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

Okay. Good afternoon, and welcome to day 2 of 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. Joining us from the company is Bryan Giraudo, CFO and COO; as well as Rob Roscigno, VP of Clinical Development. Guys, thank you very much for joining us today.

Great to be here. And as always, thanks for the invitation.

Bryan, I don't know if you want to make some opening comments, or we can just kind of jump into Q&A.

I think real quickly -- I think it's a very exciting time for Gossamer, our friends at Merck's, data with sotatercept. It really is heralding a new era in the treatment of PAH. And we are, one, very impressed what they were able to accomplish but also feel that it creates a really nice opportunity for our compound, seralutinib that we're getting ready for Phase III. But it's just an exciting time to be in a disease where there's such unmet medical need in patients and physicians yearning for new therapies. So to be drafting off of Merck's success, that's why we do this. So that's great.

Okay. So let's -- it's a great place to start. Why don't we start by going through sort of your takeaways from the Phase II data and sort of where that leaves you right now with seralutinib as you consider sort of next steps?

So we continue to be very encouraged by our Phase II data, as we've had time now to really digest the totality of what the drug was doing in PAH patients as well as understand the patient population that we had. I think it's -- again, one of the challenges that we had was we enrolled a very less sick patient population than what our friends at Merck did in Phase II, PULSAR study in Phase III, STELLAR study. But within that less sick patient population, we've been struck by not only the breadth of response that we've had. We have been able to mirror what sotatercept showed in the most sick patients has now recently confirmed in the STELLAR study. But I think importantly, some of the things that we've been able to interrogate in our less sick patients, our functional Class II folks where we're able to see, while not as large of an effect on [ PVR ] 6-minute walk because those patients just didn't have a lot of room to improve. But as we've been able to interrogate their [ NT-pro ] data as well as right heart echo being able to see an effect on the right part in those less sick patients is something that we and our KOLs are struck by as being a real opportunity for the compound as well. That being said, as we're getting ready for Phase III, we're in active dialogue with regulatory agencies. And I do think that the Phase III opportunity for us will be to mirror what our friends at Merck did with STELLAR to ensure like they did to get those most sick patients, so they get that clinical effect. And we'll be able to do that same stratification that they did to ensure that they -- ensure that we get that similar patient population.

Okay. Let's tease a couple of things of that part, right? So you've already talked around what's that appropriate population? Can we go into a little bit more detail on kind of how you think about defining that population, using additional kind of criteria to help kind of zero in on that population?

I think the first thing we've disclosed is that we're going to use the same CRO that Merck did [indiscernible] so just asking them to repeat what they did. I think it will actually be an easier study for us with the absence of, what we hope, absence of COVID. That was certainly something that affected us in the TORREY study. So right off of that, I think we'll have a more normalized environment for conducting PAH studies. Secondarily, we will tighten our entry criteria to look very similar to what STELLAR had. And we will most likely do that same stratification where at least 50% of the patients will have to be functional Class III. I think again, we tip our caps to our friends at Merck. But if you look at really what drove that response, it was those functional Class III patients. And I think as we've seen, albeit a prespecified subset, we also had a nice response in that patient population as well. So I do think all that in totality will be able to hopefully give us a very, very high probable success for Phase III. I don't know, Rob, any thoughts on that?

Yes. I think when you talk about patient population, lessons learned from TORREY and also lessons learned from the recent data readout, the patients we need to study have to have an impairment to improve and that is in regards to 6-minute walk being low enough. That's in regards to [ NT-pro and PVR ] being high enough. And again, we saw when we looked at the sicker patients, we saw a very nice treatment effect, and we're endeavoring to do that again in Phase III. And as Bryan said, not only did the recent data readout from sotatercept validate the need and the potential progress made with a new pathway, and we can do something similar, but it also showed again that's where you start with studying your drug and people that have unmet need that needs to be addressed.

Okay. So if you work towards starting this Phase III. Can you walk through kind of what are the additional -- what are the remaining stage gates to getting started on the Phase III? You talked -- you alluded to discussions with FDA? Are there -- I guess, regulatory agencies, are there other things that we should keep in mind?

