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

Sorry for the delay, everyone. Welcome to the H.C. Wainwright 26th Annual Global Investment Conference. For our next presentation, we have 89bio; and joining us today is CEO, Mr. Rohan Palekar. Rohan, great having you with us. Please go ahead.

Thanks, Thomas. It's a pleasure to be here. As mentioned, Rohan Palekar, the CEO of the company. Here is our forward-looking statements. So as a quick highlight of 89bio, we are a late-stage clinical development company focused in liver and cardiometabolic health. And our lead program, pegozafermin, is an FGF21 analog, which we believe has the potential to be transformational in these therapeutic areas. And I say that because of the mechanism of pegozafermin and the great clinical data we presented. As an FGF21 analog, it has an unique mechanism of action distinct from others in the field. And then importantly, we've shown really nice clinical data in 2 distinct indications, one being MASH and one being severe hypertriglyceridemia. Based on the strong data we've shown, we are now in Phase III development for MASH in 2 clinical studies as well as in Phase III development for severe hypertriglyceridemia. And results from the triglyceride trial are expected in 2025. It's a subcutaneous product given as a single injection as a liquid formulation. And the company is well capitalized, closing last quarter with a little north of $530 million. And additionally, the next day, we had like $25 million in warrants come in, so about $550 million. As I mentioned, in MASH, which is a very large indication, we have 2 Phase III studies ongoing. The first one is in the pre-cirrhotic population, which is the F2, F3 population. And we expect results from that study to come out, the histology results at the end of 2026. We also have a study in the cirrhotic population, which is incredibly exciting because that's the population with the highest unmet need. And both these studies started in this year and results from that study, the histology portion of it will be sometime in 2028. Importantly, we got breakthrough designation as well as prime designation in Europe from the respective regulatory bodies. A quick one on the molecule. So FGF21 is a hormone which controls lipid, carbohydrate and energy metabolism in the body. It's got an incredibly short half-life. So we've used a unique proprietary technology called glycoPEGylation, which extends the half-life, allowing us to dose the molecule once a week or once every 2 weeks. And we do this while retaining the efficacy against all the receptors. So we are not compromising anything on the efficacy in the PD front while extending the half-life of the molecule significantly. And you can see on the right, a table which compares how we do in our EC50s, so how our receptor binding is relative to recombinant-native FGF21, and you see it pretty much mirrors that. So I'm going to talk a little bit about our NASH program. So we completed a Phase IIb study. Results read out last year in March of last year and then were subsequently published in the New England Journal last year. This was a 52-week study where we tested 3 different doses of pegozafermin, 2 doses given once a week, 1 dose given once every 2 weeks. And we enrolled patients with F2, F3 fibrosis. The primary end point was at week 24, where we did a repeat biopsy in these patients. And we looked at the endpoints you see listed on the right-hand side of the screen. These are the endpoints which are used for regulatory approval, both in the U.S. as well as in Europe. Now we used a very stringent methodology to do this study, where we had 3 pathologists read every slide, both at baseline as well as end of study. And this is important because it really took away -- you're trying to get the true drug effect as distinct from any kind of a placebo response and address the variability seen when you do biopsies. Here's the primary endpoint. And at first glance, you will see it's a highly statistically significant benefit we see at the 30 milligrams given once a week, that's the qw. And the 44 milligram given once every 2 weeks. And these are the 2 doses we will be taking into Phase III development. So you see about a 20% delta versus what the placebo showed. Here, we show how does this track against a couple of the leading drugs, either in development and the one drug which has been approved for MASH, which is resmetirom for Madrigal. Now there are 2 ways to look at the data. So at the bottom, we show how does the data look when you take a look at the fibrosis placebo-adjusted delta. And what you see is the 2 FGF21s really stand out. So we have about a 20% response. Efruxifermin at week 24 had about a 20% response, and that compares favorably with every other product you see on the screen. Efruxifermin continued their patients through 96 weeks. And what you see at the higher dose, with extended use of FGF21, you would expect that number to go up significantly. All the other trials on this