C4 Therapeutics, Inc. (CCCC) Earnings Call Transcript & Summary

And why don't we get going with the Q&A? Well, first of all, welcome.

Great. Thanks for having us.

And a pleasure to be hosting you. So why don't we talk about C4's development strategy a little bit? You guys tend to go into indications that have proven targets, but these indications are very crowded. So when I look at it, is basically derisked from a science or biology perspective, but very high bar for success commercially. Is that a fair statement?

Well, I think what you're seeing is the strategy play out the company started with, which is a very classic strategy for a new platform company where you don't want to add biology risk onto platform risk. And so the goal early on was to go after validated targets where we know that some perturbation of those targets is going to lead to activity and clinical benefit and really demonstrate from a platform perspective that we can make these degraders both buyback and MonoDAC degraders and make them with drug-like properties, get them into the clinic. And I think the important thing, though, is even though they are validated targets, they all -- well, except for BRD9, we'll talk about that in a second. They all have -- and every target we work on, frankly, has to have a greater rationale. So why does the world need a degrader against this target versus an inhibitor or versus the other existing therapies that are out there? So the obvious place to start was our lead program, CFT7455 IKZF1/3 degrader. Those are the same mechanism of the [ mid ] class of medicines. But as we all know, those were designed accidentally, is call them accidental degrader. Nobody knew they were degraders when they were discovered. So they're actually fairly inefficient degraders. And so what better way to approve a platform than to try and design the most effective degrader of those targets. So that was the first program. The second was our BRD9 program, that's actually classically undruggable target. And so that was the rationale for [ degrader ] there. And then the next 2 programs are BRAF, V600 inhibitor. There's known liabilities of inhibiting BRAF. And so we believe degraders can overcome those. Same thing with the EGFR degrader. So every program well-validated target, there's a commercial opportunity, we just have to prove that clinically, but I think we've got a strong rationale for why a degrader needs to be developed against those targets. Now as we've started to think about our next wave of targets, we've proven the platform, and we can start to think now about more novel targets, classically undruggable targets, where we think that a degrader is the only way to go and can really hopefully benefit patients. So that's -- you'll see the evolution of our story as we move into the earlier preclinical pipeline, we're not actually ready to share those targets, but that's really the approach.

I see. Got it. So your focus has been exclusively on cereblon [ it like ] compared to other companies that are -- have a much broader focus. So when you look at that, do you think the strategy is going to keep C4 relevant in the future?

Absolutely. I think that was the decision the company made very early on, and I'm glad they did. It was obviously the 2 key drivers of that decision were, one cereblon is expressed in all tissues and compartments in the body. And so it gives you the widest latitude for target selection. You know that if you're going to go out for a certain target, then cereblon is going to be there to do the degradation of work that you need. And then the second was that it's clinically validated. It's the E3 ligase that the IMiDs use, and we know that it works and works relatively safely in the clinic. We've certainly investigated other ligases biochemically and have gotten them to work. But frankly, we haven't found the need because cereblon is successful with about over 95% of the targets that we've worked with, we've been able to make it to greater [ free ] with cereblon. And I think that's not to say we wouldn't go after new ligases, but I think we would have to be driven there by a target that required it. I think it's an excellent exercise to go through for the industry, certainly exploring what the function of these other ligases are what they do and how they can be used is great. We've not chosen right now to allocate capital to that effort because, again, as I said, we're focused on making medicines, and we think cereblon works. Interestingly, there was a, I think, almost a seminal paper that came out, it was last month from Christina Woo, Lab at Harvard that really talked about what's the role, what -- cereblon data, what does it actually do? And it was really informative because what it uncovered is that cereblon is actually the body's garbage collector effectively. It has no other regulatory role in cell processing. It's expressed in a moderate to high levels in all tissues, which makes it really, really nice for the greater. So I think if we were going to go after a new ligase, we want to make sure that we knew that it had similar properties to cereblon, for instance, we wouldn't want to use a ligase that had some regulatory function in the cell because we'd be concerned about off-target effects. Was it not doing more co-opting greater disease-causing protein. So that's how we think about it. But again, we think that cereblon is a great ligase. We've made a deep investment in at least 15 distinct chemical series of cereblon binders because we know the very subtle changes in the exit vector of the cereblon binder have pretty meaningful changes in the catalytic efficiency of a degrader. And so we think we've got a nice IP coverage of that. So that's going to keep us relevant. Frankly, as long as the target gets degraded, it doesn't really matter which [ ligase to use ].

