Acelyrin, Inc. (SLRN) Earnings Call Transcript & Summary

Let's go ahead and get started. Thanks, everyone, for joining. This is the fireside chat with Acelyrin. We have the full team from Acelyrin here. Mina, Shep and Gil. Thank you so much for joining us. Appreciate it.

Thanks for having us.

My name is Vikram Purohit. I'm one of the biotech analysts with the Morgan Stanley research team. I need to read a brief disclosure statement before we get started. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please out to your Morgan Stanley sales representative.

With that, let's dive right into it. Quite a lot to talk about Mina, but maybe the best place to start is just by -- for those who haven't followed Acelyrin closely recently, just recapping some of the recent announcements you made around. Taking another look at the pipeline and izokibep and lonigutamab, and then we can go into specifics from there.

Yes. And maybe I'll start actually earlier this year, right? And so earlier this year, we read out a successful trial with PsA, right? And on the heels of that, we read out a very positive POC data in lonigutamab, which is our program in TED. I took this role in May. And at that time, we said, look, we've got data coming in HS. We've got a Phase III trial. We had previously to end the year, and we were able to move that into the third quarter. And we said, we would take a look at that data and then we were going to make some decisions around portfolio prioritization and corporate strategy going forward, and that's what we did in August. So we did -- there were some very significant announcements that we made in August. We were very happy with the result and the outcome of that HS trial, which was positive. But notwithstanding that, we did say, look, while it's positive and we're -- we really continue to believe that izokibep is approvable in HS and in PSA, we're going to make some choices. And those are very large indications, capital-intensive and they may be better served and patients may be better served in those programs by a larger organization with infrastructure and existing resources to move those programs forward. And we also really are continuing to be excited by lonigutamab in TED and that we are going to prioritize that program. So in combination with that program prioritization decision, we also then restructured the company in line with those decisions pretty significant, but the combination of all of those decisions did allow us to extend cash runway into mid-2027, right? And that allows us to fully fund both Phase III trials for TAD, right? And so it gives us confidence in our ability to deliver there.

Got it. Got it. So I mean based on your commentary, then it's fair to say that the decision to deprioritize izokibep and HS and PSA was not related to your view of the competitiveness of the data sets there. It was more related to your desire to kind of scale the company differently and just find a home for izokibep where is this better fit with than maybe a bigger infrastructure?

I think that's right. I mean I think the reality is you've got to make some decisions, right? And prioritization, we think, is important, right, in terms of disciplined execution also, right? And so for those indications, again, they are larger and capital-intensive and maybe TED is rightsized for us. And also the day drives that we are very excited by the lonigutamab data.

Got it. You did decide to keep Uveitis in your pipeline. What drove that decision?

So I would say we haven't made that decision yet. So Uveitis...

At least for the time being...

For the time being. And look, that trial was fully enrolled earlier this year, right? So fully funded, and we have guided to having data there by the end of the year. So it's coming soon. And so we'll do the same thing with Uveitis that we did with HS and PsA, which is we'll turn over the data card, right, and we'll make a call.

Understood. Can you help us understand your view of the Uveitis commercial opportunities? What do you think the addressable patient population, excuse me, looks like? And if Uveitis is successful for izokibep and the drug launches, who would izokibep be competing with? What else is out there?

Yes. So maybe I'll start and then I'll turn it over to Gil on some of the markets. I think just to frame it up, I would say Uveitis as an opportunity is very different as a stand-alone versus when we were really thinking about it in combination with PsA and HS, even if you just think about pricing, right, around PsA, for example, and what does that imply in a smaller market like Uveitis versus is there a potential on a stand-alone basis were orphan pricing, right? So I think there is a sort of shift, right, in the way that we're evaluating that opportunity because it's been decoupled, right, from those other indications.

