that is fine because people do that in SMA [indiscernible] that’s fine that they will not have the immune response and that their factor levels will be sustained above 12% because they won’t have that issue? And then if that’s the case, the follow up is will you treat more patients either in this trial and then use the prophylactic regimen and could we get an answer to solve that debate as to whether that’s true in the next few months ASH over '19 or will you just go right into Phase 3 and you’ll have to solve that and answer that question in Phase 3? Thanks.

So, Michael, the short answer to your question is the strategy of making the adjustment moving towards prophylactic steroids is intended to address that point around our ultimate goals of achieving predictable outcomes for all patients. Again, I think it is important to reiterate that those patients did see initial responses to the therapy and that it wasn’t about response, it was about ensuring that they made it through that initial rise period to and above that 12% threshold. So it’s about keeping them and getting them into that 12% to 100% range. And so we believe that by shifting to the prophy course, as Kathy described before which allows you to intervene in that subclinical phase before and instead of depending upon the clinical triggers that you typically pick up, that we could get not just those five patients but all seven of those live patients and convert to that predictability, because outside I would say from a predictability perspective those other five patients are exactly where we want them to be between 16 to 49 and average of 30. And then we are also further I would say encouraged and I think it’s important not just that we’re getting in that range but those two early patients that we have out a year now are showing sustained, durable and no declines in their factor levels out up to 66 weeks. And you take those two things together and then you move to a prophy adjustment and get those additional two patients in, you get yourself back to exactly where we’ve been. In terms to the second part of your question, as I said we expect that any additional work we would do in Phase 1/2 and any development work we do going forward, we’d move to prophylactic steroids going forward. And so that would include for example as we do some of the work in the clinical comparability about manufacturing, you can see us using it in the context of that for an example.

So there will be more patients treated and we could get follow up over time should we be before Phase 3 and that could help investors answer the question.

Yes.

Yes.

Okay, perfect. Thanks.

Thank you. Our next question is from Mohit Bansal from Citigroup. Your line is now open.

Great. Thanks for taking my question. I have one and then I’ll ask a follow-up later. The first question is that the kind of immunogenicity you are witnessing right now, how do you compare it to the other gene therapy treatments out there? Do you think it has something to do with your super capsid technology? And does it have any – if yes, would it have any implications on other programs you have at that?

Well, I think what we’re seeing is something that has been very well described in the literature beginning in 2006. So it’s an immune response to the capsid that occurs in a window between – anywhere between a few weeks to up to 12 weeks after vector infusion. So I don’t think we’re seeing anything that hasn’t been described before and I would just underscore that for example we have not seen persistent elevations in liver enzymes or anything of that nature.

Got it. This is helpful. And then if you could help me understand that these two patients, would they have had good factor levels if prophy steroids were given? And can you please comment on what factor levels they were before these immune layers? Thank you.

Okay, well, I’m not going to give specific levels on patients but I will say that without any question if they had not had immune responses that were not optimally controlled on the regimen we used, they would have certainly been in a range similar to the other patients we described.

Thank you. Our next question is from Salveen Richter from Goldman Sachs. Your line is now open.

Yes. Hi, guys. Thank you for taking my questions. [Indiscernible] for Salveen. I have a quick one about manufacturing switch to suspension. I think someone has asked before but I just wanted to – is there going to be a bridging study to test the new material? And another one just switching gears from hemophilia to your new models on direct payment and how are those – the new payment models, how are they received and what seems to be becoming the more prevalent one? Like what are you learning from conversations with the payers? Thanks a lot.

I’ll answer the first one and I’ll ask John to answer the second. The first question, we will be doing work to establish and confirm comparability of the suspension made material to the adherent made material and that will involve both preclinical work, analytical work using our [indiscernible] assays as well as dosing additional patients in the open Phase 1/2 study. So that’s the answer to your first question. I’ll let John answer the second question.

Thank you, Jeff. We’re making a lot of progress with payers in regard to what we’re calling our Spark PATH program where we are obviously offering this direct procurement approach with insurers. It’s been very well received. And as I indicated during my remarks, we have almost 30% of commercial lives covered under contracts which give effect to Spark PATH. So that’s a good demonstration of the receptivity and we expect to continue discussions through the balance of the year and have an incremental number of lives covered for Spark PATH. To give you some indication of the split, for the six patients treated to-date, four were treated on the Spark PATH and two under buy and bill this quarter.

Thank you. Our next question is from Raju Prasad from William Blair. Your line is now open.

