Keros Therapeutics, Inc. (KROS) Earnings Call Transcript & Summary

Good morning. This is Jessica Chutter from Morgan Stanley Investment Banking. Let me first read the legal disclaimer. For important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. So I would like to welcome Jasbir Seehra, the CEO of Keros to this fireside chat. Welcome Jas.

Thank you, Jessica. Thank you for the opportunity to have this conversation.

Great. I think it would be great, Jas, if you could provide a little bit of background for people who are not familiar with your company. You founded the company and what the reasons were behind kind of the company.

Yes. So I think the TGF-beta superfamily of ligands, receptors is really very powerful pathway in development and in adults. And over the years, what I've seen, okay, is that this biology translates all the way from rodents to humans. So the biology risk is reduced, right, by working in this pathway. And a number of products have been approved and are marketed, infused upon morphogenic protein, too, as well as Reblozyl, a modified active and receptive track. So I think for me, sitting here in 2014, 2015, it was -- the biology is really powerful. So there's lots of opportunities. There's opportunities in hematology. There's opportunities in bone. There's opportunities in neuromuscular diseases. There's opportunities in oncology. But because the biology is there in development and in adult tissue, it can be somewhat confounding at times. So some of the molecules that are worked on had multiple effects on multiple tissue, and that can be limiting, okay? And therefore, for me, it was, is there a way -- and I put it in sort of the colloquial term, is there a way of taming this biology, right? And that's what really it was all about. And that's through really making -- engineering the molecules and being able to separate out the different effects. So can you get a molecule that has increases in bone mineral density without dose-limiting pharmacology on red blood cell. Can you end up having a molecule that increases skeletal muscle without, right, having effects on vasculature, right, which the wild-type molecules have. So That was -- those were the questions. And the answer to those clearly is yes, but that was really the sort of light bulb going off, right, for me back in early 2015.

Great. Well, thank you for that background. And as you mentioned, given the biology here, you do have a very broad product portfolio. Perhaps we can start with KER-050. You obviously recently announced some preliminary trial results from your Phase II clinical trial in MDS. And perhaps you can provide some color on that and really how you're looking to shift the paradigm for treatment in this area.

Yes. So what we saw from the Phase II data that we reported midyear is that the drug is recapitulating the biology that we've seen in rodents and then in our healthy volunteer studies. So what is that? We saw increases in the red blood cell parameters and we saw increases in platelets, right, in the 2 lower dose cohorts. And so for me, that meant we're seeing the proof of concept with the drug, right? The drug is doing what it does in healthy volunteers in MDS patients. Now what does that treatment look like? So I think when you think about MDS patients, they present with anemia. That's one of the first characteristics in those patients. Early on in their journey in that disease, they become anemic. So can you treat that? Well, there are treatments there, and we can talk about those in a minute, but as they continue to progress with their disease, they normally have anemia but they end up with thrombocytopenia and neutropenia as well. So that disease results in multiple cytopenia. So a drug that can actually address multiple cytopenias has an advantage because then the patient will remain on that therapy for a longer period of time. And when you look at the patients and their treatments today, for red blood cells, you can give them a red blood cell transfusion. You can give them erythroid stimulating agents. You can give them Reblozyl. And there are limitations, okay, right, with those treatment, but those are there. But there's nothing there for thrombocytopenia, there for platelets. Because if you use the thrombopoietin receptor agonists that are there, they have a high risk for AML. So you're not going to be using those for those patients. So how are those patients treated? Basically, physicians monitor them very, very closely and only as a last resort, they give them a platelet transfusion. So there is really no treatment for them, and they are at high risk for bleeding events. I think what 050 represents is a treatment that can treat anemia, but also the thrombocytopenia, and therefore, the patient can continue to be on a treatment for a long duration. I think when you look at the anemia aspects of it, erythropoetin stimulating agents work well only in those patients that actually have lower erythropoetin levels, right? And it's not surprising. Early on in the journey, okay, again, no red blood cells, so your body starts increasing the levels of ASA. When it doesn't get that response, then those patients continue to become anemic, but EPO levels high. Patients with high EPO don't respond to ASA. Reblozyl, on the other hand, works at the other end of the cycle or a journey of a red blood cell from a stem cell all the way to a fully mature stem cell, but there's a lot of gap in between. So you can almost think of the red blood cell going on this journey like a train ride, okay, with stops at each plate. Well, with ESAs, you've got the conductor blowing the whistle and a line will get things to go through at the early stages, and Reblozyl at the late stage, but there's all those stations in the middle. 050 works at all stages.

