89bio, Inc. (ETNB) Earnings Call Transcript & Summary

Great. Thanks, everyone, for being here. I think we can get started. My name is Yanan Zhu, and I'm a biotech analyst here at Wells Fargo. It is our great pleasure to have the management team of 89bio with us today for this fireside chat. On stage with me is Rohan Palekar, CEO of the company. Hi, Rohan.

Hi. Thanks for having me here at this meeting.

Great. Great. So I think if you don't mind, could you start us off by providing a brief overview of the company's platform and programs?

Sure. So we are a late-stage clinical company based in liver and cardiometabolic diseases. And our lead program called pegozafermin is an FGF21 analog, which we believe can be transformational in these disease states. I say that based on the mechanism of how FGF21 works, but also the really strong clinical data we've shown in both MASH, which is fatty liver disease, the steatohepatitis as well as severe hypertriglyceridemia. And Yanan, where we are just now with the company is we've just initiated two Phase III studies in the MASH program, one in the pre-cirrhotic population, one in the cirrhosis population. And both these studies have started enrolling globally. And the second one is we have a program in severe hypertriglyceridemia, where we are in Phase III, and we expect to report results from the Phase III next year. And to close out, the company is well capitalized. We ended second quarter with approximately $530 million. And shortly after the end of the quarter, we had warrants which were exercised. We brought in another $25 million, so approximately. So we're in a pretty strong cash position just now.

Wonderful. Maybe a couple of questions on the broader landscape. With the advent of GLP-1 drugs and their use in diabetes, obesity and potentially also in MASH based on ongoing Phase III studies, how do you see the NASH or MASH market evolve? And what might it look like when pegozafermin reaches the market?

Sure. So we think the GLP-1s and the incretin class has a role to play in diabetes, clearly, they have great data as well as in obesity. However, when you think about the MASH landscape, there's a spectrum of diseases in MASH, right? You start off with early fibrosis, you then progress to late fibrosis, which is like F3. And then these patients -- some patients unfortunately become cirrhotic, which is the F4 stage. In the earlier stages of MASH, the primary treatment objective is resolve the steatohepatitis because people can stay in that stage for a long time. As you progress into further stages of MASH and advanced fibrosis, the primary treatment objective is you want a highly potent antifibrotic agent because you want to prevent progression of cirrhosis. And then clearly, once you are in cirrhosis, you want to prevent a decompensation event. Based on the data presented with some of the GLP-1s, it appears that they have a very strong role as it comes to resolving steatohepatitis. So it's in that earlier treatment population, you're going to see a lot of utilization. We would expect you want to address the diabetes as well as the obesity. Where we see the role for molecules like pegozafermin and FGF21 class is in that advanced fibrosis stage, where you're really looking for a potent antifibrotic. And clearly, in the cirrhosis stage where the 2 FGF21 seem to have shown the most promising data. The last comment I'd make is we recognize that by the time we come to market, a number of these patients are going to be on GLP-1 or incretin therapies. And we have seen really nice data on top of GLP-1s. So in our Phase IIb study, we had roughly 40 patients, 37 patients who were on background stable doses of background GLP, and we added pegozafermin on top of that. And we see really nice benefits when we are added on top of GLP-1. So we think they're, in some ways, complementary because they work mechanistically very differently in the body. But there's a unique positioning for pegozafermin in the market.

Got it. Maybe to follow up on the GLP-1 catalyst upcoming. Novo is reporting data for semaglutide from their Phase III MASH study in 4Q '24. What might be the read-through to 89bio?

So this is a large study they're doing in Phase III on the backs of their Phase II data. And to remind the listeners, so in the Phase II data, they did see a benefit on MASH resolution, but they missed a statistical significance on a fibrosis benefit, right? So as we think about this data, I would expect they're going to continue to see nice results on NASH resolution. All the GLP-1 therapies have seen it. I think the fibrosis data is a little bit -- it's a 50-50. Some people will say they're going to see a benefit. Some might say it's unlikely. But I think the key one is what is the magnitude of benefit they would observe. So even when you look at some of the more potent GLP-1-based therapies, which recently presented their data, while they see a benefit in fibrosis, when you look at the total impact or the benefit relative to placebo and you compare that with pegozafermin, it tends to be lower. So I think this is going to be an important data readout, but we don't think it dramatically changes the positioning for where pegozafermin has a unique opportunity, which is that advanced fibrosis patient population and the cirrhosis population. I mean it's interesting. Like sema is actually not studying a cirrhosis population. They did a Phase II study in cirrhosis. And that one, honestly, it missed on all endpoints. Placebo actually did better than sema in that study.