Thanks for taking the question. Prior to the data set, it was kind of a thought that double the dose, double the factor level was kind of the MO. Has your understanding of this evolved with this data set at all? And then just a follow up on dose. Is there any portion of your dose consideration due to potential AAV related to tumorigenicity that’s kind of been described in the merger?

Well, let me say first of all with respect to the dose response, clearly, the high dose 2e12 is driving a higher mean level than the two lower doses. The number of subjects in the two lower doses, 5e11 and 1e12, is as you know two and three. So it’s hard really discern dose responses when the number of subjects enrolled in the cohort is so small. I think to really get a robust sense of what the level is, you probably need 7 to 10 patients in a dose cohort. So I think it’s a little more difficult to appreciate the dose response when you have a very small group because as we said before, you can have as much as a threefold variation among subjects and that of course is what we see in the 2e12 dose stand from above 16% to 49% currently. So I don’t think our thinking about dose response has changed based on what we’ve seen in the current study. Your second question about AAV in tumorigenicity, so as you know this has never been seen in patients clinically related to an AAV vector but there are experiments in mice, in neonatal mice demonstrating that if you give very high doses of AAV just after birth that late in the life of those mice you can see an increased incidence of hepatocellular carcinoma. And that is as you know the dose dependence phenomenon and so that is one of the reasons that we – even though I think that has little relevance to what we’re doing here, that’s one of the reasons that we always try to determine the lowest effective dose.

Thank you. Our next question is from Vincent Chen from Bernstein. Your line is now open.

Good morning. I was wondering if you could provide some color on the decision to move forward to Phase with the 2x1012 dose and not to try higher doses especially if you are using prophylactic steroids. While I appreciate the desire to use the lowest dose I guess with only five patients treated and limited run out, what can give us confidence that nobody will be below 12% given the potential for outliers or potentially for declining factor levels long term given what competitors have seen? I guess perhaps taken another way, what data reassures you that we adequately understand the range of inter-patient variability and can be confident patients will consistently fall above 12% as you treat more patients? And what scientific rationale suggest that SPK-8011 won’t see declines over time like competitors have as you get past this current six-week time point and that you get more run out in higher dose patients who potentially could be more susceptible?

So, Vincent, maybe on the second part of your question, I think we spoke earlier about the fact that the two patients that are already out past a year has shown durable stable factor VIII expression and they’ve not changed at all since reaching their plateau. So it’s not as if we see something that is different from what we’ve seen in the factor IX trials or in other experience that we’ve had. So we’re seeing something different in that context than maybe what has been described otherwise. The second point is that the patients – the two patients that we spoke about earlier that had immune responses that were not as well controlled, I want to reemphasize the point that those patients did have an initial response to the vector. And so we have the information about how those patients were responding in terms of where they had gotten to or where they were on their way up to. And so that gives us additional information beyond five frankly to seven about sort of what the potency of the vector is and what the range of potential factor levels would look like. When you take that and couple that together with those two patients out at a long distance at six weeks that have been stable, rock stable for that time since reaching plateau, I think that is a lot of good information and evidence to move forward with. And again, I think there’s a lot of direct comparison for us to our own hemophilia B data.

Maybe to follow up on the longer term point, I guess what’s your thinking and what’s going on with I guess your competitor data and what makes you think this won’t be seen with SPK-8011 as you go out further and also potentially the higher dose patients who went out more [ph], it could be that the higher dose patients are more susceptible than the lower dose patients where the patients attain a higher factor level maybe more susceptible than those at lower levels?

Yes, look, I think we’ll let the competitor answer the question about their own data. I don’t think we need to answer the question for them. I think we – again, I would just reemphasize those two patients at that lower dose and those two patients that are further out and the shape of the curves that obviously we’re seeing even in – as you go into the mid-dose who are out further again looking sustained once they’re hitting their plateau. Kathy, do you want --?

So I just want to underscore this. A wilt of data, not just ours, not just factor VIII but across many different studies, have demonstrated long-term expression at stable levels in liver directed gene therapy. So if you look at the trial that was run at University College London that started in 2010, that’s eight years of data with stable expression. So I would say that based on a great deal of data both clinical and preclinical, what most people would say is that what you have at 12 weeks is what you’ll have long term. And it’s really just this one other data set that you referred to that looks different from that. So I don’t think there’s a reason to overturn what we know based on years of experience with AAV mediated liver directed gene therapy because we’re not seeing that sort of thing in our longest running subjects, not in hemophilia B and not in hemophilia A.

