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

Joining us on this, our second day of Bank of America's 2025 Healthcare Conference here in Las Vegas. My name is Jason Zemansky, I'm one of the SMid cap analysts here at the bank. And I'm so pleased to have join me on stage, Rohan Palekar. Thank you so much for joining us.

Great to be here, Jason. Thank you for having us.

Well, maybe let's start broadly, especially for those newer to the story. What about FGF21 makes it an attractive approach in MASH/NASH, particularly when compared to other modalities in the space?

Sure. So I think as many of you might know, 89bio is developing pegozafermin, which is an FGF21 analog, which we believe is a highly differentiated FGF21 with the potential for a best-in-category profile. And I say this because, mechanistically, what FGF21 does is very unique relative to some of the other drugs in development for MASH. And I think it's important to think about the disease state MASH. Look, it's a liver disease state, but at its core, it's a metabolic dysregulation, which manifests itself in what happens in the liver. And over time, as the steatosis, the fat builds in the liver, you have inflammation, and then you end up with a fibrosis and then the late-stage cirrhosis. So when you think about a mechanism, you want to hit it in multiple ways. You want to address the metabolic dysregulation. You want to de-fat the liver. But at the same time, you also want to have a direct effect on the liver on fibrosis. And FGF21 is unique. So what it does is, in the liver, it has direct effects in rapidly taking fat out of the liver. It prevents the generation of new fat in the liver. But it also has a direct antifibrotic effect on the liver. But in addition to the liver, it has broad metabolic benefits, which are mediated systemically through the white adipose tissue. And so it improves glycemic control, it changes lipid and lipolysis balance. It changes things like triglycerides. It reduces LDL. So this is where it's unique. So when you think about some of the other classes, like GLP-1s, they are all acting in the periphery. There's no GLP-1 receptors on the liver. So they're working metabolically systemically and down-stream benefit on the liver. And that's why we see a benefit in as quickly as 24 weeks on fibrosis, versus some of these drugs might take 1.5 years. And then you have some other drugs which are working purely on the liver, but they might not be addressing the broad metabolic dysregulation these patients have. And I think that's the unique properties which FGF21 has, and then our profile is a very differentiated FGF21.

Perfect. I think we'll definitely get there. But before we sort of delve into the details, I mean, if you think about MASH/NASH, it's been a very challenging indication with a lot of setbacks and, until recently, no approvals. At a high level, what do you think has shifted? And I guess more specifically, why should investors be confident we're finally hitting our stride after years of setbacks?

Yes. So I think there's a couple of things which -- so you're right, there have been drugs which were previously in development which never got through. Finally, we had Rezdiffra from Madrigal see positive data in Phase III, and now has been incredibly successful commercially. I think in some ways, we learned from the mistakes of our fathers, right? I think we have become much smarter in how we design the trials, identifying the right patients to respond. So I think that's one theme. I think the second one is the second generation of products, like pegozafermin, are just more potent molecules. I think the first generation of products which went into MASH, they were not that potent. They were not that effective. And some of them actually went into late-stage development with failed Phase II studies, but I think everyone was looking at, "Wow, MASH is this huge market and let's take a chance on it," right? And so that's where you're seeing is this new generation of molecules like pegozafermin are really effective molecules, and we know how to do these drugs much better. That's why we have a high level of confidence in our Phase III program should be successful.

Absolutely. Well, speaking of new developments, I think the topic on everyone's mind right now is, last night, GSK secured rights to Boston Pharmaceuticals' efimosfermin for $800 million upfront, deal may be worth $2 billion in total. What are your overall thoughts on the deal?

