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

Good morning, everybody. Welcome to the Cantor Global Healthcare Conference. Really excited for this next fireside chat with 89bio. We have Rohan Palekar, the CEO. Thanks so much for joining me today. Really appreciate it.

Thanks for having us, Kristen.

Always exciting things going on in MASH. So you're in a great position right now. You have 3 Phase III studies ongoing. One can argue there's 3 large separate shots on goal here, all for large markets. So maybe to start, can you give us a refresher on your recent progress? What's most exciting for you these days?

Sure. So it's a really exciting time just now with 89bio. As you mentioned, we're developing pegozafermin in 2 very distinct indications, and we have these 3 large Phase III studies ongoing. I'm actually going to start with the one which gets the least talked about, which is our severe hypertriglyceridemia Phase III. So that's a Phase III study, and I'm incredibly excited about that study because we're going to have top line results from that study next year. And we have a very high level of confidence, we should see positive data there. Where we're essentially taking our Phase II study where we had incredibly robust data, and we're just doing a larger trial. So that's the first one. That enrollment is going really well and result is next year. In addition to that, we have 2 MASH studies, which have initiated this year. The first one is in the pre-cirrhotic F2, F3 population that started in March of this year, and we are really off to a good start. Sites have come up, a lot of enthusiasm from the PIs for that study. Screening has gone incredibly well. And that's a study in approximately 1,000 patients where we're going to do histology at the end of 1 year. And while it's really early to give firm guidance, what we've said on clinicaltrials.gov is we'd expect top line results by the end of 2026. So that's another very, very important study. And then the last study, which actually is kind of in some ways, my favorite study is the study we're doing in cirrhotics. It's a huge unmet need. We think FGF21 has the greatest promise for the treatment of these patients with compensated cirrhosis. And that study started in May of this year. A lot of sites are common with the F2, F3 study. So initiation has gone really well. And pleasantly surprised to see there's a lot of patients screening into that study. So really exciting times just now for 89bio.

Yes. And it's almost like you had that path on purpose. So there's catalysts coming down the line, right, staggered.

Yes. I should have mentioned the cirrhosis study, we did get buy-in from the FDA, as you know, to use histology as an endpoint for potential accelerated approval, and we would expect those results in '28. So there's '25, '26 and '28.

Okay. So since we last had you on stage, we actually have since had the first MASH drug approval. In what ways does this help the space, including folks like yourself, but why are there still more treatments that are needed?

Sure. So we are really happy that Rezdiffra, which is Resmetirom got approved. I think it's a huge win for patients because there's such an unmet need here, and there's nothing to treat these patients. Now I think in some ways, it's always more challenging when you're the first drug to get approved because you're building the market. But I think the awareness is increasing. So we do a lot of tracking studies, and we are seeing the awareness and the screening for MASH and diagnosis of MASH improving. So in some ways, from our perspective, as a follower to the market, it really helps us that someone's laying the path to build the market. I think the need for additional therapies is -- really comes down to none of these drugs is curing the disease, right? In some ways, a lot of patients will benefit, but there's a lot of patients who still need a better therapy. So when you look at Resmetirom's data on the most important endpoint, which is fibrosis, which is really what clinicians are focused on, you're seeing a placebo adjusted change of 10% to 12%. What we showed with pegozafermin at 24 weeks is nearly a double that rate. So we think there's still a very significant market opportunity for more potent antifibrotic agents like pegozafermin.

Okay. And we've clearly seen a lot of mechanisms out there for this condition. But in my humble opinion, we haven't seen any level of efficacy or safety data like we have for the FGF21 analog class. What is it about this mechanism in particular that really stands out from the crowd and checks off more boxes relative to some of these other targeted approaches?

