Kymera Therapeutics, Inc. (KYMR) Earnings Call Transcript & Summary

Okay. We're going to get started. My name is Rich Law. I'm a senior biotech analyst at CS. I'd like to welcome our -- Kymera for next fireside chat. We're joined by Nello Mainolfi, CEO. Nello, welcome.

Thanks, Richard. Thanks for the invite.

So before we jump into Q&A, any opening remarks from you?

Yes. So first, thanks for the invitation. Beautiful location. Luckily, today is a good day. I just want to remind everybody, Kymera is a company focused on taking targeted protein degradation and building a fully integrated commercial-stage biotech in a disease-agnostic and technology-agnostic manner. Obviously, we've been focused in the past 5 years or so on -- actually 6 years at this point on oncology and immunology, and building a pipeline of programs that we believe exemplifies or maybe capitalizes the best, the power of the technology. We've been focused on the evolution of the platform to being able to do new things that the current version of the TPD platform cannot do. And we focus again to continue to build capabilities and team to fulfill our vision. So we have 3 programs in the clinic. We have one more program that will hopefully go into the clinic soon. And we have several other programs that will be going into the clinic in the next 2 to 3 years. So we have a growing pipeline of best-in-class -- or first-in-class targets where, again, we can simply and clearly articulate that TPD or targeted protein degradation is the only way to capitalize on that particular biological question that we're trying to answer in the clinic.

Yes. Thanks for the overview. So I know we talked about last night over dinner that there's about 50 targeted protein degradation companies out there. How do you see Kymera staying ahead of the field? And is there -- can you still have a differentiated degradation platform?

I have to do some diligence on the 50, but I trust you. I think whenever there is a very exciting new technology, which I think we all probably here accept what targeted protein degradation is, it's only natural that there is a huge investment. And we've seen it in pharma, I think many pharma companies have either internal efforts or external partnerships or both. And so it's also not surprising that there are many science experiments out there run by some teams to try and innovate in the space. I think if you think about companies, I think about a group of people that have the capabilities and the credibilities to discover, develop drugs in the space. And I think if you think about that, then the number is quite small. Having said that, our goal is not to be the only innovative protein degradation company or to be the best protein degradation company. Our goal is to actually put drugs on the market that change people's lives. And we know that if we do it well and we use this technology well, we will do that very successfully. It turns out that I strongly believe that to accomplish the goal of putting drugs on the market to help people's lives in ways that other technologies cannot do, you probably have to be really, really good at protein degradation. And our philosophy is quite simple: first, we are focused on solving problems. We're not trying to find an application for the technology, but we actually look at the other way around: what is the clinical problem that this technology can solve for. And I think if you look at our pipeline, hopefully, you can appreciate that our target selection is quite differentiated from the rest of the industry, both small and large pharma, on how to apply protein degradation. Obviously, time will tell. But all the data we've generated so far has been telling us that, first, we can execute on our hypothesis and that we're able to generate molecules that should be able to answer those questions clinically against targets that other technologies cannot go after. So we will never work on a target that has been drugged already where there is the theoretical superiority of protein either by function or degrader. We'll work on targets where there is a biological differentiation or superiority if you use a degrader versus in other technology. So that's one aspect that I think separates us from most other companies, I would say. The other one is how we're building the company. We're very focused on a long-term value-creation curve, which means that there are investments that we're making that will transform the field, but it might take time to do it. We often talk about our E3 ligase platform and our vision to building tissue-specific or tissue-selective degrader programs where you can actually affect the biology sparing particular tissues that you want to spare from the degradation mechanism. That, obviously, is a very bold goal that we started working on, at this point, more than 3 years ago. And it will take time, but we have the time and the resources to do it. And when we are able to accomplish that, that particular goal. I think we will be able to transform how people think about medicines even outside of TPD. And that's something that I'm proud that I think we were the first company to build capabilities in this space. Obviously, now this is an area that is discussed often outside. But I like to believe that we were leading in the space. So those are some areas that I believe kind of tell our story quite differently.

Got it. Okay. So as we move into 2020, how should we think about your burn rate? Because I see some changes to 474 Sanofi, could [ you ] take that over and you don't really have to spend much money on a Phase II. And then you have the oncology assets coming up into the clinic. So how should we think about the burn rate and your need for capital?

Yes. I mean, so we're in a very fortunate position right now. We -- as many of you know, we had a -- we closed the pipe in August of about $150 million that has allowed us to be, now in Q4, with close to $600 million in our balance sheet, which gives us the flexibility to invest, but also the responsibility to do it well. So I don't expect our burn rate to materially be different from what we've guided already, regardless of Sanofi's decision, that might have an impact on, to some extent, on our runway, but not on our burn rate. I think we are focused on executing on our clinical pipeline. We have lots of exciting programs that will be going in the clinic in the next 2 to 3 years. We believe these are high-value targets that have not been drugged or drugged well before. And we're focused on capitalizing on what I often call it first-mover advantage in the space and bring as many, hopefully, game-changing programs in the clinic as possible in the shortest amount of time.

Right. Okay. Got it. So let's start with 474. You guys announced that you'll be sharing data in December -- on December 14 for that asset and also your oncology pipeline. So where are you now with the data generation and analysis?

Yes. I think as we've said in the last call, things haven't really changed. We completed the study. As we've said, we were collecting and analyzing data and we're planning to present them on December 14. So that's still the plan. I don't think there is any kind of further update from the quarterly call that we had really only a few days ago.

Have you been getting calls from Sanofi asking where's the data?

As we said in the call, we -- once we have the full data set, we will share it with Sanofi and we've also said that we have a strong relationship and we have close communication. So that's probably all I can say.

Okay. Got it. So of all the inflammatory diseases for this Part C study, why did you choose HS and AD? Why not RA where Pfizer's IRAK4 inhibitors show some success.

Yes. No, it's a great question. And actually, I can answer this question in so many ways, but I'll start with one and then see if maybe I'll add other things. I go back to what is the goal -- what was the goal, the intended goal of the study. The intended goal of the study has always been to confirm that the relationship between exposure of drug and degradation of the target is conserved as you move from healthy volunteer to patients. Initially, in fact, when we designed the study 2 years ago, this was a 2-week study, was parallel in matching the healthy volunteer 2-week dosing to basically show -- hopefully show that the healthy volunteer profile was similar to the patient profile and that the target expression or inflammatory state wouldn't have an impact on the degradation ability of the drug. And we decided to use diseases that we were interested in. HS and AD are interesting diseases for the collaboration. And we just thought, let's use indications that were -- that have future relevance to the drug development plan for the drug. Eventually, we extended the study by 2 more weeks, so it became a 28-day study for reasons that we've discussed already. Obviously, I can mention them again. But again, the goal of the study was not to show proof-of-concept in HS and AD. So yes, you could have had RA, you could have had IBD, you could have had lupus, but we decided to use diseases that we were interested in. And we didn't feel like we had to prioritize based on clinical probability of success of the study because that was not the goal of the study.

I see. Okay. So let's talk about the biological rationale for IRAK4 in targeting Th1 versus Th2 diseases. So there seems to be a lot more support for Th1 compared to Th2, right? For example, atopic dermatitis is mainly a Th2 disease. And the cytokines associated, which are IL-4, -13 and -31, which you guys haven't shown any effect on these cytokines through the IRAK4 pathway. So just want to see -- I mean what is your take on Th1 versus Th2. And does it make sense to focus more on Th1 first?

Yes. No, it's a great question. So I will start with saying that -- it's true that the IL-1 TLR pathway has been most studied in diseases that might be associated with Th1 biology, RA, to some extent, HS, gout, GI inflammation and other rheumatological diseases. It's also true that I think we're learning that there is not a particular fine separation between Th1 and Th2 biology and especially in complex diseases like AD, like HS where you have systemic and local inflammation. So you have a systemically driven disease that results in local inflammation that is then exacerbated by the local factors. And we know that in those particular context, there is a lot of TLR-driven inflammation, which is right on pathway for our IRAK4 biology. We've also learned that, for example, JAK inhibitors that have shown, so far, good -- interesting activity also in AD have -- their signature is kind of a broader anti-inflammatory cytokine blockade and not necessarily focused on only IL-4 or IL-13. So I think with the hypothesis for AD and for some of these Th2-driven diseases is that the broad anti-cytokine signature that IRAK4 degrader has, which I'm not saying IL-1 antibody has or IL-33 antibody has or even an IRAK4 kinase inhibitor has, the IRAK4 degrader signature is much broader than any of those agents that have been tested in the clinic we believe, has a serious shot at having activity in these diseases that have quite a lot of heterogeneity in terms of cytokine impact.

I see. So in your corporate deck, you guys listed the IL-1 alpha as a clinical pathway to treating AD for IRAK4. So earlier this year, J&J discontinued bermekimab after the Phase II data in AD and wrote off, I think, $600 million in losses. So this biologic agent from J&J also targets the IL-1 alpha pathway. So what gives you confidence that this pathway make sense in disease for IRAK4?

