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

Good afternoon, everyone. My name is Jess Fye. I'm a biotech analyst at JPMorgan, and we are delighted to be continuing the conference today with Crinetics. We're going to have a Q&A session in this room after the presentation. [Operator Instructions] So with that, let me turn it over to Crinetics' CEO, Scott Struthers for the presentation.

Thank you, Jess. Thank you, everybody, for coming. It's really good to see people in 3D, although I miss seeing your kids and your dogs and some of the fun things we've had over the pandemic, but this is better. So I'd like to tell you about Crinetics today. We're building a deep endocrine franchise and a company that can support it, time and again from product to product from discovery and soon into commercialization, being led by our Phase III program, which will read out this year, but there's a lot more behind that. So I'm going to illustrate with that pipeline, what we're trying to do. My forward-looking statements. So if you look at the company today, I think we've proven to those of you who know us that we've built a very strong GPCR drug discovery platform. We've built global endocrinology clinical trial capabilities. We've got these Phase III readouts for the first of the program coming later this year, and we built a pipeline now with 3 product candidates with proof of concept. But I'd really like you to also think about Crinetics tomorrow. So tomorrow, meaning a few years from now, we'll also be shifting into more and more prevalent indications, and we'll be getting proof of concept in those. We should have global approvals in multiple products and indications. We'll have fully integrated commercial capabilities and multiple programs in late development. So we're building a sustainable company that's going to innovate again and again in the endocrine franchise, and there's nobody else doing that. There's a lot of companies with good products in endocrinology, but nobody else going time and again to the same groups. So a little bit about how we approached it is endocrinology allows you a fairly unique strategy for value creation. We understand a lot of the biology here around endocrinology. It's not some brand-new gene that we just figured out last year. So we pair that with the unmet needs and then craft high-quality drug candidates against it. We've been comparing it lately to a very fine crafted watch. We're trying to design it carefully, make it perform flawlessly and look good, too. But this has then translated into reality because we have very predictive, translatable, highly conserved animal models, healthy volunteer studies can predict efficacy in patients. And endocrinology invented the field of biomarkers, we measure things in blood all the time. And in fact, it's registrational endpoints for many of our programs. And I get this secret sauce question all the time. The secret sauce is the people in our discovery group. We employ -- there's a lot of cool new tools coming out in endocrinology -- in GPCRs and in endocrinology. And we use a lot of them. But that's not the differentiator. The differentiator is a focused team operating on strategically designed portfolios with all the pieces playing together and our teams have been playing together for more than a decade and some of us in previous companies played together for 20-plus years. But it's also culture of hunting drugs. And so bringing that culture together to go solve the problems, to find the best candidates, take them into development and take them to the market. So that differentiation, speed and probability of success is all going to be from the teams using a lot of cool new tools, some things that we have just to ourselves. But endocrinology is actually, even though it's somewhat of an old field, it's a wide open field. GPCRs is the largest gene family in the human genome. Many times the number of gene products than, say, kinases for example. And these class that we're working on typically recognize peptide hormones, which makes them particularly difficult to target. But it's high probability biology and high probability value opportunities as well. So I list some of those indications that we're currently addressing on the right, a few that we see in the future, but there's a lot more that goes beyond just what you see here. And that's illustrated with our pipeline today. So acromegaly with paltusotine is deep in its Phase III program. We've finished enrollment on the first of the 2 and guiding to finish the program by the end of the year. Two more programs just starting Phase II and then a discovery pipeline where we're starting to branch into more and more prevalent indications like PTH antagonist for hyperparathyroidism. We got a very novel approach to polycystic kidney disease, which has some pretty high unmet need and also TSH antagonist. So TSH may not mean much to you, but it's for treating Graves' disease, of which Graves' ophthalmopathy is a pretty good subset of those patients. And I think we all see the [indiscernible] commercials on TV or saw the [ buyout ]. So we know that there's a decent market there. But this is going after the underlying cause of the disease, not just the eye, but the root cause, which is activation of the TSH receptor. And there hasn't been a new Graves drug for true Graves' disease since like 1945. And then our stick, one of the things we've been really quite good at in discovery is figuring out how to make quality small molecule drugs against peptide hormone receptors in endocrinology. And the most exciting thing for a lot of people lately in peptides and endocrinology are these incretins and some of the other targets for diabetes and obesity. If that's what we do the best, how can I not go into that space? Super competitive. I probably won't be talking too much about what we're doing, but very excited to get