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

So we're going to go ahead and get started. I'm Steve Willey, one of the senior biotech analysts here at Stifel. and glad to have with us from Disc Medicine, Jonathan Yu, who is the Chief Operating Officer. We're going to have a fireside chat. [Operator Instructions] We'll get your question asked and answered. Before we jump into Q&A, Jonathan, any kind of introductory comments you want to make about the company?

Yes. Just thank you very much for having us here again this year, especially at such an exciting time in the company's growth. I feel like every year, we're saying, it's an incredible time for the company. It's a very incredible time for the company right now. And Stifel has been following the story for some time. So hopefully, it's been gratifying for Carolina and other members of the team to sort of see this portfolio come together. For those who are new to the Disc story, we are a company focused on developing treatments for the -- for serious and debilitating hematologic diseases, name the company is Disc with the shape of the red blood cell. And the way we decided to construct our portfolio has been based on targeting pathways that are fundamental to red blood cell biology. So we have programs designed to affect heme synthesis and programs that regulate how iron is metabolized iron homeostasis by controlling a key hormone called Hepcidin. So just very briefly, our lead program is called Bitopertin. It's a oral small molecule inhibitor of target called GlyT1. It's designed to be -- to treat a rare debilitating condition called erythropoietic protoporphyria. And that is a program where we recently submitted the NDA at the end of September, and then we were very happily a recipient of the -- one of the first recipients of the FDA's commissioner's National Priority Voucher program. So we're -- that could potentially put us in a position to potentially commercialize at the end of the year, early next, so really tremendous program -- progress on that program. And then the other programs in the pipeline designed to control iron also have progressed extremely well. They're both in Phase II. The lead program there in the iron portfolio is a drug called DISC-0974. It's an antibody against the target called hemojuvelin. It decreases Hepcidin and increases iron and that's designed to be treated a variety of -- potentially treated variety of anemias. Our lead indication is anemia of Myelofibrosis, and we showed exceptional activity at ASH last year and follow-up activity at EHA. And the first phase from the Phase Ib portion of the study and the first installment of the Phase II data is going to be shown at ASH this year. And the last program is a drug called DISC-3405. It's an antibody against a target called TMPRSS6. That's also in Phase II, and it does the opposite of 974, it's designed to induce production of Hepcidin and restrict iron. There are a variety of applications for therapeutic iron restriction but we're taking that into Polycythemia Vera initially, and we should have the first data readout sometime next year. So extremely busy time for the company.

All right. Let's talk about all those things. So the CNPV award was a very interesting development. I think certainly recognition of the unmet medical need that exists in EPP. You did not have to initiate the investment of a $5 billion manufacturing facility to get one, it's even better. But so what are the benefits to you as a company now for this CNPV? I know you submitted the NDA in September. You've -- they've talked about how this could be turned around in 1 to 2 months, how does this now set up for you? And I guess, what are the position points that you're going to be disclosing kind of from here on out, right? Do you announce acceptance of the NDA? Do you...

Exactly. Yes. I mean this is a groundbreaking program and like we're very honored to be a part of it. And one of the things that it does, and I think the primary advantage of this is -- and this is what the FDA has said, it's like accelerating the review time. So it cuts down the review time from 10 to 12 months to 1 to 2 months. And the way we sort of think about the cadence and the timing of that is, it's a 1- to 2-month review period from when the filing is accepted. So thinking through the time lines, we submitted the NDA on September 29, give it the standard 60 days for when the FDA would determine whether or not the filing has been accepted. So sometime in the sort of November 29 time frame, that would be -- put you at the 60-day mark. We'll be able to let folks know whether or not the filing has been accepted. And then from there, it's a 1- to 2-month review time period with -- of course, the FDA always reserves the right to be able to take longer than that. But that's been the projected time that they said they would review the application. So that puts us in a potential approval window either at the tail end of this year, December or in January. So that's sort of how do we think about the time line. And as far as the benefits that come along with it, one is like just greater communication with the FDA, but primarily the acceleration of like resources to be able to focus on the review in that time line.