That's great. And so I think you're expecting to deliver additional data towards the end of the year, Jas. And how should people think about kind of the profile that you're looking to portray here in terms of this potential best-in-class product?

Yes. So first of all, when we shared the data midyear, we really only shared data from the first 2 cohorts. And even there, it was from 9 patients that had received more than 8 weeks of treatment, okay? So at the end of the year, what can we anticipate? We'll have all of the data from the first cohort, the second cohort and the third cohort, right? And then we would also, hopefully, if we don't see any DLTs on cohort 3, move on to cohort 4. So there will be some data from cohort 4 as well, okay. So at the end of the year, right, we'll be seeing 18-plus patients' data as opposed to just about 9 patients' data, okay? And then, I think being able to show that we're getting a response in both RS and non-RS patients, which we did see, and actually being able to elaborate on an our individual patient basis about what we're seeing. So we reported midyear that we were seeing increases in hemoglobin equal to or greater than 1.5 grams per deciliter for 8 weeks. It will be nice to be able to show the individual data throughout their treatment. Those are the kind of things that we'll be able to share at the end of the year, and then we would have been dose escalating. So what are we seeing in terms of the response at different doses? We saw the response at the lowest dose, 0.75, right? And we'll be able to report what we have picked as the starting dose, okay, for Part 2. Where in Part 2, you're going to be treating patients where you start with a particular dose, and then if they're not responding, you're going to dose titrate up from there. Similar to what Reblozyl doing. Similar to what ESAs do, right? So that's how we're going to be proceeding with Part 2. So by the end of the year, we'll share the design of Part 2, which is what are the doses at which we're starting, and also the number of patients that will be enrolled into Part 2 because that is the -- that will deliver us the data that we will use to design our registration trial, which will be the one that will follow this study and also to initiate the discussions with regulators on the end of Phase II data.

Great. Well, that sounds very exciting and some very relevant near-term data and decisions to make with respect to proceeding to the second part of this trial. Great. So I guess with respect to 050, it's not just MDS that's relevant here. I understand you're going to be developing this also with -- regarding myelofibrosis, both kind of in the context of a monotherapy and a potential add-on to JAK inhibitors. Perhaps you can talk to us about the program and the plans from a clinical trial development standpoint.

Yes. So I think that's an exciting opportunity because in myelofibrosis, you really have the underlying disease, which are mutations in the JAK/STAT pathway, resulting in failure to make red blood cells but also failure to make platelets, okay? And the precursors for platelets are megakaryocytes. And it's those precursors that accumulate in the bone marrow and then they break down, okay? And that break down results in inflammation and fibrosis. So as a consequence of that on a constant basis, the bone marrow is undergoing further and further degradation. And as a consequence, the hematopoesis, production of blood cells, moves from the bone marrow to the spleen, which then results in the symptoms of the disease. And that's what current treatments deal with. They'll reduce the production of those cells in the spleen and thereby relieving the symptom. But now, you get the anemia and the thrombocytopenia as well. So being able to address both of those will be a really nice opportunity. Now if you can address both of those, which we believe 050 will do so, then you will actually potentially reduce the fibrosis that occurs in the bone marrow because you're aligning those precurses to mature. You're returning that bone marrow to more natural state. So if that happens, would you then actually see a reduction in the symptoms, the reduction in the extramedullary hematopoesis in this thing. Because then, you could truly be disease modifying, okay, and therefore, make a treatment with the JAK/STAT inhabitors more tolerable or perhaps reduce the dosing and not need it in the bone marrow. So that's the opportunity is to be able to see that. And therefore, the Phase II study we want to explore both monotherapy and in combination because in the combination arm, you're going to see are you able to release -- ameliorate the anemia and the thrombocytopenia. And what does that do, right, in terms of the doses of the JAK/STAT inhibitors, ROCs, in this particular case, right? And then in the monotherapy arm, you're really looking for do you actually need to go on to ROCs or can you actually treat patients and prevent or not need to go on to ROCs. And initially, you're going to have patients who didn't tolerate ROCs in that monotherapy arm, okay? But that's -- so you're basically thinking about it as adjuvant therapy to but potentially as a monotherapy, and that's what the study will be able to address. So we'll have 2 arms to the study. One, which is a monotherapy, the other combination therapy. It will be very similar to the MDS study, which is dose escalation in Part 1, and then a dose confirmation thereafter. So very similar design to the MDS, but now, only it has 2 arms to it. And actually, this study is posted on clinicaltrials.gov.