started. But all of this also shows you what I was talking about as a franchise. So all of these programs are going back to the same investigators, the same prescribers. We're part of the endocrine community, not just a sponsor or somebody selling 1 or 2 products into it. But there's more. And I like to make sure that discovery can go in the directions that the science takes us. And these small molecule ligands of peptide hormone receptors can also be used for drug targeting, solve a lot of the problems around biologic targeting for radiopharmaceuticals, for example. So we -- but that's a bit of a different venture than what we do at Crinetics. So we spun off Radionetics last year with help from 5AM and Frazier. And we're building that company. The first of the IND should be going in, in the next few months. Second one later this year, a third one early next year and a number of targets behind that. So I won't spend any time on that. But I just wanted to use this to illustrate there's more to us than even just the endocrinology. And we still own a pretty big position here even though we will get diluted as time goes on. So let me talk a little bit about paltusotine, which is a first-in-class small molecule for acromegaly and carcinoid syndrome. But it's more than that for us, it's the vehicle we're using to build our capabilities, both development and commercial. So for those of you who know acromegaly, it's caused by a benign tumor of the pituitary gland that secretes too much growth hormone. That growth hormone acts at the liver to secrete too much IGF-1 or insulin-like growth factor and has a range of problems associated with that. In addition -- and what I should have said is that -- and somatostatin receptor ligands prevent the secretion of growth hormone and help mitigate the disease. Now somatostatin also inhibits other cells, including the ones that give rise to neuroendocrine tumors in the gut or the pancreas. And so somatostatin receptor ligands are also used for neuroendocrine tumors, particularly those that cause carcinoid syndrome where the tumor starts secreting serotonin or VIP or some other factors that cause severe diarrhea and flushing. It's very debilitating. And somatostatin analogs work very well there. And there's a couple somatostatin analogs on the market. So we have a very established biology here. We have a very established market. So it's $2.7 billion in sales with Sandostatin being -- last I checked, I think it was #5 or 6 drug at Novartis and of course, Somatuline #1 drug at Ipsen. So the market is there, but it may even be bigger than, I think, the current market -- current sales are. And we tried to -- for those of you who follow us, we started talking a little bit more about the market opportunity throughout the deck to give you some handles. But in acromegaly, there's about 11,000 patients that should be addressable in the U.S. About 10,000 of those are on endocrine therapy and you start multiplying that by WAC and you can see the type of market that we're talking about. Now neuroendocrine tumors is a much larger population and a good 19% to 30% of those get what's called carcinoid syndrome that I mentioned. And so that's about 3x the addressable market as acromegaly. And right now, only about 1/3 of those patients are being treated as we dig deeper and deeper into the script databases. So we got a question we're trying to ask, which is why. And so it's not just about switching people and taking this market opportunity, but it's also can we grow it by reducing the burden of care. And so these are not in substantial commercial opportunities. And the current treatments have a variety of challenges. Yes, a big needle in intramuscular injection is a problem, right? It is not like an immunization or something. But it's more than that. You have return of symptoms towards the end of the monthly depot cycle. You sometimes have an exacerbation of side effects at the beginning of the cycle. There's efficacy and tolerability limitations. But generally, it provides -- it is associated with a very high burden of care. And if we can lower that burden of care, can we improve -- or can we grow that market. That's what we did in laying the foundations for paltusotine when we first designed the molecule and as we designed the development program around it. Obviously, our goal is to reduce the burden on the patients, and we've engineered a number of factors into that, and we'll engineer the company to provide other factors like patient support services to help the patients. But we've also made it easy for physicians to adapt. It's a very well-behaved drug. It's simple dosing. We'll be providing HCP support services. And even if you go into the health care system, we're adding value there. And part of what we're also doing is preparing the company to be ready here by looking at the commercial function and the associated functions like medical affairs and quality and all that. And growing that out in time to really be ready for that launch, which is coming down the road. We're not waiting until the last minute. We're resourcing it now. And it's not that -- apologies to Jim, who you'll meet in a minute, who is our Chief Commercial Officer, it's a big lift, but it's not a gigantic lift. It's -- the 80% of the new scripts are written by 200 endocrinologists at about 35 centers in the U.S. That's a very focused group. The people who then maintain patients, about 80% of those scripts are written by 1,000 endocrinologists out in the community, well, 800 in the community and 200 at the centers. So it's a very defined commercial target opportunity. And what we've shown -- and I'm not going to spend a lot of time on data today. It's against my grain as a scientist, I usually like to show you data slide after data slide. But I'll show a little bit on each program, and this is some recent analysis of our open label