So to just remind the listeners, right? So FGF21 is an endogenous metabolic hormone, which controls energy, lipid, carbohydrate metabolism. But in addition to that, it has a direct antifibrotic benefit in the liver, and it does that by upregulating adiponectin, which is another hormone, which downregulates the stellate cell activity. And those are the ones which lay down the fibrosis matrix. Now if you think about NASH, it's a very severe liver disease, but at its core, it's a metabolic dysregulation, okay? And so what's unique in FGF21 is distinct from some of the other mechanisms. We address the metabolic pathway, but we also address the antifibrotic or inflammatory pathway. So there are some other drugs which are purely metabolic in nature, right? And so they are only addressing the metabolic and then downstream, you're impacting maybe inflammation and fibrosis. What we do with pegozafermin is we address the metabolic, but we are also addressing the antifibrotic. And that's a really important distinction. Like I'll take an example. Like if you think about GLP-1s, right, which people have talked a lot about, are the GLP-1s going to be the answer to MASH? They are working purely in the periphery. They're not working directly in the liver. There's no GLP-1 receptors in the liver actually. So they are working to change lipolysis balance and deposition of fat. No doubt that's important. but it's not a direct impact on the fibrotic pathway. And this is where pegozafermin or FGF21 is different. We do a lot of that reducing liver fat, reducing the deposition of liver fat, changing lipids, but we are also having a very, very direct effect on the liver. And this is why in 24 weeks, you're seeing very profound changes with pegozafermin on liver fat, MASH resolution, transaminases, but then most importantly, on fibrosis.

Okay. So as you think about these 2 trials you have ongoing specific for MASH, what's the most derisking evidence that we have seen from pegozafermin that are going to give you confidence in positive readouts?

So let's separate the 2 studies, right? So if I think about the pre-cirrhotic, the F2, F3 study, as I mentioned, there's 2 components. There's a histology component and the outcome component. So on the histology, we have a very high level of confidence based on the data from our ENLIVEN Phase IIb study. So to remind the listeners, approximately 220 patients, F2, F3, where we studied them for 24 weeks before we did a repeat biopsy. And we showed using a very stringent biopsy reading methodology, we showed highly statistically significant benefits with a 20% placebo-adjusted delta. Over time, now we're going to do a 48-week biopsy. We expect that benefit to be even stronger, right? Because as you continue to reduce the injury and insult to the liver with FGF21, you would expect that benefit to be there. So when I think about it from showing a benefit on histology, we feel really good that, that F2, F3 study would work. Now let's talk about the outcomes part of that study. So we continue those patients beyond 1 year for outcomes. And at 3 years, we do a repeat biopsy. Now the primary outcome in an F2, F3 patient population would be progression to cirrhosis. So 2 data points why we have a high level of confidence that we should see a benefit on that. One is in our Phase IIb study, we looked at the F3 patients and what was their progression to cirrhosis. And what we saw is that just at 24 weeks, we had 19% of placebo patients progressing to cirrhosis versus those on our drug, it was below 9%. So that's one point of evidence that we should see a benefit in progression to cirrhosis with patients on pegozafermin versus placebo. The second I would use is an external event. So -- and this is a very important one, which sometimes has been missed by a lot in the investment community. So Intercept with obeticholic acid or Ocaliva had done this large study in MASH, as we know. And they had continued all these patients for outcomes. Unfortunately, the drug gets -- they haven't pursued it, but they did a landmark analysis at 4 years looking at outcomes. And this was presented at the EASL meeting in June of this year. And what they saw was that at that time period, patients on drug at the high dose had a 25% benefit in outcomes defined as progression to cirrhosis relative to placebo. They hit a p-value of 0.04, which would have been static had they not split alpha. And you think about it, their drug had a 10% benefit on fibrosis relative to placebo. And despite that, they had a p-value of 0.04. We're showing a 20% delta on fibrosis. That gives us a pretty high level of confidence if we show that benefit in fibrosis, we'll have an outcomes benefit, okay? So that's on the F2, F3 study. Now on the F4 study, why do we have a high level of confidence? So we have shown in a small data set, really good reversal of fibrosis. It was like 45%. I want to caveat it by saying it was a small data set. But what was more important is we saw benefits across all the other noninvasive markers, whether you look at transaminases, you look at blood biomarkers, you look at imaging biomarkers. And when you think about this -- so that gives us a level of confidence in histology, we'll see a benefit. But when you think about outcomes, which is important in F4, when you think about all these other biomarkers, we dampen the disease activity, you should see an outcomes benefit. And what's the evidence for that? When you look at other hepatology disease states in cirrhosis patients, take hep C, take alcoholic hepatitis, you take away the injury and insult to the liver, you have seen benefit in outcomes. So over 48 weeks, we've shown normalization of transaminases, improvement in steatosis, improvement in inflammation, reduction in ELF score, reduction in FIB score. These are all fibrosis markers. We should expect to see a benefit in outcomes. So that's why we have a pretty high level of confidence in both our programs.

