Disc Medicine, Inc. (IRON) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Morgan Stanley Global Healthcare Conference. I'm Sean Laaman, U.S. Head of SMid-Cap Biotech Equity Research here at the firm. Before we commence, for important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/research disclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Disc Medicine with CEO, John Quisel. Good afternoon, and thanks for attending, John. And I thought we'd commence by inviting you to make some comments, provide a bit of an overview of Disc and some catalysts coming up.

Sounds good. Yes, it's great to be here. Yes. So Disc Medicine, for those of you who don't know us, publicly traded under the symbol IRON focused on red blood cell biology by manipulating the metabolism of heme and iron. And we have 3 molecules in the clinic, mid- and late stage, the lead program called Bitopertin in development for a disease called erythropoietic protoporphyria with an NDA due to be filed under an accelerated plan in October. So starting to ramp up towards potentially, if all goes well, a launch next year. And then the next 2 programs in myeloproliferative disorders like myelofibrosis and polycythemia vera solidly in Phase II with some data coming near the end of this year and other data readouts next year.

Fantastic. And we'll dig into that in a minute. I've got 3 macro questions that I'd like to ask you. And the first one is with China's rise in biotech innovation, how are you thinking about Disc Medicines' competitive position here? And will this influence your R&D and business development strategy?

Yes. I mean we -- interestingly, our third program was actually in-license from the U.S. subsidiary of a Chinese biotech company, and it's been a good collaboration, high-quality antibody. So I think it's actually nice to see that. And our other programs, interestingly, we feel like we're pretty unique in the biology we're exploiting, and we're not seeing fast followers from either the U.S. or China. So not feeling any competitive heat necessarily and seeing some benefits of collaboration.

Wonderful. And how are you currently leveraging AI or thinking about AI's future disruption?

Yes, yes. It's a fascinating question, right? I think we're exploring how to use it in the context of what I would say some of the more wrote documents, right? A lot of the clinical trial documents, regulatory documents. There's some serious thinking and intense writing that has to happen in some parts of those, but a lot of them are sort of formulaic in nature and probably could be done by AI to free up the team to do more higher-value tasks. So we're talking to some vendors who have solutions in that area. That's probably the first place it will manifest. Otherwise, not intensively using it.

Okay. Wonderful. And what's been most impactful on this from the regulatory side? Has it been interactions with the FDA? Has it been MFN is probably a bit early, but -- or tariffs?

Yes, yes. Well, I mean, I think like everyone, we're working our way through tariffs. We are fortunate that our lead program is entirely manufactured in the U.S. So that at least we don't have to worry about. In terms of the FDA, I have to say we've been -- our lead program is being reviewed by the division of Dermatology. They have been stable. And if anything, I think the pronouncements from the FDA around the importance of rare disease development, trying to create smooth and efficient paths for approval in that space have been favorable to us. So I think we're generally supportive of the efforts going on.

Great. Maybe to get more specifically on this. So starting with bitopertin. So you expect to submit the NDA in EPP next month, I believe. So how are you thinking about the launch plans and the commercial strategy?

Yes, yes, great point, right? So the NDA due in next month at this point, that's, I'd say, a high degree of confidence in that because it is really just a matter of formatting and proof reading at this point. That sets up, we learn in December then what our PDUFA date will be, if it's sometime in the second half of next year, presumably. So we are deep in the commercial launch preparations. We've got -- we've hired a Chief Commercial Officer. She's hired much of her leadership focused on having a lot of experience in rare disease launches. And I think a lot of what preparation goes into that is kind of understanding the size of the patient population we're trying to address and then finding the physician to treat those patients, right? And that's -- we have hired an MSL team. Everything can be done with a pretty small team, but that team is out on the ground contacting physicians, trying to validate what we have in this claims data, which tells us there's 14,000 U.S. patients. Some of them concentrated at some of the large centers. And so far, I would say the boots on the ground approach is giving us a number that matches up pretty well with what the claims data suggests. So the digital world, the real world, they're connecting pretty well so far.

Sure. Would you be able to walk us through -- I think you said 14,000 patients. Just walk us through how you think you'll approach that, what the actual commercial opportunity might prove out to be.

