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

Good afternoon. Welcome to the Barclays Global Healthcare Conference. My name is Carter Gould, senior biopharma analyst here at Barclays. I am pleased to welcome Gossamer Bio to the stage. Gossamer has got a catalyst-filled 2022 with a UC readout coming up in the not-too-distant future, and some PAH data potentially in the back half of the year. We've got a number of people from the company today. We've got Bryan Giraudo, COO, CFO. You've got another title every other quarter. Richard Aranda, CMO; and Robert Roscigno, who runs the PAH program. Guys, thank you very much for joining us today.

Thank you for having us, Carter. And thanks to the Barclays organization. Great to be back in person.

Maybe before we get started, Bryan, I might just ask you to make just a couple of opening comments around the company background, and then we'll keep rolling.

Thank you. So we were founded in 2018, really along the premise of trying to bring new therapies in the field of immunology forth. We did that originally with an asthma program that did not go as we had hoped, but a lot of great learnings on how to operationalize clinical studies in really the new age of doing clinical work in immunology. At the time, we also had 2 important compounds that were still early, our seralutinib or GB002 for the treatment of PAH, and GB004, our HIF-1 alpha stabilizer for the treatment of ulcerative colitis. We also put a great deal of investment into a research organization where the fruits of that work come forth with our BTK franchise that we announced at the -- I think about the fourth quarter of last year, where we have one of those compounds now in the clinic for the treatment of primary CNS lymphoma. So you are right, Carter, it is a very busy year for us. We are expecting top line 12-week data for GB004 in ulcerative colitis in the spring, late April to early May time frame. We can say very confidently that we will meet the PAH time line for having top line data in the second half. Of course, Richard does like me to always say it does carry a COVID asterisk, but fortunately, we weathered the Omicron variant very well. As we all know, we didn't see the same level of ICU admissions so our investigators weren't pulled away from their PAH practice, so we do feel very good about that. We will have our week-36 data from the UC study also in the fourth quarter. And we're hopeful that we'll have the first inpatient experience potentially with some data at ASH for GB5121 in primary CNS lymphoma. So we'd like to say 3.5 catalysts this year. Faheem, who is not here, he was celebrating the birth of his second grandchild a couple of days ago, said differently he's babysitting his eldest grandchild. But said that the year of 2021 was the year of execution, 2022 is the year of data. And our fingers are crossed that the biotech gods will smile at us.

Perfect. It's a great opening, and it's great to hear the PAH study is on track. All right. Why don't we jump into the IBD study? Clearly, a lot of focus. At the same time, novel mechanism. We don't really see a lot of other people following you down this path, we can say, target, which is a bit uncommon in UC where we tend to see a little bit more of a follow-the-leader approach with certain mechanisms. So I guess what gives you guys confidence you're going to see something here based on the earlier Phase II study? What really is sort of that data point that gives you the most conviction?

Let me start with the premise of why we went after the target, and then I'll turn it over to Rich. We agree that much of UC today is a follow-the-leader type of dynamic. It was about 10 years ago that Rich led the development of ozanimod in ulcerative colitis where people did not think S1P could be used in UC. So we're very comfortable on being a pioneer in a disease, and Rich as a gastroenterologist, certainly knows the field better than anyone. And so ultimately, we appreciate that folks are a little skeptical about doing that, but I think our track record speaks to -- if there is a group that can operationalize new mechanisms in this disease, it is certainly the team that we have at Gossamer. But Rich, I'll let you talk about it.

Yes, I think first and foremost, we are compelled by the science and the data that's in the preclinical literature that supports the mechanism, and that we then corroborate it, if you will, through our Phase Ib study in active ulcerative colitis, where we enrolled an active ulcerative colitis patient population -- required that everyone had to have active inflammation based on biopsy as well as some minimal disease activity. And then we asked the question, beyond safety and PK, do we see signs of that -- with treatment, can we see signs of both improvement histologically and signs of clinical activity. So I think to date, combination of the science and the combination of our Phase I data is the best we can do in terms of giving us the confidence of the underlying mechanism as a potential therapy in colitis.

