BeOne Medicines AG (ONC) Earnings Call Transcript & Summary

Let's chat with BeOne Medicines. My name is Michael Schmidt, senior biotech analyst with Guggenheim. And it's my great pleasure to welcome Aaron Rosenberg, CFO of BeOne as well as John Scotti, Head of Strategy. Welcome. Thanks for joining us.

Thank you for having us.

So there are a lot of exciting things happening at BeOne Medicines. BeOne is one of the fastest-growing large biotech companies in my view. And this is the first year in its history really that the company has reached profitability. At the same time, BeOne has one of the deepest product pipelines in the industry. And so if you maybe step back for one second, Aaron, what are the key competitive advantages of the platform as you see it?

Great. And thank you again for having us. So we could probably spend the entire time, I think, talking about the differentiating features of BeOne Medicines. So we'll focus on a few. And I think what we often point to is our fully integrated CRO-free clinical development organization. Clearly, we have incredible discovery capabilities. You see that in action in our performance, putting 10 internally developed NMEs into the clinic in 2024 and 16 since that time to date. And clearly, we have that capability in basic science. But what we recognized upon our founding was the critical importance of clinical development in terms of realizing the value of that innovation ultimately to the patient. Core to our mission is this focus on access, global access and in fact, to many parts of the world that typically the industry doesn't serve. And we looked at how do you solve that problem. It was recognized how much expense and development and time goes into the clinical development process. I think we often talk about 70% of the cost of developing medicines is in the clinical development process. So to solve that problem, the company invested in a vertically integrated clinical development organization that has now more than 3,600 clinical development professionals. And now that extends to our global manufacturing capability. And the value of that is our ability to take our inventions and bring them to market with incredible speed and time advantages. And just to bring it to sort of what does it mean in practicality, I think we point to a few examples. We can look at some of our really exciting solid tumor candidates, say, our CDK4, where I think when we look at this program, we started maybe 3 years behind competition, give or take. And now we've closed that gap as we've announced our intent to go with our first-line pivotal trial in the mid part of next year, maybe cut that down to about 15 months. We look at our CELESTIAL trial in treatment-naive CLL for sonro plus zanu, and we enrolled that study in about 14 months from start to finish. So you think about what really matters in this industry, that's being able to develop your medicines with incredible time advantages, and we're seeing that in action through that capability.

Right. So obviously, so a super efficient development platform. You also have been very successful commercially though. And so BRUKINSA, your anchor product in a way, has now captured sort of the leading market share in the BTK inhibitor market. And so yes, maybe let's touch a bit about that. And what is driving BRUKINSA growth right now in this stage of its life cycle?

Sure. I think when you talk about BRUKINSA, it starts with the medicine. This medicine was designed from inception to be fundamentally different with 24/7 target inhibition. And ultimately, that design has played itself out in the incredible differentiated data profile. And we're really excited to share a lot at the upcoming ASH, one of which is the 72-month data, SEQUOIA data, which really shows how durable BRUKINSA is in terms of sustained PFS with 74% landmark PFS, 77% on a COVID-adjusted basis. This is really unprecedented. And when you think about particularly CLL, the importance of sustained long-term PFS for patients because this is an indolent disease, and often, you look at other medicines in the class, both existing and emerging, it's really 2 to 3 years is just not enough to see that sustained durability of the mechanism. And we're seeing that with BRUKINSA in a fundamentally differentiated way. And what does that mean? That's translated to its impact on both for patients and what's happening in the real world with prescriptions. So what's driving BRUKINSA? Clearly, we're doing incredibly well in the United States with 47% growth on a year-over-year basis in our most recent report, more than 40% volume. We are the leader within our China business from market share by far. And we're really in the earlier days of launch globally. You think about in our European business, where we grew 71% on a year-over-year basis, much earlier in the product launch cycle where we're growing share across all the major markets. And there are many markets around the world where we're much even earlier in launch, and we're seeing incredible growth. So we're really excited about BRUKINSA, what it's doing for patients and what it means for the long-term sustainability of our franchise. Obviously, this is the foundation of our CLL franchise. I'm sure we'll talk more about our pipeline assets, but this is really where it starts, and we're really pleased with the performance and ultimately, what this medicine is doing for patients every day.