extension study in acromegaly, where patients in the Phase II program remain on paltusotine. Quite a few of them getting out to 2 years now, and this continues to go on. And what you see is very stable control of hormone levels, which is the registrational endpoint for these patients. But also a very high enthusiasm for the drug with almost 90% of the patients participating and staying in this trial despite the pandemic and all the other things that are going on in the world these days. So that is now deep into a global Phase II program with over 100 sites around the world. These sites will use for the next trial in carcinoid syndrome, many of them or at least the same centers, sometimes the same investigators for Cushing’s disease, congenital adrenal hyperplasia, time and again, we'll be going back to the same people who we know well now. And this is just the example of how we're doing it. So we have 2 Phase III studies going. We've completed enrollment on PATHFNDR-1 that reads out in the third quarter. Enrollment is continuing on PATHFNDR-2, but it's a shorter study. So we're predicting that's going to finish in the fourth quarter. And I might mention that for almost all of these things that I'm mentioning data, there's hyperlinks in our slide deck, so you can go back to some pretty rich content on our web page if you want to dive a little deeper. But I just told you that carcinoid syndrome is also a very important opportunity and even larger than acromegaly. So we've started a study to begin to explore in patients with carcinoid syndrome. And we're not really trying to prove a biological point because we know this target is right, and we know the drug gets to that target. But we are trying to test the dosing and pharmacokinetics in the patient population. So in acromegaly, we're using 40 and 60 milligrams. But based on history with injectables, we think may need a higher dose in carcinoid syndrome. So we're doing 40, 80 and an option to go up to 120. So once we figure that out, which we hope to report out later this year, then we'll switch into the Phase III program for carcinoid syndrome so that after we get the launch going for acromegaly and get that whole organization going, the next thing comes into the commercial pipeline. But we're expanding this franchise with additional product candidates that are now starting to mature and get into patient studies. We've reported out last year some very exciting first-in-human healthy volunteer studies, which prove the pharmacology and show the value of these biomarkers for making sure you've got the right drugs, the right dosing or at least dose ranges. But I'll just illustrate a little bit on these opportunities. And I'm only talking about the indications we're doing today. There may be additional indications for both of these molecules. But for 4894, this is an ACTH antagonist, is the only way in which the adrenal is stimulated by the pituitary. ACTH is a 100-year-old hormone. Harvey Cushing identified his first patient in 1910. There's 60-something thousand papers about ACTH in PubMed, and there's no other ACTH antagonist in the clinic. I don't even know if there's anything preclinical. And so that's Cushing's disease, which is tumors just like acromegaly that make too much ACTH, treated by the exact same pituitary docs. Sometimes it's cured by surgery, but it leaves a population of about 5,000. And it's a fairly difficult patient population for the pituitary docs. So a little smaller acromegaly, but very substantial market and the current drugs in there are priced higher than the acromegaly drugs. If I look at CAH, so this is a disease where you lose the ability to make cortisol. So you lose negative feedback in the pituitary and start making way too much ACTH, which causes a range of problems. And there's probably 17,000 patients there in that population. And there's no other approved therapy. So it's a little harder to figure out what the potential uptake would be for that. But again, not an insignificant market opportunity. And what we've shown in our healthy volunteer studies is that we can affect this system, be well tolerated and at 60 or 80 milligrams once a day reduce urinary cortisol down to by 70% to 75%. Now urinary cortisol in Cushing's patients is the registrational endpoint. So we've shown this drug does what it's supposed to do. There's a bunch of other information on this trial available in various posters and talks that we have up on the website. But this shows part of the power of being able to derisk a compound early in development in healthy volunteers. So we're starting now a study in ACTH-dependent Cushing's syndrome. This is being done at the top investigator at the NIH. It's a dose escalation study, trying to figure out exactly what the doses are we'll need for the Cushing's population. You may notice that we're going 80, 120, 160, whereas in the healthy volunteers, we stopped at 80. And a lot of the reason we stopped at 80 is because these healthy volunteers were starting to lose too much adrenal function, and it really wasn't ethical to keep going higher. But in Cushing's patients, we can go higher, if we need to. So this is an open-label study. We'll be looking at each patient, looking at PK, looking at hormone responses and setting up the data to let us jump into registrational studies afterwards. So this is probably a '24 event. In parallel, we're doing something similar for CAH -- so just on the Cushing's. So that's already been through the FDA, it's starting at the NIH. We're just waiting for an IRB approval to get going on the study. The CAH program, each indication needs its own IND. Here, we filed the IND for CAH later -- earlier this week. In another month, we should have clearance, which will allow us to start program again, open label, exploring a range of doses, looking at endocrine biomarkers to make sure we understand the dosing, tee