Yes. No, that's right. And I think that when we look at the Uveitis market, Vikram, the -- it's a very high unmet need market. Right now, there is only steroids available and then adalimumab or HUMIRA is the only biologic approved within Uveitis. And when we look at the entire population, so we're studying in noninfected noninterior Uveitis in our study, that's a fairly significant population. It's about 70,000 in the United States, and you can do different sorts of math on treatment and severity. But when you get to the end of it, you have a very significant number of patients either as second line to HUMIRA or potentially first line when we see the data. And as Mina said, with the orphan pricing framework, it could be a very significant commercial opportunity as well. So we're looking forward to seeing the data.

Got it. And for the data readout, is there anything beyond stats on the primary end [ or ] do you think the data needs to show to look competitive from a real-world setting? Or is [ stats ] take on the primary endpoint, is that sufficient? Is that clinically meaningful itself?

Look, I think like we said with the HS and PsA, we're going to everything, right, the totality, the data. I mean, it is a different setting here because HUMIRA is the only approved biologic. And we do know that many patients will eventually fail, right? And so we're going to look at all of that. But our trial is designed to be very similar, right, to the HUMIRA trial.

Got it. Got it. Okay. Great. Jumping back to HS and PsA decision really quickly. You mentioned that it could be a better fit for a larger company. Is BD effort with the target of out-licensing is a [indiscernible] for those indications? Is that an active effort at a...

Yes. As Mina said, we really did. We brought out the top line data was positive in both indications. So there's one more trial to go for approval in both indications. And so we're in the process now, we got the data a couple of weeks ago from HS and kind of looking at all the options for the program. So that's an effort that's underway. We're going to have the Uveitis data before the end of the year. That will help inform the total program approach as well. But I would just mention as Mina said earlier in our cash guidance and our new operational plan to extend cash to 2027. We didn't include any assumptions around partnering proceeds or anything else or like.

So that would all be upside...

But it would all the [indiscernible] guidance. Exactly.

Got it. Okay. Maybe then we should shift over to lonigutamab. Question one, how has the molecule been designed to be differentiated versus other kind of IGF-1R or agents in this space?

Shep, do you want to take that?

Yes. We're pretty excited. Number one, this is a validated pathway where TEPEZZA has already shown some promise for patients in a remarkable Way. The -- I think there are 3 key considerations in terms of attributes for differentiation on this molecule for lonigutamab. Number one is potency. Number two is the efficiency internalization when loni binds the receptor and internalizes the receptor and any IGF-1 sitting on the surface. And then the second is the unique binding site epitope. I will mention the 3 in how they provide opportunities for differentiation in terms of therapeutic impact and benefit risk profile. Starting with potency. It's well characterized that we are 75x more potent than TEPEZZA and around 20x more potent than Viridian. In the proof-of-concept data that we presented, where we had a 40-milligram at week 0. At the time of first evaluation at week 3, we already saw robust clinical activity on proptosis cause and patients also improved in diplopia. That speaks to really a low exposure based on the comparison I just mentioned in terms of that potency. If you take a similar sort of patient on TEPEZZA, that's 20 mg per kg and then Viridian 10 mg per kg, 80 kilogram patient [indiscernible] has to receive 1,600 milligrams on TEPEZZA and 800 milligrams Viridian. So we are very excited that we have a molecule which at low exposure, we might be able to sketch any overexposure that's associated with safety liabilities. And the additional thing of low exposure is that it's low volume. And as we look into the future for Phase III and when we get to the end of Phase III in terms of launch, we hope to have an autoinjector less than 1 millimeter home use and that would be very critical for parents because currently, there are no subcutaneous therapies in thyroid eye disease. Moving to the internalization, that's critical in terms of what we are seeing as we have also presented data from our Cohort 2 that we have a rapid kinetics in resolving the manifestations of the disease. These rapid kinetics could then provide an opportunity for deeper responses at earlier time points that could be durable. And that would really save patients well in terms of outcomes. The last differentiation is both Viridian and TEPEZZA are competitive binders on the receptor. So when they bind the receptor, we have seen that IGF-1 increases in the systemic circulation to affect us between 200%, 600%. We bind on the periphery of the receptor. So it means if IGF-1 is sitting, we internalize that and degrade. And therefore, when you look at the percentage increase in IGF-1 in the circulation, we are around 50%, 100%. That has implications around glucose handling, and that could be the reason why you see hyperglycemia with other therapies. And we believe we might be fortunate not to have that happening in patients. And then the last thing around exposure is all the other adverse events that are on label like significant fatigue, diarrhea, alopecia, menorrhagia, [ dysgeusia, ] where you recognize the receptor is really present in so many other systems within the body, the gastrointestinal system and other aspects of maintaining homeostasis. So when you over expose, you end up having patients having more adverse events. So we believe our profile might enable us to be successful in having a favorable benefit risk profile. The last thing I would say is our approach is really to serve the unmet need, which is currently the 6 dosing in a disease that could be lifelong. It's a chronic autoimmune disease. And there's very clear evidence some patients don't have complete resolution beyond proptosis [indiscernible] and diplopia at the fixed dosing regimen. And therefore, there is a need for a therapy that it's a minimal optimal exposure where you can arrive at disease modification with long-term treatment, and that's one of the things that we'll be considering given the characteristic we have of low exposure, low volume and potential convenience.

