Gossamer Bio, Inc. (GOSS) Earnings Call Transcript & Summary

Okay. Welcome to the afternoon sessions of the BofA Virtual Vegas Health Care Conference. My name is Geoff Meacham. I'm the senior biopharma analyst here at BofA. Also, I have Olivia Brayer with me on the line from my team, and we're really excited to have Gossamer presenting today. And speaking on behalf of Gossamer, we have a few folks. We have CEO, Sheila Gujrathi; we have Bryan Giraudo who's CFO; and we have Richard Aranda who is Senior VP of Clinical Development. And so welcome, guys. Sheila, do you want to say anything just to kick it off? Then we get ready into some questions.

Well, great. Thank you, Geoff and Olivia. Very excited to be at this virtual conference. It's been quite productive. So kudos to both of you and your teams for running such a successful conference. Really pleased to be here. Very excited to share updates we have for Gossamer despite the COVID-19 pandemic, which is so challenging and hard on all of us. We have been able to continue with our efforts, both on our clinical programs, which very excited to share some important updates we have on 001 and 004, but really all of our programs that are moving forward very robustly as well as on our research programs, and that will be coming out at a later date. So thank you so much, and look forward to just jumping into Q&A and seeing how I can provide helpful information.

Perfect. Well, let's first turn to 001. So you had a positive interim go-no-go decision today. Maybe just give us some context for this, Sheila. Obviously, the trial is going to continue to completion. But just help us put maybe the threshold and the bones of the go-no-go decision as it relates to what happened this week.

Sure. Yes. And I have -- I think we believe we sent out slides. If people have those sort of reference, they can look at them. I can refer people to Slide 6 just to remind them about the LEDA study design. So as designed, this is a 480-patient study. So really nice sized clinical program of almost 500 patients, studying 3-dose levels compared to placebo. And we had designed a prespecified interim analysis when 2/3 of the patients had crossed 24 weeks. And this was, again, an administrative analysis that was really going to help us with planning for Phase III activities. And we did conduct this analysis, and we looked at efficacy end points of both primary end points, which is a composite end point looking at worsening -- components of asthma worsening as well as key secondary end points including looking at the effect on exacerbations. And given the totality of the efficacy data and the safety data we saw, we were encouraged by the data. And so that was really helpful for us. We discussed this with our IDMC who were aligned with us and recommended to continue the study without any modifications to its completion. So that -- again, the positive development and the positive recommendation from the IDMC. With that -- all that information, we did decide to start some initial Phase III planning activities which really are important to make sure we are in a great position to start Phase III. That includes CMC work, clinical pharmacology work, other operational work. And we are looking forward to getting the totality of the data in the second half of this year where we'll get the full data set from the entire study. And as you know, because we were looking at clinical outcomes, we -- it's really important to get as many patients as we can to have that more robust sample size. And we will get some global regulatory feedback both from the FDA and from our European health authorities and then make the final decision to go into Phase III. So we feel like we're in a very good position right now.

Perfect. And I wanted to ask you, just in the context of the fevi discontinuation. When you think about the size and scope and maybe even the bar for a Phase III for 001, has -- how has that changed over time? Clearly, you don't have an emerging competitor. But -- so I imagine that any success would be viewed positively. But I want to kind of get -- how have your views of the bar for efficacy sort of changed over time?

Yes, thanks, Geoff. And it has been an evolution in our thinking in that if we take a big step back, what we're trying to do here, which I know you know very well, is actually to have a promising oral therapeutic option for patients with moderate to severe asthma. And if I could refer people to Slide 7, we know biologics have entered the space, but they are relegated to step 5 therapy, and there is really 1.5 million to 3 million patients that have uncontrolled asthma with a moderate to severe phenotype. And the idea of having an oral for these patients and for these physicians is so significant. So there's such a huge unmet need. More than 50% of patients are uncontrolled today, and they are really looking for that type of oral treatment option. You may have up to 20% penetration with biologics, but you won't have a lot of these patients going on to biologics because they really don't have good asthma control. And that's really why we started this program. That's why we were compelled. And clearly, that's obviously why Novartis moved fevipiprant forward as well. And I think we all kind of understand the market opportunity and the need for patients to have this type of profile. So we were very much interested to see what Novartis was going to be doing. And to your point, with them no longer being in the market, there is a significant opportunity for us. And we've always thought about, well, what does that efficacy profile have to look like? And we know it doesn't have to be as robust as a biologic. As the biologics have a range in terms of their exacerbation reduction, which has ranged from the 20s up into the 70s percentiles, with many of them netting at around 50%, but there is variability there. And so for an oral type of agent, we've always said, if you have a 30% reduction in exacerbation, that would be very robust and very acceptable. And we've done a lot of our market research with that 30% profile. And we also know that some community clinicians say if you have any effect on exacerbations in this moderate to severe asthma setting, we'll be very excited about your program. So obviously, we know there is a high unmet need. And so we feel comfortable with that kind of range of efficacy. So now that Novartis isn't in front of us, it's interesting, though, just to point people to their LUSTER-1 and -2 results, there is a conception out there that those trials were completely negative. And actually, that isn't the case. We have released data on the clinical trial registries and on their website which shows that they actually seem to have some efficacy, especially in LUSTER-2, and they actually saw a 30% reduction in exacerbations at both dose levels. So very interesting data, something that we're taking a close look at. And we obviously want to see how much we can learn as we move forward. I think we're getting a better handle of how to design Phase III trials in this area. And I think we also are getting a better handle of what that oral profile can look like for [ asthma ].