Yes. Thanks for bringing the Ocaliva data set up. I think that probably went under a lot of radar just because it didn't proceed. So why bother looking at the data. But you're right, it is important read. And on that note, one of your peers is also going to have some longer-term data from a similar drug, same class, obviously, differences. But is that going to be an important read-through for you and kind of go along this thesis of longer term on drug is better?

Sure. So I think, Kristen, you're referencing the efruxifermin F4 data on 96 weeks, right? And I think it is important when we think about that data set. So as we know, they've done the study in F4 patients. They had 1 readout at 9 months. But at 9 months, we think they saw very nice benefits what we would expect with an FGF21. We think at 24 months, that benefit should improve over time. And this goes back to the way FGF21 works with longer treatment and reducing injury and insult to the liver. It gives time for the liver to heal itself and regenerate, right? It's one of those organs which can do that. So we think it's important because that will be the longest data set in an F4 patient population. Most of the other studies have been a year, most have not worked. So I think it will be important to note that. And I think what we will be looking for and the read-through to our drug will be is if they see good benefits, not just on fibrosis reversal, but across the whole parameters of other markers of disease activity because I think that's going to be important. Remember, that study is -- it was never powered for -- it was a proof-of-concept study. So I think we got to be a little cautious about how we interpret that data and not put too much emphasis, let's say, on a single number, which in some ways, I think, what happened at 9 months. Everyone was focused on a single number. But to us and when we've talked to the KOLs on that data set, we feel pretty optimistic they're going to see nice data, which will really read through to our Phase IV -- sorry, our Phase III program in F4s.

So bigger focus on just overall trends versus like looking for a bogey on a certain number.

That's how we look at it because I go back to the comment which that when we have shared this data set with experts, they go like what excites them in our data set and the other FGF21 is not the single fibrosis number. It's the fact that all the markers are going in the same direction. And that they believe is you're really making a difference in the cirrhotic liver, which should translate to outcomes.

Okay. And we talk a lot about GLP-1s. I don't mean to keep bringing it up. But I think the recent data in MASH, the expectation in terms of fibrosis benefit, it was a little bit better than people were expecting. I know there's still some question marks, dose response, other factors. But to you, does this really change anything? And we'll talk also about some of your data as a combination. But just in general, does it change the thesis at all about how we think about this drug?

