Erasca, Inc. (ERAS) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Sean Laaman, Head of U.S. Mid-Cap Biotech Equity Research at Morgan Stanley, and welcome to the Morgan Stanley Global Healthcare Conference. Before we commence, to make you aware of some certain disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com, and if you have any questions, please reach out to your Morgan Stanley Research Sales representative. For this session, we have the pleasure of hosting Erasca with Chairman and CEO Jonathan Lim and CFO and CBO David Chacko. Thank you for your time, gentlemen, we really appreciate it. So we'll jump right in. So let's start with ERAS-0015. You've now shown the Aurora-1 data across dose escalation with first responses at doses as well as 8 milligrams and a 50% ORR 8 week into L plus KRAS G12X pancreatic cancer at recommended dose per your July update, as well as with other data. Can you give us a view on what's most differentiating in the data set that you've shown so far and how you think about durability in data in the future?

Thanks, Sean. Great to be here. Yes, I think, taking a step back, we're really excited about ERAS-0015. This is a potential best-in-class pan-RAS molecular glue. It's one that is in a Phase 1 dose escalation study called Aurora-1. And going into that program, preclinical activity looks really because this is a molecule that's been optimized on both potency as well as PK. So, from a potency perspective, the binding affinity is about 10-20 times higher to cyclophyllin A than the predecessor compound, and that translates into about a 5-10x potency advantage. And then also much stronger PK characteristics in terms of longer half-life, shorter life clearance, and then much higher absorption within the local tumor environment because of CypA overexpression. So going into the clinic, we weren't sure if we would need to make tradeoffs between higher efficacy or stronger safety and tolerability or in that unique case, whether we could actually see both. And I think from the early clinical data in the Phase 1 setting with Aurora-1, we've presented data twice this year, our April R&D day and then a July update. And what's interesting is that you're seeing very promising single-agent efficacy within the second line plus pancreatic cancer setting, to your point, at pharmacologically active dose ranges, which is between 16 to 32 milligrams, we're seeing response rates in the 40-57% range, which really is very compelling. If that persists within that range, that truly is best-in-class for that indication. And then as a company, we'll talk about this later, but we're really focused on first-line patients pancreatic cancer, where the unmet need is about, unfortunately, four times the size of what it is in the second line pancreatic cancer space. Within non-small cell lung cancer that's RAS-driven, about a third of all patients with RAS lung have a G12X mutation or a RAS, mostly KRAS mutation of some sort. And what we've seen there is response rates in the 62-75% range, which really is extraordinary for a targeted therapy that really puts it in a select group of molecules where you have some of the best targeted therapies that are seeing response rates that high, and that's at that pharmacologically active dose of 16 to 32. When you limit the data set to just second, third line only, post-checkpoint and post-platinum, that's where we see response rates in the mid-70s. So that's on the efficacy side where we're, I think, one of the reasons we're seeing that higher efficacy is that the PK and exposure is dose proportionate. So when you move up from 16, 24, to 32 milligrams, you're seeing very good dose proportional increases in exposure, which then is really grabbing that additional efficacy. But you'd worry if that's coming at a cost of safety and tolerability. And we're just not seeing that. We're actually seeing very reasonable frequency and severity of rash, very low grade, mostly Grade 1, some Grade 2, and then very minimal GI in terms of diarrhea and vomiting, very low vomiting and nausea, if at all. And then in terms of stomatitis, those rates are quite low. I think what's interesting is a measure of how well tolerated a drug is is what's called the relative dose intensity. And our median RDI stays at 100% through that dose range. So we think we're in that sweet spot of having both encouraging safety tolerability as well as encouraging efficacy.

Sure. Thank you, Jonathan. Looking ahead to the 1H '27 expansion data for ERAS-0015, and in combination data, you know, what are you hoping or what are you focusing on with respect to release of that data set?