So I'd start at the high level, I'd say 2 things. I think it's validating in 2 aspects. One is I think it's a strong validation that there is interest in big pharma for entering the MASH field and acquiring good assets, right? There's always been this question, is there really interest in big pharma to play in the MASH space? Because, honestly, there's been no deals done in MASH for the last 5 years, right? Over the last few months, we know we've been in active discussions and engagements with multiple players. And we've always believed that, because this market is one of the last few big markets left where big pharma is not playing, right? So I think that's the first I'd say. The second I would say is I think it's a very strong validation that FGF21 is a mechanism of action which has a high level of interest. And this goes back to FGF21 is truly differentiated and can compete really effectively both in the pre-cirrhotic and the cirrhotic population. And from 89bio's perspective, look, we think this is really good news because, arguably, this is the drug with the least amount of data in the FGF21s. It's a relatively small study, we can talk about, and a player felt it was big enough to yet pay the big money for a data set of 30-plus patients, right? And so in some ways, to us, this is pretty encouraging that you're now starting to see players step in. The last comment I would make is, look, GSK is not what I'm going to call the classic MASH player. I think there are other logical players who are already in the MASH space or big in cardiometabolic space who might be arguably the more logical players for partnerships moving forward.

Got it. Well, we'll definitely get into the details a little bit more, but just another high-level question. Is this saying to you that, if you want to play in MASH, and maybe obesity as well, do you need an FGF21 in your armamentarium?

So I do believe, to be a successful player, why FGF21 becomes critical to have in your armamentarium, is the biggest unmet need and arguably the biggest opportunity in the MASH space is in the F4 cirrhotic market, okay? That's the highest unmet need, it's the market with the highest pricing power. And in the F4 population, the mechanism with the highest likelihood of showing a positive benefit is the FGF21 class. And we know that a lot of the strategics, they are really focused on the -- sorry, on the F4 space. And so it makes a lot of logical sense that, if you want to be a major player in the MASH market, you need an asset which is going to be effective in that space. So if you think about the GLP-1s, right, it's very unlikely that the GLP-1s are going to play in the cirrhotic marketplace. In fact, semaglutide did a large study and did not work. In fact, placebo did better than sema in that F4 space. So I would submit that to be a successful MASH player, you want to have the entire spectrum of the disorder covered, but if you had to only play in one space, the biggest one is in the F4 space.

Makes sense. Well, let's pivot to pegozafermin. What are some of the characteristics, molecular, clinical, administrative that you think are differentiating? And I ask this specifically with -- there was a very interesting paper came out in Hepatologist flagging pegozafermin.

Yes. So pegozafermin is, as I mentioned, it's an FGF21 analog, which we have engineered to extend the half-life while maintaining the potency of the molecule against the key receptors. And based on doing this, we can dose it once a week or once every 2 weeks while essentially replicating what native FGF21 does. In our Phase II study, we showed really significant benefits on fibrosis. It was a 20% placebo-adjusted delta. But what's important to look at is, and referencing the Hepatology paper which you talked about, is when you look at cross-trial comparisons, it's important to look at how did your drug perform relative to placebo in the construct of that study? This is important because every study in MASH has taken slightly different approaches: different approaches in how they read the biopsies, different pathologists, different durations. Some studies are 24 weeks, some are 1 year, some are 18 months. We showed a relative risk/benefit of 3.5. The competing FGF21's relative risk at 24 weeks is about a 2.1. And so the paper you're referencing, so this was a publication which came out in Hepatology where they looked at 29 studies in MASH, 9,300 patients, and they looked at how these trials compare on the 2 histology endpoints: fibrosis improvement versus MASH resolution. And pegozafermin stood out as the most potent molecule on histology based on this criteria when they looked at it, right? Some of the other FGF21s were included, like efruxifermin, which does well also, but not as good as pegozafermin. So we think from an efficacy perspective, we have, amongst the most potent FGF21s, and arguably across the entire category, the most potent on a histology benefit. But then there are I think 2 other points of differentiation, Jason, which become important. So we've shown a very nice tolerability profile when you compare with the other FGF21 agents. And this is important from a commercial perspective because MASH is an indication where you're going to chronically treat patients and it's a symptomatic condition. And we know that patient compliance and persistency is driven by tolerability. So we have shown a nice tolerability profile relative to, say, efruxifermin, with much lower rates of GI adverse events. And then on bone biomarkers and bone mineral density, we are not seeing any clinically meaningful or statistically significant change. So that's an important one, versus some of our competitors in the space have shown statistically significant changes on BMD by DEXA scan. So I think tolerability becomes really important. And then finally, on the dosing, right? We are dosing once a week, once every 2 weeks. You have efruxifermin which is once a week dosing. We think that's important. But then importantly, we are a liquid product in a prefilled syringe. Some of our other competitors are a lyophilized product which have to be reconstituted before it gets ejected. And so why does this become important? We have all the reason to believe that we can be combined and co-formulated with a GLP-1. And if you fast forward from a life cycle perspective, a lot of patients, by the time we come to market, are going to be on GLP-1s, whether for the obesity, but more likely for their diabetes. And if you have an opportunity to co-formulate, so versus giving 2 injections, a GLP-1 and then an FGF21, if it's a single injection, it would make a lot of sense. And it's unclear whether a lyophilized product, which has to be reconstituted, can be co-formulated. We know we can be co-formulated. So I think those are a couple of the differences which are really important when you think about the technology we've used to extend the half-life.