I think it's really going to be about final alignment with regulatory authorities on either side of the Atlantic, those discussions are ongoing, have been very productive. So we've been pleased to date, but we've got the final [ final ] before we can fully nail down our protocol. It really just comes down to execution. We've been in a fortunate position where we have been investing in infrastructure, people and process for the Phase III with, I believe Merck has guided to an approval in the U.S. in Q1 of '24. Our expectation is a Q1 approval in '25 in the European Union. We are being told by our folks on the ground in Europe that really -- they will have broad-based reimbursement coverage in Europe, at really the beginning of 2026. So with us starting our Phase III in -- we've guided to July, August of this year, we'll have a good 6 or 7 months in the United States where sotatercept will not be on market, but really the totality of the Phase III in Europe. And so we expect the Phase III to be about 70% enrolled from outside the U.S., the vast majority of those, 90% plus, if you will, in the European Union. And so ultimately, that's where we're really focused right now, making sure that we can hit the ground running, try to mirror the enrollment time lines that our friends at Merck had, I think, using not only the same CRO but going to many of the similar sites and similar KOLs will be to our advantage.

Okay. On that front, so what's going on there is the question around kind of cash runway and your ability to execute and -- so let's start by saying, what is that runway? And do you have adequate resources to get that study completed?

So we have capital to the second half of 2024. We will be looking to bring in some additional resources to complete the totality of the registrational program. And we're looking -- we're actively engaged in that process, whether that be with potentially strategic partners on regional partnership or whatnot or some structured finance types of folks. But I think importantly, we have the resources today to not only get everything ready for the study, but to kick the study off. It's part of the reason why we raised capital at the midyear last year, and fully expected -- we're not talking big numbers to be able to complete the registrations, I mean, $125 million. And we think through rationalization of costs, rationalization of our pipeline, focusing on seralutinib, we'll be able to do that.

Okay. Rob, maybe, well -- I mean the STELLAR data was clearly solid, but there were some wrinkles to the data, too, right? And the bleeding risk is one of them that's popped up in a number of the conversations. Does that create an opportunity for you guys? Can we assume we haven't seen that same sort of, a clearly different mechanism? I think that's understood. But all in all, like does that create an opening or a wedge that maybe you [indiscernible].

I was thinking about that a little bit when you were talking to Bryan earlier in terms of what our Phase II data and now that we've had time to think about it, I think something that's underemphasized is really the strong safety and tolerability profile we had. Really, it's a twice-a-day therapy, fairly easy for patients to use in the home. And what did we demonstrate? We demonstrated we could take the potent targeted kinase inhibitor, avoid the systemic effects that we're seeing with the oral versions of that, if you will, and really be able to get folks to a proper dose that would elicit an appropriate clinical effect. And now we can have conversations with the KOLs and the investigators about our safety profile, and again, getting them to find the patients that we talked about that's intermediate or higher-risk patient that need something else. And now they have the confidence to put them in our study. So I think, yes. And again, avoiding some of the -- every drug is going to have side effects, but when you have to monitor for bleeding or other things, it kind of presents a therapy burden. And I think we can make a strong argument, our therapy burden is pretty reasonable given our TORREY data. And again, it's another option for folks. It's an option, not only for the clinicians, but an option for the patients, what do they want to bring into their home now. And I think we have a strong argument, seralutinib is a very viable option, especially for the current environment with all the other drugs.

I think while we too have heard bleeding as a concern, we think it's manageable. And I think the big question as we project 10 years from now when both seralutinib and sotatercept are on the market. But ultimately, I think what will be important for sotatercept is going to be as Rob said, safety tolerability for chronic use. I think there is certainly a question around elevated hemoglobin, viscosity of blood, what does that do to right heart over a long period of time. . And I think that, secondarily, the route of administration, my expectation is that they are going to have like some of the other antibodies be able to do home injection and the rest, but it will be also that compliance and then durability, right? We've seen from the PULSAR open label right, that the durability, once you get beyond kind of week 56, starts to wane a little bit. I do believe that in the coming months, we'll be able to talk about our durability vis-a-vis our open label extension. And I do believe that, that's where we'll start to see differentiation from our compound, so safety and durability as well as comparable efficacy, and that's why they start to get exciting, right? Which is, what's that treatment paradigm going to look and you're going to start to see and have physicians talk about their ability to come up with their own regimen of treatment for patients.