Great. And when do you expect to start that trial?

Well, it's posted on clinicaltrials.com. That tells you we're moving forward with it. We said we would start this study in Q3. And so we're really just rocking and rolling on that.

Great. Okay. Fantastic. So I think now we'll move to KER-012, which I think is another very exciting product. Perhaps, again, you can touch on the background here in terms of what the opportunity is, and we'll talk about competitive product profile in depth.

Yes. So I think the opportunity, okay, is that in PAH is actually signaling -- reducing in the bone morphogenic arm of the pathway, right, that leads to the disease. And really the beautiful thing about this pathway is that both the BNP arm as well as the TGF-Beta active arms always operational, and they're antagonistic to each other. So if you want to balance signaling, you can either increase signaling of one arm, okay, or you can actually decrease the signaling of the other arm. And that's what 012 will do. It will bind the active arm, okay, right, and they will improve the signaling to the BNP part of the pathway. And the key thing here is if you do that, what are the biology that you're going to see? Well, clearly, in PAH, but the other is bone -- the activin receptor's increased bone mineral density. How do they do that? They inhibit activin signaling in the bone and increase the BMP signaling. So that's exactly what's happening in PAH. So we were able to see that with 012 in preclinical studies early on that we can increase bone mineral density with it, right? And we don't increase red blood cells, and that's been one of the real issues in this pathway, is that when you get that red blood cell effect, then that becomes dose limiting. You can't go more than 1 gram per deciliter increase in red blood cell without putting additional strain on the heart, and therefore, regulators tend to want you to keep that increase well below 1.5 grams per deciliter. So if you've got a red blood cell effect, yes, the drug will be effective but it is going to be limited, okay, right? And so we were looking for a model to -- frankly, for bone indications, and that would not have a dose-limiting pharmacology on red blood cell. And then when we see sotatercept's data, it was like, okay, we always thought that this could work there, but that data was very, very compelling.

Great. And just in terms of the data you currently have under -- preclinical data that you have underpinning this, and I think -- I understand also there's read-through from 050 that gives you confidence. Maybe just talk about the bolus as we enter into this clinical trial.

Yes. So when we saw that there are no increases in red blood cells with this molecule, it really was exciting because it means that we won't have that dose-limiting pharmacology. That means, okay, we can dose to the dose levels where we got good target engagement, high target engagement. That's what we want. And every time I've worked on one of these receptor ligand traps, if you see increases in bone -- sorry, increases in red blood cells in monkeys, it inevitably translates to increases in humans'. So I saw it with earlier work. We saw it with 050. We see very nice increases in rodents. We saw it in monkeys. We see them in humans in healthy volunteers. Now we're seeing it in MDS stations. With 012, we don't see it in rodents. We don't see it in monkeys. So we have a high degree of confidence that we will not see it in humans, but we have to do that experiment. We have to do the healthy volunteer study, and that's what we are starting this half of the year.