Makes sense. You brought up a number of differentiated characteristics. But based on your market research, do you have a sense of what prescribers are looking for and what patients are looking for? And I ask this under the guise of, as you alluded to earlier, you have a near-term rival as both products may be on the market around the same time.

Yes. So I'll break it up into 2, Jason. So when we talk to physicians -- and I'll break it up a little bit between F2, F3 and F4. It's very similar. But the key, most important one, no surprise, is fibrosis benefit. What is the benefit you are seeing on fibrosis? Now they use it within ranges, right? They don't tease out, is 18% better than 20%, right? But they will clearly say you want to be over a threshold. The threshold they would say is a 15% placebo-adjusted delta in F2, F3. And in F4 disease, they would say even a 10% is clinically meaningful. Anything about 15% is highly meaningful. Their focus is on fibrosis benefit. We hear this from physicians, we hear this from peers. They would like to see that you're addressing the underlying disease state of steatohepatitis. Most of them would say this FDA kind of MASH resolution, no one understands it really. But they want to see that you are actually impacting steatohepatitis, right, because you want to do that. So that's the key criteria. Then they do bring up that the drug needs to be well tolerated because, from a physician perspective, they want to ensure that the patients stay on drug. And this has got heightened because they see the noncompliance with GLP-1s. They actually observe it in their clinics. So we do know from a lot of the databases, about 2/3 of patients at the end of year 1 have dropped off. They actually experience it. So they want to make sure that the drug is well-tolerated and patients could stay on it, is a very important. Interestingly, the -- once upon a time, if you've done the same research 5 years ago, they would have said oral is significantly preferred to injectable. Today that has gone much lower in the importance criteria. And I think it's a function of people have got very comfortable in the cardiometabolic space using GLP-1s, right? So that's less important. I'm not saying it's not. And then the dosing convenience, from a physician perspective, yes, 2 weeks is better than 1 week, 1 month might be better than 2 weeks. But they don't get that hung up on this. As long as it's at least once a week or better, physicians are "We have no challenges helping our patients use that," okay? Now when I flip it to patients, it's a slightly different dynamic. From a patient perspective, dosing convenience is pretty important. Once every 2 weeks, they literally, in our research, 2/3 of patients said they would rather have a once every 2 weeks than once a week, other things being equal, which, if I were to say I was a patient, 26 less injections probably makes sense, right? They do care about, from a patient perspective, what is the AE profile? And then what patients tell us, which, again, no surprise is, is this going to be paid for, right? That's a really important determination. What's my co-pay going to be, which is very reasonable, right? So I think that's kind of the patient dynamic. Now the patients would prima facie say an oral product is better. But they, as long as it's a once-a-week or greater from an injection perspective, there's no concerns.

Does your answer change, specifically on the prescriber side, when you think about right now, I'd say the majority of MASH patients, especially if they're cirrhotic, are being treated by hepatologists. But longer term, you're thinking about moving especially into the F2, F3 population, you're probably targeting more endocrinologists with the possibility of moving into a GP's office. Is pegozafermin something that could be administered in those offices? And what does it take to get there?