Understood. That's helpful. I guess with that backdrop in mind, could you kind of walk us through some of the highlights of the data you presented so far? And how were you're seeing from the clinical data kind of maps to some of the points of the hypothesis for how you believe the agent could be differentiated? Are you seeing that being borne out through the data you're seeing?

Yes. so far, we have presented 2 data sets. The proof of concept, as I mentioned, we only dosed with 40 milligrams at week 0 and week 3. We demonstrated rapid improvement in proptosis. And we also showed that when you look at CAS below 200% of patients maintained that by week 6 and off-treatment from week 6 to week 12, that proptosis response, CAS response was maintained. There was only 1 patient out of 4 who responded in terms of diplopia and maintained that. In the second study where we dosed with 50 milligrams and 25 milligrams weekly, which is slightly a higher exposure. We saw also a rapid improvement in proptosis improvement around 6% to 7%. That was maintained all the way to week 6, that's the date we have presented to date. And we saw a remarkable improvement in scars and diplopia around 50%, which is commensurate with the consistency we saw in the fifth cohort. So that's the data set we have in the public domain. That data set gives us great excitement in terms of the clinical activity we are seeing that's robust at early time points. And therefore, when we continue to calibrate in our dose range, we hopefully will lend at a dose. When in the current competitors, there is no dose range that was done with a subcutaneous in thyroid eye disease. We are the first to be doing that. And therefore, we will focus on a minimum effective dose and then calibrate to an optimum steady state without overexposing drug. The steady state will determine how much drug stays in the body, in the system, engaging target, improving or sustaining efficacy.

Understood. And then one kind of safety consideration you've spoken about where you feel like lonigutamab could differentiate, which I know has been a focus for investors is the hearing benefit and hearing loss rather. Kind of educate us first on how big of an issue this currently poses on TEPEZZA from your perspective and your understanding of the market? And from -- for that signal, kind of what are you seeing so far that kind of gives you confidence that, that could be a differentiator?

Yes. So we are also very fortunate that to date, we have not seen any hearing impairment or sensorineural hearing loss in any of the patients we have started in the respective cohorts. We measure audiograms at base line. And we have serial audiograms over the duration of the protocol. And none of those audiograms have shown any change that would be worrisome. So we are very excited about that observation. We reported 3 cases of transient resolving tinnitus, which is a subjective complaint rather than objective change when you look at sensorineural hearing loss on an audiogram. We also believe, as I mentioned, the exposures we are playing it are much lower. There is a hypothesis that when you have a high exposure in a patient who might be predisposed to have maybe IGF-1 receptor deficiency, it's possible that you can then abrogate the blood-labyrinth barrier and then have impact on how cochlear cells function and then that might result in sensorineural hearing loss. At least what we have seen in patients that have had audiograms in prospective studies in [ rural ] world with TEPEZZA is that 10% of patients with normal hearing have succumbed to sensorineural hearing loss. And then obviously, if there is mild or moderate, that percentage is higher. We hope in our Phase III to do audiograms at baseline and major audiograms sequentially over time. And that data set will feed knowledge around whether our hypothesis of low exposure will help have lower rates. If anything, we'll then have to depend on that data set for our understanding of that hypothesis.