Okay. That's helpful. I think Olivia from the team had another -- had a couple of questions also on 001.

Yes, Sheila. When you think about that final 1/3 of patients in the Phase II LEDA study, obviously, coronavirus has had some impact on some of your programs. I mean how do you guys think about timing there. Are there any concerns that maybe that data could be pushed back? Are you guys still pretty confident in the second half? Just any sense of how enrollment's going, how confident you guys are in those the time lines just given the coronavirus backdrop.

Absolutely. And we are very confident in that the enrollment has been completed. It completed earlier this year. So we actually are in a great position from that regard. And so now the goal is to make sure we get our patients through all their assessments and getting them to the 24-week end point. And so with that, we are seeing -- again, most of the patients are actually able to go to their office visits which is obviously very helpful and continuing to go in there. And that's because we have a different mix of geographic countries, and there are many countries that we're going to already -- that have not shut down from the -- especially from the office clinical point of view, so that's been very helpful. And for the sites that have closed down and aren't taking the patients in their centers, we've actually developed a number of mitigation plans. We have direct-to-patient shipping. We are doing remote lab monitoring, and we're doing virtual office visits which have been very successful in being able to get high-quality data. And then we're doing remote monitoring of that data at the site level. So all of that has led us to actually have very, very few missed study visits. So not only we're not having patients drop out, we're actually getting very good study visit completion data, so that's good. And so we feel comfortable for the remaining 1/3, we will have high-quality and relatively complete data set to be able to continue to monitor and evaluate the efficacy and safety from this program. So that data will be coming out in the second half of this year, and that's very promising.

Okay. Great. And then just a follow-up -- sorry. Go ahead.

No. Actually, I just wanted to also -- thinking back to the question about Novartis being that they were in front of us and now they are not. I think a couple of other points that I want to make there is that we had originally designed this administrative analysis to really, again, help us with Phase III planning. And the reason there was also because we knew we were second in class, and we would have to catch up. We also were aware that there was a shorter IP runway because we – or Novartis would have a runway out to 2030. Now that, that's no longer the case, we're no longer that second in class. As we've discussed, we could be first in class. And we actually are in even a stronger position because we had a U.S. patent issued. That's a very solid patent on a novel [ license ] compound claim, and that extends our IP runway out to 2037. And we're following a [ suite ] in terms of doing the same thing in Europe. And because we've had the patents in the U.S., we think we have a really good chance for Europe as well. And this actually just really greatly enhances our investment thesis further in the program that not only can we take the time to make sure that we're designing really -- and have high confidence going into Phase III with, again, that robust regulatory interaction and really confidence in our statistical trial design, but we also have potentially much longer time on market with this prolonged IP runway. So I just wanted to make sure I have mentioned those 2 because that's a real benefit, again, of where we stand today.

And then just thinking about the top line data in second half, I guess, maybe just clarification on time line for investors. When you think about that go-no-go decision to move into Phase III, is second half sort of the right time frame to think about that as well? I recognize that you probably won't present the data until later on, but just trying to get a better sense for next steps seeing the top line readout in the second half of the year. And then how do you guys think about going forward into Phase III from there and sort of communicating those decisions to the investor base?

Yes, great questions. Our plan right now is to get the data from the final analysis, the top line in the final analysis from LEDA and have a number of interactions. And our plan would be to do all of that the second half of this year to really put ourselves in a good position to make that decision. So we are really trying hard to make those decisions later this year. And then if we're so fortunate to be in that strong position that we feel like we could be in, we would start those trials, the Phase III trials next year. So that's our current plan.

Sheila, it's Geoff again. I wanted to maybe switch gears to the PAH program to 002. So maybe just starting off with kind of where we are in the Phase II program, are there ongoing preparations ahead of the trial initiation in the second half of the year?

Yes, great. So again, very exciting program for us in PAH. We have a potential disease-modifying approach beyond vasodilation with this PGF (sic) [ PDGF ] receptor inhibitor that's locally delivered. So as we discussed before, we had positive data with imatinib in PAH in Phase II and Phase III clinical trials but a lot of safety and tolerability issues which precluded the drug from getting approved and precluding further use of this -- of the drug. So we have designed a drug that's more selective and potent on PDGFR alpha and beta as well as some other important kinases and are delivering it locally through a dry powder inhaler to really minimize systemic safety and tolerability issues and really maximize exposure to the lungs. So that has been going on very well. And we started the Phase Ib trial to get PK safety and some biomarker and target engagement experience in patients. We have done all of our normal healthy volunteer work. We started that study earlier this year and had a significant ramp-up in enrollment and a lot of screening activities that are occurring. But because of the COVID pandemic, a lot of those sites did shut down because of the brittleness and [ reality ] of those PAH patients, and we really want to make sure we're ensuring their safety. So we paused enrollment. We are hearing that many of those sites are getting ready to get ramped back up and want to open up again. So we're hoping that we're going to keep the study longer and hope to enroll more patients. So I will say we have enough data from the patients who have enrolled into the trial that we needed to actually finalize our Phase II decisions on dose and on trial design. So we've actually finalized the protocol, and we are in study start-up activities right now. We've had a number of conversations that Richard and the team have led with so many different investigators across the world, and we are just waiting for them to open up. And we've been able to get a lot of our study start-up activities done. A lot of the administration and contract signing work, they're well underway. So that when they do open up, we'll be able to start. So we are guiding to a start in the second half of this year, and we're really hoping to do that as quickly as possible. So we feel like we're in a very good position for PAH to do the next study, which will be a 24-week PVR trial. Also looking at 6-minute walk distance and kind of giving a definitive proof-of-concept read. And if we're able to stick with our enrollment time as we planned, we will hope to have data next year. And the other thing I would like to say about this program is that we have a lot of investigator enthusiasm about this program. I think now that we have another compound out there that actually has shown some good data, which is a disease modifier, the investors are very excited about our potential to be at work beyond vasodilators. And so we're getting a lot of great feedback on our program and, again, a lot of great -- a lot of enthusiasm to start that study.

Sheila, just as a follow-up to that, when we look at PAH, obviously, you guys are developing 002 in combination and as an additive to what's out there. But the bar continues to be raised, though, with some improvements in the prostacyclin class and, to a lesser degree, the ERA class. So maybe just help us with that, how you think about the competitive landscape for add-on therapies as it relates to 002.

Sorry. I think I was talking, but it wasn't coming through. I was just saying, absolutely. On the competitive landscape, and just to kind of go through our thinking on the vasodilators, to remind folks, the imatinib study was a study that's an add-on to background vasodilators. So patients had to be on at least 2 classes of therapy if not all 3. And 50% of the IMPRESS trial were on prostacyclins. And this was IV prostacyclin. So again, really thought they'd be kind of maxed out on that dose of prostacyclin in that really late-line severe setting. And that they did show clinical benefit on top of prostacyclin. So that's obviously a very good sign in terms of the level of efficacy we could hope to see. So to your point, even though there have been some changes around in the prostacyclin class, you have some other orals coming in, you have some potentially other inhaled prostacyclins coming in. I think the benefit adding on to prostacyclins is -- will still be there with this mechanism. And so as you have improvements within these 3 classes of vasodilators, our goal again is to add on to these classes of vasodilators. And we've seen that even despite maximum use of vasodilators, we're still seeing additional clinical benefit. So I think that's very reassuring. Clearly, we have sotatercept now that has had really great Phase II data, and we're excited for them and we're very happy for patients. Looking at that activin pathway and looking at pathways that really upregulate BMPR2 signaling, and so there, you think you're going to have, again, these ideas of potential disease modification but, obviously, just additional clinical benefits coming in and adding on to these classes of vasodilators. Obviously, very different type of therapy in terms of its route of administration and how it's been -- may have to be given in the clinic. We're not sure about [ the marketing that ] will be required with that. We're obviously an inhaler. So we're going to do dry powder inhaler to be taken twice a day, very convenient that patients carry around their pockets. So we have some differentiating features. And I'd love Richard to actually talk a little bit about how we could overlap with the status of data, too, because there is a possibility we could even be synergistically combined with that mechanism. But even that we are seeing the same impact on certain mechanisms that they also address. So, Richard, do you want to have a couple of comments on that? And then we can [ continue ].