page are much longer studies other than the 2 FGF21 studies. Now I did mention that we used a very rigorous methodology to read the biopsies. And what that did is it dampened both the placebo response as well as the drug response. So when you look at cross-trial comparisons, one way to equalize a cross trial is you look at a relative risk or an odds ratio, which you might be familiar with. So how did the drug do relative to placebo? Because each trial had its own nuances. Some had 2 readers, some had a single reader, some had 3 pathologists reading slides. Now what you can see is we compare -- we are kind of the best in the category when you look at the relative risk relative to the placebo. There's a second endpoint in MASH, which is used extensively, MASH resolution. Again, we see very highly statistically significant results. One of the other endpoints, which is looked at very closely in MASH studies is what do you see on liver fat, right? At the end of the day, it's fat which accumulates in the liver. And pegozafermin is extremely effective in reducing liver fat. You see that on the left-hand side. This is after week 24, and this is kind of best-in-class data where you have 50% to 55% reduction in liver fat. And on the right, you see a table -- a chart which talks about the responder analysis. So there have been studies done which have correlated a 30% reduction in liver fat with improvement in histology. And what you can see is we have between 77% and 88% of the patients have a 30% reduction in liver fat. So it's not just we are getting some people with incredible liver fat reduction and many don't respond. We're seeing it across the board. Transaminases continue to improve very, very well. Again, these are best-in-class data with transaminases changes, the ALT and AST. And then additionally, we looked at a series of noninvasive markers. So when you think about it, the biopsy is just a very small part of the liver. So we wanted to look at other markers and cT1 and VCTE, these are kind of imaging markers you look at. FAST is you're looking at imaging where you're taking the elasticity as well as AST. And again, we see very nice and consistent changes both at the once-a-week and once every 2 weeks. If you talk to the KOLs, they'll say a lot of focus these days is being paid to VCTE. This is done by a FibroScan machine, which is easily available in all practices. So we were very encouraged to see it was not just on histology. We saw consistency of response across all these markers. I mentioned we continued all these patients through week 48 in a blinded fashion. We did not re-biopsy the patients. It's tough to get consents to keep re-biopsy-ing patients. But we looked at all the noninvasive markers at week 48. And it's a pretty busy slide, but what you will see is that across all the markers, we saw a nice maintenance of benefit between week 24 and week 48. And what this does is it gives us a high level of confidence. As we do longer studies, we should see a nice response in the longer study. Really, one of the important points to think about is what happens in a world of GLP-1 utilization. So we had about 20% of our patients who are on stable doses of GLP-1s in our study. And we saw very nice changes on top of GLP-1. So to orient you on this slide, the gray bars are patients who were on a GLP-1 and got placebo. And the purple bar is patients who were on a GLP-1 who got pegozafermin. And whether you look at transaminases like ALT or you look at VCT using FibroScan or you look at ELF score or Pro-C3, which are blood markers, you see a clear benefit on top of the GLP-1s. And in a great extent, that makes sense because mechanistically, GLP-1s work very differently than how pegozafermin works. I mean in fact, there's no GLP-1 receptors on the liver. And so we work directly on the liver, but we augment what GLP-1s do. And we think, in the real-world commercial market, what you're going to have is patients being on GLP-1 and on top of that, they are going to use molecules like pegozafermin and see a benefit. We also had, in this study, a small sampling of patients with compensated cirrhosis. So there were 14 patients who had F4 disease upon rereading of their slides. Albeit a small patient group, so I want to always caveat it with small numbers, but we saw very nice changes in the 11 patients who had repeat biopsies and who received pegozafermin. Out of those 11 patients, we had 45% of them see a reversal of their fibrosis from F4 to F3 or below. So this is very encouraging and gives us hope that as we move into Phase III in F4 patients, we have a very high likelihood of showing a benefit. Importantly is this benefit in these patients with F4 disease was not just at week 24, you also saw it at week 48. And this goes back to my earlier comment that it's important to see long-term maintenance of benefit, because liver is one of those organs which can re-heal. So if you reduce the injury and insult to the liver for an extended period, you tend to see better