Yes, so the key combinations that we're looking at, so all of that data that I just mentioned in lung and pancreatic is monotherapy data. Now, as we think about combinations, we sort of have a hierarchy of priorities. So the top priority is really what does this molecule do with standard of care therapy within certainly the big three tumor types of lung, pancreatic, and colon are key areas of focus for us. So with lung, a key priority is to see what does this do with pembrolizumab, and then what does it do with pembrolizumab plus chemotherapy if you need that, for instance, especially for patients with low PD-L1 expression, then whether a chemo-free or a chemo-containing regimen, that's going to be a data-driven decision. I think when it comes to pancreatic cancer, you certainly want to be able to explore both chemo-containing as well as chemo-free regimens, and in that regard, we're already starting to explore combinations with gemabraxane, because that really is a standard of care in that frontline setting. We also have disclosed a partnership with Tango for combination with VOLK, which is a PRMT5 inhibitor. And so the public guidance from Tango is initiating a dose escalation of the combo of ERAS-0015 with VOLK in the second half of this year. Finally, with CRC, you really need to have an answer for EGFR activation, which can be a mechanism of resistance, especially when you put RAS MAP kinase under pressure with a pan-RAS inhibitor. So in that regard, we're excited to have disclosed in July successful completion of the lowest dose of 16 milligrams, where that passed the DLT window, and so we were able to dose up to 24. So 16 is a viable go-forward dose with panitumumab full strength, and that's something that at the time of the disclosure we were expanding and so in the first half of next year, we're going to be disclosing various monotherapy and combination arms. At minimum, I think panitumumab is something that we're, because we started that first this year in the first quarter, we are calling that out as part of the 1H '27 disclosure.

Great, thank you, Jonathan. How confident are you that the therapeutic index holds into expansions and combinations, and is any rash prophylaxis built into the program?

Yes, we're confident based on the early clinical data that we have a meaningful therapeutic window because we are seeing meaningful efficacy differentiation, but not at a cost, as I mentioned. And so, in fact, as we, in July, showed the data of safety and tolerability by dose, we were worried that if you see a certain rash rate at 16 and 24 milligrams, do you suddenly see a spike at 32 milligrams? We didn't see that. We actually saw numerically lower frequency and severity of rash at 32 milligrams. Now, that could come up over time, but it's really, you know, in that same ballpark. So I think the therapeutic window seems very reasonable from 16 to 32. From a durability standpoint, time will tell, but we're really excited enough and have enough conviction based on the early clinical data that we've disclosed for both non-small cell lung as well as pancreatic to initiate three registration-enabling trials next year. So the first one is a potentially registration-enabling trial with monotherapy ERAS-0015 for second line plus non-small cell lung cancer. There's something that we plan to initiate in the first half of next year. And then we are going to be conducting a confirmatory combination trial of ERAS-0015 with pembrolizumab plus or minus chemotherapy. And that could start sometime between the second half of next year to 1H '28. And then in first-line pancreatic cancer, based on the compelling activity that we've seen in second line plus pancreatic, we think that first line could be even more interesting and we've guided to starting a Phase 3 for first line pancreatic in calendar year '27.

Wonderful, thank you, Jonathan. How are you thinking about competitive positioning with those registrational studies?

Yes. So you know we were moving fast. So far, we haven't seen any abatement or slowdown in the enrollment of our Aurora-1 study. So unfortunately, that speaks to the high unmet need, but also speaks to the enthusiasm amongst patients and investigators about the promise of ERAS-0015 from a safety and tolerability and efficacy perspective. So we're really excited to make that available globally. So our Phase 3s will be global trials. And you know, the unmet need outside the U.S. is even higher because there are no registered drugs outside the U.S. But it's going to become a more crowded space, I would just say, as a second entrant in the space with respect to pancreatic cancer. We're feeling very good about our competitive positioning.

Wonderful. And I guess on Accomdex, you cleared the first escalation cohort at the full commercial dose in CRC with no DLTs. How central is the backbone plus EGFR strategy in CRC to the thesis? And how do you think about combination versus monotherapy approaches?