Right, right. Yes. So if you try to size this, the genetic prevalence of the disease as predicted by a paper from Mass General, would put it at about 20,000 patients in the U.S. We went to this Komodo claims database that looks for the ICD-10 code for EPP, and we're very fortunate that our disease has a unique ICD-10 code. So that points to 14,000 unique patients in the U.S. That's in a 7-year look back. And then if you look at people who had one claim against EPP, that's the full 14,000. But if you look for people who've had multiple claims against that code, you get down to about 6,000 patients. And so we're viewing that as a group of 6,000 engaged patients looking for -- actively looking for therapy for the disease. And we think that's going to be the easiest group of patients to activate. So the way we look at it is there's a group of -- there's obviously our patients on trial, probably about 150 of those at launch who can -- who will convert eventually to a commercial product. Then there's the key centers that have another kind of concentric ring of patients. And then we're really sizing the sales force so that we can call on all the physicians who treat that 6,000 engaged patient group. And then to get to the full 14,000 opportunity, take a little more time probably. We're going to be relying on the efforts of the patient advocacy groups and our own social media campaigns, et cetera, to get the word out about the exciting therapy and activate that final 8,000 patients.

So it sounds out of the gate that you've got a pretty accessible patient population that might be on a therapy and that's the way that you're approaching it. But I hope that the market will build out from that initial subset of patients.

Yes, I think that's about right.

Yes. I guess based on the data observed to date, can you provide more color on how you're thinking about the commercial dosing strategy as well as expectations around price?

Yes. So we brought 2 Phase II trials to really establish the dose. The goal here in this disease is to reduce the toxic -- the buildup of a toxic metabolite called protoporphyrin IX or PPIX to keep it short. And what we're seeing is that the higher the dose, the lower the PPIX gets. We're using a 60-milligram dose to achieve about, I'd call it, 50% reduction. And if that reduction, the literature would suggest there should be a major clinical improvement. And we do see signs of that in the trials we've run so far. So 60 milligrams once daily, very simple oral pill, convenient presentation. And then in terms of pricing, I mean, look, it's likely to be in the classic rare disease pricing corridor. If you look in other porphyria therapies, there's one price at about $300,000 per year. There's another price closer to $600,000 a year. I think that matches up with the rare diseases.

Got you. John. What are the key learnings from the HELIOS long-term extension trial regarding sustained PPIX reductions and improvements in quality of life measures?

Yes, great question. We just presented that data at the European Hematology Meeting in June. So patients had the option. We enrolled about 100 across the Phase II program. And we are pleased to get about 85 of them who chose to roll into the long-term extension and have had very little drop out from there. And what we saw in that data is, yes, first and foremost, PPIX levels are suppressed within about a month of dosing, and they are sustained seemingly for years at this point is what the data shows. So that's -- I mean, it's as expected, but also very exciting to see that really playing out. And then if you look at how the patients are feeling. Almost everyone reports feeling much better when you survey their PRO score, which is also just really affirming to see that. Yes.

Okay. And what are your expectations for the confirmatory APOLLO trial in terms of enrollment timeline and the trial needing to be well underway for bitopertin to be approved?

Right. So as part of the accelerated pathway, we're working on the confirmatory trial we call APOLLO about 150 patients to be enrolled primarily in the U.S., but also at sites in Europe, Canada and Australia. And by and large, there's a lot of enthusiasm in the community. We're seeing enrollment go well. We've started enrolling in May, and we expect it to take about a year to enroll. So fully enrolled by next May, map that against potential PDUFA dates. And I think there'll be no debate that the trial is well underway, meeting FDA expectations before approval.

Great. And I've got a couple of questions on the APOLLO co-primary endpoint. So what are you hoping to show in terms of PPIX reduction? How confident are you in the study's ability to demonstrate stat sig average monthly time in sunlight?

