Homology Medicines Reports Fourth Quarter and Full Year 2019 Financial Results and Recent Accomplishments

- Announced Encouraging Initial Clinical Data From the Phase 1/2 pheNIX PKU Gene Therapy Trial and Expects to Select Dose for Randomized, Concurrently Controlled Expansion Part Mid-Year 2020 -

- Executed 2,000-Liter Bioreactor Scale in Internal Facility with Commercial Manufacturing Process Being Used to Supply pheNIX Trial and Pipeline Programs -

- Progressed IND-Enabling Studies with MLD Gene Therapy and PKU Gene Editing Programs -

BEDFORD, Mass., March 12, 2020 - Homology Medicines, Inc. (Nasdaq: FIXX), a genetic medicines company, announced today financial results for the fourth quarter and year ended December 31, 2019, and highlighted recent accomplishments.

“In 2019, we delivered on our goals to launch the first ever PKU gene therapy trial and announce initial clinical data,” said Arthur Tzianabos, Ph.D., President and Chief Executive Officer of Homology Medicines. “We reported encouraging safety and efficacy data from the dose-escalation portion of the trial, an important milestone for Homology and for the PKU community. We plan to provide an update on pheNIX when we choose the dose for the randomized, concurrently controlled part of the trial, which we anticipate will occur in mid-2020.”

Dr. Tzianabos added, “We continue to be a leader in the field with our manufacturing expertise, expanding our commercial process to 1,500 liters of capacity in our internal GMP manufacturing facility, and we recently executed 2,000-liter scale. Our investigational gene therapy program in MLD and our gene editing program for PKU are currently in IND-enabling studies. In addition, we continued to characterize the unique properties of our family of novel AAVHSC vectors, highlighting that all 11 of our vectors tested crossed the blood-brain-barrier and blood-nerve-barrier and may serve as gene therapies for neurological disorders.”

Fourth Quarter 2019 and Recent Accomplishments

  • Shared initial encouraging clinical data from a single I.V. administration of investigational gene therapy HMI-102 in the pheNIX trial, the first gene therapy clinical trial in phenylketonuria (PKU). Keeping with guidance initially set in 2018, Homology released initial data from Cohort 1 (low-dose, n=2) and the first patient in Cohort 2 (mid-dose) at the end of 2019. As of the data cut-off date of December 2, 2019:
  • - Preliminary safety data from Cohorts 1 and 2 showed HMI-102 was well-tolerated.
    - Efficacy data from the first patient in Cohort 2 indicated a dose-response effect with an observed reduction in phenylalanine (Phe) levels from baseline at Weeks 1 and 4, increase in tyrosine (Tyr), and reduction in the Phe to Tyr ratio, suggestive of increased enzymatic activity.
    - The dose-escalation part of the trial is ongoing and Homology expects to provide an update mid-year 2020 once a dose is selected for the randomized, concurrently controlled Part B expansion phase of the trial, which has the potential to be converted to a registrational trial.
  • Established 1,500 liters of active capacity with three 500-liter bioreactors in our internal GMP manufacturing facility, and recently executed a 2,000-liter scale; our commercial process supplied all of the pheNIX clinical trial material, which is on-hand, as well as pipeline programs across gene therapy and gene editing.
  • Announced data characterizing the potential of Homology’s naturally derived adeno-associated virus vectors (AAVHSCs) as gene therapies for neurological disorders.
  • - Presented data that showed all 11 AAVHSC vectors evaluated crossed the blood-brain-barrier and blood-nerve-barrier following a single I.V. administration in non-human primates (NHPs). These data were presented at the WORLDSymposium™ 2020 Conference.
    - Additional studies also demonstrated the ability of AAVHSCs to transduce (enter the cells of) the central and peripheral nervous system following a single I.V. administration in NHPs along with other key tissues, including the liver, skeletal muscle and heart. These data were peer-reviewed and published in PLOS ONE.

    - Taken together, these data further the understanding of which AAVHSC vectors may be best suited for particular diseases based on preferential transduction of different cells.

  • Presented data with investigational gene therapy HMI-202 for metachromatic leukodystrophy (MLD), which reduced key biomarkers of disease and produced normal levels of human ARSA protein in the MLD murine model. These data were presented at the WORLDSymposium™ 2020 Conference.
  • Published findings from a five-year retrospective chart review that demonstrated Phe concentrations remain elevated in adult patients with classical PKU, the patient population being studied in the pheNIX trial, even when closely monitored and on the standard-of-care highly restricted protein diet. These data, which were peer-reviewed and published in Molecular Genetics & Metabolism, support the need for new therapies to control Phe levels in patients with PKU.
  • Strengthened management team with appointment of clinical geneticist and biotech industry veteran Gabe Cohn, M.D., as Chief Medical Officer.