Yes, I think the beauty of all these data that has been generated, so IRAK4 kinase inhibitor has shown some interesting proof of concept in RA, disappointing data in HS. I think some people might be able to like squint and see some trends in activity, but let's say, nothing that was in my eyes, statistically significant. Then we've seen activity in -- with IL-1 directed antibodies with IL-33 directed antibodies, IL-36 directed antibodies in a variety of diseases. Some of them also in AD in early studies, they then eventually showed harder time to show real activity in larger placebo controlled, randomized late-stage studies. So confirming what you said. But if you see that many of these upstream partial blockers of this pathway have clinically shown relevance to disease, and now you have an agent like an IRAK4 degrader that has the ability to block all of those upstream cytokines together with a single or a small molecule and you can hopefully expect that you're going to have the combined activity of all these agents that have shown some activity, then I don't think it's a stretch to believe that actually this signature that we have with an IRAK4 degrader can have a really broad impact in many immuno-inflammatory diseases, especially the ones where you have high inflammatory state where you really need to have a full blockade of the pathway that no other agent is able to give compared to an IRAK4 degrader.

I see. Okay. So let's talk a little bit more about the Pfizer data in HS. Obviously, a lot there to make sense. Pfizer was not able to show any effects in the [indiscernible] compared to placebo. And I get that 474 could be more potent at blocking IRAK4 activity by degrading it. And I mean, do you agree that there's risk that targeting sort of this pathway may not make sense just based on what Pfizer data showed?

Look, I think we've -- for 6 years, we've been saying that the IRAK4 kinase inhibition as -- and we've shown it, there are 7 slides in our corporate deck that I encourage everybody to get very familiar with that demonstrate the biochemical -- the biological and the mechanistic differences between inhibiting the kinase function and degrading IRAK4. And this is not about potency, at least not in terms of how I think about potency. I think about potency as you need a lower amount of drug to have a similar effect and another drug that requires a higher amount of drug. I think that we have -- so we don't have that. We have a differential way to block the pathway that is -- that an IRAK4 inhibitor is never going to be able to have even if they inhibit the kinase function at 100%. And our signature is what, we said often in the past, is context-independent. Meaning that no matter what the activation is of this pathway, we'll always be able to block it with the same potency profile. If you take the inhibitor, there is only some context in which that inhibitor is able to block the pathway. And that usually results in there are only some indications or some subset of patients in that indication that will respond to IRAK4 inhibitor. So we've always said that in order to block this pathway well, you need an IRAK4 degrader. And for us, IRAK4 inhibitor might as well be considered a different target because the biological output is completely different. So obviously, I'm biased, but I'm biased based on data. The data that we've shown so far continues to point to a differential biological response if you use a degrader versus inhibitor, and is the point about building our company is investing in pathways and in targets where we know there is a different biological response. So the fact that the IRAK4 inhibitor didn't work in HS just continues to validate our thesis. And actually, the fact that it works in AD -- sorry, in RA was quite surprising to me because actually RA is also a quite heterogeneous disease. So the fact that IRAK4 inhibitor worked in RA to me is a big deal and a big validation of that pathway. But the final answer will come from a placebo-controlled randomized Phase II study, and we hope to be able to run that soon.

Sure. So you mentioned about QTc prolongation observation, about 10 to 20 milliseconds. Did the FDA require you guys putting a more thorough QTc assessment for Part C?

No. So thanks for bringing that up. So we disclosed, I believe, in May that in the healthy volunteer MAD study, so this was a 2-week study, we saw this, I call a subclinical QT observation. It was not an adverse event. It was a finding that we observed where even across different doses, the magnitude of the effect, which was very minor, a shift of about 10 to 20 millisecond was consistent across the dose cohorts. So a very minor effect that was self-limiting and plateaued on its own, look like, between day 7 and day 14. So when we design our Part C study, we did not get any particular feedback about any other studies that we needed to run to kind of confirm this QT effect. I mean we've definitely measured in the healthy volunteer and that's sufficient to measure this effect. And then now it's really continuing the development of the drug in a way that is safe for patients and hopefully will be supportive of registration when it happens. And based on the magnitude that we've seen so far, we have no reason to believe that if the magnitude stays within the range that we've seen in the healthy volunteer that this will play a role in how the drug can do in development and in the commercial stage.

Sure. And so for Part C, was there any QTc exclusion criteria like, say, patients less than for 10 or for 20 milliseconds?