Okay. I think the outcome of the approval itself, I don't think is necessarily viewed to be a controversial thing amongst investors and certainly not now post the CNPV. But I guess we do have some discussions around labeling. And I know that you guys have the opportunity to maybe secure a pediatric review voucher. You do have some adolescent data. I think it's limited to 4 patients. Do you think this CNPV award somehow now changes the likelihood of you getting a broader label that covers adolescents?

Yes. I think to be sure, I mean, I think the drug certainly has applications in the adolescents, the 12 and up. And our base assumption is that -- and our expectation is that the label would encompass adolescents, the 12 and up and then, of course, adults as well. And we are seeking a broad label to treat EPP and XLP. You do bring up the point that it is just 4 patients. I think that there is a pretty good case here, though, because we've shown that the drug does what it's supposed to do, lowers PPIX in these patients in those 4 patients, the safety is extremely well understood broadly of the drug. But -- so I think we continue to believe that there is a good case to be made for the -- for inclusion of adolescents. So yes, the biology of how Bitopertin works doesn't seem to be any different in adolescent patients.

And it certainly seems like there's some increasing scarcity value around these priority review vouchers just given they're starting to get phased out a little bit.

Yes, yes, remains to be seen where the things land with that. But I think even if it were just focused on the adult patient population, that is where the majority of the patients are. So I think that there's still a very good, certainly a very strong business case. So it doesn't affect the overall thesis too much. But yes, there's no reason to think that adolescents shouldn't benefit from Bitopertin.

Maybe you can talk a little bit about launch readiness and just kind of where you are now in terms of building out your commercial infrastructure? Do you think that your teams that you have in place now are rightsized? Do you have a lot more hiring to do?

We do have some hiring to do. So I think this is -- as you can imagine, originally, we were thinking that a launch would be potentially in kind of the midyear Q3 time frame, and that was our original plan for the launch. This substantially accelerates things. We are also -- we are accelerating internally operationally and getting ready for launch. But the way we're thinking about it is, that, if we are thinking about a commercialization in the December, January time frame, it's very unlikely we'll have the sales force entirely hired and trained and deployed at that time. That said, we do have the supporting commercial infrastructure largely in place. We'll be focusing primarily on building up our market access capabilities. And we already have an MSL sales force and med affairs team in place. So I think the way to think about this is it will probably be staged and kind of a staged approach where we'll be relying largely on our existing relationships and word of mouth early on, and then there will be a wave 2 once the sales force is trained and deployed, where true awareness and the classic things you think about in the launch, we'll be able to leverage that sometime, call it, midyear.

And another point of leverage I would imagine is the fact that EPP has its own specific diagnostic code.

It does.

So that kind of helps you determine the volume of claims and maybe where those are originating from. Where are you in the process right now of kind of identifying patients and mapping accounts?

Yes, we're right in the middle of that right now. So you bring up a very good point in a -- the nature of the EPP, we're not starting from -- entirely from scratch. There is an ICD-10 code. There is rich claims data that allows us to be able to do more like kind of a surgical focus kind of account targeting launch. So I think what we're doing right now is relying on our MSL team to be able to qualify those accounts and to help us prioritize where to focus initially. But yes, so like that's -- we're in the thick of that right now. Initial read is that our data -- that the data is sound and that we'll be able to be able to have a very bespoke targeted early launch.

And so for those folks that are trying to think about what the trajectory of uptake here might look like over the course of the next 12, 18 months, how are you thinking about this notion of there's obviously a pre-identified pool of patients that could be candidates for therapy right off the bat. I know you have another 150 or so patients in open-label extension trials that could become paying customers as they convert over to commercial products. So how do you frame up what that trajectory will look like over time? Is there going to be a bolus of patients? Would you expect it to be kind of more measured as you build out infrastructure over the course of the first 1, 2, 3 quarters?