Thank you. Our next question is from Steven Breazzano from Evercore ISI. Your line is now open.

Hi. Thanks for taking my question. Maybe on the kinetics of factor VIII, would you expect the data in the factor VIII levels to increase after week 12? And second, any idea and potential predictability for those who might develop a T-cell response versus those who might not? Thanks.

Well, so first of all, I think that honestly you probably need experience with larger number of patients to comment on whether things ever rose after 12%. So I don’t want to talk about individual subjects – after 12 weeks, sorry. So I think you need larger numbers of patients to comment on that particular point. And now you ask a very interesting question about whether – is there a way to predict who might have an immune response and this has been something that we’ve been interested in for a long time. And what I will say is that – and we presented a poster about this at ASH last year, but if you do HLA typing across all these people who have enrolled in liver directed gene therapy trials, what you do see is that there are some HLA haplotypes that are more likely to have an immune response and then there are others that are low likelihood for immune response. And I think that’s predictable based on the fact that AVV capsid is not very big and so you can actually delineate what the immunogenic peptides are if you look at large numbers of patients. But I don’t think that’s evolved to the point yet where you can actually say, okay, this person will have an immune response and this person won’t. When I started this work I really hoped that that would eventually be the case. I don’t think that’s the case. So I think what we have to do is develop a generic solution and that’s what we’ve done with going to prophylactic steroids.

Thank you. Our next question is from Matthew Luchini from BMO Capital. Your line is now open.

Great. Thanks for taking the questions. So I guess as we think about the 16% to 49% factor VIII range, I was wondering if you could just give some color on potential factors that you think led some patients to be at the lower end of that range versus some at the higher. And then two points of clarification if I could. Can you tell us where on that range the patient with 12 weeks of follow-up lies? And lastly, just wanted to confirm that the two patients that had the immune response never reached the 12% threshold? Thanks.

Sorry, just repeat the second question again. I think it was about the 12 patients at 12 weeks --

So there was – the question was factors that influenced where patients fell on the 16% to 49% range and then the two clarifiers were if you could tell us where the patient with the 12 weeks of follow up, basically the shortest follow up falls and if the patient – the two patients with the immune response ever hit the 12% threshold.

So here’s the peak – first of all on your first question about determinant of 16% versus 49% are in that range, we’ve spoken about this before. There is obviously multiple different steps of transduction and every one – every individual has different fundamental biology and different cell surface receptors in a way that they package and process through the capsid and lead to driving expression. And we see the same thing in factor IX. So as you know, there is a range there of around 15% to 70% and so it is normal biological variability. With respect to the second question, again, we’re not getting into subject level data here only because and I want to be – I want to clarify this that we are looking to preserve our ability to potentially present data at ASH and we don’t want to harm the ability for the abstract that we’ve submitted on that front. On the third question that you asked, we mentioned before and I will clarify that those patients did have an initial response and we’re in or on the way to that range. And that’s what we can say about that at this point.

Thank you. Our next question is from Elemer Piros from Cantor. Your line is now open.

Thank you very much. Kathy, I just was wondering if you could help us understand the rationale for not doing prophylactic steroids at this higher dose level considering that you thought that it’s a good idea with a locally administered gene therapy such as LUXTURNA and there was evidence from others that it may be a good idea.

Okay. Thank you for that question, Elemer, and I think it’s an important one. And so this is what I want to say in response to that. First of all I want to point out that all of these doses from 5e11 to 2e12 drove therapeutic levels. When we began this trial, we did not know which of these doses we would be moving forward and I personally like to make data-driven decisions. So we started with no steroids and that’s what we did in hemophilia B by the way. We got experience at a range of doses. And now based on the data I think I can make the confident decision five out of seven people at the 2e12 dose needed steroids and so I think we can confidently say that’s the best way for the dose that we intend to move forward. So that is how we made the decision. I think it’s better in Phase 1/2 to run things through without prophylactic steroids and make the decision based on the data, where you’re going to be and whether or not most people at that dose needed steroids. So that’s what we’ve done.

Thank you. At this time, I’m showing no further questions. I will like to turn the call back over to Jeff Marrazzo, CEO, for closing remarks.

Thank you, everyone. Thanks again for joining us this morning and we look forward to providing additional updates as we progress throughout the balance of the year and certainly answer any questions that you have offline. Thanks, again.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect.