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

Okay. Welcome to the afternoon sessions for the Virtual Vegas BofA Healthcare Conference. My name is Geoff Meacham. I'm the senior biopharma analyst here at BofA. I have Olivia Brayer with me from my team as well. And we're thrilled this afternoon to have Gossamer Biotech. And speaking on behalf of Gossamer, we have Faheem Hasnain, CEO. We have Bryan Giraudo. [Audio Gap] [indiscernible] Hey, guys. How's it going?

Great, Geoff. Good to see you again.

Thanks, Geoff.

Good to see your face. Yes. Faheem, I thought you're the Ronaldo of biotech. I should just call you Faheem with no last name.

No.

That's exactly right.

So let's start off with just sort of a higher-level question. You guys have a lot of meaningful derisking data next year. You have had some proof-of-concept this year. Just give us a sense for where Gossamer is -- what to look forward to, to set the stage for 2022 from both the strategy and kind of a company build perspective?

Yes, absolutely, Geoff. So we like to think about 2021 is really the year of execution and 2022 the year of data. So setting up for 2022, we've got top line data first half of the year, first half of 2022 for both our seralutinib program. That's 004 program in IBD. So those will be pretty important readouts for us the first half of the year. After those readouts, we will have over $0.25 billion in cash and kind of embedded into that kind of cash guidance is the notion that we will also be bringing in another clinical stage program. We'll be announcing that target very shortly within the next couple of months. We're excited about this next opportunity that will be a lineup into our clinical stage programs in that. It's a validated target. We think we've got a best-in-class profile with some indication optionality. So that really sets up kind of the clinical stage profile for Gossamer, 3 fairly important programs that get pretty high unmet need, reasonably large indications. Behind that, we have a significant number of preclinical assets, of which we'll be prioritizing the next ones in, because importantly for us [Audio Gap] issue, but also making sure that we've got enough runway to execute on the clinical stage programs to important value inflections.

That makes sense. And I think this year, for a lot of developmental stage biotechs that are pipeline oriented, COVID has still been a bit of an overhang, just execution of trials and things of that nature. Are you guys still seeing an effect from that? And when would you expect that to normalize, if so?

Yes. So like pretty much everybody, we've all kind of dealt with COVID implications one way or the other. We've been pretty conservative on our time lines right from the get-go, and so that allows us to really continue to be consistent with our guidance, which was top line results for the PAH program and the IBD program first half 2022. And all of that still comes with a COVID at risk in terms of what lies ahead. But so far, we continue to be tied to that guidance.

Got it.

[indiscernible] with cash, but how are you thinking about collaborations here clinical programs going forward? Are there certain assets or indications where maybe you'd be more open to partnering and really just outside of your asthma program already? Because I know that's obviously something you guys have been very vocal about in terms of partnerships.

Yes, it's a great question. So pretty consistent with the way we always think about this even back in the Receptos days that as we think about our development plans, we really think about long term and making sure that we're set up to be able to drive these programs directly to commercial. Obviously, things happen along the way, and partners get interested and excited on certain data points. Fundamentally, though, I think the way to think about it is that, for anything we're working on at this point, we would not give up U.S. rights. And when we think about partnership, we could be thinking about that in 3 ways. That will be China, Europe and then kind of everything else in the world, and those could be 3 -- could be a consistent one partnership or it could be 3 different types of partnerships. But yes, we would [Audio Gap] obviously, after Phase II data contemplate bringing in partners to help us with rest of world development.

And just a follow-up to that, guys. Maybe one for Bryan on capital allocation context. I mean when you do bring in new assets or when you can secure some nondilutive funding, are there some creative ways that you're thinking about it this year and next? Or is it fairly standard in terms of the structure that you'd expect to do both licensing in and maybe partnerships?

It's a good question, Geoff. And I think the first and foremost, we'd say that we're not in the in-licensing business right now. We've aggregated a lot of assets and really what we're focused on is executing. So the target of the compounds that we'll be talking about is something we brought in many, many months ago that we've been optimizing with our own group. So we're fairly quiet on the business development front as far as in-licensing things. Recall also, we have a unique structure where all of our pharmaceutical assets are wholly-owned subsidiaries. That will pass us really some unique optionality when it comes to [Audio Gap] I think we are successful clinically. And so I think more to come on what those deals could look like. But certainly, as we look to prosecute larger clinical studies, whether it be in PAH or in UC as well as with some of the other compounds that we have, we're going to look to be very nimble. And as Faheem has directed the entire organization since coming back as CEO, it's really about driving value for shareholders.

Got you. Okay. That makes sense. Well, let's turn to the pipeline. And Richard, I want to involve you here with respect to the 002 to the PAH program. Just give us kind of some context for the -- for where we are today. Are we still on track for first half of next year from the Phase II TORREY study? And maybe what are some of the lessons learned in the studies thus far in PAH, just with regard to kind of potential points of differentiation.

Yes. So we're obviously very busy executing on our Phase II trial. We're dealing with some of the COVID pandemic hangover, as you will, but we are seeing light at the end of the tunnel. And the guidance today still remains the same, that data will hopefully be available for first half of next year. We're actually quite excited about the program. A lot of the feedback we've been getting from our advisers as well as our sites, there's a great deal of interest on the program, given its mechanism of action, given it's been held around administration. And it's a kinase selectivity and the potential for a better safety profile. As you know, the whole project, if you will, the project is -- the underlying premise is based on the IMPRES trial and the great efficacy results that we're seeing in PAH patients, although it was encumbered by certain safety issues.

I think it's important point -- Geoff, I think it's important point to wane the enthusiasm that the communities had really building upon that we've talked about many times the IMPRES data. But also -- and again, as we've done in the past, [ tip our caps ] to our friends, Acceleron, we're -- there's definitely an enthusiasm for new innovation to PAH. We're just very, very pleased that as COVID lives to be the front of the line on that.

Yes.

Sorry to interrupt.

No. It's okay. A good segue into my next question, Bryan. When you think about the PAH regulatory paradigm. I know obviously, there have been updates right with sotatercept from Acceleron. I mean how do you guys think about that paradigm? Do you feel like it's shifting? Do you feel like the conversations around endpoints, trial designs, just where your asset can fit into that market is evolving? And would just love to get any sort of updates that -- and really [indiscernible] that paradigm shift and evolve over the next few years.

Can you handle it, Faheem?

Yes. I think it's definitely an evolving regulatory landscape. For any product such as ours that really has a great promise, seralutinib itself is one of the underlying mechanisms, it's going to be a disease modifier. No, it's not going to be a vasodilator much like sotatercept in that way, although it's a different mechanism. So we have to clearly think creatively about once you get positive Phase II results, how do you get it to market on behalf of patients, right? Because that's why we're doing this. And so I think our view is based on the robustness of our data, we're clearly going to have conversations with the regulators. We're going to think of creative ways to do a Phase III program that allows us to be [Audio Gap] in terms of giving the regulators what they need in terms of a package. So I think we're going to learn a lot by what sotatercept is doing ahead of us. But I think we're also going to learn as we continue our discussions with operators in the area and what other endpoints beyond 6-minute walk can be utilized in Phase III programs. And just as a reminder, just kind of further background on that, recall, the Phase II is powered for a primary endpoint of PBR. And then 6-minute walk will be a secondary endpoint that we're not powered for the PBR, which arguably is probably a more objective measure of effect is what we're going to be focused on, on the Phase II.

Yes. And guys, when you think about a successful Phase II, I know we'll have to wait and see for the data next year, but maybe just help the audience with, what are some of the key aspects that you guys are looking for on that trial? And what sort of -- would you deem a study successful for Phase II outlook? What [Audio Gap]

Yes. The study is powered for the primary endpoint for change in pulmonary vascular resistance. We would likely -- would like to see an effect size that was similar to what was observed in the IMPRES trial and even to some extent what was observed with sotatercept. So that's around an 18% to 32% reduction in PBR. Now in addition to that, we would like to see other endpoints go in the right direction. So that means improvement in 6-minute walk, although the study is empowered for that. We'd also like to see the appropriate changes in NT-proBNP, which is a biomarker for right heart failure and other endpoints. And obviously, the underlying premise for inhale side is a good safety profile. So...

Just a follow-up to that, when you think about the broader PAH space, right? I mean there's been some generics on the prostacyclins end of things. There's been also some generics on the PDE-5 as well as the endothelial antagonist. But there is, to your point earlier, there is a real need for a newer mechanism, a more innovative-centric sort of approach. Is it -- maybe just kind of little bit more detail in terms of what feedback you're getting from some of the KOLs to really help sort of capture the most robust effect? And is there a lot of enthusiasm for newer mechanisms that could help commercially, but more importantly, in the near term with trial enrollment and things of that nature?

Yes. First of all, as mentioned previously, the thought leader, they're very excited about new therapies beyond the vasodilators because vasodilators, while there's been some benefit and impact on the natural history of the disease, just not enough, right? And so drugs like seralutinib are going to target the underlying mechanism and hopefully, reverse the overgrowth of the cells that cause the disease process. So I think we're going to have to take baby steps. And what I mean by that is, patients are still going to use the vasodilators, right? And once we're developing seralutinib on top of the vasodilators and eventually, that's probably how it's going to be used on top of vasodilators as a complementary type of therapy to those mechanisms. However, once you demonstrate some efficacy in that setting, there's always a possibility that you could work earlier. And that's something that would have to be thought about. Enthusiasm and the need is pretty evident in them. The need -- I mean, is why we kind of went to double and now triple therapy because that search for increased efficacy and increased effect. And in the enthusiasm component, it's about being able to think about that combination approach from different mechanistic angles as opposed to just doubling up on vasodilators as an example. So I think it's pretty clear there's a lot of enthusiasm for novel mechanisms. And we know specifically a lot of enthusiasm based on the data that Novartis had generated with feedback originally.

That makes sense. Yes. Let's switch gears to UC. So when you think about the I&I landscape overall, there's lots of different mechanisms but a lot of therapies are sort of sequential. The duration of therapy is not that long, maybe it's 12 months to 2 years. You know this market quite well in terms of fine tuning. Just talk about maybe the eventual commercial positioning and how do you maximize your success with respect to trial design looking to -- prior to that?

Yes. So Geoff, it's great question. I mean when people think about the IBD landscape, the UC landscape, words like crowded come to mind. But in fact, when you really dissect that, there's really substantive land ways and substantive need that it's just not being filled today. One of them is what you just mentioned and the duration of effect of these therapies suggest that patients are going to continue to meet the cycle through therapies to find kind of longer-lasting solutions. We saw that effect in MS, where multiple orals, but everybody cycles to all of them. So the overall market size expands because of the fact that none of these things are cures, unfortunately. As it relates to our positioning, this isn't really kind of, I would argue, a unique positioning. In that, you've got an agent that can be utilized post 5-ASA failure and then preimmunosuppressant and certainly prebiologic. And so in doing so, you're pushing up the need for agents like JAKs, arguably even ozanimod and certainly biologics, but also, hopefully, in doing so, reducing the reliance on steroids. So that's an exciting premise in of itself. And then the next frontier, if we continue to see the safety profile that we're hoping to see and have seen thus far, the opportunity for combination therapy to take this indication to kind of the next level. We've had this glass ceiling essentially of clinical remission rates. And there's a lot of enthusiasm amongst the investigator community to be able to determine whether or not combinations can break through that. Up to this point in time, we really haven't had an agent that's safe enough to be thinking about it in a combination approach. I would argue that 004 with the profile that we've got has the potential to be eminently combinable and potentially, the backbone of therapy for combination approaches here.

Yes. And I just want to add, I think patients are really looking for nonimmunosuppressive mechanisms, right? And even practitioners are looking for something like that. And to Faheem's point, it's the ability to provide a drug with that profile and with the upside of potentially combining mechanisms at some point in the future is what is exciting, folks that we talk to.

Yes. Is it your sense, Richard, from the medical community the fact that in -- across the I&I landscape, we haven't really seen combinations. Is that more a limitation on overlapping toxicities? Is it more related to costs? Is it excess? But always surprised me that, that's obviously not the case. Combos are the norm and -- in antivirals or in oncology.

Yes. I think it's a combination of several of those factors that you mentioned. Clearly, safety is always a concern. But at least in the IBD space now, people are starting to combine biologics more on a very refractory patient population. And there's getting some good data out of that. And second, it is the cost, right? So sometimes, the biologics are quite expensive, and then you bring in a new mechanism and depending on the cost of that it's -- so we'll have to do our work on the medical side to get payers involved and really demonstrate the value for patients, but also to the health care system, right? Because what we do, we want to make sure that we reduce hospitalizations and that the back side of the medical expense. [Audio Gap]

And then, Richard, maybe as a follow-up to that. Obviously, UC has been a focus for you guys. And just curious, how do you think about expanding that program to other indications like -- I know you guys have talked about Crohn's disease, but maybe even some opportunities to move into other indications beyond IBD down the road?