Great. And so as we think about the CLL market longer term and especially around market dynamics, how will the potential increased uptake of fixed duration regimen affect the market opportunity longer term? And maybe stepping back, how do you think about fixed duration treatments in general in the CLL space? And do you expect them to gain more uptake? And if so, how will it affect the market overall?

Sure. So why don't I start and I'll invite John to jump in as well. So first and foremost, we're big believers in finite treatments. But we do believe that they need to meet 4 specific criteria, and we've talked about this a lot in our various discussions with investors. First is to have a deep response measured through uMRD. The second is to have deep and sustained PFS and really looking at continuous use BRUKINSA as that benchmark. And we just talked about the 72-month SEQUOIA data. The third is having a safety profile that's no worse than what you can get today with continuous use BRUKINSA, and that's obviously a very high benchmark. And then lastly, when you're talking about fixed duration therapy, it's having the convenience effect. And what we know is while ven is a very effective medicine, it's actually very difficult to administer. And that's really limited its uptake. So when we look at existing offerings for fixed duration treatment with respect to ven-based treatments, it really doesn't meet the mark across any of those 4 variables. So we're really excited, of course, about our potential combination with sonro plus BRUKINSA, which we believe meet all 4 of those criteria, and we can talk a bit more about the data. In terms of the market opportunity, as we come with our treatment around zanu and sonro, this is really a market expanding opportunity. And this is even before we get into our BTK CDAC. Today, continue -- if you focus on the U.S. as an example, today, continuous use BTKs are basically getting about 50% of the market, of which we're, call it, we're getting approximately half. About 20%, 25% is getting a ven-based regimen and then CD20s and chemo-based therapies are getting the balance. So there is a significant opportunity to grow the entire market to bring an offering that solves patient needs for that fixed-dose treatment as well as the subset of patients that continuous use BTK will continue to be the right offering. So overall, we see this as a market-expanding opportunity. And what BeOne Medicines is doing is bring offerings that can fill all portions of the patient journey. So whether you're treatment-naive and you're seeking a fixed-dose treatment, continuous use BTK and certainly in the relapsed/refractory setting that between BRUKINSA, sonro and our BTK CDAC that we can really fulfil all patient need, and that's really what we're seeking to bring.

Maybe I can just add, if we talk about then sonrotoclax and adding on to what Aaron said. If you step back and you think about then, it's a great drug actually. It's nearly a $3 billion drug. It's still growing. But its use, as Aaron mentioned, is effectively capped the academic setting, primarily in CLL, and there's reasons associated with that, that have to do with the fundamental characteristics of the molecule and the convenience challenges associated with the TLS ramp-up, the lab monitoring, et cetera, as we all know. And so when you think about a drug like sonrotoclax, which is our BCL-2 inhibitor, we essentially designed a molecule that is 14-fold more potent, it's sixfold more selective, and there's a half-life of 5 hours, which is very different from the 26-hour half-life of venetoclax. And that's important because there's no drug accumulation. So number one, we have a molecule that is hitting the target harder. It's doing so with a wider therapeutic index, and it's doing so in a way that we hope will enable much broader access outside of the academic setting. And that's why we view this as a market expanding opportunity.

Great. I'll come back to sonrotoclax in a second, but you did mention that you completed enrolment of the CELESTIAL-301 study earlier this year, which is obviously built on some very exciting Phase II data that I think you'll update again at ASH. But on the earnings call recently, you also announced another Phase III study of the same combination head-to-head versus venetoclax, acalabrutinib. So what drove the decision to add the second study?

