Crinetics Pharmaceuticals, Inc. (CRNX) Earnings Call Transcript & Summary

Great. Good afternoon, everyone. My name is Jess Fye. I'm one of the biotech analysts at JPMorgan. And we're continuing the 2020 Healthcare Conference today with Crinetics. We are going to do a Q&A session with the management team right after this, just down the hall in the Sussex Room. And for the presentation, let me turn it over to the company's CEO, Scott Struthers.

Thanks, Jess, and thanks for the invite. Hello, everybody. Thanks for coming today. I'd like to tell you a bit of an update about the company. There's a pretty data-rich website -- deck on our website, so I'd encourage you to go there if you want to see more details, but I'll kind of skip through some of the highlights here today. And I think the thing to know about us at Crinetics is we're really trying to build something special that can bring new drugs to patients around the world in the area of endocrinology and endocrine-related tumors. And a lot of it, I think, highlights on this little girl, Julietta, we got to know her parents who are professional photographers. She has hyperinsulinism and that backpack she's wearing with a tube is a glucose pump that's keeping her from hypoglycemia. She has to wear it 24/7. And I think we've got something that can help her and other kids like her. And I'm telling you that now because it's program #4, and I want to make sure you stick around to see that we have a rich pipeline in endocrinology. So endocrinology is great because we're operating in an area of physiology that is generally well understood. Some still high unmet medical need because of -- we just don't have the drugs we need, but the biomarkers we measure in rats and dogs translate very well into the same hormones and things we measure in healthy volunteers, which are the same things we're trying to control in patients, and in many cases, are the registration endpoints in those patients. Our strategy is to advance multiple pipelines in parallel. We've built everything in-house. We're retaining all rights to everything at this point. And you can see on the right, some of the endocrine systems that we're working in now, some of the disease states we're working in now. We've got a long list of things we want to do in the future. And I'll just touch on some of that. So this is our pipeline as of today. We've got 2 sst2 nonpeptide small molecules in development. CRN808, which some of you may know about, has now got an INN name of paltusotine. So I'm going to try and remember to say that throughout. It's in Phase II in a series of studies around the world. We also have a second molecule, which is a backup/follow-on that we're developing in Phase I. I'll tell you just a touch about that. We've recently had a breakout and made small molecules that are antagonists of the central hormone of the stress pathway, ACTH. That's now in preclinical with Phase I anticipated end of the year. And sst5 agonists, and again, a molecule selected in preclinical, looking for Phase I at the end of the year for little girls like Julietta. All these things are in-house. We own all of it. The first patents of composition of matter for paltusotine start expiring in 2037, and we've got all the subsequent filings that you might expect. So first, a little bit about the sst2 program. For those of you who are a little new to it, sst2 is a receptor for the peptide hormone, somatostatin. It naturally inhibits the secretion of growth hormone and inhibits the secretion of other hormones in the gut through gut neuroendocrine cells. But when tumors arise in these tissues and they secrete too much growth hormone, you get a disease called acromegaly. If you have the stomach or gut tissue tumors in the pancreas or the small intestine, you get these neuroendocrine tumors. And somatostatin peptide analogs are now the standard of care for these patients. It's almost a $2 billion market at this point, if you include a couple of smaller entrants into it. It's Novartis' number fifth selling drug with Sandostatin. Ipsen's #1 selling drug. Good drugs, have made a lot of progress for the health of patients, but they are suboptimal. The 2 peptide somatostatin agonist, Sandostatin and Somatuline, are monthly intramuscular deep subcu injections, large gauge needles. And actually, the patients complain less about the needles and the injection pain and the lumps than they do having to find a half a day to go visit their doc and get these every month and think about trying to schedule your vacations around that. Some of it is a little worse. It's a daily injection, works fairly well. And then even these injections tend to wear off towards the end of the month, and so patients see a return of symptoms in many cases. So despite these being great drugs, there's still a lot of room for improvement, and that's what we're trying to do. Paltusotine is what we call a nonpeptide, the structure is up here on the top. If there's any chemist in the room, you can see this is a very traditional-looking small molecule drug, with the type of behaviors you'd expect of a small molecule drug. Binds at the same receptor as octreotide, the market leader, but with slightly different epitopes. And with a small molecule, you can do things you can't do with a peptide. A little bit of background data on it, it just shows that it's a highly selective for the somatostatin type 2 receptor, sst2. There's 5 subtypes. They control different aspects of physiology. For acromegaly and neuroendocrine tumors, you want to block the -- or activate the type 2 receptor. For other indications, we have small molecules to activate the other somatostatin receptors. It's got good characteristics. I'll show you some of that on the upper right. We've got a good manufacturing process for this, selecting commercial -- we have a commercial supplier selected now. The chronic tox studies are complete. We