So when you think about the market environment and then when you guys are advancing a lot of assets into the clinic, can you speak about your burn [ rate ] and the need for capital?

Yes. So we reported last week our Q3, we had $366 million in capital. We're burning about $25 million to $30 million a quarter. So that gives us runway through the end of 2024. So I think we're very comfortable with our cash position today that it gives us runway through and beyond meaningful readouts of across a number of our programs. Obviously, to continue -- we plan to continue the company beyond 2024. So we will need to do additional capital, but we're going to be mindful of how we do that as we think about equity versus other non-dilutive capital. One of the things I really like about true platform companies like C4 is protein degradation has broad applicability across a wide range of therapeutic areas. And even in oncology, where we're focused, we can't possibly do all the targets, and that provides us the ability to work with collaborators and bring in non-dilutive capital to do degraders and other therapeutic areas or for other targets that we're not going to pursue. And so we have that flexibility.

I got it. Okay. So I asked the same question in the last session as well. So there's now about 50 targeted protein degradation companies there, and the [ solicit ] is growing pretty rapidly. So how do you see C4 staying ahead of that competition? And how do you -- how would you continue to differentiate yourself with the newer degradation company?

I think it's not -- well, first of all, I think at the end of the day, target degradation is a very protein degradation is an incredibly important modality, if you will, or approach to drugging targets. I don't think one company is going to own this space. One company doesn't own the inhibitor space when a company doesn't own the antibody space. So I think there's actually room for plenty. And I think the innovation that's going on is fantastic to see. I think we need to continue to innovate our platform, too. We can't just continue to sit on what we're doing. But ultimately, I think we've built our platform in a way where I think the key principles, focusing on the catalytic efficiency of a degrader, being able to model and predict that, focusing on cereblon being able to do both MonoDAC or molecular glue in the generic term or buyback or [indiscernible]. I think that keeps us there. I want to say it's easy to make it greater, but you can see by the number of academic papers, they take VHL, -- they've got a linker, they put a targeting ligand HL anchor and they got a degrader. But that's not a drug. I think 6 years ago, right, the real challenge was, can you get degraders with oral bioavailability, permeability and may have drug-like properties? I think we and all the other peer companies have answered that as yes, but that's not an easy thing to do. It's not trivial. And I think the experience that we have and the data that we have through the 7 years we've been at this, will continue to keep us in the front of the field.

I see. Got it. Okay. So why don't we move on to CFT7455? What do you think exactly went wrong with the dose-limiting toxicity with neutropenia?

Well, so before we talk about that, we talked about what went right with -- so I think we were -- the goal with that program was to develop the most potent degrader of these targets. And I think we were actually pleased and pleasantly surprised to see that in our first dose at 50 micrograms dosed 3 weeks on, 1 week off. We saw fairly meaningful reductions in the difference in serum-free light chains in the 48% to 78% range. And that difference was not seen with mezigdomide, which was the BMS most one medicine until they hit 600 micrograms. So that was very exciting for us because we saw that we played out that potency. Now, what was surprising and when we ran it to some trouble is we had predicted that the half-life of the drug would be in the 24-hour range. And that with the number of our clinical pharmacology modeling set the -- gave us -- made us comfortable about a dosing schedule of 3 weeks on, 1 week off was going to be the right schedule. We were surprised to see that our half-life was actually 48 hours. And so that resulted in an unacceptable level of grade 4 neutropenia, in fact, DLTs at our first dose. And so what's important about any of this class of medicines is that they have to be given with a break in dosing because we know that from all the work that was done by Celgene and BMS that degrading IKZF1 leads to a down-regulation of a transcription factor called PU.1. And what that does is block neutrophils in the bone marrow and doesn't let them repopulate the periphery. So the neutropenia you see is not killing neutrophils in the periphery. It's actually just the regular blocking the turnover of healthy. So as the ones of the periphery die off, you're not getting replenishment of new neutrophils. And so based on that, you need to dose with a brake so that they can come back and repopulate the periphery. And that wasn't happening because 1 week was just too short.