Interesting. How about thoughts on the recent approval of Rezdiffra and its potential market uptake. How do you think pegozafermin will position into the MASH market? Which patient segment you hope to serve?

Sure. So I'll first start by saying it's wonderful that Rezdiffra got approval. All of us are in this drug development business to help the patients. So there's a very significant number of patients, and there was no approved therapy. So it's great to see a product get past the finish line from a patient perspective. From a company developing drugs, it's great to see a drug get across the finish line because it sets the tone for a regulatory pathway for approval. So all of those are really positives. I can only comment on what we see in the public data, what Madrigal has put out. It looks like the launch is going reasonably well, right? They're getting great payer coverage. It looks like there's physician adoption. The second quarter was a very small quarter, but it looks like there's good momentum. And in our discussions with physicians, KOLs, we hear very high awareness of the drug, but also importantly, a lot of intent to treat with Rezdiffra. Now, as I think about it in the context of pegozafermin, when you look at Rezdiffra's data relative to ours, so they had a fibrosis benefit between 10% and 12% in a year study. We showed a benefit on fibrosis relative to placebo at 20%. You also look at some of the other markers. And while Rezdiffra had benefit, that numerically seems to be lower than what we are seeing with pegozafermin. And so I think what would more likely happen is this would be a very good agent in that earlier to mid-stages of NASH, where it's more a metabolic disease. But going back to our positioning, which is the more advanced stage, which is F3s and F4s, we think that's the sweet spot relative to Rezdiffra.

Got it. That's very clear. How -- moving closer to the FGF21 space, how is pegozafermin differentiated from Akero's drug candidate?

Sure. So to remind the listeners, the Akero candidate called efruxifermin, it is a different molecule targeting FGF21. So -- and the reason I bring this out is -- so the two companies have taken different approaches to engineer the FGF21 to extend the half-life. Ours is a glycoPEGylated version. So it's a different, more improved way of PEGylating the molecule to extend the half-life versus efruxifermin is a fusion protein. It's a technology used very often, you have IgG backbone to extend the half-life. When you look at the data presented on the two molecules and you look at the Phase IIb results from both the drugs and you also look at some of the preclinical work and binding results, you see an efficacy profile, which is very similar. Both the drugs had about a 20% placebo-adjusted delta on fibrosis, okay? And it's always difficult to make cross-trial comparisons, but that's just kind of -- and you'll see some metabolic markers, we do better, some metabolic markers, they might do better. But the most important endpoint in this disease state is fibrosis benefit, right? So what is the points of difference? So we see there are 4 points of difference. The first one is to date, in the clinical studies, we have seen a drug which has shown a better tolerability profile relative to efruxifermin, especially when it comes to the context of GI adverse events. And this is important when you think about the commercialization of the product because it's an asymptomatic condition. People are going to be on this drug chronically. So you know from other disease states, a well-tolerated drug makes a big difference in that, right? So that's one part where we have seen a very different profile to date in all our trials. The second is dosing convenience. We are developing our drug to be delivered subcutaneously once a week or once every 2 weeks. Efruxifermin is being developed as a drug given only once a week. So the every 2-week dosing, again, from a patient compliance, persistency and convenience perspective adds a lot of value. It's 26 less injections, right? And in all our research is when we talk to patients, they go, wow, that's a big benefit as long as the other markers are the same, right? So we think that could be a significant differentiator in a commercial setting. The third I would mention is we are a liquid formulation. So our commercial presentation is a liquid in a prefilled syringe. The efruxifermin program, as we know -- as we've seen in the public domain, what they've said is it's a lyophilized product, which needs to be reconstituted. Per se, that's not a big issue. However, having a liquid formulation may allow us to co-formulate with the GLP-1. So all the GLP-1 drugs currently are liquids. There are orals being developed, but because we are a liquid product, we might have the potential as part of life cycle management to create a single co-formulation injection, right? So that could be very interesting, something we would think about, which could be a very different approach. And then the last thing I would say is we are developing pegozafermin in two indications in both MASH as well as severe hypertriglyceridemia. And again, when you think about it, when you come to the market, it allows us to target additional physicians. There's an overlap, and it creates a different opportunity to build pegozafermin relative to efruxifermin.

Got it. Thank you for elaborating on those points. Perhaps, if you don't mind, could you review the data from pegozafermin's Phase IIb study in the F2, F3 population? And also, please compare the fibrosis improvement with the competitors, Akero's compound and Lilly's GLP-1. And also, please compare NASH resolution with those compounds and help us understand how -- where do all those data points fall.