We've got somebody with deep expertise with the prostacyclin. So I guess let me ask you the unfair question around how you see that treatment paradigm evolving. Do the prostacyclins just get kicked even further to the end of the line. It seems like these agents, both you and sotatercept potentially could slot in nicely before patients looked at prostacyclin. Is that a fair characterization?

Yes. And I appreciate the unfair question. Prostacyclins have shown a lot of benefit, but we have different versions. We have the [ parenterals ] which really can act quickly and have profound effects. But here, again, given their potential effects, every patient should be on IV prostacyclin when they get diagnosed with the disease, is a reality check there. It's difficult to manage, not only from the clinician perspective, but from the patient perspective, especially in the home environment. And then we have the oral or inhaled prostacyclins, which are like diet coke, a little lighter version, if you will. And they're still good drugs. But I think now if you're thinking about where the patient is, and Bryan brought it up earlier, those Class II patients that are okay, but you know what's coming down the road for them, if you could give an agent like seralutinib and they never get to that bad place you're trying to avoid, there's opportunity to use it earlier. We also learned from TORREY that although our patients weren't necessarily as hemodynamically sick or exercise-capacity impaired because those tend to show up later, their right ventricles were still very sick. And we showed at the doses we gave in the 24 weeks that we were starting to have an impact on the right ventricle, which ultimately is what these patients die from is right heart failure. So I think there's going to be a lot of talk about where do you put these other non-vasodilator type therapies? Do you start everyone early on them, let them run in the background and add prostacyclins as necessary because not everyone is going to respond to every drug? But as a patient and a clinician treating a patient, how are you treating the disease and throwing prostacyclins at the disease, unfortunately, is not the answer. And I think the other learning from the STELLAR study was given all these drugs, people on triple background therapy, it's almost embarrassing and you have a 40-meter improvement on top of that. So it's something that sotatercept, but it also says what these drugs weren't able to do on their own. And I think that's important.

Okay. So I guess one of the things that's going on in the background here, and Merck hasn't commented explicitly on this is, what do the STELLAR results then imply around time lines for [ Hyperion ] reading out? And potentially, if that comes -- I mean, there's the [ clin ] trials that [indiscernible] kind of time line and I would say that's conservative. And certainly on the back of the data now, I think there's clearly a chance that, that reads that even sooner. How does that then complicate your world if...

I can counterargument to that. I think with the imminent NDA filing, if they are not successful at enrolling that study, and I'd like to see those studies get enrolled, so we get the questions answered. If those studies are not enrolled at the time of approval, there'll be a hard uphill climb to get those enrolled because the drug will be commercially available. But if those studies do enroll, they're going to expand the opportunities of where these other classes new pathway agents can fit. Can you use them earlier? Can you use them in different populations, if you will, et cetera? So I think there's different clinical questions to answer. Can my drug take -- pull somebody back from [ this ], which I think we've seen in the current studies? But importantly, also, can you prevent worsening down the road as well from somebody who's less sick or the disease may be more malleable? That's really what those studies are designed to do. And hopefully, they'll get some questions to those. But right now, there's no data to support either with that drug or...

I guess I was thinking about a little bit more from the context of in a world where patients are getting sotatercept earlier, did that just then even complicate your life even more when it would be just difficult to enroll sotatercept naive population in...

In our Phase III enrollment...

The Phase III or in a [indiscernible], you have a label that reflects a sotatercept naive population, even if those patients maybe don't exist to the same extent.

I don't think they really [ matter ] from a labeling perspective. And again, we are designing the Phase III and where we're going, where sotatercept will not be available. So I think from that execution perspective, we'll be fine. I think the other piece, too, that's important because it also makes a commercial question. What does the patient population look like when seralutinib is approved, right? And I think that we're struck by a couple of things. The New England Journal of Medicine editorial last week that aptly pointed out that 60% of patients in [ seralutinib didn't ] have a benefit, okay? That's right there, a market opportunity for seralutinib. I think the other piece is, again, I come back to durability. This is a progressive disease. We're starting to feel analogies to what we saw in the MS world, right? Okay. TYSABRI is going to be the end all, be all. It progressed the disease. That was going to be TECFIDERA. [indiscernible] so I do think that, that lends itself to a real opportunity set for our drug. And again, we come back to not only our safety and tolerability, but I believe we'll be able to make an argument about efficacy and durability that will have a unique position in the marketplace.