Yes. So thank you for that question, Jason. So I should have clarified. So most of our market research which I referenced was done with GIs and heps and a small subset of endocrinologists. We have not done work in primary care, okay? And here is I think how I would characterize it. We think the advanced fibrosis patient and the cirrhotic patient, which is pegozafermin's sweet spot, they will predominantly be treated by gastros, heps and endocrinology over time. Endocrinologists are very comfortable with this mindset, right? They use GLP-1s extensively. They today are not screening for MASH, even though the ADA guidelines ask them to screen for MASH, they're not doing it extensively. But I do believe once semaglutide gets approved -- and I think it will get approved, as we know, they had their Phase III positive data, they have said they're going to file -- or maybe they've said they've already filed. I think once sema is in the market, Novo is actually going to help people like us by really educating this broader audience. And so by the time we come to market, I think the endos are going to be very comfortable with it. I think primary care, it's tough to say how that's going to evolve, right? So primary care might not have some of the tools. So I think a lot of the diagnoses of MASH is going to happen with FibroScan, which is this ultrasound machine, and not already have -- many of them have it. Primary care is not that extensive. So I don't know how extensively they are going to be screening. I think there are going to be some primary care who are going to do it. And over time, it might shift. Like today, GLP-1s are prescribed, I think, over -- I heard a stat, it's like over half is being prescribed by primary care.

Ultimately, what factor -- 2 or 3 factors would you gauge as being -- or assess being the most important in determining market split within the FGF21 class?

Yes. So I'll start by saying, if FGF21, which I believe will live up to its promise in Phase III studies, this is going to be one of those categories which would be multibillion dollars, right? Just the F4 space could be well north of $5 billion, right? So you're going to have potentially multiple players who could be highly successful. So then to answer your question, how does this play out and how it splits. I think it's going to be, first, a benefit/risk ratio, which the physician is going to see. So what is the relative efficacy I'm getting relative to the tolerability, okay? The research we've done, including some conjoint work we've done, is they are not willing to trade off tolerability for benefit on efficacy. It's got to be well tolerated, and what's that balance, okay? Interestingly, we learned in F4 patients, there was the mindset saying it's all about efficacy. Interestingly, in the research that's come back, actually in F4, they are just as concerned about tolerability. And the reason is these patients are frail, so they do not want to take a chance with these patients, especially on bone mineral density, because they're already at a risk of sarcopenia. And then the other thing which came out is, in a cirrhotic patient population, they want to ensure that the patient stays on drug. So they actually are concerned that if the GI AEs are excessive, patients are going to drop off drug, which then doesn't help the patient, right? So it comes down to, fundamentally, what's the benefit/risk profile of the drug, is going to be a big driver. Then they're going to look at it from a patient perspective, is it convenient for the patient? And then the third, which in some ways we control, but not as much, is it going to get paid for? So in today's, in the U.S., physicians are very sensitized to "I want to make sure that I'm giving my patient something which they can actually get access to." And so it becomes really important, as we set up our commercial infrastructure, we are generating all the data to get payers to actually cover and reimburse this because, to a great extent, that drives a lot of it, to be honest.

Makes sense. Maybe briefly, if we could talk about last weekend's EASL conference. I think it's -- most will agree that I think one of the biggest takeaways from the meeting is, at least in the field of MASH, exposure matters, length of time. The more exposure to the drug, the better. When you think about your ongoing Phase IIIs, on one hand, there's really no option available, especially for cirrhotic patients, which would kind of justify maybe an accelerated quick look at the data, but on the other hand, I think we're just scratching the surface even at 2 years. So where is the sweet spot for you in looking at a clinical study, and why?

Yes. So when you think about -- and clearly, on EASL, I think the talk was all about the cirrhosis data and what FGF21 could do. And in fairness, there was limited data provided -- or limited incremental data on resmetirom, but it's an open-label study. In the cirrhotic population, there's always a belief you got to give sufficient time on treatment to actually expect to see a benefit here. Think about it, these patients have probably taken 15 to 20 years to get there, it's a very dense fibrotic matrix. Even with the efficacious drug like a pegozafermin, by the time you break it and allow the liver time to re-heal, it's going to take time. And this is why we had, well before the SYMMETRY data came out, had planned a 24-week -- 24-month study, sorry. Not 24 weeks, 24-month study, right? We had the discussions with the FDA in 2023 about that. We do think actually treating beyond 24 months could actually continue to see additional benefit, okay? We picked 24 months as the primary endpoint for the interim analysis for histology because we think that gives us enough time to reverse fibrosis from F4 to an earlier stage. And we have got alignment with both the FDA and EMA that, if we show a reversal of fibrosis from F4 to F3 or earlier, we could file for accelerated approval in the U.S. and conditional approval in Europe. Okay? So we have this in writing from the FDA. They've reviewed our protocols. They've signed off on our protocols. So we are really bullish about getting that data, generating the data, and that would support accelerated approval. But then we'll continue those patients for outcomes. Because at the end of the day, what we also show is that, over time, treating with pegozafermin prevents progression of this disease to a decompensation event, okay? And we will generate that data. Today there's no one who has generated 3- and 5-year data in the cirrhotic population.