Yes, I think in CRC, the name of the game is most likely combination because, to your point, EGFR is a key escape mechanism for reactivation of the MAP kinase pathway. So if you put it under duress with a pan-RAS agent, the pathway can circumvent and reactivate MAP kinase through EGFR reactivation. So you really want to take a combination approach with whatever RAS targeting strategy you have by having an anti-EGFR antibody on board. And so in our case, we chose panitumumab because of the fact that it's slightly better tolerated than cetuximab and you don't have to have certain carve-outs in Southern United States the way you do with cetuximab.

Sure, wonderful, thank you. I guess now that there is an approved RAS on benchmark with defined efficacy, safety and pricing profile, how does that shape how you're thinking about your own development and positioning?

Yeah, I would say it certainly has dissuaded us from going in a second line pancreatic, but outside of second line pancreatic, I think it's still wide open. I mean, in the history of oncology, with all of these high unmet needs, whether you look at the checkpoint inhibitor space, whether you look at the CDK4-6 space, whether you look at a number of different areas of targeted therapy, there's never sort of, you know, one first mover that just takes over everything. And so I think patience and KOLs and the oncology community would prefer multiple options for patients, and so we're right in the mix. But I think we're in an exciting time for offering different choices to patients, and we really want to make sure that ERAS-0015 is one of those choices.

All right, thank you. I've got a few questions down in the PRMT collaboration and the strategy debate around that. So maybe just take us through the scientific rationale of the combination of the pan-RAS inhibitor with a PRMT5 and maybe talk about how you see the commercial opportunity in MTAP-deleted setting.

Yes, it's an exciting area. The whole idea of targeting PRMT5 as a synthetic lethal strategy to go after MTAP-deleted tumors. Tumors in pancreatic cancer, that frequency is anywhere from 25-40%, so pretty meaningful. And then I think it's about a third or so in lung thereabouts. And so it's pretty meaningful in both PDAC and lung. And there's been really compelling early data presented by our partner Tango in a dozen patients where they showed very high response rates in the 92% range with combination of Durexan RACID with VOLK. So we think that scientifically and clinically that's an area to look at. And so we're excited to be working with Tango to be on the leading edge for, certainly for pancreatic cancer. And then I think for non-small cell lung, you know, so the key differentiation for PRMT5 inhibitors is whether they have CNS penetration or not.

And so that's something that we're going to be paying attention to as well. Sure, thank you. And on the deal, it's capital light and non-exclusive, and you keep your molecule and they keep their molecule. But how do you think about these collaborations as a way to explore combinations without diluting focus or spend and should we expect more of them?

Yes, I mean, I think we're convinced that we have a potential best-in-class pan-RAS molecule and we're getting a lot of inbounds from companies of various sizes to really get access to our pan-RAS molecules. So to your point, you know, without diluting focus and resources, if we can make our drug available as a pan-RAS molecule of choice, we'll do that. But we do have to sort of prioritize because we're just getting inundated based on the early data that we've presented. People are really excited to work with us on that. And so, you know, if there are these sort of capital light, low bandwidth requiring collaborations, then we're certainly open to those.

Sure, thank you. And still on collaboration, so in May, you signed a collaboration with Merck for ERAS-0015 with pembrolizumab and Aurora-1. How central is the checkpoint combination to positioning in lung and when do first combination data come and how do you weight against the other pathways like with PRMT5 and monotherapy?

Yes, I think in lung you have to have an answer for checkpoint. So can you combine appropriately with checkpoint inhibitor like pembrolizumab? You know, if we can, and that opens up a frontline strategy for us. And so that's something that Merck and us are excited to see what happens. So we've disclosed that we're in dose escalation for that combination. And then the question is, if the doublet has an attractive go-forward dose, then will you need to layer on chemotherapy on top of that? So will you need a sort of a cis or carbo-pem-pem strategy on top of ERAS-0015? So that's where we really need to complete the dose escalation with pembrolizumab alone, see where the dose falls out, and then consider layering on chemotherapy.

Got you, got you. And stepping back on the broader strategy debate, the field now, pan-RAS and new selective inhibitors, codon-specific approaches, pan-KRAS, pan-RAS. How do you frame where pan-RAS wins versus a more selective approach? And is your thesis that the broadest possible RAS shutdown is the durable answer or that different tumors and lines will call for?