Arvinas, Inc. (ARVN) Earnings Call Transcript & Summary

Thank you. Thank you. Terence Flynn, Morgan Stanley's U.S. Biopharma Analyst. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, very pleased to be with Arvinas this morning from the company, Randy Teel, the company's CEO, and Andrew Saik, the company's CFO. Thank you both for being here. Really appreciate it. I look forward to the conversation. Maybe to kick it off, Randy, you've been in the seat now for about 6 months. Just talk to us about your priorities. What are you most focused on these days as we enter the end of the year here?

Yes, thank you very much, Terence, and thanks for having us at the conference. You know, maybe I'll also definitely talk about that as we go through the through the day, the half hour. I want to talk a little bit about the company where we are right now, mainly because we've been around a little while, right? So the company is now 13 years old and has certainly gone through some phases. We really have led the way in PROTAC discovery and development. And it's been really gratifying that just in the past few months, the first program that we invented is now in the market and serving patients. So it's off the shelf, treating second line plus breast cancer patients, which is obviously pretty thrilling for all of us at the company to have discovered the technology and have the first drug out in the market. You know, and we have now shifted, as we'll talk a lot about, to our earlier stage pipeline. So, we decided to not invest in the commercialization of that, but to focus our capital phase 1 programs that we have that we now have 4 of. And I think one important feature for investors looking at our business these days is that we've been talking for a while about milestones and catalysts from that pipeline coming out in the future, and now the future is very rapidly approaching. So as we sit here in September and look out over the next year, year and a half, all 4 of these programs are going to be, I would expect, to have important data coming out. So just to set the scene a little bit, we've got 4 programs in the clinic. The first is a BCL6 degrader for hematology indications and subsets of NHL. That program will have its first data by the end of the year. We've got a neurodegeneration program that degrades LRRK2. That will have some important biomarker data coming up at a conference next month. We just began a rare neuromuscular program for Kennedy's disease, also known as SBMA. Started that in the beginning of the year. It's been enrolling well and we expect to have data in the first half of next year. And to round it out, we have an HPK1 degrader for use in immuno-oncology indications, just starting the clinic in this current quarter. And so, no commitments on data, but starting the trial now, maybe we'd expect to have data in a year or so. So we've been pushing those programs forward, I think, very effectively. We have made some important decisions. To get to your point on priorities and prioritization, over the first 6 months of my tenure here, we've tried to be very focused. I've tried to lay down a very clear priority that where we invest, we're going to invest to win. And if we don't feel like we're positioned to do that, that will be a place for someone else to jump in and we'll talk a bit about that. You know, the last point I would make is, from a capital perspective, our guidance is into the 2H '28, so we certainly have the capital we need to get through these important inflection points. So when it comes to my initial priorities, it has really been to look at the pipeline. I've been at the company for 8 years, so it is not as if I've learned a great deal about the company in my first few months as CEO. I certainly continue to be impressed and amazed and proud of the team that we have and how well we've done at moving important programs into the clinic. And right now, it's really about moving those phase 1 programs to their inflection points and seeing where the data are, where they end up, what makes sense as next steps for each program, whether that's to pile in and invest more, whether that's like happened for the KRAS program earlier this year, we decided that would only move forward with a partner, whether that's the call, that's what we're thinking about. And also making sure that we turn ourselves a bit from being a company that was on the precipice of being a commercial company, and company to now being back to a company that's in phase 1. Those companies look different. They operate differently. They feel differently. And it's been very important to me and the team that we ensure that we are acting like a young phase 1 company and not a company that is about to be a commercial breast cancer company. Yes.

Okay, great, great, perfect framing. Maybe let's just jump into the the um the assets that you walk through here. I mean, ARV393 is your BCL6 degrader. Maybe just give us an update and kind of, like you said, you know, data by year end, walk us through, you know, the trial and maybe level set us on expectations in terms of what we should be focused on.