And can we talk a little bit about sort of the patient population enrolled? Obviously, it's in that more mild to moderate population, but when we get down to brass tacks, is it -- how is that going to be split up? And was there a different, I guess, rules put in place when the trial was designed to push you to one direction and just to make sure there is a good balance there?

For our Phase II?

For Phase II.

Yes. So maybe I'll just put it into some context, some historic mild-to-moderate studies typically require a Mayo score somewhere between 3 and 10 with 3 and 4 being in the lower end of mild, and sometimes allow for endoscopy scores of 1, which is also mild. What we've required is a Mayo score between 5 and 10 and then endoscopy score of 2. So while the 5 score captures Mayo, the endoscopy score captures a more moderate population. So at the end of the day, we're likely to enroll a predominantly moderate active ulcerative colitis population.

Okay. And when we look back to the earlier Phase II data, it was a relatively short study. When we think about the underlying biology in terms of the repair of gut lining, maybe just help us think about the kinetics there and maybe why it's following out to a dozen weeks or so is better positioned to really keep out that signal?

Yes. So our Phase Ib was a 28-day study and where we looked at baseline, and obviously, the day 28, and perhaps I would say -- the strongest signal was around histologic remission endpoint. We had concorded data when we looked at biopsies and looked at inflammation biomarkers as well as fecal calprotectin, so sort of focusing on that early sign of histologic remission as well as some evidence of mucosal healing and some evidence of clinical signs of improvement in rectal bleeding and clinical response, our view is that we're trying to anchor the histologic results as not being predictors, per se, but there's sufficient literature out there that suggests that when you see early histologic remission and early signs of mucosal healing, that seems to translate or be associated with a more robust clinical endpoint such as response and remission at a later time point.

Okay. And given this is sort of an earlier stage patient population than most of the studies we've been looking at the past 4 or 5 years, where we've been looking at moderate to severe and a moderate severe population that's been highly competitive for patient enrollment and that's continually kind of pushed towards more severe patients, maybe help anchor us around your expectations for that placebo arm and to whatever extent you disclosed around the study's powering and expectations for benefit of -- to the results.

Sure. Let me start off by saying that we believe there is clearly an unmet medical need in that mild to moderate post 5-ASA prebiologic and even pre-steroid immunosuppressive patient population. So that's the space that we believe that there is value for a mechanism such as 004. So within that context, and as I mentioned, we're likely to enroll a moderate population based on our Mayo score. So we scan the placebo literature and our assumptions are a placebo rate between 10% and 13% because that seems the bracket, the moderate-severe population as well as what you see with the mild to moderate population. And with that foundation of a placebo response, we assume a treatment delta of about -- also about 10% to 15%.

Okay. And first of all, you have a clear opportunity when you think about the current options today, and when you think about the -- how the oral space in IBD has kind of evolved over the past 18 months, it's -- you guys are a clear potential beneficiary of that between the JAKs being positioned post biologics or the TYK2s not really working out thus far and you see a clear opening for you guys to sort of -- I think we've kind of characterized it or -- I know you've commented, Bryan, before sort of the Otezla of UC potentially. I wanted to ask you also, when you think about then -- that potentially opening up combination opportunities for you, are there specific mechanisms you think might be a good fit or not? Or is it -- is this just such an orthogonal mechanism you guys could play nicely with almost everyone?

I think fundamentally, we could likely play with any mechanism. Obviously, we would want to have a little bit of this science help guide us potentially. And we know Cormac Taylor did some work with cyclosporine. I know that's not really used in IBD, per se, but I think that tells you a T cell targeted therapy, along with this mechanism seems to add additive or synergistical value. Once again, it's based on animal model data. But I think at the end of the day, either an anti-cytokine or perhaps even anti-trafficking agent.

I think it works really well, Carter, just from what 004 could do for patients and physicians. The idea of having something post 5-ASA to drive, we hope, mucosal healing, a level of clinical remission. And as Rich said, really we don't think that there's an advanced partner we can go with as far as you think about the market of immunosuppressive compounds. And we think from a market position of commercial potential, that mild to moderate patient population is about 2x the moderate to severe population. So certainly being able to get a beachhead and capture patients, and really enable physicians and their patients to have a real discussion about that next therapy where 004 is really the backbone, we think is a tremendous opportunity for physicians and patients alike.