up for subsequent studies in '24 with the data readout in '24. So '23 is about data in paltusotine, acromegaly and carcinoid syndrome. '24, we start seeing data here. And -- the next opportunity that I wanted to talk about is 777, which is a somatostatin 5 agonist that suppresses insulin secretion. This is for kids who are born with genetic defects where they just make too much insulin. And if you make too much insulin, you cause hypoglycemia. It's profoundly damaging disease. About half the kids end up with developmental disorders because of repeated episodes of hypoglycemia. On the right, I have a utilization of health care example from a little girl. Each of those symbols is a health care access point. The top rows are diagnosis where she was diagnosed with CHI and hypoglycemia and a bunch of seizures. The middle row is about hospital utilization. So look at all those ER visits. And this is despite being on standard of care. So it just gives you a sense of how brutal this disease is. And there's a significant population of these patients in the U.S. This isn't an ultra-rare. I mean it's pretty rare, right? But probably 1,500 kids in the U.S. that could benefit from this. And then there's another class that doesn't have this monogenic hyperinsulinism, but it has a syndrome -- they have a syndrome that is one of the components is hyperinsulinism, and that's probably another 1,700 patients. So again, this is a fairly rare indication, but you start adding up the burden of care and it's a pretty decent market. And again, in healthy volunteers, we showed that we could stop insulin secretion in a model where we create a constitutive secretion by giving sulfonylurea, which knocks out the activity of the KATP channel, which is the most commonly mutated gene in the kids. So this is a pharmacologic model in healthy volunteers that very adequately reconstructs the genetic defect. And we show 90% suppression of insulin. In order for this to be safe when you give that sulfonylurea -- essentially giving them sulfonylurea poisoning. In order for that to be safe, you [ have to ] come up to an automated glucose infusion system. This is called a glucose clamp. And if you don't treat them, they need a lot of glucose being pumped in. If you treat them with 777, they don't need more glucose. And there's a lot of little kids who are still hooked up to glucose pumps or get glucose feedings through a G-tube multiple times in the day. If I can get rid of some of those G-tubes, that's pretty awesome. But we're not done there. Our GPCR discovery group is continuing to work on new targets, new ideas. I mentioned the radio therapy. But one of the things we've started doing is shifting from these rare disorders into the more prevalent disorders. It's almost as much work to discover a drug for rare disease is something that will help millions of people. And as we've grown the company, we think we can start addressing it. As we think about the company in the next few years, as we continue to grow, we'll be ready to handle some of these. So I won't get into all those details, but I did want to just wrap up some of the market opportunity because I think sometimes, we get pigeonholed as an acromegaly company. It's not a bad market, but if you start thinking about the totality of what we're addressing, we're starting to address some pretty large populations and large market opportunities. So on the left is total addressable market, just with our things in the clinical pipeline just in the indications that we're looking at. And it starts to add up to a USD 9 billion opportunity. I'm almost embarrassed talking about the right-hand side because these numbers are so amazingly huge. But when you start talking about hyperparathyroidism or polycystic kidney or Graves, which is like 1% of the population, 2% of the population, mostly women, by the way. And then, of course, I think we all know that the market projections for the obesity field, diabetes, obesity combined and all the other things that does, it just kind of goes off the charts. So we're not going to take all that market. I'm not that crazy, but we're going to take some segments of it, and I think we can make some really good drugs addressing these populations. So with that, I'd just like to kind of highlight what's coming up next. '23 is a big year for us. I've kind of said that every JPMorgan Jess has invited me to. But '23, we have the 2 Phase III readouts. We have the carcinoid syndrome data. Some of these new products, new candidates I'm talking about should mature this year, and we'll start IND-enabling work in those. And as we go into '24, we'll be doing the NDA submission. That's a big lift. We're building the organization to do that. We'll start getting the Phase II data out of Cushing's, adrenal hyperplasia, congenital adrenal hyperplasia. And hopefully, some of those new drug candidates from the discovery efforts are starting to get in the clinic and maybe even generating some early proof of concept in healthy volunteers. We are in a pretty strong cash position at the moment. I know it's been terrible markets for many. We've been very fortunate. Thank you to all of you who have supported us. But we have money to the end of '24, which gets us past a lot of these data points that are coming up. And I think we also start to reach a level of flexibility in our financing strategies as we get through Phase III and other things that makes a little less dependent on the equity capital markets. So with that, I'd just like to thank everybody, and I guess we're going to open up to questions and bring some of the rest of the team up so that -- I can't handle all the questions anymore. I used to know everything that was going on, but I'd like to introduce Marc Wilson, our Chief Financial Officer; Dana Pizzuti, our Chief Development Officer; and Jim Hassard, our Chief Commercial Officer. Thank you.