Yes. I think if you look at -- there have been any number of recent rare disease launches in the last year or 2, which I've shown. I think if you look at that trajectory, it's very similar to say lots of these conditions and launches, they really were able to rely on patients who are already in clinical trials, they able to leverage folks who are at centers of excellence. And then it's kind of a Steady Eddie kind of growth. So that's kind of how we think about it in that. There's going to be some word of mouth that's required long term to be able to sustain the long-term growth, but we'll also be able to use, as you say, patients who are in the clinical trial already. We have good relationship with patient advocacy groups and the centers of excellence are important initial source of patients as well. So I think it's -- there's no reason to believe that the launch shouldn't resemble some of these other early rare disease loss.

Okay. And then I know you're trying to complete enrollment in the confirmatory Phase III APOLLO trial. Does the commercial availability of Bitopertin somehow impact that at all, good or bad?

Yes. I -- we don't think it will have a negative impact. I can totally see where that comes from. If you have the drug available and sometimes the patients don't want to be in your trial anymore. But the trial has been open since around May and recruitment is going well. We've basically given guidance before that it takes about a year to enroll the full study. And so we don't think it should be -- should have an adverse impact on the study completion. And just as a reminder, it's a global trial as well. So we also have European sites that will be able to support continued recruitment for the study.

Okay. On the competitive front, we know Synapse has been in the market for a while. There's also a product from Mitsubishi Tanabe that I believe they're guiding to data before the end of this year. Just how do you think about maybe that product? And if that were to procure approval at some point, how do you think the 2 product profiles line up?

Yes. I think the biggest distinction between our drug and some of these standing agents is that we would be the first agent, if approved, that affects the underlying driver of the disease. And so it lowers PPIX which is a photoactive molecule that accumulates in your body, and that's what causes the phototoxic reactions whenever patients go on to sunlight. And the data that we've seen so far is that our approach of lowering PPIX has this profound impact on photosensitivity, patients are able to spend more time in sunlight, their attacks disappeared at the end of the study and then they felt palpably better. So and so far in our patients who are on Phase II study, there's been -- patients have stayed on the drug. There's been a lot of desire to stay on the drug. So I think all that says that the profile is very strong. And there is also a reason for patients to want to have a PPIX reducing agent because that has an impact long term, we believe, on the hepatobiliary complications, which these standing agents will not have an impact on at all.

Okay. [ Place ] For Bitopertin outside the U.S. I know you have some legacy economics here that are owed to Roche. Does that incentivize you to maybe try to do this on your own? Do you think that this is something that you guys could do?

Yes. I think that EPP is one of these conditions where, yes, certainly, it's -- and there have been many examples now where like if we wanted to go it alone, we certainly could. The time line for ex U.S. approval is a little bit more delayed from the U.S. approval, particularly now with the CNPV. So the basis of any approval in jurisdictions outside the U.S. will be around the APOLLO -- with the APOLLO data. But what we understand about the market outside the U.S. is that the structure is very similar to the U.S. and it's also centers of excellence, there are patient advocacy groups, and there's already an infrastructure ex -- outside the U.S. that we think could enable a small company to potentially launch if we so choose.

Okay. I know you flagged other potential opportunities for this drug, one of those being Diamond-Blackfan anemia. I believe there's a study that's been going on there in conjunction with NIH. We're going to see some of that data at ASH. I think we learned the ASH abstract, didn't really look to be much in the way of responses, but also looked like these were really difficult patients to treat. Just kind of what's your general conclusion? I know we're not going to see the data until next month, but just kind of what are your thoughts around that opportunity specifically?

Yes. I think the case in DBA and some of these other indications is the biology is just going to be more complex than EPP. Like EPP, the biology translated very clearly from like PPIX reduction into clinical benefit that we observed in the Phase II study. Yes, it's more complex than some of these other indications. We'll continue to explore, but I think the upshot of this is -- Bitopertin is being -- our focus is going to be on EPP.