Okay. Let me try and do this in as efficient manner. So the Phase IIb study was a study in F2, F3 patients. I'll come back to a small subsample of F4 patients in the study in approximately 220 patients where we studied different doses of pegozafermin given once a week or once every 2 weeks versus placebo. It was a 52-week study with a primary endpoint at 6 months, where we did histology. And the primary endpoints were the two standard FDA-approved endpoints, which were fibrosis improvement at 1 stage or NASH resolution with no worsening of fibrosis, okay? So we biopsy patients at the start, at the end of 6 months, we rebiopsy them, and we look at the difference versus baseline. But we continue all these patients in a blinded fashion through week 48. So, if I were to highlight the key results on the fibrosis improvement, we saw a highly statistical significance and a 20% delta, 19% and 20% delta at the 44 milligrams given once every 2 weeks and the 30 milligrams given once a week. And those are the doses we are moving forward into Phase III. We also saw very nice impact on NASH resolution, again, in the mid-20% delta versus placebo. Importantly, we saw really good benefits on all the other secondary markers. So liver fat reduction in the mid-50s, nice change in liver transaminases, all the noninvasive markers of liver stiffness as well as very nice changes on metabolic markers like lipids, LDL and glycemic control. The drug was well tolerated, very few discontinuations in the study. The only AEs of significance were mild grade 1 GI events, which were early. So, well-tolerated drug. And we did not see any statistical or clinically meaningful changes on bone markers, which has always been coming up or DMD -- sorry, BMD or on key vital signs, okay? Two other comments on the data. We had a small group of patients, 14 patients who had F4 disease at baseline. And in those patients, we rebiopsied 11 of them were on drug, and we saw a very dramatic change on fibrosis despite it only being a 24-week study. So very encouraging on that. We also had patients on background GLP-1, where we saw very nice data. The last thing on efficacy, as I mentioned, we continued these patients on to week 48. Now at week 48, we did not rebiopsy them, but we looked at a lot of noninvasive markers and all of the noninvasive markers continue to sustain between week 24 and week 48, okay? To answer your question on comparing us versus efruxifermin, and say, tirzepatide, right? So when you look at the fibrosis benefit, you see a very comparable benefit between the studies. At week 24, we saw a 20% delta, efruxifermin saw a 20% relative additional benefit versus placebo. So not that different. Tirzepatide also saw a very similar 20%, okay? However, all these trials were done with a very different construct. We used a very rigorous methodology on reading the biopsies. So we used a 3 panel where 3 independent readers read each slide separately without communicating with one another. And then we took the score across all 3. If all 3 agreed, otherwise, we took the mode. The other programs have typically done 2 readers. And if they disagree, they have a consensus call to decide what's the number. When you take this very stringent methodology we did, you have a much lower placebo response. So for example, our placebo response was 7%. In tirzepatide's case, the placebo response was 30%. So one way to do cross-trial comparisons, Yanan, is you do what's a relative risk or how does the drug effect relative to placebo. And when you look at that, our drug effect relative to placebo was about 3.5x what placebo saw. Efruxifermin was in the 2s and tirzepatide was below like 1.7, right? So it's important to look at what was the delta, which looks similar, but what was also the relative risk or the odds ratio. And so we think we have a molecule which potentially has amongst the best fibrosis data, either when you take it numerically, but clearly when you look at the relative risk. On NASH resolution, a very similar story. Now there, you do see our numbers -- absolute numbers are lower. We had a 2% placebo response on NASH resolution in our study. Others have seen a response in the teens, mid-teens, up to 20% placebo response. So they see a higher placebo response as well as a higher drug response. But when you look at the odds ratio of relative risk, we actually have amongst the best data sets.

Got it. How should -- so how do we think about to read the data with the delta versus a ratio, like you said risk reduction. Like the two -- what's the pros and cons of using either method to evaluate efficacy?

I mean the reason in MASH, you want to look at both is because, as I mentioned, each one of these studies, the way biopsies were read was very different. The methodologies were different. But the second one is the readers were different in different studies. And there is inherent biases some pathologists might have on how they read a study. So it's important to think about each study is it's kind of self-contained construct, right? And so if you want to compare one study versus the other, the only way to equalize it is to look at within that study, how did the drug do relative to placebo? Because it's that same reader using the same methodology who read both the placebo slide and the active drug slide, right? So if they were -- I'm just going to generalize, if someone is very strict in reading fibrosis, they will be strict in reading the placebo slide as well as the active drug slide, right? So if they have low scores on drug, they'll have low scores on placebo. Conversely, if someone is more liberal and sees any change they view as a change in fibrosis, you're going to have a higher placebo rate and you're going to have a higher drug rate. So the numerical numbers look much bigger, but that doesn't mean that the drug effect was anymore. So we think it's important to consider both of them. And so it's not one versus the other. It's -- both are important.