[Operator Instructions] So Scott, I'm sorry to start on acromegaly. But can you...

It's an obvious area to ask us about.

Can you walk through what results would represent a win in your mind for each of the Phase III acromegaly trials?

Well, the primary win is beating placebo. So that's, I could say, a low bar. But it's also not just about the responder rates, which are the primary end points. It's about IGF levels. And what you care about in patients is not whether they meet some arbitrary thresholds on IGF of 1x the upper limit of normal, which defines a responder in our case. But if we show that IGF levels are the same on paltusotine as they were on the patients in the run-up, where they were on standard of care, and that's in PATHFNDR-1. That's great. So what hesitancy would you have of switching a patient then to a much more -- much less burdensome therapy if you can show the same efficacy with the less burden. In PATHFNDR-2, these are patients who are not on current SRLs, they've been off for some reason, never had it or have washed out. And so they'll all be uncontrolled acromegaly patients. And we expect the vast majority of them to have improvements in their IGF levels and some proportion will hit the responder threshold of one. But there, you also get a feeling for the real population out there where almost everybody benefits from an SRL. If they don't quite get low enough, you add something else on top of it. So I didn't give you a single number, x percent, but I think you get the gist of what makes us a good drug.

So these studies are [ reading out ] in sequence, right? So if we get positive results from PATHFNDR-1, how is that going to make you feel about the odds of success in the next study?

I'm actually -- I'm not -- maybe I shouldn't say this. I'm not that worried about the biological outcomes here. It's about study designs that we've committed to. It's about recruitment, it's about making sure the data integrity is good. But by finishing PATHFNDR-1, we've shown we can do all that, right? And we've shown we can recruit that study. We finished it last fall. So I think it helps with PATHFNDR-2. There's still some risk left in PATHFNDR-2. It's a population, many of whom we haven't looked at before. But there's not much biological risk there. There's a lot of execution risks.

Can you talk about some of the reasons we could expect stronger data from paltusotine in Phase III than we saw from MYCAPSSA?

Sure. So for those of you who don't know, MYCAPSSA is a twice-a-day reformulation of a generic octreotide that gets about 0.5% bioavailability. And what we've seen in the studies there is that on average, patients who switch from standard of care to that drug have an increase of about 20% in their IGF levels. Goal of switching to somebody, you're trying to reduce IGF levels, you're not trying to increase them. So that provides a pretty big burden. And we've shown in our Phase II that switching keeps IGF levels the same. So I actually don't spend too much time thinking about that. I think more we're thinking about how do we message to patients and docs, so that switching is easy so that they're aware of our drug, so that those people who are used to using Sandostatin or Somatuline for a long period of time are comfortable switching. So that's the competition to us.

I know you said this was a medium lift, not a huge lift or something, but...

I shouldn't say...

Can you talk a little bit more about how you're thinking about building the sales infrastructure for acromegaly? And beyond the U.S., do you expect to launch independently in Europe, for example? Or would you partner there?

Yes. So my part of that is to hire Jim and let him answer the question...