So maybe I can answer that one. I think when you think about the way this market has evolved and if you start first with BRUKINSA, we have, as Aaron mentioned, an overwhelming body of evidence from human PK to head-to-head trials to real-world evidence that this is the best-in-class BTK inhibitor. And yet, despite all that, there are still some physicians that ask us, well, where is your head-to-head data against acalabrutinib? And I think when you think about SZ, which, as you know, we have an ongoing study against VO, which is the CELESTIAL-301 study that's fully enrolled as of February of this year. That is the standard of care in the U.S. from a fixed duration standpoint. And this is a company that is unafraid of running head-to-head trials because we view them as critical to delivering the best drugs to patients. And fast forward to AV, our view is that ultimately, we want to dispel any doubt that could possibly exist in the market that SZ when it eventually hopefully is approved and used in CLL is the best regimen against any comparator that exists in the market. And that's really the genesis for the trial. Ultimately, we feel very confident about the trial because if you look at the AMPLIFY data of AV, they had 34% MRD. And what we're seeing in Phase I with ZS is 92%. So it looks very different. And again, this is due primarily most likely to this characteristics of sonrotoclax, et cetera. And ultimately, to Aaron's point earlier, our goal is to deliver a fixed duration regimen that patients and physicians can feel confident enough that they have achieved a deep enough response. So when they stop therapy, they can sustain long-term outcomes that are comparable to what we're seeing with BRUKINSA, which we really do feel like is the bar. Aaron referenced the 7-year -- 6-year 74% COVID unadjusted 77% COVID-adjusted PFS. That's our goal.

All right. Super helpful. And then maybe just one more on the CLL space. So you talked about the value of the long follow-up you have on the BRUKINSA data, the multitude of trials that are ongoing, fixed duration, et cetera. And so as we think about non-covalent BTK inhibitors entering the space, how do you think that will shape the landscape?

Yes. Maybe I can take that one as well. So we're all aware of the BRUIN 314 study, which is the pirtobrutinib head-to-head against ibrutinib that was in the ASH abstracts. So just keep in mind, this was a mixed population study, about 2/3 of it were relapsed/refractory, 1/3 was frontline. And when we look at the data, particularly in the relapsed/refractory setting, we compare those to our data, which is zanubrutinib against ibrutinib in the ALPINE trial in which we demonstrated head-to-head superiority on PFS. If you look at their data at 18 months follow-up, they have about a 9% delta in response rate versus ibrutinib. If you look at our data, again, cross-trial comparisons and all the caveats that go along with that. But if you look at our data, our delta versus ibrutinib is about 12% on response rate at roughly similar follow-up. And what's most interesting is if you look at the deletion 17p subset, which are the most aggressive clones, these are the clones which arguably require the deepest level of constitutive BCL -- our BTK target engagement, they had virtually no difference between pirtobrutinib and ibrutinib. I think their response rate was -- pirtobrutinib response was 80.6%, ibrutinib was 80%. And again, if you go and look at our data at roughly similar follow-up, we had a delta north of 20% in that population. So we feel very good about how zanubrutinib is performing in that population. And mechanistically, if you ask, well, how does that make sense? We feel that zanubrutinib really doesn't leave that much BTK engagement on the table. This is a drug that at trough is fully engaging the target. We've presented data and published data to the effective target engagement across all disease compartments and tissues at very, very high levels. And pirtobrutinib, as you know, is a non-covalent inhibitor, which by default requires a thermodynamic equilibrium between on and off states, which is very different than covalent. And then if you think about the frontline setting, which, of course, was part of that trial, I think it's just too early to say much about that. And Aaron made -- alluded to this earlier, but in that trial, in the BRUIN 314 trial, only 1/3 of patients were frontline. The follow-up was, I think, 22.5 months. And we're talking about 18-month landmark PFS in which just over half the patients are really reaching that point. And CLL is an indolent disease. It takes time for patients to progress. Ultimately, those data are really just a handful of events at this point. And we're going to have to wait for a much longer follow-up to see how those pan out against the bar of 74% at 6 years that zanubrutinib has set.