Got it. Thank you for explaining that. What is the relative importance of fibrosis endpoint versus the NASH resolution endpoint in the eyes of treating physicians?

So in the eyes of the physicians, it's all about fibrosis benefit. Meaning it's important that you are impacting the underlying disease. But really, what their focus is, is I want to prevent the progression of fibrosis because it's the progression of fibrosis which results in bad liver events, and in due course, results in advanced fibrosis, and unfortunately, for some patients, cirrhosis. And it's very similar with payors also. They are really focused on -- because that's where health outcome costs are generated, that's the issue.

Got it. Thank you. The company is running a Phase III study, as you mentioned in the beginning. The histology endpoints are measured at 1 year. Can you talk about your expectation for the histology primary endpoints? What is the bar for success?

So I think we feel a high level of confidence that we should see positive data, right? At 24 weeks, we saw highly statistically significant benefit on both fibrosis as well as NASH resolution, right, and amongst the best in the category. We've then shown at week 48, we have seen a maintenance of all the underlying disease parameters being down, whether it's transaminases, liver fat, et cetera. So we expect at week 48, when we rebiopsy at year 1, we should see very nice histology benefits. So -- but that's why we do clinical studies, right, to see. What is the bar? I think there is -- it comes back to a little bit. I think if you talk to some of the KOLs, they will say anything in the F2, F3 population, a placebo delta of 15% is clinically meaningful. 10% is where I would start using the drug, but a really clinically meaningful benefit would be in the 15% range, right? In an F4 population, that's lower. They would say even a 10% is clinically meaningful. If I can show a 10% delta versus placebo, they feel that drug really could bring value to their patients.

Great. Thanks for the insights there. How is the pace of enrollment? When could we expect data?

So it's early in the studies. We initiated the F2 F3 study in pre-cirrhotics in March of this year, and the cirrhosis study started in May of this year. So it's early on enrollment. Here's what I can say. In the U.S., the sites are coming up really rapidly. There's a lot of sites. So would suggest that the PIs are very interested in the trial and getting engaged. The screening is going really well. We're screening a lot of patients, which would support the hypothesis that there's a lot of these patients out there in the marketplace, right? So that's going well. It's a long screening period. So it's a little early just now to say how enrollment specifically is. As regards to your other question on data, what we -- we haven't given a firm guidance because we want to see how enrollment takes place over the next 6, 12 months. What we can say is that in -- for the histology portion of the F2, F3, what we've said on clinicaltrials.gov in our posting is that we would expect top line results from the histology portion at the end of 2026.

Got it. Is that from all the patients or from part of the patients?

Great question. So it is from a part of the patient. So that study is enrolling approximately 1,000 patients, the F2, F3 study. We do not need all the 1,000 patients from a statistical powering perspective for the histology endpoint. So it's a subsegment of that. We haven't disclosed the exact number. It's a smaller number of that, but it would be the histology readout from that smaller number of patients.

Got it. Could patients in the Phase III study take GLP-1 and/or Rezdiffra? If so, what proportion of patients do you think will go that route?

So they are allowed to be on GLP-1s as long as they have been on a stable dose of GLP-1s, okay? And they got to be a stable dose coming into the study because you don't want someone starting it in the study and you don't want someone going because GLP-1s have a long titration period, right? It's tough to predict exactly what that number would be, but I wouldn't be surprised if it's 1/3, if not slightly more of the patients could be on GLP-1. We think that number will be higher in the U.S. It's probably going to be well higher than 1/3 of the patients in the U.S. However, OUS which is where a significant part of the study would enroll, GLP-1 utilization is not that prevalent. In fact, for obesity, GLP-1s are not being used outside the U.S. as of now when we are enrolling. So, and then as it relates to Rezdiffra, at this point in time, patients are not allowed to be on Rezdiffra. Now Rezdiffra has just got approved. By the time someone were to come in and be on a stable dose of Rezdiffra, we probably have enrolled all our patients, right? And again, going back to the comment about an international study, by the time Rezdiffra gets approved in the international markets, we would be well down our path of getting to potentially hopefully finishing enrollment.

Got it. Got it. So the trial is powered with the assumption of there could be 1/3 of patients on GLP-1. Can I assume that?