Great. Okay. Fantastic. Again, exciting, and I understand that, that data also will be available at some point in 2022.

Yes. It will be. We anticipate the full data set coming out from the single ascending dose and the multiple ascending dose in 2022. The single-ascending dose will be in the first half of the year. And that really will allow us to understand what doses we're able to get maximum target engagement without any confounding biology.

Great. Fantastic. Okay. Well, I think then we have KER-047 in terms of the clinical -- Phase II clinical trials ongoing there, perhaps we can touch on that in terms of the activity.

Yes. So 050 addresses, in effect, hematopoiesis, where you're not making cells. But you failed to make red blood cells, mature red blood cells if there isn't enough iron. So if you don't have enough iron in your diet, you become anemic. But then, there are other reasons why you may not have enough iron available for incorporation into red blood cells. And that's because iron gets locked up in tissue. Iron is toxic. You don't want free iron around -- floating around in the body. It causes radical oxygen species to be generated that are really very toxic. So iron gets locked up in tissue. And that iron mobility or homeostasis is through a master regulator called hepcidin. And hepcidin allow -- by increasing or decreasing, you allow iron to be either stored or moved out of the storage issue. And that's what 047 does. So we're moving this, and we completed our Phase I study, where we saw that treatment resulted in reduction in hepcidin in healthy volunteers, right? Even though they have low hepcidin, you could reduce it further, and as a consequence, you increase iron and circulation. And that iron is available to be incorporated into red blood cell. Now we've got to take it to the next step, which is in patients. There are 2 patient groups that we're going into. First one is this iron refractory, iron deficiency anemia, and these patients have uncontrolled signaling through this pathway, high hepcidin. So for us, okay, it's a very clean patient population because they've got a genetic mutation that results in this. Can we now treat them and actually see improvements in their anemia, okay? Can we get or ameliorate that anemia? So that study is starting in this half of the year. And then the same sort of biology is at play in diseases where the chronic inflammation is there. So in rheumatoid arthritis, in inflammatory bowel disease, in chronic kidney disease, same biologies is at play. But it's also at play in myelofibrosis and MDS. So for us, there's actually synergy between 050 and 047 in those 2 indications. So we're starting a study in iron deficiency anemia, anemia of chronic disease this half. And our focus, okay, initially is going to be in MDS and in myelofibrosis, but then, we'll use that to walk into other patient populations.

Great. Well, gosh, a lot of activity. Perhaps, you could just articulate from the 3 programs we've talked about, and I'm assuming there's a lot going on in the preclinical side, too, but what kind of news flow we should anticipate over the course of the rest of 2021 and into 2022.

Yes. So 2021 is going to focus on 050 in the MDS trial at the end of the year, okay? There will be preclinical data on multiple programs throughout the year. And then in 2022, because we would have started all 4 -- or there were 4 Phase II ongoing studies with 050 and 047, and they're open-label studies. So there's going to be data that's going to be coming along in the course of the year from those studies. And then 012, in the first half, the SAD data. In the second half, MAD data. And then towards the end of the year, looking to pivot 012 to Phase II studies in PAH and in osteogenesis in cofactor. So that's really quite a lot on our plate, but there's a lot of news flow in terms of data coming along in the remainder of 2021 into 2022 and into 2023, actually.

Great. Well, that's really exciting. We're coming up to the half hour here. We've got one more minute to ask. Is there anything else that you'd like to add in terms of, obviously, all the exciting activity that's going on with your portfolio?

No, I think, really it's a wonderful opportunity to really show the power of the biology. And I think the team has done an amazing job of coming up with these molecules and where we can get the selectivity in terms of the pharmacology that we want, okay? So in just a little over 5 years since we got our Series A funding, it's really a great validation of the biology in my view.

Great. Well, thank you very much, and we look forward to our continued dialogue here and seeing the continued successful results of these clinical trials. Thank you very much. Thank you, everyone, for attending.

Thank you.