Okay. Maybe you can provide a little bit of just an expectation framework for what we should expect from the RALLY-MF data that's going to be presented at ASH. So this is now shifting gears to the anti-hemoglobin 0974. So I know you've guided to an update. We obviously saw the ASH abstracts. But what should we expect to see within the framework of the presentation itself just with respect to patient numbers, duration of follow-up, et cetera?

Yes. Yes. So I mean, so just as context, at ASH last year, we showed data from the Phase Ib portion of the study, which is dose finding for patients with anemia of MF and anemia of MF is an extremely difficult to treat anemia. And we just saw extraordinary efficacy in the dose-finding study. And along the lines of there are a couple of dimensions that we look for in terms of the profile, the magnitude of increase in hemoglobin or reduction in transfusion burden, the durability of that effect and then how broad that effect is and specifically how the drug works in patients who are on JAK inhibitors and those who are not. And I think it's very important that our -- for us to be able to show that the drug works together with JAK inhibitors because those will continue to be the mainstay of treatment. We were able to show even in the Ib study that the drug was able to hit each of those attributes. And so the goal at ASH, and I think what people are looking for now with -- now that this is the first -- this will be the first data release of the Phase II portion of the study having selected the 50-milligram dose, just seeing those attributes continue to persist. And I think we haven't given guidance in terms of patient numbers but the study has recruited well. We expect to have a meaningful group of patients that we can report data on. And I think these patients, it will be a variety of how -- it will be a range of how long patients have been on the drug and that we'll have show data on. But what we showed at EHA was that some patients had already been on the drug for almost a year. This is from the Ib patients. So you should be able to have a range of patients from -- who have recently started on the study to who have been on the drug for a very long period of time. And that should give folks a sense for how durable the effect is. I'll say the last thing that we plan to show -- report on is we said that at EHA that we had completed recruitment of the exploratory cohort of patients who are on momelotinib. And so that means what you can take from that is that we should -- we will have data showing how the drug works not only on top of ruxolitinib but also on top of momelotinib, one of these newer JAK inhibitors.

So the go-forward assumption will be that this will be a drug that can work in a way that's agnostic to JAK inhibitor.

Exactly. I mean 25,000 patients in the U.S. with MF, almost all of those patients are anemic. And the idea is that if you have anemia, we want to -- 974 should be the go-to agent to treat the anemia independent of what your background treatment is.

And maybe last question related to that presentation but how should we think about the attribution of patients we'll see at ASH as a function of baseline anemia status, right? So are we going to see an overrepresentation of patients who are not transfusion dependent, who are high transfusion burden? Just how are those going to break out across those buckets?

Yes. I think what we showed in the Ib is a pretty good representation of that patient set.

And do we know if we're going to be getting independence data at ASH from [indiscernible]

We don't know. I didn't see the abstract.

I didn't see the abstract. I'm not sure if it's going to be popping up somewhere else.

I mean that was the major development this past year that missed its primary endpoint. I think it speaks to a year ago, this was a very, very crowded field. There were approaches targeting oral small molecule inhibitors targeting ALK2, there was luspatercept. And now what we have shown now is that we seem to have a leading profile and the other programs seem to -- the competition seem to have faded away. So that we're very excited about the program.

What do you think registration looks like here? And I know I think there's been some commentary before around potentially being able to incorporate all of these different patients in a variety of different anemia states into a single registrational trial. But just curious as to how that works logistically, right? And I guess when I look at what Bristol did luspatercept with in INDEPENDENCE, just kind of knowing that, that drug doesn't really work well in patients who have a high transfusion burden at baseline. I don't know if the FDA pushed them to that patient population specifically because they're of the greatest unmet medical need. But just wondering how you're thinking about what a registrational Phase III could look like here?