Yes, absolutely. So PPIX reduction is really not in debit anymore, right, even in our small Phase II program, the p-value was less than 0.001. So having that as a co-primary for the APOLLO trial, feels like a very certain win for us and hoping to show ballpark size of reduction continuing to be in that 40%, 50% range. And then as you mentioned, the co-primary is the time that patients are able to spend in light. It's a voluntary endpoint, meaning the patients choose how much time they want to spend in light regardless of the capacity the drug is given them to keep it through a diary. And so we learned in Phase II that there's a placebo effect during the first 2 months of trial. And that -- but that the placebo group feeds back to baseline after about 2 months. So we've set this study up as a 6-month study, we're using the last month of time and light data as the key measurement interval. So if you apply that approach to our Phase II data, even in that small 25 patient per arm study would be pro forma stat sig right? So now you translate that to a 75 patient per arm 1:1 study, we have a very high degree of confidence that we're going to be able to hit that.

Wonderful. And maybe for investors that might be less familiar, just talk about the severity of the disease. So how it compromises life. And maybe draw a comparison to a bit to -- with bitopertin to what is currently on the market.

Sure. Yes. So it's widely regarded as a very severe disease. The primary manifestation is this light sensitivity. So -- and to call light sensitivity is understated. When patients go out in the sunlight, this PPIX metabolite that's flowing through the bloodstream absorbs that light energy and turns into a free radical and damages all the surrounding tissue. So importantly, damaging nerve endings. So these patients suddenly experience this excruciating pain, like they describe it as like there's Lava in their blood and it takes typically days for this to resolve. People are often -- we've learn now about 1/3, 40% of patients are managed with opiates, even though they don't show efficacy. So quite a horrible pain attacks. So needless to say, patients avoid the sun like anything, right? If you had that kind of pain hanging over you, they take great efforts to avoid the sun, and that changes everything about life, career choices, choices of not playing sports in high school, not able to go to social activities that are outside. But even not being able to sit near an open window, right, driving a car, the light coming in because it is visible -- it's both visible and UV light that triggers it. That's why sunscreen doesn't work. If you wanted to cover yourself in tar, that might show -- that might do the job. But -- so really every aspect of life has changed on a daily basis for these patients. And then the other really difficult complication is that, that same PPIX, it can build up in the bile duct system of the liver and cause and crystallize there, causing damage to the surrounding liver tissue. So about 1/3 of patients have evidence of ongoing liver damage. They'll have gallstones, gallbladder removal. And then in a small percentage of patients, actually liver failure can happen, which is potentially fatal complication requiring a transplant to survive.

Wonderful. Thank you. I might jump over to 0974. So the Phase Ib data showed that greater than 50% of patients receiving concomitant JAK inhibitor therapy achieved major hematological responses. How might this influence treatment paradigms for MF patients with anemia.

Yes. We're really excited about this program. It works by mobilizing your internal iron reserves, which are known to be impaired in myelofibrosis patients right? So anemia is often the first detected morbidity in myelofibrosis patients as the bone marrow starts to be damaged through this inflammatory process. And it's also a continuing morbidity associated with poor outcomes, poor quality of life. So there's been a desire for decades now to have a therapy that would manage anemia in myelofibrosis patients and nothing has really worked. So what we're seeing in our -- we presented 35 patients worth of data at ASH last year. We're seeing, call it, ballpark about a 50% aggregate response rate is exceptional, really looks like we're really correcting one of the major drivers of anemia in these patients. So that's really exciting. It's also exciting because of the mechanism to the point about Jakafi. Jakafi JAK inhibition is an important mainstay therapy for these patients to try to decrease spleen enlargement. And because the way we work is by mobilizing iron, these are highly orthologous approaches, right? And so the hypothesis is that it would combine well together. There wouldn't be any drug interaction. And that is, in fact, what we've seen that. Basically, if you're on Jakafi, not on Jakafi, the response to our drug is basically the same, and that's what we want. Our goal here is to provide a once-monthly simple subcu injection, hopefully very safe that doctors can use to manage anemia in these patients regardless of what therapy they may be on to manage underlying spleen, fibrosis, whatever other aspects of disease.

Got you. And could you discuss the decision to update the RALLY-MF trial protocol?