I'm happy to, Sheila. So just to supplement Sheila's comments, as most people may be aware of, one of the actions of sotatercept is to increase BMPR2, which is a molecule that is already down-regulated in PAH and underlies some of the genetic reasons of why people develop PAH. We also have now preclinical data, and this was some data presented at the American Heart Association meetings with GB002 that when you block PDGF signaling, you also get increase in BMPR2. And there's a number of mechanisms, but this clearly demonstrate there's crosstalk between the activin pathway that sotatercept hits and the PDGF pathway. And so there's an opportunity, potential even in that setting, to have additive or synergistic effect. Sheila, back to you.

Thanks so much.

Okay. Great. Thanks, guys. And maybe just shifting gears to 004. Obviously, you guys had some positive Phase I data earlier this week. So just how do you think about the clinical differentiation there in such a crowded market? Obviously, you guys have a different mechanism of action, so what were some of the signals that you saw in the Phase I that really stood out?

Yes, that's great. And I'll start and Richard can add. It is really a truly exciting program. It's a program that has a very unique differentiated mechanism, and we think that is really addressing unmet needs. So in patients with IBD, you have the biologics, of course, a powerful immunosuppressive, and you have some orals coming in. But you really don't have any therapy today that address the high unmet need of -- the need for mucosal healing and getting patients into deeper states of clinical remission, histologic remission and, again, this mucosal healing phenomenon. So the way GB004 works is through HIF-1 alpha stabilization, which really affects epithelial barrier repair and function. So the ability to have a distinct mechanism that's really focused on the epithelium for these patients is very novel, and it's actually just what has been desired in this field. And I think we have known a lot about this mechanism. We designed the Phase Ib to really address these mechanistic confirmation of the mechanism as well as the clinical end points. And we were so pleased to see the data that actually exceeded our expectations. And we've listed this out on Slide 11 for those of you who have it, so we can walk you through some of the data. And as you can see, we were actually able to show mucosal healing and histologic remission in this small study of 34 patients with only 28 days of dosing. And we did use an oral liquid solution that's on the lower end of our dose range. So to see this type of clinical data, again, at the lower range at only 28 days was very promising to us. And so we have 4 out of [ 28 ] patients having mucosal healing. And this is defined -- for those of you who may not be as familiar, it's a high-hurdle end point. It's a new regulatory end point. So it's designed not only for patients who have endoscopic improvement, so the visualization on their mucosa looks normal when they're looking through at the endoscope. It's also -- you also have to have histologic remission. So you have to have no inflammation in your tissue on biopsies. You have to have both of those criteria to actually be meeting this definition. And for histologic remission also, very high significant hurdle to be able to show a resolution of inflammation in the gut. And then we were very pleased that we had nice trends on our clinical end points of clinical response. Clinical remission where we had a patient who actually went to clinical remission in the 28-day study as well as an improvement in the rectal blood score. So again, very good data. And when you take a look at this data and compare it to other 28-day studies such as gut-restricted JAKs or other programs, even if they're induction studies at 8 and 12 weeks, this data lines up very favorably and actually could be even more -- better, I should say, with the mucosal healing and the histologic remission. So that's very promising for us. And it is a very much a gut-targeted type of profile. So if you look at the preceding slide on Slide 10, it really shows how we had very low systemic levels of the drug but very high colonic exposures, both in the rectum and the sigmoid, multi-fold level higher above the systemic periphery. So this is that really gut-targeted type of profile that we were looking for. And given all of this, the guidance from our KOLs have been again very exciting. They love that it's not an immunosuppressant. So they love those nonimmunosuppressant type of profile. They love this aspect in the epithelial barrier. And they've been guiding us to go into the mild to moderate population and to see if we can actually be a transformational therapy in that if we can show that efficacy in the moderate patients who are failing 5 to 8 days, that's really where they -- where the high unmet need is today. And if we can go there, there is very little competition there today. So that would be very significant for us to be able to differentiate ourselves in the clinical trial enrollment for these studies as well as in the commercial marketplace. And then the hope is that actually other immunosuppressants could combine safely with our mechanism. Because right now, no immunosuppressants are actually able to combine together. So all these patients, unfortunately, have the ceiling effect of efficacy because they get on to 1 therapy, especially one of those powerful immunosuppressants, and then they have to come off if they've cycled through and try something else. So they're never able to combine like you can do in oncology and other disease areas. But in this case, we think we could actually synergistically combine our mechanism with another immunosuppressant. So not only are we seeing good monotherapy that we think could be in the mild to moderate as well as moderate to severe space, we can potentially have good combination-type approaches, which would really increase the value creation for this program and for patients. So again, really exciting data from this early study. And from this side, we are poised to go into a definitive Phase II proof-of-concept trial and where we can go forward with tablet formulations and look at higher doses and look for 12-week end points instead of 4 weeks. So very, very promising data from our perspective and exciting news.