Yes. Yes. I mean it's hard to say exactly what drove the -- what specifically drove the independence design. I will say that, that segment was the one segment that where luspatercept performed. It was transfusion-dependent patients who are also receiving a JAK inhibitor. That was the best performing segment. My suspicion is that is what drove that study design. Because if you look at the segments in their Phase II study, luspatercept just didn't perform as well. From where we are, our expectation is that independent of the patient segment, the drug should be -- our drug should be able to have a benefit. So our going proposition is still to have a single study independent of background JAK or transfusion status or anemia status would give us -- enable us to have sort of a broad label in MF. And I think if you balance the subgroups properly, you should be able to tease out an anemia signal in a single study. So you might need to use different endpoints, whether it's hemoglobin in one subgroup or reduction in transfusion burden in different subgroup, you'll have to sort of design the study that way. But we believe it's feasible. As far as what that endpoint is, that's a discussion to be have once we have completed the Phase II study, but we're collecting all the classic information that you'd be -- all the different -- we're collecting a very rich set of data that will inform that at the end of Phase II.

Okay. And another data point of relevance that we just saw was the nondialysis-dependent CKD data for this drug that was presented at Kidney Week. What would you kind of highlight just as the takeaways there? And when might you be in a position to communicate kind of what the status of this program is going forward?

Yes. I mean we showed a little bit of the same data from the SAD portion of the study at ASN last year. So the upshot of what we showed at ASN is that the drug in a different disease setting, now nondialysis-dependent CKD continues to do what it's supposed to. It lowers Hepcidin, it potentiates iron and that we also saw early markers of erythropoiesis that iron is getting into red blood cells. The efficacy in terms of hemoglobin readout, however, was a little bit more variable. And what we showed at ASN is we believe that is driven by background levels EPO, which EPO kind of serves as a multiplier for hemoglobin by driving the number of red blood cells. So I think what that tells us is that the efficacy -- the mechanism is -- the mechanism of the biology continues to translate extremely well. There's some patient heterogeneity, particularly with regard to background EPO levels in CKD patients that we need to figure out. And so for the moment, that's what we need to understand, does it make sense to do a study together with EPO, does it make sense that we select patients who are high EPO, that's something we need to sort of define what the next steps forward are. In the meantime, our plan is to continue to take 974 and explore in other indications just to understand how the biology works in other settings, and we're planning to initiate an IBD anemia study early next year. And so the idea then is to focus 974 on MF and then continue to understand the biology in some of these other indications. And we're also looking to bring online the next-generation anti-HGV antibody, which is a longer-acting form, which might allow us to be able to separate some of these indications.

Okay. Can you share your rationale for going after anemia in IBD?

Yes. In these patients, so anemia is a pervasive issue in patients with IBD. It is kind of a classic presentation of anemia of inflammation. So underlying inflammation that drives Hepcidin production and that restricts iron, so you have functional iron deficiency. Also, these patients experience blood loss. And so that also contributes to anemia. And so supplementing enhancing iron levels should be able to help address the underlying anemia. And these patients have normal to high levels of endogenous EPO production. So we shouldn't run into the same issue that we encounter with CKD.

Okay. Maybe we can switch gears to 3405. So as you said before, this is the TMPRSS6. I know you're looking at this in Polycythemia Vera. You're also looking at this in sickle cell. The PV opportunity for me, I think, is very interesting. We follow Incyte. I've seen the commercial success of a drug that has become $1 billion plus in PV simply because it causes anemia. So I think there's a lot of opportunity here. The biology has been validated, right? You know that iron restriction is key to the pathology here. There does appear to be some room for improvement on the safety and dosage front, just given what we've seen from the protagonist product profile. So high level, I guess, what are your thoughts on 3405, the opportunity in PV specifically? And just what kind of competitive edge you think you may have over Rusfertide?