Okay. That's helpful. So then as we think about that, how is this going to play out over the coming months here, we'll have the induction data. You've been pretty straightforward that the press release is going to have -- I think actually, if you characterize, it's going to look very similar to the Receptos press release, which, as I recall, and lived through at basically everything you wanted at the time to assess that molecule. And then at that point how much are you going to be able to kind of communicate around your next plans or -- it could be also very logical. We have to then wait for the maintenance data later in the year to really kind of -- to my next steps.

Actually, great question. We obviously want to get to the 12-week data, understand the totality of that data, understand where we are at 36 weeks. Critically important is to engage with global regulators about what a Phase III plan could look like in this patient population. We've had some preliminary conversations with regulators in the United States and the European Union. And they're obviously very encouraging of us to continue to soldier on because they do see that unmet medical need for less immune suppression in this patient population. But really before we get overly prescriptive, we want to understand the data, and it's obviously critical to have those conversations.

Okay. Perfect. I think we've covered a lot of 004, let's move to PAH. Again, really great to hear that this study will read out this year. Maybe starting with similar kind of starting point, when you think about sort of the earlier Phase Ib work, what gives you the most confidence coming out of that data?

So great to be here. I think, for me, as we think about therapies for pulmonary arterial hypertension, we have to remind ourselves it's a chronic disease. And that means patients have to live with it in an outpatient setting. And that Phase Ib study allowed us the opportunity to see that for the first time. I think the safety and tolerability profile gave us great confidence and also seeing some of those exploratory end points, if you will, gives us confidence that we're getting the drug to where we want it to be and that we're starting to see some of the clinical effects of intervening in those -- in the anti-proliferative, anti-inflammatory and anti-fibrotic pathways.

Okay. And when we think about moving on. When you think about that positioning in the marketplace, ultimately we're -- it sounds -- it feels like PAH is right on the verge of another kind of shift with orthogonal mechanism in sotatercept. So when you then think about something like 002 and where that might fit, are there natural opportunities that will kind of fall out or -- to the extent you can comment?

So having seen the landscape evolve from having no drugs to where we are today, while we've made great progress, we've been kind of treating the symptoms with vasodilators and really treating later rather than earlier. And I think with drugs such as seralutinib and some of the other interesting mechanisms being studied, the landscape is on the verge of -- the treatment landscape is on the verge of evolving again, as you said. Whereas if we can get these drugs on board that have potential for anti-remodeling effects, and have relatively benign safety and tolerability profiles on for -- on patients earlier when they're in functional Class II, and then treating obviously, symptomatology with the existing agents as needed and really reserving the big guns, the parenteral prostacyclin for late-stage disease when -- in all the right ventricles involved, it could represent a dawn of, like you said, a new era for treating patients in a more proactive way.

I wanted to come back to the safety profile, I thought that was one of the key aspects of the earlier study in terms of that you really weren't getting that systemic exposure beyond the lungs. And if you kind of go back to the original Gleevec data and the tolerability and safety concerns they had, can you just walk through kind of the differentiation there and why that's so important?

Sure. So if we think back to the IMPRES data from the Gleevec work, it was an oral compound, while we did see very strong signals of efficacy in terms of improving hemodynamics and also improving exercise capacity in a very sick patient population, the safety and tolerability profile was just not justifying the risk benefit of the drug. And I think the sponsors saw that and certainly the regulatory agencies saw that. And again, it goes back to getting the drug to target, which in this case, in pulmonary arterial hypertension is in the in the pulmonary vasculature in the peripheral lung and minimizing systemic exposure so we can avoid some of those off-target side effects.

Given that you were doing the study during COVID obviously, these patients, if they do get COVID, it could be such a disruptive to their lung function. Maybe talk about any steps you took to minimize that risk or other kind of procedures put in place to maybe just help out on that front.

Yes. That's a really great question, Carter. And I think, first, as a drug developer, all my drug development colleagues, not only Gossamer but other companies, we really had to reinvent how we can conducted trials during this difficult time with the pandemic. Fortunately, we thought this through very carefully at Gossamer, and were able to put mitigations in that, again, gave the study sites and the patients maximal flexibility in terms of allowing us to collect the endpoints we needed, make sure that we were not missing data, if you will, but also give the patient some flexibility. And when they had to come to the clinic, some windows around study visits and whatnot. But again, at the end of the day, allowing us to protect our primary end point and really having minimal impact from COVID disruptions.