Yes. Right now, we're just so focused on executing upon the UC program based on really the exciting data that we generate in Phase Ib. So that's been our focus. But the team, we have been thinking about other potential areas where the mechanism is applicable. And I think, as you mentioned, Crohn's disease could be one of those. But we need to do some further diligence internally and talk to some of our external experts in the area to further establish where this mechanism could be even less.

It's not just Crohn's as well. I mean, there's a lot of other companies focusing on eosinophils and their role and bowel diseases and other information. So yes, it's -- there's a lot of, I would say, mini markets in inflammation that are smaller patient populations, but definitely unmet though.

Yes. Absolutely.

Yes. Let's talk a little bit about the asthma franchise. Just -- I know that there was a discussion about you have to get FDA feedback and that surrounding that partnership discussions or some sort of collaboration. Faheem or Bryan, what are some of the unique ways that you could still get some value from this program that maybe potentially retain some long-term economics, but also recognizes the huge effort that you guys have put in so far?

Well, I'll start, and then I'll turn it over to Bryan. But yes, as you mentioned, Geoff, so we have received [Audio Gap] and I think we're comfortable with that feedback in that there's some concurrence with the effect size that we saw would be an appropriate level of effect to be able to push forward. We won't do that for all the reasons we've discussed in the past and related to the excitement that we have around the pipeline as we've just discussed it. But hopefully, that will generate some partner enthusiasm. We're certainly in the process of discussing this program and the opportunities for partnership as we speak, and I'll turn it over to Bryan.

Geoff, as we disclosed on our -- we did our 10-K call in late February, March, in the GB001 and the associated backup. The backup didn't have some of the top viability that GB001 did. And so we feel encouraged by initial conversations that we've had since we've had that feedback. And that's really rather fact that one [Audio Gap] feedback on the path forward for ADP 2 antagonist in asthma. We believe we have a differentiated asset in backup. And more importantly, a lot of human capital experience, shall we say, on how to develop it. So I would say it's still early days. We've been encouraged by the conversations that we've had. And hopefully, I mean our economic expectations are modest on upfront in those types of things. But we really want to be in place where we can find some folks that want to continue the experience that we have with DP2 antagonist in asthma. We do think there's still very much unmet medical need.

Makes sense.

Yes. Guys, we haven't talked about your oncology program. Maybe just quickly, can you just give us an overview of where we're at with that program? I know you guys are going to have some data at ASCO. What are things that we should be looking for? What are sort of the next steps for that program? And how you guys are thinking about broadening that program and expanding into other indications there?

Yes. So we're currently enrolling the expansion phase in 2 specific tumor types that were informed by the dose escalation phase that we reported out previously. Those 2 tumor types are CRC, colorectal cancer and gastric esophageal cancer. So at ASCO, we're going to be presenting data from the dose escalation phase, more of on an update. And it certainly focused on the safety of 1275 as well as very intriguing biomarker data that is consistent with the mechanism, but really nothing more. And we need to execute on the expansion phase, where once we get the results that we're going to be able to make a final decision on the program.

And just a follow-up on [Audio Gap] of newer targeted therapy companies, there's been a lot of IPO activity. But you guys, Faheem, have incredible expertise, chemistry, biology. I'm just curious, if you think about of all the markets that you're going after all the different indications, oncology has the potential to really be -- you probably -- to make the most differentiation in terms of asset. How do you think about prioritization within the different therapeutic area that you work on, recognizing that PAH is more advanced, of course.

Yes. So I mean, the prioritization, I think, becomes reasonably obvious in that, of course, the PAH, IBD program are #1 and #1 priority. The second program into the clinic, which we'll be announcing shortly, you'll see in terms of the indications we're going after, I think capitalizes to a great extent on the expertise [Audio Gap] Beyond that, in preclinical pipelines that are kind of not that far away from IND, we've got some assets that really kind of fit that description that you just put out there, Geoff. Interesting programs. Certainly, oncology is within our view of our capability and expertise. And of course, immuno-oncology being more of our sweet spot, but trying to take a more targeted approach to immuno-oncology, I would say, is kind of the definition that we would give to the programs that we have in our preclinical bag. Obviously, programs that have the potential for Phase I proof-of-concept as opposed to having to take the programs into Phase II, multiple tumor types, multiple combinations, those things aren't that attractive for us. So things where we've got a more defined patient population and a very strong biological thesis.

Got you. Makes sense. Well, with that, we're out of time. So Faheem, Bryan, Richard [Audio Gap]

Yes.

Thank you.

Thanks for having us.

Thanks, Geoff.

Yes of course...

Take care.