Yes. Yes. I mean, very well said and exactly, we're very excited about the opportunity in PV. I think it is a significant market opportunity. And it's very clear that iron restriction is a very important and now well-validated way to be able to treat the condition, not only because what Rusfertide has shown is that by iron restriction through Hepcidin that you're able to control hematocrit and avoid [indiscernible] but that patients seem to feel better as well. And this is -- that's a key element -- there are limitations to Rusfertide with regard to the drug itself as a Hepcidin mimetic, that requires at least once-weekly dosing. It seems to be associated with injection site reactions. And the reason why we went after an antibody and going after TMPRSS6, which promotes -- by doing so, it promotes your body's own production of Hepcidin is that, one, it enables more less frequent dosing. So anywhere we anticipate we'll be able to get once a month dosing. But it also gave us -- what we also showed at least preclinically and in the healthy volunteer setting is that we had a better quality of what we believe is a better quality of iron restriction. In other words, we're able to see very significant iron restriction levels and that was durable as well as opposed to some of these other approaches, it's a little bit more cyclical and -- and so we feel that being able to have a controllable potentially deep iron restriction that's also durable, that mix of iron restriction is the best way to come up with an agent to be able to restrict iron. So that's how we view the opportunity in PV. And the antibody has been very well behaved so far that we showed in the healthy volunteer study and looking forward to the Phase II readout sometime next year.

Okay. There's also some oligos, some siRNAs that are in this space going after the same target. I think SILENCE has one, Ionis ONO have one. How do you measure 3405 relative to some of those?

Yes. I mean our antibody, what we showed is we should be able to have durable restriction of iron. I think the other attribute we've always cared a lot about is being able to have controllable iron restriction as well, being able to have as much flexibility and being able to balance durability with depth of iron restriction, are you able to get deeper iron restriction without having last for too long, we've heard from certain treaters that they're a little concerned sometimes about having something that -- is there such thing as having too long of iron restriction and you can't back away that. So finding that sort of Goldilocks kind of balance point was important for us as we were thinking about an agent -- an iron-restricting agent.

Okay. Maybe just a couple more questions. Can you talk about the rationale for this drug in sickle cell disease?

Absolutely. Yes. So you have mentioned that before. Yes. So iron restriction is increasingly weathered by -- is an approach that's been explored in sickle cell. The rationale there is what drives the pathology of sickle cell disease is the tendency for hemoglobin S to polymerize. But there's very good evidence showing that, that tendency to polymerize, which also causes sickling and all the downstream complications is -- occurs at a power of 30 of what the concentration of HBS is within the red blood cell. And what folks have shown preclinically and even in clinical setting is that if you can restrict iron, that can actually reduce the concentration of hemoglobin S within the red blood cell and reduce the propensity of the cell to sickle. And so the problem is there hasn't really been an effective iron restriction agent. Folks have been reduced to either using iron restricted diets or phlebotomy to be able to get that effect of iron restriction and reducing HBS within the red blood cell. So we're very excited that we have an agent now that is very controllable that can reduce -- that can restrict iron and hopefully, that can reduce the HBS within each red blood cell and reduce the propensity for sickling and also hemolysis. So this is an exploratory study and that we've initiated and hopefully, we'll have some data to share next year.

Okay. And maybe just lastly, the balance sheet and kind of what that allows you to execute on.

Yes. I mean we just completed the financing. So that we fortified our balance sheet. That should be able to power through some really key milestones for the company. Pro forma, we have about $820 million in our balance sheet. That takes us into 2029. So that should support at a minimum, the commercial -- we should be well into the commercialization of Bitopertin, completion of the Phase II MF study, completion of the Phase II PV study as well as some of these exploratory studies.

And that guidance doesn't include Bitopertin revenues, correct?

It does not.

Yes. Nor does it include any PRV voucher sales?

It does not. So it's a very conservative view. Exactly. So it is -- yes, exactly. So we are well capitalized to execute on the next phase of the story.

All right. Jonathan, really appreciate it.

Thanks very much, Steve.

Thanks, everyone.