outcomes. Quick one on safety and tolerability. The drug was well-tolerated. We tend to have AEs much lower than the competing FGF21, which has seen much higher levels of adverse events, especially GI events. And an important one which has come up around FGF21 is we have not seen any clinically meaningful or statistically significant changes on bone markers or bone mineral density done by DEXA scan or on vital signs. So to date, albeit it's a IIb study, I always would caveat, we are feeling pretty good about the tolerability profile of this drug. Most of -- nearly all these events were Grade 1 events. So based on this, we've embarked on 2 Phase III studies. The first one here is a study in pre-cirrhotic population, which is F2 and F3, where we will be enrolling approximately 1,000 patients, testing 2 different doses, the 30 milligram once a week, the 44 milligram once every 2 weeks. And there are 2 portions of the study. After 1 year, we will do a repeat biopsy to look at histology with co-primary endpoints, which is fibrosis improvement and NASH resolution. And if we have positive data there, we can file for accelerated approval, both in the U.S. as well as in Europe. We will continue those patients for outcomes. We expect the primary outcome here to be progression to cirrhosis, and that will be done at month 36. Now while the study is 1,000 patients, we don't need all the 1,000 patients for the histology portion of the study. It will be a subsample of that group, which will be done for histology. I mentioned we also have a study in cirrhotic population. Here, we are bringing in patients with compensated cirrhosis. We're testing only a single dose, the higher dose, 30 milligram given once a week, very similar design, 2 components, histology and outcomes. Unlike the first study here, the histology will be done at 24 months. F4 patients have a much more dense fibrotic matrix, so you want to give longer duration on the drug. If we have positive data at month 24, we would file for accelerated approval in the U.S. as well as Europe. We are the first company, to the best of our knowledge, who's got regulatory buy-in to do an accelerated approval for F4. So it's a big win for this program to do that. But we will then continue all these patients through the outcomes readout. I want to switch gears to spend 2 minutes on kind of how do we see pegozafermin being positioned relative to the other drugs -- sorry, to the class of drugs in development, including the incretin therapies. So at a high level, the way physicians think about this disease, they think not in fibrosis stages, but what's the risk of these patients, like going from low to medium to high. And that's really about the risk of fibrosis progression or risk of a cardiovascular event. If someone is low risk, their treatment objective is let's resolve their steatohepatitis, because someone can be in that stage for 10, 15 years and never progress. But once you get to advanced fibrosis, which is like F3, their primary objective is prevent progression to cirrhosis. And if they're cirrhotic, it's all about preventing a decompensation event. If you think about this, so if your goal is resolve steatohepatitis, an incretin therapy, obesity drug, a diabetes drug is -- could be very effective. You could be on that for 10 years, 15 years. But once you get later down, where the goal is to prevent progression to cirrhosis, you want a really potent antifibrotic. And then once you are cirrhotic, it's all about the fibrosis. And that's where we think the sweet spot for pegozafermin is, that advanced fibrosis patient. And in the cirrhotic patient, we think the FGF21 is the only class which probably is going to have positive data or has shown data. The good thing is since we've shown good data on top of GLP-1s, we do expect that some patients will be on GLP-1. And over time, their fibrosis progresses and a drug like pegozafermin would be added to that molecule, okay? We do acknowledge that with the use of GLP-1s, the prevalence could change, because some people will be at GLP-1. So on the left, you see the blue line is what the prevalent population is projected to be. This is from published literature. But if GLP-1s get used extensively, it's kind of that dotted line with a wide interval bar, right? So the projections over 10 years was F2,F3 would be about 13 million. But we think it could be somewhere between 8 million and 10 million with use of GLP-1s. But the interesting thing is when you look at what the size of the diagnosed pie is, we expect that to grow tremendously. Today, the diagnosis rate is as low as 7%. So there's only about 530 million patients being diagnosed. Conservatively, in 10 years, that could be 15% to 18%. If I take what happened in the hep C market, it could be 25% to 50%. So the pie is going to be significantly bigger up to about 1.8 million patients. And if you look at how physicians -- this is market research, how physicians think they will allocate these patients, you see that FGF21 gets a dominant