Yes, yes. So we're in the middle of this RALLY-MF trial. We had set aside a 10-patient exploratory cohort for patients who are on a new drug called momelotinib. And the question was, we were worried that patients receiving momelotinib maybe like last flying patients, highly recalcitrant to therapy. So we put those into an exploratory cohort. And what happened is we got underway is -- and we don't usually update on enrollment. But in this case, it was exceptional. We had just enormous demand from people who've gone into momelotinib, remained anemic, were very interested in anemia therapy and our trial is really one of the only ones now available. And so we overenrolled the cohort. So we thought, well, it would be nice if we could actually roll those patients back into the overall 90-patient study and create more capacity. And in order to do that, we needed to have some confidence that the drug would work on top of these patients. So we took an early look. We haven't shared quantitative data. We'll share that actually at ASH. But in an early look, it appears that the responses on top of momelotinib are the same as the responses in non-JAK treated patients, Jakafi treated patients didn't seem to really matter. So again, our mechanism is orthologous, distinct from these other drugs and the response is about the same. So with that, then we amended the trial to eliminate this exploratory cohort and just roll those patients back into the core 90 patient Phase II trial.

Yes, wonderful. Thank you, John. And what are our expectations to the initial data readout in the Phase II RALLY-MF trial, which I think is in 4Q? And what would you consider a clinically meaningful outcome?

Right. Yes. So we anticipate presenting near the end of the year, likely at ASH, of course, we have to wait for the abstracts to come out. And -- but that's where we've typically presented year-over-year. And so a win there would be really sustaining the remarkable response rates we've seen to date, which are hanging in around the 50% range, focusing on hemoglobin increases for those patients who are not transfused and looking at transfusion avoidance in patients who are heavily transfused. So across the board, we should have a snapshot in time. And like I mentioned, we can pretty much guarantee that you'll get data from the 10 patients who were on momelotinib therapy. So a good look at how that dynamic is playing out. So it should be an exciting but midpoint data check-in.

Sure. Wonderful. And what biomarkers or baseline characteristics might help identify which MF anemia patients are most likely to benefit from 0974?

That's a great question. I think going into the study, we expected a good deal of heterogeneity. We weren't sure how well people would respond. We've been very pleased with this 50% response rate that we're seeing. And even those who don't meet the criteria of responder are typically having some kind of benefit. So I think in a sense, it appears that identifying a subgroup isn't going to be that important. But I think one fairly intuitive thing is that most of these patients have elevated hepcidin. The way which is a core hormone that controls iron in the body, the way our drug works is by decreasing hepcidin levels. So fairly obviously, patients who have elevated hepcidin are going to be good targets for drug therapy. And fortunately, that -- and part of why we were into this disease is almost all patients do have that criteria.

Sure. And -- just thinking about the competitive landscape, if there been any recent updates on the competitive front and how you view the positioning of 0974 in the met space.

Right, right. Yes. So one competitor was luspatercept, which is approved as Reblozyl to treat anemia in myelodysplastic syndrome or related disease. So there was a Phase III trial running in the most severely affected heavily transfused patients and on Jakafi being run by BMS. That trial read out, and they missed the primary endpoint, p-value 0.067. So the drug is clearly having some effect, but not enough to reach stat sig. So that does remove, I think, a competitor. That said, luspatercept is used off-label by some physicians who feel like it provides some efficacy as is EPO is used a little bit off label. I think, though, as a major competitor as a broad spectrum treatment of anemia and myelofibrosis, we're unlikely to see that. So -- so at this point, actually, there is no therapy approved to treat anemia and myelofibrosis, and there's actually no therapy in development to accomplish that either. So we really feel both the burden and a privilege to be kind of the last-standing drug trying to address this important medical issue.

Sure. Thank you, John. To move on to 0974 in non-dialysis dependent CKD with the MAD Phase Ib data expecting 4Q, what will you be specifically looking for, for this to select the right Phase II dose?