Yes. So ARV393 is a degrader for BCL6. And BCL6 really, given our history, you know, I'd say our formative years in AR and ER as our first targets. BCL6 was one of our first targets that's certainly an undruggable. There had been BCL6 inhibitors moving through preclinical studies, none really that I know have made it to the clinic. And one reason for that is, and that makes BCL6 an ideal target for a PROTAC degrader, is that deep degradation of the BCL6. The degradation of BCL6 is important. It's rapidly resynthesized. And BCL6, just for a little more stage setting, is an important factor in B cell development, functions in germinal centers to allow B cells to rapidly allow to develop into mature B cells and allow some DNA mutation without apoptosis that's important for B cell maturation. Could turn off after that. If it doesn't turn off, that's where you start to have problems with BCL6. So the study that we're running is in subsets of NHL. We are rolling pretty broadly across both B-cell lymphomas, like LBCL, and T-cell lymphomas, like AITL. The landscape in that setting, which is an important context, is pretty crowded when it comes to other therapeutic modalities. If you're looking at antibodies, bispecifics, chemo, there's CAR-T therapies, there's transplant as an important modality. It's pretty crowded. If you're looking for oral therapies, it's not very crowded. If you're looking for BCL6 targeted agents, it's not very crowded. And the way that the space has typically evolved is to add on additional therapies to deepen and extend responses, and that's what we'd like to do with a BCL6 degrader. So you made a point in your question about the conduct of that trial. We've been clear to say that for a couple of factors, we began that trial dosing at levels that we did not expect to be efficacious. So we made it through a few rounds of enrollment in different cohorts at levels that, especially in B-cell lymphomas, we would expect to be below an efficacious range. So as we get to that first data, what we've decided to do is focus the first data release by the end of this year on the T-cell lymphoma patients, and then save a disclosure for B-cell lymphoma patients more for the middle of next year or so. That allows us to focus on a population with very high unmet need, which later line, second line plus T cell patients certainly are. And also, just through the way the trial was run, we mentioned about a year ago that we'd seen responses in both T cell and B cell lymphomas. I think that unmet need absolutely led to an enrollment of a disproportionate number of T cell patients versus what we would have expected. So we're going to focus on them first. The other thing that does is that as we get to the B cell patient disclosure, more focused on those patients next summer, we also can discuss our ongoing combination therapy. So we have an escalation ongoing with ARV393 as monotherapy, but we're also dosing with glofitamab in patients as well. So that will allow us to disclose both of those next year. So when it comes to this first data disclosure, there really is no specifically indicated therapy for second line plus T cell lymphoma patients. So we will be looking for initial signs of safety, of course. Obviously, we've been able to dose as we'd like to, so that that feeling pretty good about that. PK, PD, degradation of BCL6, and of course, some early signs of efficacy. Now, in an escalation study, especially where I've said we would not expect early doses to be efficacious, we'll keep the expectations a bit more modest there. But if you look over time, what a patient in second line AIITL or diseases is getting, think about of a 40% or so range of ORR. So that's what we'd be like to be seeing to make sure that we have good single agent activity in these patients. And then clearly, as we get to be dosing at a range that we'd prefer to be dosing at, we'd expect to continue to see improvement there. But that's how we think about the first set of data in the last part of the year.

Okay, great. And just a reminder, is it like typical 3 by 3 design? Yes, it's pretty. Okay. And then have you said how many cohorts? I know you said it's more predominantly T cell versus B cell, but have you said how many cohorts you've gotten through yet at this point? I think we've got it. Okay.

Yes, it's a pretty typical design. I think we've said, you know, assumed dozens of patients, but in terms of number of cohorts, haven't talked about it. The important question I think will really be, now that we are, and we've said this, dosing at a range that we would expect to produce efficacious exposures, that's what we'll be most focused on. There certainly will be some patients that were dosed well below where we'd expect to see.

Okay. And how much, um, how much follow-up will you have on those initials? It'll vary much, it'll vary. So patients that are dosed the highest will have.

Have the least follow-up. We've said it. We've said a medical congress, I think as an aside, that's really important for us in terms of making sure that, especially in a space where there's multiple players.

Yes, okay. And is this a, um, is this a medical conference? Is this something like an ASH update or this is a corporate?

We've said it. We've said, you know, I think a lot of combination options. I think it's really important for us to get word out about the trial, what's ongoing, how it's done, how it's performed, especially as the doses have increased. That being said, going back to what I said about acting like a younger phase 1 company, we certainly over our history as a company have used both medical congresses and done our own releases and both are in play. We've said for this to expect a medical congress, but I'm much more worried about making sure we get the data out at the right time in the right way.

Okay, makes sense. And I guess in terms of the monotherapy versus combo. So again, T-cell monotherapy is the approach, but in B-cell it sounds like combo. So the data update next year, it's It sounds like it's going to be both monotherapy but also some combo data with glofitamab initially, or is it only going to be monotherapy data next year? With combo. Combo data as well. Yep both.