share with about 50% -- 45% to 50%. GLP-1s continue to be used extensively. They think about 2/3 of these patients will be in GLP-1. But a lot of the market share we'll get is about 30%. Half of it is monotherapy and half on combination. When you translate that to F4, it changes a lot. In F4 patients, really GLP-1s, they don't choose to use extensively. So here, FGF21s are expected to garner nearly 60% of the market. So very extensive market share for the FGF21s. Okay. I'm going to cover this in the last 2 minutes. I know we started late, so we're going to run out of time. So our second indication is severe hypertriglyceridemia. So this is an indication which there are roughly about 4 million patients in the country. About 1.8 million of them are currently being treated. Of those, about 50% of them are unable to bring their triglycerides to the desired level, which is below 500 mg per deciliter. So there's a very large market. We did a Phase II study where we tested multiple doses of pegozafermin versus placebo. These were all patients who had triglycerides between 500 and 2,000. They were allowed to be on background therapies, which are approved here, which is fish oils, fibrates and a lot of them are on statin use, even though statins are not approved. And the endpoint was very simple, reduction in triglycerides from baseline. And this endpoint is an approvable endpoint to get full approval with the FDA. Here, you see the primary endpoint. We saw very dramatic reductions in triglycerides after only 8 weeks of dosing. So between 57% and 63% reduction in triglycerides. And then importantly, we saw this reduction whether they were on background therapy or not. So the chart on the left shows patients who were not on background therapy or fibrates or fish oils. The chart on the right shows patients who were on background fibrates, fish oils or high-intensity statins. So we were very pleased to see -- we see very nice data on top of existing drugs, because we recognize these are generic drugs, and they will be used on top of these drugs. We also see very nice changes on non-HDL cholesterol and ApoB. These are 2 markers, which tend to be best predictors other than LDL of seeing cardiac outcomes benefit. Based on this, we've embarked on a Phase III study where we are testing 2 doses given once a week, 20 milligrams and 30 milligrams. It's effectively taking the Phase II study and doing it larger. Same endpoint. It's a 52-week study with a primary end point at week 26, which will read out next year. My last slide is going to be -- so what is the big -- so what's the big key competitors in this market? So there's another class of drugs, the ApoC-IIIs, which are RNA therapies being developed for this. But what is it that physicians are looking for in SHTG? Clearly, triglyceride reduction starting from the right is the most important thing. But after that, what they're looking for is drugs which have broad metabolic benefits, because these patients have multiple metabolic issues. In our study, 100% of them had liver fat, published literature would say about 75% to 80%. 2/3 of patients are prediabetic or have diabetes. So what they're looking -- and the existing drugs do nothing on the rest of the metabolic issues. So what they're looking for is drugs which, not only improve triglycerides, but address the metabolic challenges. So a leading drug is [indiscernible], which is a drug which presented its Phase II data. This is an ApoC-III agent. And what you see is the triglyceride reduction on a placebo-adjusted basis between our drug and that drug is very similar. However, our difference is we show a reduction in liver fat, going back to what's important. We actually show benefit in glycemic control, the last straw versus the ApoC-III. This drug has actually shown worsening of glycemic control, which could be problematic in patients with severe hypertriglyceridemia who already have an issue. And then we actually are neutral in LDL cholesterol versus, in this drug, they saw a 60% increase in LDL. So we think we have a very differentiated profile in that we offer triglyceride reduction, but we offer other metabolic benefits such as reduction in liver fat, improvements in ALT and improvement in glycemic control. This is where we think the sweet spot for a molecule like ours. Now the ApoC-III is also being developed for FCS, which is an extreme case of severe hypertriglyceridemia, but that's not the market we are targeting. So just to close is we're really excited about where 89bio sits today. We're in the midst of 3 large Phase III programs, which are being executed. The studies are enrolling really well. Execution is going well. We'll have our first data readout from a Phase III next year. Then in 2026, the first NASH program reads out; and in 2028, the cirrhotic study reads out. The company is well capitalized. It's a management team who's had extensive experience in Phase III development, but as well as in commercialization of the drugs. Thank you for your time.