Got it. Got it. Okay. Great. Going to your ongoing study then. You did mention recently that you added a new dose cohort. Could you kind of walk us through the rationale for adding that new dose level and kind of what you believe that could do to the overall development time line and program?

Yes. And so maybe, again, just to go back to what we had discussed previously, right? So the original study design had 3 dosing cohorts, right, and was intended to be sort of a Phase I/II, and we had previously guided to a Phase IIb start this year. In lieu of that, what we've done is we have added a dosing cohort at 70 mg, right? And what that allows us to do is to complete the dose-ranging work in patients inside the Phase II trial, right? And so what we said in August is we will then take sort of the totality of the data that we have, go talk to the FDA as part of an end of Phase II meeting later this year, right, that would allow us to finalize the Phase III trial design. And we have guided that we intend to start that first Phase III trial in the first quarter, right, and that we would report to both on the interaction and the Phase III trial design plus additional data from that Phase II either later this year or early next year. I mean the big difference is by not doing that IIb, right, which would have been sequential so you run the IIb and then you run an additional Phase III, it does allow us to run 2 concurrent Phase III trials, right? And that is enabled by doing all of this dose-ranging work in patients, right, inside the Phase II. And I think it's a look at sort of the totality rate of the work that we're doing. So we're trying different doses in different regimens, right? So weekly to Q4, right, and dosing from 40 mg to kind of 70 mg, but we're really looking for that optimal exposure that Shep was talking about. So for example, if you take the cohort of patients that was dosed with a 50 mg loading and then 25 mg weekly, it's actually relatively high exposure, right, because of the regimen. And so we're going to have the totality of that Phase II data really to inform to.

Got it. Got it. So I guess with that data in hand, when you speak with the FDA related this year, what are the key questions you have for them? Or what are the key discussion topics you think are going to kind of come up during that meeting?

Yes. I mean I think we do want to talk to them about sort of dose and Phase III trial design. I mean I think the size of the trial is an important thing to get aligned with the agency around, right? We don't expect them to say, this is great, approve it. Everything, but I think getting alignment largely around sort of the size of the trial and around that safety database in particular, having that understanding is [ really ] important.

Got it. Got it. Okay. You're shifting the focus back on loni to commercial considerations. A good amount of competitive development going on in TED, right, from other IGF-1R agents. There's new mechanisms -- at least new mechanisms for this space coming to the forefront, Argenx, for example, evaluating their FcRn agent for TED. Where do you think the market, call it 5 to 10 years from now settles out? Tough question. I know a lot of data still pending. But where do you think the market could go if there's multiple branded players out there? And where do you think lonigutamab could fit in that environment?

Yes. Good question. I think that -- it is kind of peering into the future, which is always a little dangerous. But I think the way we see the market developing is the IGFR-1, the same that mechanism is central to thyroid eye disease. We see that staying in the first line for thyroid eye disease as the most proptosis impact, CAS impact in the acute setting and that's been -- has delivered a lot of benefits to patients. And I think within that market, the move to subcu is going to be important and the substantial majority of the scripts we believe in the future will be written for subcu. And I think that has 2 impacts, both the transition from IV to subcu as well as opening the aperture on the patient population that can be addressed with an IGFR-1. Right now, it's primarily prescribed by oculoplastic surgeons in an acute setting. And there's definitely room to have intervention earlier in the patient's journey before they become a severe TED patient. So it's kind of the IGFR-1 landscape. And then you mentioned some of the other mechanisms in the space. And I think most of those or all of them are more broad-based immune suppressant mechanisms. They seem to have a less of a direct impact on the symptoms and sequelae of thyroid eye disease, but it could be important. It could be another option for patients more likely to live in the second line. But having said that, we'll see a how all the data shakes out, but that's our core view of the market. We think it's a big good opportunity with -- as Shep and Mina have described with lonigutamab, we're seeing very fast onset of action, which we think is very important and then delivering in an auto-injector subcu format, potentially having a therapeutic window that's differentiating around safety and the ability to chronically dose.