I see. Got it. So this new study design with 2 weeks on, 2 weeks off, you basically increased the dosing holiday by 100% and then you decrease the drug treatment period cycle by 33%. So what's going to give you confidence that this is the right dosing regimen going forward?

Yes. So I'll take that. I think we're confident in the schedule. I think one of the big misconceptions coming out of AACR was that we thought that 25 micrograms was the dose. That's not the case. We never said that or thought that because we saw DLTs at 50 micrograms per protocol, we had to go down in dose and establish a safe dose that we could then escalate from. So that's the reason for the 25 micrograms. And in fact, based on the data from AACR, we know we need to be above 50 micrograms because while we saw promising signs of activity. We didn't have any responses at 50 micrograms 3 weeks on, 1 week off. So I think I'm not confident that 25 micrograms is the right regimen because we know we need to be above that. What gives me confidence that the 2 week on, 2 week off schedule is really based on a whole host of data when you look -- first, when you look at the neutrophil curves from our cohort at AACR. You can see that at day 14, there's really nothing even maybe grade 3, but nothing close to it. And so we know from a safety perspective that we probably will be okay from that perspective. We also know from other drugs. BMS has another IKZF1/3 degrader called it CC99282. They're developing that for non-Hodgkin's lymphoma. That has a half-life closer to 7455 and their Phase I dose exploration resulted in a 2-week on, 2-week off schedule as well. So -- and we also know that from our modeling that while we have a longer half-life, our 2-week off holiday allows the target to come back up to levels that the BMS 1 week does with their shorter half-life. And so all that hangs together that we're able -- we think we'll be able to ameliorate what we saw. I think the question you might say is, well, of course, if you give less drug, you're going to have less side effects, what's going to happen with efficacy. I think that's the natural question. And I think what we're comforted there is the mechanism of efficacy is apoptosis. And we know that dead cells don't come back. And so based on all the data that we have, we feel strongly that 2 weeks of dosing with the potency we have with our medicine is going to be enough to continue to have that efficacy. And we're looking forward to hopefully showing that data when we get there.

I see. Okay. That makes sense. And have you explored other dosing regimen likes to say, 2 weeks on, 1 week off or something like that?

Yes. So clinically, no. Obviously, we did lots of modeling and we did modeling wise. I think the 1 week off is just too short a holiday, given the half-life of the drug. And so we don't think 1 week off is in any scenario, whether it's preceded by 3 weeks or 2 weeks of dosing is the right way to go. People have said, "Oh, what about 18 days on." And I think it's just -- that's too close to -- you need to get too close to 21 or too close to 14 -- and so it doesn't really make any sense. So we certainly are enabled to do it if we need to in the protocol, if we wanted to change the schedule. But based on all the work, we don't think we will need to.

I see. Okay. So the ASH abstracts came out and then we saw some data from Bristol's [ mezigdomide ]. What is your impression of the data so far based on what you see?

Yes. So I think, obviously, an abstract has limited amounts of data. So everything I say will be caveated but we need to see the data at ASH. I think the response rate was consistent. I think there was some commentary that, oh, the response rate came down a little bit, 50% in 11 patients and 45% in 100-and-some-odd patients is to me is the same. And I think the confidence interval is probably overlap. I think the grade 3/4 neutropenia rate went up a little bit to 75%. And I think we'll have to see what the split there is between grade 3 and 4. I think the thing that drew my attention and like most people's attention was the 15% rate of febrile neutropenia. Again, all kinds of caveats. We don't know what the baseline new [ accounts ] were. This was a heavily pretreated population. But if you look at the federal dystrophin rates of len and pom, they're like the 3% to 5% and [ KOLs ], we've spoken to, I think, 15% may be too high. So I think we'll have to see what the data at ASH says in more specifics, but I think that's something that we're watching that we'll see what that means for how that drug gets developed.