Yes, we do that. And what we would do is this is a priority. It's stratified on GLP-1 use because you just want to make sure you never end up with an imbalance across the arms. So it is stratified for GLP-1 use.

Great. For the outcomes endpoint, can you talk about what the endpoint is and what the bar for success is? And what kind of effect size did you use in your powering assumption?

Sure. So it's a little different for the two studies. So the outcome event in the F2, F3 study is predominantly progression to cirrhosis, okay? So these are F2, F3 patients who become cirrhotic. We expect roughly 90% of these patients are going to be progression to cirrhosis. Now the other events could be decompensation, a MACE event, MELD score going really high, but that's kind of rare for F2, F3 patients. Based on the data we've seen to date, we have a high level of confidence we should see that. So, recently, Intercept put out their data even though they closed down the Ocaliva study, they had -- at 4 years, they stopped the study. But they looked at in each arm, they had over 700 patients, and they saw about a 25% reduction in progression to cirrhosis. This is despite the fact that their fibrosis benefit was only about 10% delta. So we think with a 20% delta, we have a very good chance of seeing a benefit. And in fact, in our Phase IIb study, in the F3 patients who were on placebo, approximately 19% had progressed to cirrhosis versus less than 9% on our drug, okay? So that's where we think that event is going to be the primary driver of an outcome, and we see pretty good data. Now in the cirrhosis study, the outcome events are slightly different. The outcome events in the cirrhosis study are primarily decompensation events. Now you can also have death, MACE event, MELD score going really high, liver transplant, but that will be few. And when you think about decompensation events, and this was a very significant win we got with the regulators, we have defined the decompensation events. So the FDA has certain definitions of decompensation events in their guidelines, but those are really at the end road of decompensation. And we've got them to agree to talk about a decompensation event earlier than that. We haven't disclosed them. But these are predominantly SITs having hepatic encephalopathy where you get confused because -- or you could have [ varicose ]. So those are the key events. And the way we powered the study, like any event study, we've taken a, I wouldn't say, a very approached -- a very good approach looking at historical data, how people progress in placebo and then a hazard ratio, which is a reasonable hazard ratio. So not being overly conservative, in which case, then you'd be doing 3,000 and 5,000 patient studies or not overly aggressive that your drug has to show a phenomenal benefit.

Got it. Got it. Very helpful. One catalyst coming up in the space is Akero's readout for their 24-month F4 Phase IIb study, 1Q '25. What will you focus on? And what might be the read-through to your compound?

So I think what we're going to be looking at is clearly what's the benefit they see on fibrosis. But beyond that, we want to look at what the total data set looks like, right? Are they actually having an impact on the disease scores here? Because it's a small study. So you don't want to always rely on one number. But I do think that's an important to see. Look, in their 9-month data, they saw a 10% fibrosis benefit. They missed stat sig, but we think that's because they went too short, and it's a couple of patients might have made them static, right? We do think there is a read-through to our drug because, as I mentioned, the drugs are very similar in many ways as it ties to efficacy. So if they see good data on that, I think it translates, we feel much more bullish and positive on our F4 study.

Got it. Very helpful. I think in the remainder of time, perhaps let's touch on SHTG indication.

Sure.

You have ongoing Phase III study reading out in 2025. A couple of RNA therapeutics programs are also in Phase III development. Any thoughts on the differentiation of your compound and how competitive it is against the RNA therapeutic drugs?

Sure. So I think the ones you're referencing to are targeting APOC3. And we think we have a differentiated molecule really based on our mechanism. So when you think about these SHTG patients, a lot of them also have metabolic dysregulation. So many of them, in fact, close to 100% have liver fat or liver abnormalities. And about 2/3 of them have this prediabetes or diabetes. And so when we talk to physicians, what our research has shown is they want to drop triglycerides, but they also want to address the other metabolic dysregulation. And we not only reduce triglycerides. So when you compare our data versus plozasiran, our triglyceride reduction on a placebo-adjusted basis is very similar, but we see a benefit on liver fat reduction, which to date, none of them have published. We see benefit on ALT. We see benefits on hemoglobin A1c. And in fact, they actually saw a worsening of hemoglobin A1c, and that's in their AE tables actually. And then the last thing I would say is we are neutral on LDL versus in that study, the APOC3 saw a 60% increase in LDL. And in a patient who is at a risk of cardiovascular disease, that's less than ideal. So we think we have a very differentiated molecule because of our mechanism and the value we bring to these patients.

That's super helpful. Thank you for all the insights. I think with that, we're out of time. Thank you, Rohan, for a very helpful and informative session.

Yes. Thank you very much. Appreciate it.