have no dose-limiting toxicities in the chronic rat and dog studies. Basically, this is a high-quality drug that results in small capsule you see on the lower right. Commercial pharma will likely be a tablet rather than a capsule. We're just finishing that up. Small molecule oral drugs are the traditional way to make something orally available. On the upper right, we've recently completed a C14 study to look at mass balance, a well-behaved molecule from that point of view, and we include an IV arm so that we could look at oral bioavailability, which is about 70%. That's not bad for a small molecule drug. Now that's because it can permeate lipid bilayers. It doesn't get chewed up by proteases in the stomach or the intestine. And you can see, compared to oral octreotide, 70% versus about 0.5%. Also because it's a small molecule, we've engineered in stability. It has a half-life of roughly 2 days, which is consistent with once-a-day dosing. So here's an outline of some of the core studies in our clinical program, and I'll talk a little bit more detail of those. Like all our programs, the first-in-man was very enlightening. It showed that we had QD dosing that we could measure growth hormone suppression, insulin-like growth hormone suppression and showed that, that was roughly equivalent to what the peptide-approved drugs could do. And we expect this in all our Phase Is where Phase I and these endocrine programs are very much a proof-of-concept study for the mechanism. We now have 2 Phase IIs going around the world called ACROBAT EDGE and EVOLVE. Here, patients come in, they switch from the Depot to the oral. We're looking for the ability to maintain their control that they have on the Depot, but in a much better form in the oral. And these are running -- the ACROBAT EDGE study is in patients who are not well controlled by existing therapies. We know that if an acromegaly patient comes in -- or a population of acromegaly patients come in naive to drug, about 93% of them will show a reduction in IGF-1, which is the biomarker that docs use to monitor the disease and the regulatory agencies use for regulatory decisions. But only 20% to 30% of them will get down to normal levels of IGF-1. So our program is designed to capture all these subpopulations of patients. So EDGE, which is about 65% of the patient population, are those that are not well controlled. We're looking to show that we can do just as well as the SSA therapy that they're benefiting from today. And then in the patients who are already controlled on the existing peptide drugs, we're looking to do a placebo-controlled study for the regulators to show that we beat placebo. And then finally, we've just started an open-label extension trial where the patients that are completers on the EDGE and EVOLVE studies can roll into this long-term extension. We'll get long-term data for the FDA, EMA. And then we've also allowed newly diagnosed patients who are naive to therapy to enter this trial as well. So we're trying to get a coverage of all the different patient types of acromegaly in this program. A little bit of Phase I data, which was very illustrative for the molecule, gave us a lot of confidence in moving forward. In the upper left is -- a healthy volunteer comes into the clinic, we give them another hormone called growth hormone-releasing hormone. And you can see it causes this rise of growth hormone, kind of a temporary acromegaly that last a couple of hours. We then go in the next day, give them oral 808 at 10 milligrams -- or excuse me, paltusotine. I'm still getting in the habit. And then rechallenge, and you can see that it can block more than 90% of the GH secretion with that once a -- dose of 10 milligrams. Nice dose response in the lower left, beautiful textbook exposure response study on the lower right, suggesting 10 milligrams is the right dose. Now in growth hormone, it goes up and down pretty fast, which is why we had to do that maneuver with the GHRH challenge. But IGF-1, which is made in response to growth hormone, is a more slowly changing marker and the reason why that's used for physicians to monitor the disease. So if you give daily 10 milligrams in the upper left, you can see that the trough concentrations hit steady state in a few days. IGFs begin to come down. You hit a steady state of IGF in about a week. That's maintained until you withdraw the drug. We have about a 2-day half-life. So it takes a little while for that drug to clear out. IGF gradually returns back up to baseline. Safety and tolerability profile was consistent with what we see with the peptide drugs, which allowed us to choose 10 milligrams as a starting dose for the Phase II studies. So as I mentioned, we have 2 studies going on in parallel at the same centers, EVOLVE and EDGE. Single screening process. So a patient comes in, they're eager for the trial. They go through all the normal screening procedures. If their IGF is below 1x upper limit of normal, they go into EVOLVE. If it's above 1x upper limit of normal, they go into EDGE. We're doing this across the U.S., U.K., Eastern Europe, Brazil, and Australia, New Zealand, building a relationship with centers around the world that will be ready to do our Phase III program and also who are participating in this open-label extension study. So both studies are fairly similar in design. They're both switches. So a week after screening and week minus 4, they come in, they get their last dose of the monthly Depot. 