Okay. So on that -- so that's fair. There seems to be a disconnect between that line of thinking and how the Street is perceiving it today. What do you guys need to do to kind of crosswalk that to...

Well, I think there's a couple of things. I mean we obviously need to ensure that we can pay for the totality of [indiscernible]. And until I do that, I don't think the Street's really to pay attention is where it is. I think secondarily and through the balance of the first half of this year, as we have continued to interrogate the TORREY data set, I think it's really using our KOL partners to help them help the investment community understand like what is most important as they think about a treatment paradigm for their patient and that patient population, right? The greatest criticism we've gotten from the Street is that we only performed in the sickest patients. That same criticism was celebrated with the STELLAR data. It is what it is. So ultimately, there is a reality that these drugs will have a profound effect on those patients that aren't [indiscernible] sick, right? I think that if we can have, as Rob said, really get the Street to understand what we're doing in less sick patients vis-a-vis what's happening with the right ventricle, that, I think, is where our KOLs are starting to go to today. And I think the Street will appreciate that, that is a meaningful medical opportunity and revenue opportunity for seralutinib.

I think from the patient perspective, we haven't talked a lot about risk score, but I'm saying we really showed a nice improvement in risk score. That wasn't talked about as much last week either, but it's really -- I'm thinking about what I want to put my patient on or I'm thinking about as a patient, what I want to be put on. Some of those questions are going to come to light, not what this drug is going to do for me just in 24 weeks, but what do I -- what's my future look like a little bit. And I think we can make a pretty compelling argument as [ might ] do with the normal symptom improvement that you've seen, you're comparing one number with another, and you can play that game. Are there some other potential benefit on your right heart that's going to resonate? And if my risk of getting worse is lessened or improved, that's going to make me think a little bit. I'm not interested in the next 24 weeks. I'm interested in the next 2, 3 years. And I think that's where the data is going to be supportive, but also then there's the opportunity. Maybe you need both. And I think that's where the field is going to go, start with a case study, both drugs are approved, somebody is going to put them together, they're going to write a case study and then it's going to be a huge clinical question for community. We've seen this over and over and over again.

I mean it's not [ dissimilar ] to what we do in oncology, right? There are some patients that sotatercept is going to be fabulous for; and there's some that it's not...

[indiscernible] that's the key.

So I think we're going to be part of just a whole new way of thinking about treating these patients. And again, sotatercept's a fabulous drug. We think seralutinib is a fabulous drug. The winner here is going to be patients.

Okay. So to what extent can you guys use ATS as an opportunity to sort of recalibrate the discussion? I assume we're going to get TORREY data. I don't know if you want to say that today, but it seems like that would be in a [ venue ].

Yes, we will have [indiscernible] at ATS. And we were fairly disclosive [indiscernible] criticism, but the [ meeting ] went to the last minute before the market opened when we released the data. So there will be some additional data that we released at ATS or at some sort of an investor forum, things like translational and potential predictive biomarker work, some of the discussion around where we will be with -- will be through regulatory Phase III clarity as well as -- and again, well, for us, early days. We do think that some of the signal we're seeing in our open-label extension will really also change the perspective on seralutinib.

Okay. Maybe in the final minutes here, talk about the non-seralutinib part of the portfolio [ at an ] earlier stage, but you've made some progress there and just kind of remind me and focus where you stand?

So we are in a dose escalation study for our BTK program, GB5121 in primary CNS lymphoma. Almost everything else that we have paused just for resource allocation towards seralutinib. So we hope to have some data in the second half of the year. It is a very tough indication as you can imagine. So we are marching through. And we believe we're approaching what we think will be the therapeutic dose.

Okay. And then just a final messaging, remind me just on what you guys have formally communicated on the Phase III start.

Hopefully, July of this year.

Okay. Great. We'll stop there. Bryan, Rob, thank you very much for the time, and best of luck.

Thanks, Carter.

Thanks, Carter.

Thank you.