Yes. So we'll be -- exactly as you say, we've been running single ascending dose, multiple ascending dose. We shared a snippet of single ascending dose last year. I would say, middle-of-the-road data, some responders, some nonresponders, but only one dose. So now we'll have a full data set where we go to the highest dose in the study, 90-milligram and then one or more doses chosen for multiple. And I guess, what are we looking for? If you look in other drugs that have been used and developed to treat anemia in this population of non-dialysis chronic kidney disease, you're seeing on average, it seems to meet the bar for efficacy if you're getting about 0.7, 0.8 grams per deciliter increase. So here, small cohorts, 6 patients on drug, 3 placebo. But if we can get to that threshold, then that clearly is a dose to take forward into Phase II. The alternative path here is we may get responders, but not necessarily an aggregate response, right? And then there'll be a bit of a challenge in trying to figure out how to characterize and identify those responders kind of to your point about the MF population. But here CKD seems to be a more heterogeneous population, much larger population than that kind of subgroup identification may become an important part of the program.

Sure. And can you talk a little bit about the mechanism of 0974 and whether the differentiation from current standard of care in CKD.

In CKD. Sure, sure. Yes. Right. So the central regulator of iron in your body is this hormone called hepcidin. In cases of inflammation, hepcidin becomes very high, and it traps the iron, so your red blood cells don't have sufficient iron then you get a kind of anemia call anemia of inflammation. In chronic kidney disease, there's a second issue that develops, which is that hepcidin is actually cleared through the kidney. So as clearance rates fall, hepcidin becomes elevated. And so these patients essentially have a double whammy of increased inflammation as well as decreasing the clearance, you get these very high hepcidin levels. So there's been a long-standing hypothesis that if you could bring hepcidin down, refresh the -- release the iron from internal stores, you would be able to treat the anemia in these patients. Current therapies are really IV iron or EPO. So IV iron, if you give someone high hepcidin for years, that person will end up iron deficient because it also blocks your body's uptake of iron. So I think there's a lot of reasons why these patients end up iron deficient. Once you're iron deficient, IV iron is an appropriate therapy because you're literally putting iron in the body. Our drug works by mobilizing iron you already have. So I think if you look at ferritin, which is a measure of internal iron stores, a low ferritin person like below 50, they should be getting IV iron. But if you're above 50 today, sometimes look at IV iron anyway, even though it would appear that you have adequate iron on board. So our drug is really designed to provide an anemia therapy for those who have adequate iron but just needed mobilized. And then the alternative -- the other alternative is EPO, ESA type agents, which are sparsely used because some of the risk of adverse events have been identified.

Sure. Sure. And I guess, sort of back to the population, just to clarify, could you discuss any potential biomarkers being evaluated to identify MDD, CKD patients most likely to respond to 0974?

Sure. I mean I think the most intuitive biomarkers that we're starting with are actually ferritin levels. So the intuition being, if you have very low ferritin at baseline, you may be a better candidate for IV iron than for our therapy. But then as those ferritin levels go up, it's an indicator that you have adequate iron also that you have inflammation and therefore, may not be able to mobilize it. So that would be one, again, prospectively the suspicion would be the higher your ferritin, the more likely you are to respond to our therapy. And I think another hypothesis that remains undetermined as of yet, would be the baseline EPO may matter. Almost every form of anemia is marked by very high EPO levels because your body is desperately trying to make more red blood cells to provide adequate oxygen supply. And as a consequence, EPO levels get very high. But chronic kidney disease is different because as the kidney fails, the capacity to make EPO is diminished. So these patients may be quite anemic and yet their EPO levels may be low or just normal. And I think one question that we're looking to answer is whether in a setting of low EPO -- low baseline EPO is mobilizing iron sufficient to restore red blood cell protection -- production or do you need patients to have at least normal or higher levels of EPO. If you look over at myelofibrosis where we have fabulous responses, those patients have very high levels of EPO. Their body is ready to go to make red blood cells. They just need the iron refreshed. But here, with the CKD population, it may be a little bit more in question. So again, if you sort of sit back prospectively, you'd say, well, maybe we'd predict people with higher EPO levels at baseline would be better responders to that iron replenishment that we provide.

Sure. Sure. Wonderful. And what are your thoughts on potential combination approaches with 0974 still in CKD?

Yes. Well, combination will work beautifully in -- with EPO. We know this already from some mouse studies we've done. It's pretty well understood that EPO is like provides the pressure to make red blood cells and then you need iron in order to actually form them mechanically. You can't make red blood cells without iron. And so the 2 together provide a very powerful erythropoietic response. So I think combination of that patient population would be a very effective therapy.