So our perspective is fundamentally, no. So I'll take it from 2. Let's first talk the data and then let's talk about kind of positioning where we see GLP-1s versus pegozafermin or FGF21, right? You're right, the data -- and I think you're referencing the tirzepatide data and the survodutide data, right? But when you think about those data sets, while the initial numbers seem really high, when you actually peel back and look at the New England Journal publications, the data sets are not that different from a fibrosis benefit than, say, what FGF21 has shown. I mean tirzepatide was very similar on the absolute numbers, but they had a placebo response of 30%. And so when you look at the relative risk or odds ratio, it doesn't compare with pegozafermin. And it's tough to interpret a study which has a 30% placebo response, to be honest. And then you couple that with no dose response across the 3 arms, you just go like, okay, how much faith do I put in that data set, right? And how true are these numbers? I think survodutide, their fibrosis delta was 15% to 17%. So not only was it lower, but more importantly is the commercial value proposition there, I'm not sure is as strong. So you had a 26-week titration period. And despite that, you had a 20% discontinuation rate and nausea at 60%. When we've talked to experts, they go in the real world 26-week titration, no patient is going through that. And realistically, if you have 20% discontinuation in a clinical setting, that's going to be tremendous in a real world. So in some ways, the data sets would not be as robust as we think. But we acknowledge and realize that people are going to be on GLP-1s. So I think a large percentage of the market will be on GLP-1s, whether for their diabetes, whether for obesity. But when it comes to MASH therapeutics, think about it in a slightly different paradigm. So what physicians tell us is they are thinking about the risk profile of the patient and what drug to use. If someone is low risk, the treatment objective is resolve their steatohepatitis. But as they become high risk, the primary treatment objective is prevent progression of fibrosis and once they're cirrhotic to prevent a decompensation event. So if you think about your treatment objective is resolve steatohepatitis, you're going to use a GLP-1. Because you can be in that state for 10 to 15 years and a good metabolic agent, a good anti-obesity agent, a good antidiabetic can resolve steatohepatitis. But once you are high risk, which is like more the F3 population, the singular focus is prevent progression to cirrhosis. There you want a highly potent antifibrotic, which works quickly. You're not waiting for 18 months to see a benefit. And that's where we think the sweet spot for pegozafermin is. And then clearly, once you're a compensated cirrhotic, you want to prevent a decompensation event. So we think these 2 mechanisms coexist beautifully. And we've shown really nice changes on top of a GLP-1. So in some ways, our market who we are going after and the opportunity is slightly different.

I think another good news is when you're on market, we'll probably all be a lot smarter about these GLP-1s with a couple more years of experience, but we'll also be smarter on FGF21. So I guess, thinking about the future here and patient willingness to go on 2 therapies, how are side effects going to play a part? I mean when we hear about GLP-1s today, that seems to be something that limits patients, right? So if you add another therapy on top of that, is it going to get worse? Is it going to limit administration? Is there a reason why maybe keeping that in mind, FGF21 is the best combination to go?

It's a very fair point, right? Because we do know -- I'm not taking from MASH. From most therapeutic areas, patient persistency and compliance is, to a great extent, driven by tolerability and convenience, right? So what we have observed in our study, so we had about 20% of our patients in our Phase IIb study were on GLP-1s, predominantly semaglutide. And so not a lot of tirzepatide because when we did the study. We did not see any significant differences in the tolerability profile, additive tolerability profile versus patients who were over or not. We think it's manageable. Most of these events were still pretty low Grade 1 events. But it is something, I think, as we do larger studies, we're going to have to monitor and think about how do we keep patients on drug and therapy. Amongst the FGF21 class to date, we have shown a better tolerability profile than some of the other drugs. So when you compare us versus say, efruxifermin, especially on the GI events, which are what GLP-1s have. So when you look at our nausea rates, diarrhea rates, vomiting rates, they are significantly lower than what has been observed with efruxifermin or some of the other early-stage FGF21. So we think as physicians think about which FGF21 to add on to a patient who's already on a GLP-1, I think that's going to be a very important consideration, right? Because you don't want to exacerbate tolerability events.

Okay. We'd love to move on to SHTG. I think you're right, it doesn't get as much credit, but I genuinely believe that sentiment is going to shift as we enter a new calendar year and we get closer to that top line data. It is an indication that's quite large, can fit many drugs, but it's becoming a little bit more competitive. So thinking about both commercial and the clinical landscape, where do you see this best fitting?