4 weeks later, instead of the next dose, they get the oral -- switch to oral at 10 milligrams. We monitor tolerability, IGF levels. If they need additional drug and are tolerating 10 milligrams, they go up to 20, 30, 40. And then at the end of that 13-week period, they're washed out and allowed to go back to higher IGF levels to prove that, in fact, they're benefiting from the drug. Here, the endpoint is to look at the IGF level before and after switch to the oral, and show that we can keep them as well treated as they were before, but on a much more friendly patient therapy. Now the other thing we're doing with this study is we're exploring a number of different patient groups, which is shown on this table on the lower left. Probably the most important is that first group, which is patients on monotherapy who have IGF above the upper limit of normal. And that, together with those patients on the dopamine agonists, are the primary analysis set. We want at least 30 in that group. And then we're also exploring people that have a dopamine agonist added on top or the pan somatostatin agonist, pasireotide, or the growth hormone antagonist, pegvisomant, just to begin to get a sense of how we can do in those patient populations. The EVOLVE study is similar in many ways. Again, titrating from 10, but this case, up to 30 milligrams. And here, we wanted to show superiority over placebo. So in that last month of treatment period, we have randomized between placebo and active and are looking for a difference in responders at the end of that 13-week period. So once they've hit week 9, if they're still maintaining a normal level of IGF-1, they're randomized. At the end of that, we look at responders versus placebo. And then there's a washout period to, again, confirm that these patients needed therapy, and we expect them to have a rise in the IGF at the end of that. Now we could have done this design with a washout ahead of time so that -- and then looking at suppression of GH and IGF levels, but patients really don't like that, and neither do IRB. So this randomized withdrawal is a more patient-friendly type of trial design. So both of those are underway. We'll let you know us as we're done recruiting. When the recruiting is done -- they're not in sync, so the EDGE will report out before EVOLVE. It will take 4 months of treatment period there, and then another month -- well, 4 months of treatment plus washout and another month or 2 of data analysis. So 6 months from the time of enrollment completion. Now at the same time, good companies should always keep backups in mind. We made a backup, 1941, which was an independent molecule of its own. Separate chemical series, separate patents, improved on some risks we were worried about early on for 808. Now those risks -- or paltusotine, excuse me, those risks didn't seem to play out. So it's going to be really hard to do any better than paltusotine. But having a second molecule does and will give us a little bit more flexibility in going after the NETs market with 1 molecule, or going after the NETs market with 2 molecules, 1 for NETs and 1 for acromegaly. But we're weighing that against the strategy for us, which could also be to take 808 forward on its own, which would save us some time and money. So 808 is derisked more than 1941. It's probably a year, maybe 1.5 years ahead. And every day, key risks keeps coming off the table. So this study has finished the in-life portion. We're finalizing the PKPD analysis. We'll report that out along with the details of our NETs strategy in the coming months. And one way or another, our goal is to get into the full opportunity of somatostatin agonist in that $3 billion market. So next steps are, of course, to complete enrollment on these Phase IIs, show you how they've been doing in that population. But more importantly is getting ready for Phase III. Phase IIs are great, but the goal is an NDA. We're finalizing the designs for that. We're working with regulators around the world. We're working with KOLs. We're also actively working with patient groups in all our programs. And we're preparing final drug product to go into that. You want to start a Phase III study with something as close as possible to your commercial form. So we selected our commercial suppliers. We're working on final formulations. Carcinogenicity studies are about halfway through, and we need to get started on the NETs development. So behind that is this program in the stress hormone, ACTH. Now ACTH is synthesized by the pituitary in response to stressors, either emotional stress like a lion chasing you on the savanna, or a hemorrhage, which triggers vasopressin secretion, which, in turn, triggers ACTH secretion. A variety of other stressors in the body then takes that ACTH, goes to the adrenal, makes cortisol, which allows you to respond to that stress. Cortisol is made in response to activation of a receptor called melanocortin type 2 or MC2, which then stimulates cyclic EMP, stimulates cholesterol uptake and conversion into cortisol, which can come back to pituitary and shut down the production of ACTH in a normal negative feedback loop. Now just like in acromegaly, if you get a tumor in the pituitary that makes too much ACTH, you end up with a state of hypercortisol production that is equivalent to being maximally stressed out 24/7 until you can find some way to resolve it. This has a variety of very toxic symptoms from malignant hypertension, to abnormal weight gain, swelling in the face, psychiatric disorders. You can imagine the difficulties that can cause. There's another indication, which is kind of the opposite of that. So if a child has a defect in the synthesis pathway for cortisol, you get a backup of those precursors and excess androgens. And then the loss of cortisol means there's no breaks on ACTH production, so you get excess ACTH, which is stimulating all those precursors and can cause the adrenal to grow hyperplastic. Hence, the name, congenital adrenal hyperplasia. So here, this is a disease of ACTH excess as well and then you also need glucocorticoid replacement. And to give you a sense of the severity of CAH, our commercial group has pulled out this data. We've been analyzing a bunch of claims data for a 5-year period in all our indications. And this is an example of a little girl born in 2014, showing