Got it. Got it. I guess from a freedom to operate perspective, given there's a couple of IGF-1R agents in development, one obviously commercialized, do you see any issues there for lonigutamab? And I guess talk a little bit about at a high level kind of what sort of IP you have on lonigutamab.

Yes. So obviously, we have the composition of matter patents around lonigutamab. And as Shep has described, I think very well, there's some very unique properties of how lonigutamab operates, which bodes well for the underlying IP. So we're going to have significant coverage beyond approval, and we kind of have a pick and fade strategy would expect with the composition of matter and then other follow-up methods of treatment, methods of manufacture patent. So that estate is still building, and that will allow us to build upon biologic exclusivity after we get to market. I think we'll be able to be a long patent life, while we're in the commercial stage.

Got it. Got it. Okay. Great. Moving quickly also to 517 -- SLRN-517. You mentioned that, that asset is also going to be deprioritized.

Correct.

I guess what led to that decision? Was it more of a business decision or more of a data-driven decision?

Yes. So look, I -- same thing. I think it's just a prioritization exercise around what are we going to move forward internally. We did publish some of that data within our corporate deck. We did a healthy volunteer study and the molecule is definitely active, right? So I would characterize that very much as a prioritization decision.

Got it. Got it. And I mean you did telegraph the openness to more BD or looking at other assets going forward. What would be interesting and what would be a good time point -- time point, excuse me, for the company to start thinking about assets beyond lonigutamab?

Yes. So maybe just to step back. I mean, we do think BD is sort of in the DNA of the company, right? It's how we build the portfolio. We all have significant experience there. And so it's something that we're going to be opportunistic and kind of look at, right? The nice thing about the runway that we have is there is no rush to do anything, right? We think it's really important to focus on setting up our TED program for success, right? And that focus is super important, and it's fully funded, right, which we feel really good about. I think Gil did say that we have left a little bit of room in that cash runway guidance for BD. Gil, I don't know if there's anything else.

Yes. No, I think that's well said. I think -- I think the bar is high, but we continue to process opportunities opportunistically. So that will be an effort that we continue here. But we're pretty -- we're very focused on the current operational plan for the company and maintaining that longer runway that we just set out.

Got it. Got it. I know this is a question that is a little bit into the future for the company, but assuming lonigutamab succeeds in the pivotal program, assuming you're ready to go to the market, would you want to prosecute that independently? Do you think that you could rightsize the organization to do that? Or would you then start looking for maybe a larger partner to help with that commercialization piece?

Yes. I mean we do like to because we think we could do it, right? And again, we've got -- the trials are funded, right? And so it does give us a lot of flexibility around how we move that program forward. But just like we said with HS and PsA, we'll do whatever makes sense and it's right for the program and that we think fundamentally drives value for patients and for shareholders. So we'll look at that. And it'll -- in the same way, it will be kind of on the back of data and sort of information, and we'll be disciplined in how we make those decisions for sure.

Got it. Got it. Pivoting I guess, back to the data then that we're going to be seeing, I think you said later this year/early next year.

Yes.

Your guidance for investors and analysts on how to best interpret that and how to best try to gauge? How the data is comparing and contrasting to other data sets in the space?

Well, it is the only sort of -- it's the only data out there that's inpatient subcu data, right? And we think that's important. If you look at the totality of the data set, right, across the 4 cohorts, it's approximately 30 patients, right, which is small ends, right? So you don't want to over-rotate on that, but it's meaningful in the context of a TED setting, right? TED trials are not large. And so we think that's meaningful data. We are using it for dose confirmation, right, and for some of the signals around early efficacy and durability, all of those things that Shep was talking about. So we think that's a nice robust data set that we hope provides comfort, right, and derisking around the Phase III program.