I see. Is there any learning from that and bring it back to your development program?

I don't know. I am going to have to see the data and understand like what drove that. Certainly, if you looked at our data set, there were patients that had very different levels of baseline neutrophil accounts. And we think one patient that was up in the 8,000 or so and that patient obviously never ran into trouble. But if a patient starts at a low level, given the mechanism, then they might. So I think we'll have to look, but it's concerning, I think, in terms of thinking about their strategy of taking iberdomide to replace lenalidomide and taking mezigdomide to replace pomalidomide. And so we'll just have to see what that means.

I see. Okay. So what is the status [ 7455 dose ] escalation study? How many dose cohorts have you completed so far? When should we see data?

Yes. So we're not prepared to provide an update today. So there's not much that I can say. Will we plan to guide when we can be a little bit more precise in terms of when we think we'll get there and then -- and how we'll do that. Likely, we'll provide guidance like we normally do early in the year. But right now, we're not prepared to provide guidance, but you could look for that early in 2023.

I see. Okay.

Guidance that is not data.

Sure. But I guess it's safe to say that the trial is progressing due to dose escalation cohort.

Yes, we've -- we are progressing through escalation, continuing to enroll patients by escalating as needed.

Okay, got it. So obviously, you're not running into dose-limiting toxicity. Otherwise, you wouldn't be progressing.

We would not be progressing and we would probably have to make an announcement about the program we ran into some more DLTs at a -- where we did see what we want to see.

Okay. Fantastic. And so what do you think is the bar for success for [ 7455 ] in terms of safety and efficacy, given that Bristol already has like what you said REVLIMID and POMALYST?

Yes. So that's a complicated question. I wish it could be -- I could give you a number and say, here's what it is. Myeloma is a pretty complicated space. And so it really depends on what line of therapy you're talking about and what's setting. So at a high level, the way you asked the question, if our goal, which is one of our goals is to replace len and pom with 7455, then we need to be better than them on overall profile in different lines of therapy in every setting. I think you know we have 2-pronged development strategy. We're developing it initially as a single agent, and I'll get to that in a second, but when I say single agent, they don't mean it's the only therapy it'll be on was monotherapy, but we're developing as a single agent. And then also at the right time, we'll be adding [ dexamethasone ] to the regimen as well. And that adding [ dexamethasone ] is important as we think about that replacement strategy. Again, I think our strategy can be different than BMS. We have one drug, and we're going to try and move it as early as possible in lines of therapy. But the other important component of our strategy is thinking about some of the newer agents that are out there. We have all the BCMA-targeted agents we have bispecifics. And the important part of the single-agent strategy is in some of those settings and combinations, you may not want to have dexamethasone on board. And so we think it's important to establish single-agent efficacy as we move forward to think about combination regimens with some of the more novel agents.

I see. Okay. So why don't we move on to 1946, your BRAF degrader, what's the development plan for this asset?

Great. Yes. So we're really excited. We got IND clearance in September, and we're now moving to get those trials up and running with the goal of helping to dose a patient by the end of the year. So the development strategy is fairly straightforward. We'll start dose escalation in melanoma, lung cancer, colorectal cancer as a single agent in patients who are resistant to BRAF inhibitors. At some point in the Phase I, we'll add a MEK inhibitor and escalate there. And then once we establish a recommended Phase II dose as a single agent, we'll move into an expansion cohort there in lung cancer and melanoma -- and to get that, see what that looks like in the resistant population. And then within the combination with the MEK inhibitor, the plan would be to look at it both in melanoma and lung cancer in the refractory population, but then also in lung cancer in the frontline population, all in those 3 expansion cohorts.

I see. Okay. So again, this is a very clouded market. So when you look at it, the bar for success is going to be very high commercially. So what do you think is that bar for you guys? So what are you guys trying to achieve in terms of a product profile?