With combo, combo data as well. So both. Exactly. All right. Yes, and importantly, the patients treated with the glofitamab, those are LBCL patients, BCL lymphoma patients, and I think as we look if we look at the landscape, right, and you may be getting this question, but as we think about development, across LBCL and other B-cell lymphomas and across T-cell lymphomas, there's really an opportunity to think about what you do in the late line versus what you do in the early line. As monotherapy, the opportunities are really in the late line. Those opportunities can come a bit quicker. You know, trial timelines are shorter. Responses for patients are often unfortunately shorter, and so it's a bit quicker to run those trials. And we do think that those are important for demonstrating efficacy, allowing the sort of of the number of combination trials that we can run to show that individual contribution of components. But that being said, it's pretty clear that there's unmet need in the earlier lines as well, especially as combination therapies with bispecifics or even chemo in some settings. And those are also where there's a greater commercial opportunity. So as we think about a development path, it's going to include both. It won't necessarily be the case that everything has to be done in a sequence. You should expect some overlap so that even as we're moving into late lines, we're moving into earlier lines. And I think the Glo-Fi combo is a great example of that, where it isn't that there's no opportunity for a Glo-Fi combo in later lines of LPCL, but the opportunity certainly gets more attractive as we move earlier into second line and places like that. So we'll be looking across the whole treatment landscape for places where we think it's right to put a BCL6 degrader.

Okay. Maybe just talk to us about the the um the baseline characteristics of the monotherapy B-cell cohort versus the combo cohort? Is it all late line or does it differ because you have Glofit in one of the combo arms? So meaning those are going to be like slightly earlier stage patients?

Yes, yes on that front, but they're all in this setting pretty late line. Like I said, even though there is not a tremendous number of options that are oral and certainly not BCL6 therapies approved, there are none. That being said, there are a lot of therapies in the space. And so patients that are going to be on a phase 1 trial get to be pretty late line.

And what, again, you said 40% OR and T cell. What's kind of the bar you're setting for the data mid next year?

So I think the easiest way to do that is to wait a little bit. So like I said, BCL6 was one of our first undruggables. So we were quite gratified to see that, as there are other players in a similar space, BMS being one of them, that they've had response rates over 50%. So I think that as we look at what a combination or a, B-cell target looks like. We're going to actually have to look at what how the landscape is evolving because of those therapies. And that's, you know, on the course of a year away. And I think there's a few data disclosures in between will help inform that. But right now, over 50%, of course, you've always got to look at the patients that you are cross-referencing. It's very hard to make these cross-trial comparisons. But I think it'll be easier to set a number of expectations when we get closer to those data. But we've been very gratified to see good response rates for BCL6 degrader in the clinic already. So not really.

And by class, if you mean class proteasome inhibitors, definitely the answer is no. Yes, if you mean BCL6 degraders. And anything in terms of just given the pathway, anything, any predicted safety tolerability things that are on the watch list for the class as a whole that we should think about? I just meant BCL6.

Yes, if you mean BCL6 degrader. As we did our GLP talks, the only thing that was prominent, prompted for us to be paying attention to is eosinophilia. Of course, in phase 1, we'll be looking for everything. We've looked at the other degraders that have shared some clinical data. I wouldn't say that there is a commonality between them. I don't think we've seen that. They've also been still early releases, so that's going to be a place to watch it evolve. I do think it's worth pointing out, as we think about eventual differentiation from competitors here, it's a big space, especially as you move forward in combination, I don't think it's a winner take all kind of space. I think that the way we develop and how we develop and the speed which we develop is going to be very important. And there will be opportunities to differentiate, whether that's deeper responses, whether that's safety, whether that's tolerability. It's a bit hard to speak too much with, you know, when we're not sharing the data yet, but I think overall combinability, being able to combine well with a broad set of other therapies in the NHL space will, I think, be a very strong indicator success, which is one reason that we were quite pleased. We put out a lot of preclinical data, a lot of preclinical models with many different combination agents, and we're really happy with what we both saw in terms of tumor regressions and inhibition, but also just the combinability and tolerability of those in the preclinical models, of course.

And then maybe just remind us, like, again, I know there's not any clinical data yet to do a cross-drug comparison to Bristol's BCL6 degrader, but on a preclinical basis, what do you think differentiates your drug the most from their compound?

Yes, I think that there's some comparisons that we've done. And doing our best to suss out exactly which compound they're using is always a good exercise to do. We did a couple things. One is that we built in some lenalidomide-like activity into our molecule believe that they did, which could allow for some stronger potency that you might otherwise need to get from adding on another agent. So that is a possible benefit. And there were some differences that we have seen, again, cross-trial, cross-preclinical trial comparisons of looking at tumor regressions versus inhibitions that do make us think that we may have an edge there, it could play out. Those will really have to come to, you know, come to come to bear in the clinic, of course. Yes.

Okay. Makes sense. But if we were to see differentiation, you know, that could be a rationale.

Yes.

And then again, I guess a couple of questions on just the kind of next steps. So would you guys, because again, B-cells, the bigger market versus T-cells, but let's say the data in, know T cells proves more promising would that be something that you'd go forward with or would you necessarily want it to be active in both settings kind of how do you weigh like that development path like going for just T cell versus going for T and B cells together?

I see this the T and B cell a little bit like the question around what line are you going after, which.