Got it. Got it. And do you have aspirations for lonigutamab ex U.S. as well?

I mean we certainly have the rights, right? So I mean, same thing. We're going to look at all of that going forward and what makes sense, for sure.

Got it. Got it. Okay. I guess what would you -- I know it's a tough question, but what would you kind of consider kind of the best case outcome for the next data update from a safety perspective, efficacy perspective, touching on all the considerations, Shep, that you mentioned on hearing benefit and a proptosis response, what do you think is the ideal outcome here from the Phase II -- the next Phase II update?

Yes. I think the ideal outcome is to constantly show that [indiscernible] onset, we are starting now to look at responses at week 2. The earliest we did look at before was week 3. And then how do we see the other manifestations also responding according to the different dose levels and dose regimens. So I think that -- and then to your point, the overall safety and then being able to, in that small data set, make sure that there is nothing that we are seeing given that they are different exposures. There's nothing that's dependent on [ extensive ] exposure across where we are playing, which is very low.

Understood. And Gil, you mentioned that there's the possibility, data dependent, of course, for lonigutamab to be a first-line product option. Do you think that it could be challenging to design a Phase III study to direct yourself towards that label? I mean could you design a Phase III trial where you're only looking at treatment-naive patients? Or do you think just because of the unmet need, you'd have to allow patients to be treatment experience to come in and therefore, that could impact your label? Any thoughts around that?

Yes. I think that we think we're going to build design a trial that definitely would get us into the first line. I think that's the important thing. And then what we're thinking through is exactly how to incorporate and address both populations. You have both the acute in the less active population. So we won't have a strategy to include both of those populations within our registrational trial design. So that will be important to delivering the patient benefits as we were talking about earlier beyond the acute setting as well and looking at the benefit for lonigutamab there. So those will be [indiscernible] Mina was saying that the size and the safety, but also the population design.

Got it. Got it. I mean from the research that you've done in the field, do you feel like if the efficacy outcomes were maybe slightly lower than what TEPEZZA has shown just the fact that it's subcu that could still be differentiated? Or do you think you need to kind of be equivalent on efficacy and then provide that administration benefit to be competitive?

Yes. I mean I think that there's -- it's multidimensional, but what we see as Shep has said with the early data we do see a very fast onset of action. So we don't appear to be giving up any efficacy at all on proptosis and in CAS responders. So we're going to be able to get that same efficacy with a lower exposure, which we think could be important in translating the safety benefits and the potential to be able to administer the drug for a longer period of time beyond the fixed dose regimen, which is the current paradigm for the IGF-1Rs. So we think there's opportunity there.

Okay. Okay. Understood. We don't have that much time left, maybe I'll ask you one final question to close out. Just kind of recap for us. At this investor event, later this year, early next year, in addition to the Phase II data update, what else can people expect to learn about the program?

So we expect to provide more details around the Phase III program design, right, and an update from the FDA interaction.

Got it. Got it. Final catch-all question then. Any other milestones or even if they're not publicly facing like public-facing catalysts, any kind of internal development that you would point people to that the company is going to be thinking through in the next year that are kind of important to consider when people look at Acelyrin?

Well, maybe to go back to the beginning of the discussion, right? I mean the next data readout is actually not in lonigutamab. It is going to be Uveitis, right? And so I think that will be important -- that will be an important milestone for us, right? And so I think that's sort of the near term for sure.

Got it. And the typical last question I ask is on cash, but we've talked about cash balance, cash flow where you said cash went until...

Into mid-'27.

Mid-'27. And that would get you through the pivotal program?

Yes. Phase III trials. Yes.

Got it. Okay. Great. I think with that, we can go ahead and close out. Thank you all for joining. Really appreciate it.

Yes, thanks so much for having us.

Great thanks for having us.

Thank you. Appreciate it.