So I think it's very well described with BRAF inhibition some the liabilities of a BRAF inhibitor. Inhibitors do a great job of inhibiting the monomer. But we know that can incorporate into the dimer and lead to oncogenic signaling and it makes them PFSs about 15 months with those inhibitors, median PFS. And so we've got to do -- we can do better than that. Our preclinical data shows that we can lead to deeper and more durable remissions with a degrader because by taking down the whole protein, we remove that scaffolding function. And obviously, the monomer then can't incorporate into the dimer and so you completely block signaling. So that's the goal for the program. And so that -- the bar will be to have a much more deeper and durable remissions than you see that inhibitor.

I see. Okay. Got it. We have a couple more minutes for the session. So if the audience have any questions, please raise your hand and we'll get to you. Okay. So why don't we move on to 8634, -- what's the development path there? And what's the timeline for solid tumors?

So this is actually fairly straightforward compared to the other programs. So 8634 is our BRAF degrader, and we're developing that in both synovial sarcoma and SMARCB1 deleted tumors. And so right now, it's in dose Phase I dose escalation in a mixed pool of both synovial sarcoma and SMARCB1 deleted tumors. The plan is once we establish a recommended Phase II dose, we will split out the cohorts into pure synovial sarcoma cohort as well as a SMARCB1 deleted tumor cohort. The goal there, and it will be in the second-line setting and the goal there would be to try and use that for accelerated approval since there really are no approved second-line treatments in synovial sarcoma, huge unmet need. The bar that we've been told by investigators is really the 20% to 25% response rate. It's just pretty low, but that speaks to the level of unmet need.

I see.

I think the development path in Smart B1 deleted tumors is a little bit more complicated that it's really going to be -- it's a collection of rare tumors. And so that's likely to have to be some tissue agnostic development, which I think the agency will be open to us to have some data and then figure out how to do that.

Okay. Got it. And when should we see data from the current Phase I/II study?

So again, we haven't guided yet. We want to be able to do that more precisely when we have a sense for when we will reach the recommended Phase II dose. We started dosing in May of this year. I'd say that trial has accrued probably faster than we thought. I think we were a bit concerned initially given the rarity of synovial sarcoma, how fast that trial would enroll but it's actually exceeded our expectations, and we're not providing guidance today, but early next year, as with 7455 we'll provide guidance on when we think we'll have the recommended Phase II dose and then subsequently data sharing.

I see. Okay. Any questions from the audience? Okay. So let me have a couple more to end the session. So why do you think C4 is a great stock to invest in?

How much time do we have?

We got 3 minutes.

Well, first of all, we're fairly trading above cash. So I think we're not really getting credit for a number of the programs -- any of the programs really that we have. And so I think when I look at our programs, the 3 we talked about and then the one we haven't talked about was our EGFR L858R degrader. I really think there's great opportunity. I think degradation is really the next wave of small-molecule drug development. And I think we're a leader in the field. I think that the team can -- I almost [indiscernible], we can degrade anything. We can't. But -- and so I think we have the right team, the right scientific and platform approach to really drive the field and have degrade some of these truly undruggable targets and continue to be a leader in the field. I think on the face of it, the 4 lead programs alone, I think if they're successful, the company is way undervalued, and I think we're not getting recognition for those right now.

I see. Okay. So last question for me. So as we move into end of 2022 and then into 2023, what are some of the most impactful events that you think investors should be paying attention to?

For C4?

Yes for C4.

Yes. Well, certainly, data readouts among our lead programs, which are the big ones. I think we've got -- over the next -- over 2023 and 2024, I would expect to have data readouts across all 4 of our lead programs, our IKZF1/3 degrader, the BRD9 degrader, or BRAF degrader and the EGFR degrader. And so I think those are important. I think in that time frame, we'll likely start to be able to articulate what are the next wave of programs that we'll start to work on now that we've proven the platform. And so I think -- and then I think the other thing that's not talked about much is we have 3 collaborations with Biogen, with Calico and with Roche, and we're not really allowed to talk about any of those programs. But hopefully, some of those programs will get to the point where our partners will start talking about them. And I think that's also going to be an exciting time as well.

So I know you can't guide data readout timing, but can you guide when you would be able to guide at?

I think we'll do it early next year at an investor conference.

Okay. Fantastic. Any final remarks?

No, just thanks for having us, and we're excited to be here.

All right. Thank you so much, and pleasure to be hosting you.

Great. Thank you.