0 John, thanks. This is maybe a good segue to talk about your BTK CDAC actually before we come back to sonrotoclax. But as we -- you obviously are running a head-to-head study against [indiscernible]. And so yes, maybe just stepping back, high level, how do you think about your BTK franchise strategy beyond BRUKINSA using or leveraging the BTK CDAC?

So the BTK CDAC is a very exciting molecule. It's a degrader. It's a fundamentally different mechanism. So there are a few key differences between the degraders and inhibitors. Number one is it's catalytic. One degrader can degrade several thousand copies of BTK protein. It's very different, of course, from the standard 1:1 stoichiometry that are associated with small molecule inhibitors. And then it also, by virtue of degrading the entire protein as opposed to binding solely to the kinase domain, it degrades the protein such that any scaffold function associated with that protein that is independent of the kinase domain is also obliterated effectively. And there are mutations associated with zanubrutinib and also non-covalent inhibitors like pirtobrutinib that are in the kinase domain that abrogate kinase activity yet still result in BTK signaling. These are so-called kinase dead mutations. And they have implications from a durability of response, if you think longer term. And also those drugs are not active against those mutations. Our degrader retains activity against those mutations. And as a result of that, it seems, at least where we're going initially with the program is in the relapsed/refractory setting, again, intuitively, this makes the most sense initially given the profile of the molecule. We have a pivotal -- potentially pivotal Phase II cohort that is fully enrolled and we will have data in the first half of next year, and we hope to be able to use those data to register the product, again, we'll see. That is in the relapsed/refractory CLL post-BTKi and post-BCL-2 setting. And we also have multiple Phase IIIs ongoing, one of which is versus investigator's choice, the second of which is head-to-head against pirtobrutinib. Again, we're confident in the profile of the molecule. We had an 84% response rate thus far in very heavily pretreated fifth-line patients, of which 80% of them have seen a BTKi and a BCL-2. And in that data set, the 12-month landmark PFS was 79%. And when you look at -- when you look at, for example, the late-line pirtobrutinib BRUIN 321 study, they had slightly less pretreated population and a median PFS of 14 months. So we'll see how those data hold up in Phase III, but there's a reason why we're confident here. And I think KOLs have been very enthusiastic about this molecule because they're seeing responses in patients where they really don't have any other options.

Right. All right. So looking forward to that first registration data next year. What else will we learn at ASH about the BTK CDAC?

So at ASH, we're going to have several abstracts for the BTK CDAC. We'll have updated data across several B-cell malignancies, CLL, Waldenstrom's, et cetera. And we're looking forward to sharing some of those data in a month's time.

Great. And then yes, maybe then a couple of questions on sonrotoclax. You already mentioned its profile and areas of differentiation versus venetoclax, which is obviously established BCL-2 inhibitor in hematology. I think -- so this product is nearing disclosure of first registration data later this year, I believe, at ASH and MCL initially. And so maybe talk about how much more we will learn about its profile in MCL and how that will translate into the overall product offering as you think about it?

So of course, so at earnings, if you look at our earnings call, we had some data in the abstract on MCL. And maybe stepping back just a second. This is a product that received breakthrough designation in relapsed/refractory MCL. We plan to file globally based on those data later this year. And those data and longer follow-up will be presented at ASH in a month. And what's interesting about those data is when you look at them, again, this is a single-arm trial, so keep that in mind. When you look at them compared to historical benchmarks of venetoclax in the literature, you see trials of venetoclax in which venetoclax was used at 3x the approved dose. And even despite the fact that it was triple the dose that is typically used of venetoclax, you see response rates comparable to what we're seeing and our PFS and duration of response outcomes are nearly double. And so again, in our view, when we look at the data that is emerging from that program as a single agent, we see the 14-fold increased potency, the greater therapeutic window really translating. And those are the data that you're going to see in a month and longer follow-up at ASH.

Okay. Great. And then we already talked about sonrotoclax's important role in your fixed duration regimen in CLL. But you also announced on the earnings call actually a Phase III study in multiple myeloma. And so stepping back, how do you think about the longer-term opportunity for sonrotoclax and specifically in multiple myeloma? So what's the size of that opportunity?