Fourth Quarter 2019 and Full Year Financial Results

  • Net loss for the quarter ended December 31, 2019 was $(24.2) million or $(0.55) per share, compared to a net loss of $(18.8) million or $(0.50) per share for the same period in 2018. Net loss for the year ended December 31, 2019 was $(103.9) million or $(2.47) per share, compared to a net loss of $(55.6) million or $(1.95) per share for the same period in 2018.
  • Collaboration revenues for the three and twelve months ended December 31, 2019 were $0.6 million and $1.7 million, respectively, as compared to $1.2 million and $5.3 million for the comparable periods in 2018. Collaboration revenue consisted of revenue recognized under the Company’s strategic collaboration with Novartis. Collaboration revenues are being recognized over time consistent with the pattern of performance of research and development activities under the collaboration agreement. Homology and Novartis continue to work together on ophthalmic programs and seek to identify new targets for the collaboration based on its exploratory research component.
  • Total operating expenses for the three and twelve months ended December 31, 2019 were $26.1 million and $111.6 million, respectively, as compared to $21.4 million and $65.2 million for the comparable periods in 2018, 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, 2019 were $20.3 million and $89.4 million, respectively, as compared to $16.3 million and $47.9 million for the comparable periods in 2018. Research and development expenses increased due to a rise in direct research expenses, including costs related to manufacturing preclinical study and clinical trial materials, costs incurred with Homology’s contract research organization (CRO) to conduct and manage the Phase 1/2 pheNIX clinical trial, and development costs in advancing HMI-202 and HMI-103 through IND-enabling studies, increased personnel costs to support ongoing development programs, research initiatives, technology platform and manufacturing capabilities, as well as increased expenses related to laboratory supplies, research materials and services for the further advancement of early-stage research programs.
  • General and administrative expenses for the three and twelve months ended December 31, 2019 were $5.8 million and $22.2 million, respectively, as compared to $5.1 million and $17.3 million for the comparable periods in 2018. General and administrative expenses increased due to personnel costs as a result of new hires, increased consulting costs and increased costs associated with expanded operations.
  • As of December 31, 2019, Homology had approximately $262.4 million in cash, cash equivalents and short-term investments. Based on current projections, Homology expects cash resources to fund operations into the fourth quarter of 2021.

Upcoming Events

  • Oppenheimer 30th Annual Healthcare Conference on March 17 - Virtual 1x1s only
  • Stifel Annual CNS Day on April 1 - Virtual
  • 4th Annual Genome Editing USA Congress at the Hyatt Regency Boston on April 7-8
  • H.C. Wainwright Annual Global Life Sciences Conference at JW Marriott Grosvenor House London on April 19-21
  • American Society of Gene & Cell Therapy (ASGCT) 23rd Annual Meeting at the Hynes Convention Center in Boston on May 12-15

About the Phase 1/2 pheNIX Clinical Trial in Phenylketonuria (PKU)

The pheNIX trial is the first gene therapy clinical trial ever conducted for people with PKU. pheNIX is designed to evaluate the safety and efficacy of a single intravenous administration of HMI-102 in adult patients with PKU aged 18-55. The study design allows for expansion of the number of patients in any dose cohort pending review by the Data Monitoring Committee and the Homology Internal Data Review Team. A decision to expand would trigger the addition of the randomized, concurrently controlled Part B of the trial, which has the potential to be converted to a registrational trial. The primary efficacy endpoint of the expansion part is incidence of sustained plasma Phe concentration ≤360 μmol/L as demonstrated by two measurements ≤360 μmol/L between 16 and 24 weeks.

About Homology Medicines, Inc.

Homology Medicines, Inc. is a genetic medicines company dedicated to transforming the lives of patients suffering from rare genetic diseases with significant unmet medical needs by curing the underlying cause of the disease. Homology’s proprietary platform is designed to utilize its human hematopoietic stem cell-derived adeno-associated virus vectors (AAVHSCs) to precisely and efficiently deliver genetic medicines in vivo either through a gene therapy or nuclease-free gene editing modality across a broad range of genetic disorders. Homology has a management team with a successful track record of discovering, developing and commercializing therapeutics with a particular focus on rare diseases, and intellectual property covering its suite of 15 AAVHSCs. Homology believes that its compelling preclinical data, scientific expertise, product development strategy, manufacturing capabilities and intellectual property position it as a leader in the development of genetic medicines. For more information, please 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; plans and timing for the release of clinical data from the Phase 1/2 pheNIX trial, including the Part B expansion part; plans and timing for the release of clinical data; our beliefs regarding our manufacturing capabilities; advancing our novel platform and pipeline; our goal of delivering potential cures to patients; beliefs about preclinical data; our position as a leader in the development of genetic medicines; the sufficiency of our cash, cash equivalents and short-term investments; 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: 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 capabilities and potential expansion of our manufacturing facility; risks relating to the regulatory approval process; 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; 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 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, 2019 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.

Company Contacts:Theresa McNeely
Chief Communications Officer
and Patient Advocate
tmcneely@homologymedicines.com
781-301-7277

Media Contact:
Cara Mayfield
Senior Director, Patient Advocacy
and Corporate Communications
cmayfield@homologymedicines.com
781-691-3510

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