a diagnosis on the top and all the various medical procedures she's dealt with over the next 4 or 5 years. And you can see the medical usage is just profound. And I'll come back and show you something similar for congenital hyperinsulinism. So these are very sick people that are having a lot of interventions and need a much better way of managing that disease. So here's what our ACTH antagonist can do. Up in the upper left is an example of acute study in a rat where we give ACTH, and then in those open circles, you can see that there's large amounts of cortisol produced, and you can block that with oral antagonist. You can see that for 7 days on the right. You can see that on the lower left, if you implant a pump in a rat and they have ACTH for a week, they start losing weight and they're feeling terrible and you can reverse that with this antagonist. And then in terms of congenital adrenal hyperplasia, on the lower right, that upper left is an adrenal that's got a week of ACTH, and it's inflamed, it's 4 or 5x normal size. If you give that rat once a day this antagonist, it's back to normal, its cort levels are normal, like the adrenal on the right-hand side of that picture. And so we've done a lot of characterization because I should say that ACTH has been around almost 100 years now. Harvey Cushing described Cushing's disease, and his first patient was 1910, there's 62,000 papers in Pub Med about ACTH, and this is the first antagonist. So this molecule, now we have a candidate. We've put it through all its paces, just some of the characterization here. We try and have good craftsmanship in our drugs. It's been through short-term tox studies, non-GLP and rats. We're now making kilos of it, starting the GLP tox studies. If all goes well, it should be in the clinic towards the end of the year. Similarly, for sst5, so somatostatin has these 5 receptors. sst5 controls insulin secretion. Kids who have problems in the insulin secretion pathway have what's called congenital hyperinsulinism, and they make insulin, even in the face of hypoglycemia. And if you don't control that hypoglycemia, you can have seizures, developmental disorders, a whole range of different problems. And I won't go into the whole treatment pathway, but the bottom line is there's not many good ways of treating it. And many of these kids go on to have their pancreas taken out as the only way of managing the disease. It's better to deal with diabetes the rest of your life and digestive disorders than it is to try and worry about a hypoglycemic event that can kill you. And again, here's another utilization graph for another little girl. You can see the diagnosis up on the upper right. Notice that second row are ER visits, inpatient visits, outpatient visits, seizures on the third row. Again, and this is somebody being managed with the best standard of care that we have. And we think that somatostatin 5 is a great mechanism for treating this. We know that somatostatin is a negative regulator of insulin secretion in the normal pancreas. But in the disease pancreas, on the left side of this graph, we took mice who've been genetically engineered to have the same defect as about half of these kids took out their pancreatic islet. In the blue, you can see the response of insulin accretion to an amino acid ramp showing excess of insulin. And then if we give them in the same perifusion study, concentration of one of our sst5 agonist, you can block that excess insulin secretion. More importantly, on the right, I told you many of these kids have their pancreas taken out, which is tragic for them. But as a research tool, we can sometimes get a hold of those pancreatic islets and use them to evaluate drug candidates. So here's a little kid with Beckwith-Wiedemann syndrome. We've got access to their islets. In blue is the response of insulin secretion to a glucose ramp, and in purple is the effect of one of our sst5 agonists to blunt that excess insulin secretion. So I don't know what else we can do to prove the mechanism outside of getting into these patients as soon as we can. And to do that, we need a high-quality molecule. Again, we've got some great med chemists. We found a molecule we really like, all in vivo activity on the left, a bunch of profile information on the right. It's passed all our internal hurdles. It's passed some short-term tox studies, everything we can think of to make sure it's a good molecule. And now we're making kilos of it. We're starting the IND-enabling GLP tox. That should be in the clinic towards the end of next year as well. From a cash point of view, we haven't closed out the end of the year books. But as of September, we had $132 million in cash. This is enough to take us forward into the second half of '21, assuming all programs going full speed, including a significant Phase III burn for our acromegaly program. And I just want to leave you with this slide, which shows where I hope we'll be in 2021. So as this pipeline matures, we start entering Phase III in acromegaly, Phase II in NETs. The transition from preclinical to Phase II and the ACTH antagonist and the sst5 program can be really quickly. And we're obviously continuing to work on discovery efforts. And we have some pretty good leads on a new target we'll tell you about sometime next year that should be in preclinical by that time. So this is a picture of the small group and fantastic group of folks that I'm privileged to lead. If you want to hear more about how we do things, we're very proud of a new podcast. Pituitary World News has got a 6-part podcast interviewing a lot of these folks and asking them how we actually make these drugs to teach the pituitary patients where these things come from. We're working hard with all the patient groups and looking forward to helping them. So thank you for your time. I guess there's a breakout coming up. Happy to answer any of your questions there.