Makes sense. Shifting gears briefly. Novo Nordisk is conducting a combination study of it's FGF21 zalfermin with semaglutide. It makes sense, I think, in a number of different avenues, especially as you think about, again, moving towards an endocrinologist's office. But what additional benefits do you think we need to see to make the combination make sense from both a safety, tolerability side and an efficacy side?

So I think the study Novo is doing, which, hopefully, one day they're going to present the data -- we know the study is completed in December, so we should expect it soon. I think if you take a step back, it makes sense from a mechanistic perspective. One drug, which is a very potent anti-metabolic or metabolic pathway, obesity pathway, coupled with another drug, which has metabolic benefits in glycemic control, but has direct and rapid antifibrotic properties, which is FGF21, right? So we'd like to believe that with a potent and a good FGF21, you should see nice synergistic benefits. We've shown that in our data. We had about 20% or 22% of our study in Phase IIb on patients who were on GLP-1. And on top of GLP-1, we saw really nice benefits on liver markers, fibrosis markers as well as metabolic markers, including like hemoglobin A1c, et cetera, right? Now I think with the Novo molecule, we don't know much about their FGF21. We don't know a lot about zalfermin. There's only a Phase I data, which was presented 2 years ago at EASL, it's a poster. It shows the kind of activity you would expect with FGF21, but it also had very significant safety and tolerability issues. And so I think it's going to be important when this data set comes out to understand -- because GLP-1s already have GI side effects. Now if you add another one which has significant GI side effects, does it compound the issue? The second is if the efficacy profile is not as great as pegozafermin, like would it make more logical sense to combine sema with the most potent and the best FGF21? So in some ways, we think this data set is actually good for us, right, because it would validate, if the data bears out what we expect it to do, it would validate that this combination makes a lot of sense. And you would kind of say, let's combine the best 2 mechanisms you have.

Makes sense. On the brief time we have left, let's switch gears somewhat. In addition to MASH, you're also pursuing severe hypertriglyceridemia. Can you discuss some of the rationale behind the strategy, particularly as the addressable population is far smaller than MASH?

Yes. So sHTG patients with triglycerides about 500 mg per deciliter, these patients have multiple other comorbidities. So most of them have a metabolic dysfunction, dysregulation. Over 2/3 of them have glycemic control issues. And between 75% and, in our study, 100% of them had MASLD. And I bet you, if you actually biopsied them, most of them had MASH. There are drugs approved for sHTG; they're suboptimal, whether it's the fibrates or the fish oils, and then statins are used. About half of the patients in those drugs are unable to get their -- sorry, unable to bring their trigs below what is required, right? What's unique in our Phase II study we showed, we not only dropped trigs, so our response rate in 8 weeks was between 57% to 63% of patients, that was their drop -- sorry. The drop in triglycerides was between 57% and 63%, so very significant. But then importantly, we improved liver fat, ALT, as well as showed other benefits on lipids like ApoB and LDL, right? So we think we have a really good profile for this patient population. We see ourselves as a second-line therapy. We're not trying to be the first line. So these are patients who are refractory or have failed on a fish oil or fibrate. We showed really good data on top of those drugs in our Phase II. And that group is still a pretty big group. It's somewhere between 800,000 to 900,000 patients, who have tried an existing drug and are refractory to it. So it's a very large audience we have, and we think we have a very differentiated profile here.

Great. Well, we are out of time, Rohan. Thank you so much for joining us.

Thanks to having us here.