Yes. So to just ground us, right? So there are about 4 million patients with severe hypertriglyceridemia in the U.S. Of those, about 1.8 million are diagnosed and treated. So it's a pretty big market. Now interestingly, about 50% of those patients who are diagnosed and treated are unable to bring their trigs below 500, right? So there is an easily accessible market who is in the health care system who are being treated for this indication, but not seeing the benefit. Now I think there's 2 classes of drugs which have the greatest promise here. One is FGF21 with pegozafermin and then the other is the ApoC3 class, which is being developed by 2 other companies. I think we have a unique value proposition relative to ApoC3. So a lot of these patients like MASH patients have multiple comorbidities. About half these patients -- about 2/3 are prediabetic or diabetic and between 75% to 100% of these patients have high liver fat. In our study, their liver fat was close to 20% like a MASH patient. And when we talk to physicians in all our market research, what they tell us is they're looking for agents which can drop trigs but also address the broader metabolic dysregulation these patients have. Because they go -- if it's only about trigs, I can keep them on high-intensity statins and try and get that down, maybe I'll work, right? But the opportunity to reduce liver fat, improve transaminases and improve glycemic control is a very significant benefit, especially for the sweet spot of patients who are, I'm going to say, 750 plus or minus 20%. If someone has got trigs at 2,000, all you care about is drop their trigs, right? So when you contrast us versus an ApoC3, our triglyceride reduction is very similar on a placebo-adjusted basis, very similar to what the ApoC3 are showing. However, there's a couple of key differences. We have shown benefit on liver fat reduction in transaminases. They have not shown that. We show benefits on glycemic control. And in fact, one of the ApoC3 actually showed worsening of glycemic control, up to 19% of patients had worsening of glycemic control. This was with one of their programs. And then the other thing is we show flat LDL changes. One of the ApoC3 agents has shown a 60% increase in LDL. So we think from a profile perspective, we have something unique, improvement in trigs, improvement in glycemic control, improvement in liver fat. And so our unique position where we would carve out is what I'm going to call the sweet spot of not excessively high trigs, but in that 700 to 900 range, where we think we have a very distinct profile. And we've shown really nice benefits on top of existing standard of care, whether it's fish oils, fibrates or statins.

Okay. So clearly, everyone needs to pay attention to this program in addition to MASH.

And it's actually, it's good, right? Trigs has been -- as someone goes, it is like when you think about cardiovascular management, everyone is focused on LDL. It's a stepchild, right? So everyone is let's get the PCSK9, let's get the next one. But there is a lot of residual cardiovascular risk these patients have even if the LDL is in control. And I think with new drugs coming out. So I'm actually happy that the ApoC3 are coming out because it's going to revive interest in managing and treating high triglyceridemia.

And maybe to close, maybe you can just kind of recap anything we need to talk about and why this is really an optimal time for people to consider an investment opportunity in 89bio.

Yes. So look, I think, the entire space of liver and cardiometabolic diseases is going through a pretty significant transformation with all new classes and categories of drugs. These remain one of the few large markets with no to suboptimal therapies. Yes, one drug has got approved, but there still is a very significant market opportunity. And you're seeing that with all the research we are doing, Kristen, is the intent to treat is very high. The awareness is high. And some of the concerns which have been raised about the payer dynamics, I think, are going away in some. We haven't talked about that, right, meaning that there's no need for a biopsy, et cetera. That's been really important. And so we think these markets are primed for growth based on some drugs which could have a unique value proposition. And we think FGF21 has the potential to become truly a market leader in this space. Because I go back to where I started because of its unique mechanism of action relative to the other drugs. And arguably, the clinical data to date with the FGF21s has been the best to date. And within that class, in the 2 drugs which are in Phase III development, we have a very differentiated profile based on our tolerability. One thing we have not talked about is we are studying the drug both a weekly dose and once every 2 weeks versus the other FGF21s are being dosed weekly, the one in Phase III. And that again goes back to convenience, which is really important from a persistency and compliance perspective. It's 26 less injections for the patient. And the last one is we are a liquid formulation. And as we're thinking about life cycle management of our program, with a liquid formulation, there could be one day going back to the GLP discussion, a potential to co-formulate with a GLP-1. So unlike efruxifermin, which is a lyophilized product, being a liquid product might give us that opportunity. So I think we are incredibly excited about our 3 Phase IIIs and with multiple catalysts over the next couple of years.

Okay. Great. Well, we're rooting for you, and thank you very much for your support in being here. And thanks, everyone, for coming.

Awesome. Thanks, Kristen.