Yes. For multiple myeloma specifically, you're correct. We did announce that we will move forward to a Phase III later next year. Specifically, this is going to be in the translocation (11;14) population, which is about, give or take, 20% of multiple myeloma. This is going to be sonrotoclax as part of a triplet regimen with dara and dexamethasone. We acknowledge the competitiveness of the space. There are many, many, many options for patients with multiple myeloma, which is fantastic. But a lot of the bispecifics, as you know, right now, are IV, and this would be a regimen that does not require infusions given subcutaneous daratumumab. That's point one. Point two, we saw early data from -- which we actually presented at R&D Day for venetoclax -- sorry, for sonrotoclax versus venetoclax in a combination with dexamethasone. And as you know, venetoclax in the CANOVA trial was close to reaching -- to being successful, but it didn't quite make it. And again, cross-trial comparisons, but we're seeing greater evidence of activity for sonrotoclax versus venetoclax in multiple myeloma, specifically in that translocation for (11;14) setting, which is underpinning our confidence to move forward with the pivotal trial.

Okay. Great. So obviously, between the 3 molecules, so BRUKINSA, sonrotoclax and the CDAC, you have really the CLL and hematology market in a broader sense under control and strong control. And so as we think about your solid tumor pipeline, the CDK4 inhibitor has kind of stands out as one of the more advanced programs. You did commit to a Phase III trial next year in first-line breast cancer. And so maybe just stepping back, talk about differentiation perhaps relative to Pfizer's atirmociclib.

Maybe I will just for the sake of the audience here, just remind everyone of what we disclosed on our earnings, and I'll come back and answer your question. So we decided to prioritize the first-line Phase III. And subsequently, we also decided to -- decide not to pursue a Phase III in the second-line setting, and let me just walk through the logic behind that decision. So first and foremost, we're seeing some very encouraging data in the first-line setting for our CDK4 inhibitor. And then when you think about the second-line setting, this was always intended to be a transitional opportunity. The PFS of CDK4/6 inhibitors in the post-CDK4/6 setting is unfortunately only on the order of months, 6 months or so when you compare that to a couple of years in the first-line setting. And then on top of that, the second-line competitive landscape, as you all are aware, is extremely heterogeneous, and it has gotten even more competitive just in the past few months with recent data sets from other additional regimens. And so when we step back and we looked at our data in the frontline setting, and we thought in the second line in 3, 4 years, if and when this would have made it to market in the second line, it was not likely to be an extremely impactful medicine in that setting. And so we decided to prioritize in the frontline setting. Now with respect to Pfizer, Pfizer presented some -- what we felt to be very interesting data at ESMO for their CDK4 inhibitor. They showed a 68% response rate, which is above the response rates that you would expect for a CDK4/6 inhibitor in the frontline setting. And importantly, given they have longer follow-up, that response rate did appear to translate to a greater degree of PFS benefit than you would expect again with the CDK4/6 inhibitors in the frontline setting. They had 67% PFS at 24 months. What I can say about our molecule is that we're seeing a similarly high response rate as Pfizer. Obviously, we do not have the duration of follow-up yet to comment on durability, but we will definitely be presenting data for our CDK4 inhibitor in the frontline setting next year, primarily to give investigators confidence ahead of starting that Phase III in the first half of '26. And then I just want to make one more final comment. This is a molecule that entered the clinic 40 months behind Pfizer. And they started their Phase III earlier this year. And so we really -- by virtue of the infrastructure that we have, it's incredibly valuable. We've been able to catch up materially in the clinic from quite behind to within roughly a year, give or take.

Great. Well, thanks, John and Aaron. Our time is up, unfortunately, so we have to wrap up here. I did have more questions about your pipeline, which has a lot of moving parts, a lot of molecules advancing, but we'll save that for next time. So thank you. Really appreciate the time.

Great. Thank you very much.