Okay. And so when we think about the Phase II readout later this year, what's really the -- first off, how is the study being powered? What would be a win in your mind? And then also maybe put that against the backdrop of clinical significance in this population.

Sure. So the expected anticipated readout later this year, obviously, our primary endpoint's hemodynamic change, looking at change in pulmonary vascular resistance. And we're 90% powered to detect the p-value, 0.05. What we're really looking for is something in the range of an 18 to 30-ish percent improvement or decrease in pulmonary vascular resistance. That compares favorably with work that was done previously with both imatinib and also with some of the recent work from the published sotatercept data with the PULSAR study.

And with this mechanism, how do you then -- is there a consideration or thought or interest in some of the Group III diseases? We've seen some of the inhaled formulations show interesting data in some of the Group III, whether it's ILD or PAH COPD.

So if we see a signal that we really are impacting pulmonary -- cardiopulmonary hemodynamic in Group I or PAH, I think that that's a very reasonable question because unlike some of the existing pulmonary hypertension therapies, which can be used in Group I, but really have issues with being used in most of the other treatment groups, the one exception being Tyvaso, because we're -- and because we're trying to intervene, if you will, in the targeting the underlying pathways of disease, the possibility for this drug then is very real in terms of being able to be tested in other forms of pulmonary hypertension, including Group III.

Right, to get away from that perfusion mismatch.

Exactly.

Okay. Perfect. All right. And so then when we get that data, how should we then think about -- I'm pretty sure I'm going to hear you say the same thing again, you'll sit there and talk to regulators. But at that point, it seems like you'd be probably in a pretty good position to comment around sort of next steps.

Yes. I mean I think that obviously, our friends at Acceleron, now Merck have put forth a development plan for Phase III that would be our base case, really for what they're doing in the STELLAR study, both from an endpoint and number of patients. But obviously, with this patient population, we would want -- and hopefully with good data, we want to see if there are ways for us to optimize that Phase III development plan. More to come on that, we obviously want to finish enrollment, get the data and then have that robust conversation. I do think that, as you had said, as we are on the -- in the dawn of new treat paradigms for PAH, and Rob has certainly said this, the excitement that's going on in the clinical community about really being able to think about new modalities for their patient, and some of the advocacy groups and some of the physicians talking to global regulators saying, we need to think about moving the ball forward with Phase III design above and beyond what we've done for the vasodilatory therapies, it's very exciting to be in the mix up. However, our base cases for Phase III will look like -- with STELLAR at least as we sit here today until we have conversations with our friends at global regulators.

Okay. And then maybe just coming back to the earlier stage efforts, talk about when we could see sort of initial potential signs of efficacy or signals that might have emerge from those early studies.

For our BTK stuff?

Yes.

So for GB5121, we're in healthy volunteers right now. We hope to be in the second quarter in patients with primary CNS lymphoma. We are, again, talking to regulators about that being on an accelerated path due to just significant unmet medical needed approved therapies. Our hope is that by ASH of this year, we'll have the first patient experiences, shall we say. But really 2023 is going to be the go year for that program. As hopefully we go from really dose escalation to finding the dose going to a Phase II study that could be registrational.

Okay. And when you think then staring down potentially 2 large pivotal Phase III programs, everything goes well, and an early-stage pipeline, just in terms of your cash position and what you can manage and the potential need to raise -- is that just a good problem to have? Or how do you think about that?

We ended the year with about $325 million of cash on balance sheet, Carter. And ultimately, when you look at the ambition that we have at Gossamer, it's to get these therapies to patients as quickly as possible. Certainly, the cash we have today would not enable us to run Phase III programs for seralutinib and 004. That being said, our -- with that ambition to get drugs to these patients as quickly as possible, we'll look at the most capital efficient and cost of capital efficient way to get those drugs to patients. So we'll be looking to understand where the financial markets are as well as the strategic markets to underwrite those endeavors. Okay.

Perfect. We'll stop there. Gossamer, thank you very much. I'm looking forward to all the data this year.

Thanks, Carter.

Thank you.