Sheila, it's Geoff. I just wanted to follow up on your last point. And obviously, you guys have a lot of experience in the IBD field from your prior -- your partner company, but the gold standard is clearly monotherapy. But is there a mechanism that you feel like could be most synergistic with 004 from a -- in an IL-17 and an IL-23? Is there something that you kind of find in some preclinical or mechanistic models that would be more viable as a combination?

Yes, that's a great question, and it's something that we are working on right now. We do have a number of preclinical in vitro and in vivo experiments we're conducting to look at different combinations. So we're not ready to announce exactly where we're going -- what the best ones are right now, but that is something -- the data we'd like to start talking about shortly. So we are trying to develop the preclinical rationale, and then we want to move forward into the clinic. And all of the mechanisms you're talking about are actually of interest to us. There is some interesting data on TNF and other immunosuppressants which show some mixed data when you look at epithelial barrier function. Maybe, Richard, you could walk through some of the TNF data we're aware of because I think that's a very interesting mechanism just because it's also so highly used. It's really first-line treatment in, really, many countries because of even payer restrictions right now and because of the generic nature of the anti-TNF antibodies. Richard, do you want to talk a little bit about that TNF data around its mixed effects and its epithelial function?

Sure, sure. Yes. Just to point out that when you look in the clinic, TNFs, they're probably associated with maybe 30% of mucosal healing rates. And they don't necessarily use that stringent criteria, so it's probably a little bit lower. And there's research out there that if you look mechanistically, on one hand, you do need TNF while it causes an inflammation, and one needs to block TNF to reduce the inflammation. You also need some TNF present that is responsible for helping to repair the mucosa. So there's actually a sort of a yin and yang. And there's probably some other molecules that are currently being used in IBD treatment that has the same phenomenology. So I think 004 then allows us -- once we understand some of the mechanistic underpinnings of that, we will be able to better approach how to combine the drugs together.

That's helpful. And then just a final question. When you look at your pipeline, Sheila, and we haven't talked about the oncology programs, but from a capacity perspective, what's the appetite for more product licensing? What's the appetite for kind of uses of capital to expand on what you have versus looking externally.

Yes. So again, great question. We have these 4 clinical programs, and we have data coming out at ASCO on the GB1275 program that shows great mechanistic data and biomarker data that supports this myelosuppressive mechanism that we're very interested in. And then we'll have more data on that program by the end of the year looking at clinical outcomes as we go into the higher dose escalation cohorts, so more to come. So right now, we have a very strong balance sheet that allows us to really execute on all these clinical programs. And one thing we don't ever talk about, Geoff, is -- we'll probably start talking about this later this year, is our research pipeline. So we actually have a number of research programs that are getting right and start going into the clinic next year in areas that are near and dear to our heart, especially in the autoimmune and immuno-oncology space. Again, some validated mechanisms that we're excited about that we think we could differentiate in, especially given our clinical expertise in some of these different disease areas. So that's definitely 1 additional area that you're going to see more from us in terms of these research programs going quickly into the clinic. And our hope is that we can get to proof-of-concept in a rapid fashion like we try to do always. And then we are continuing to look at external licensing opportunities. And so we have a number of different collaborations going on right now. We also have some collaborations with academic researchers that we focus more time in. So we're always on the lookout, and there is appetite for us to take on more. Obviously, we have a lot in the clinic, and we want to focus and we know how to prioritize our programs, but we will continue to look to bolster our pipeline through research efforts as well as business development efforts.

Okay. That's helpful. Well, with that, Sheila, Bryan, Richard, thanks a lot for your time. Really helpful conversation.

Thank you, Geoff. Thank you, Olivia. And a great conference. Thanks very much.

Thank you. All right. Take care.

Okay. Bye-bye.