Wonderful. And moving on to the 3405. You more recently initiated Phase II in PV. The Phase I data showed meaningful reductions in hematological parameters, including hemoglobin and hematocrit. But how might these translate to clinical benefits in PV patients?

Yes. It's great. We're really excited about this program. It's coming into Phase II now within sight of POC data. So it's a good time to pay attention to it. The goal in polycythemia vera therapy, at least in what I call kind of mid-stage patients is the disease drives excess red blood cell production, which sets up a risk of thromboembolic events. And so the goal is to get hematocrit down to a target of about 45% and the way that is the standard of care to accomplish that right now is phlebotomy, good old-fashioned bloodletting. And it's not so much mechanically removing the blood from the body. That doesn't -- that's not the real basis for the therapy. It's actually as you remove the blood, you're removing iron. And over time, you remove enough blood and iron from a person's body, they will become iron deficient. It's a way of forcing someone into iron deficiency. And on the one hand, for a PV patient, that means your bone marrow can no longer produce red blood cells effectively. And so you see the hematocrit come down and come into control towards that target of 45%. On the other hand, making someone iron deficient induces a lot of discomfort. You get brain fog, you get some itching. There's a lot of -- there's a whole syndrome that goes with iron deficiency. So this phlebotomy type therapy while providing some ability to achieve that target 45% hematocrit avoiding thromboembolic events, probably is [ theorized ] comes with the side effect of a lot of discomfort. And then hats off to protagonist with a program called rusfertide, basically delivering hepcidin mimetic, right? So this hormone that controls iron and subcu injection weekly, they just read out from data showing that this does restrict erythropoiesis because now you're not taking iron out of the body, but you're restricting it away from the bone marrow, so that red blood cell production is restricted, but you don't have to induce whole body iron deprivation. And the other remarkable results from that program from that Phase III trial is the patients feel much better, which is sort of intuitively yes, it should be that way that if you hit your target hematocrit, but you're not removing iron from the body, patients feel great by comparison to phlebotomy. So I think there's a lot of excitement now about this approach of iron restriction for treating PV and replacing phlebotomy. And our goal with our program, Anti-TMPRSS6 antibody is rather than giving exogenous hepcidin and we're giving antibody, you can probably do that once a month, something like that and achieve the same overall biologic effect.

Wonderful. And what are you expecting? What should we expect from the Phase II data during PV next year?

Yes. So the protocol is designed, trying to be very patient efficient. 20 to 40 patients will enroll. We give them a quick rising dose to get to kind of the maximum dose and then allow titration from there. And the goal would be to show that we're causing the majority of patients to become phlebotomy-free, right? That's the objective to get to target hematocrit or maintain target hematocrit while relieving the need for phlebotomy.

Wonderful. And are there other iron overload conditions that you might be able to throw 3405 at?

Yes, this approach of iron restriction has a lot of potential indications. So hereditary hemochromatosis is fairly common genetic disease marked by iron overload. It's literally a genetic defect that causes excessively low hepcidin levels. So our drug would raise those back to the normal range and presumably provide a mechanistic fix for the disease. That's one. We've also seen really interesting data in mouse models of sickle cell disease where there the theory is that by restricting iron, you restrict the production of the sickling hemoglobin and thereby achieve some therapeutic benefit. So that's something we are working on getting going as well.

Sure. And coming up to time, but a couple of more questions. So the first one, just your balance sheet position, cash position and sort of how that times up with sort of commercialization?

Yes. So at end of Q2, we had $650 million in the balance sheet that is projected to fund us into 2028. So a good runway. It does include within it, the commercial build to launch bitopertin next year. It does not include any revenue from that. So it's a very conservative runway statement in the sense of like we're spending money to launch the drug, but we're taking no credit for any revenue we may receive. And then it also includes expenditures to get us into Phase III for myelofibrosis and then through Phase II for PV, for CKD and even some other indications as well.

Okay. Wonderful. And final question is, is there something I should have asked that I didn't?

No, I think you covered the whole pipeline. And in almost exactly half an hour. Yes, good set of questions. You covered everything.

Wonderful. Thank you for coming, John. Appreciate hosting you.

Yes, thank you for your time.