So I think the only thing that we've discussed is that, obviously, if you have a drug that has even a small effect on your QT at baseline, there are some subjects that are very rare that have a genetic mutation for which their QT is elevated. And so those type of patients were excluded from the study. Again, we've never actually encountered one of those patients yet. So I don't believe it had impacted our ability to recruit. And then our bar for the baseline was consistent with any Phase I or Phase II studies. It wasn't necessarily designed to account for our profile just because, again, our QT effect is quite minor. So it doesn't require a stringent entry criteria.

So you didn't account for that, say, that 10 to 20 or up to 30 millisecond into the enrollment?

No. We had some inclusion and exclusion criteria, but actually were not different or dramatically different than the healthy volunteer study.

I see. Got it. So we spoke to our derm expert and he expects to see about greater than 20% AN count and greater than 30% is or EASI benefit even for a short 4-week study just to be confident it's not placebo effect that they're seeing. Is that a fair statement? Do you think that's a fair assessment?

So it's a great question, actually. So let me answer in 2 parts if you're okay with that. The first part is the study -- as I said earlier, the study was designed to confirm PK/PD and safety. And because it's a small study without placebo, our goal was not to come out of the study with discussing absolute clinical endpoints. But can we learn that there is a correlation between maybe PK/PD, some biomarker that we'll be able to generate in any measurable clinical changes in patients. And that continues to be the goal of the study. We will share the data that you mentioned. And obviously, everybody will be able to do math. I think what you've said is not different than our understanding about what placebo effects can be in these patients -- in this patient population. We've seen in these studies with approved drugs that in AD, you can have maybe 10% to 20% placebo effect; and in HS, around there or slightly more. And so I guess, yes, I understand where that is coming from. But again, in the absence of placebo, this is why it's difficult to extrapolate absolute responses.

Right, right. So our derm expert also expect that no Grade 1 QTc, especially for AD, just because I think he mentioned about medical liabilities for dermatology setting. Is that a fair assessment?

Well, I think as we've said, with regards to safety, if you look at the safety profile of our Phase I healthy volunteer study, we had a really benign safety profile with -- and then the finding of QT, which was not in the adverse event table, as you guys remember, was what we call a subclinical with a mean between 10 and 20 millisecond. We love that from the patient cohort, the safety profile is consistent with what we've seen in the healthy volunteer.

Okay. So you guys didn't have to add the clinical endpoint. You guys added that later on into the trial. And then I think you guys -- you said with Sanofi's approval. If these endpoints are not positive, would that increase of risk for Sanofi not wanting to proceed?

Yes. It's a great question. Why -- in the way you're asking why take the risk in AD, yes. So -- and actually, we were discussing this last night. So why did we include this clinical endpoint because we extended the duration of the study. Maybe it's now a good time to explain why we expanded the duration for 2 reasons. In the healthy volunteer study, which was a 14-day study, we were able to see that between the -- while in plasma, both PK and PD basically reached steady-state at day 7. Meaning that between day 7 and day 14, we saw the same PK and PD. In the skin at day 7 and day 14, we still saw more degradation at day 14 and day 7. So I guess the data is pointing to the fact that probably we hadn't reached steady-state by day 14. And so we wanted to run the study longer to capture kind of the steady-state in the skin. And also, as we just talked about, we did observe this QT finding that seemed to have plateaued between day 7 and 14. So we say if we extend it to 28 days, we'd be able to hopefully continue to see that plateaued effect. Now because we went to 28 days and we know that in the standard-of-care drugs at 28 days, you can start to see separation from placebo of this clinical endpoint. So we thought we could learn something. Obviously, this was really driven by our drug development mindset of trying to learn something from a study to inform the next study. We obviously discussed it with our partner and obviously understood and appreciated that, given the nature of the study, we weren't going to be able to make go/no-go decisions on such a short study, small study without placebo. And so we felt that it was an exploratory endpoint that might be able to tell us something that would be useful in designing further studies down the road. So that's how we view it from the kind of clinical development viewpoint.

I see. Got it. So we have a couple more minutes left. If the audience have any questions, please raise your hand and we'll get to you. So why don't -- I have one last question on 474. So obviously, once you submitted the data to Sanofi, you're going to wait. And then at end of the year, they're probably going to do some portfolio prioritization. If they decided not to proceed for whatever reason because of the market, they want to cut costs and so forth. How do you think about moving this program on?

So the question is kind of 2 questions in there. So if the question is about not advancing 474 into Phase II, we believe that we have aligned expectations about what the market needs to do to move into Phase II. So if Sanofi decides that it hasn't met the internal bar and we're aligned on that bar, then probably we would be aligned that 474 should not move into Phase II and then we'll focus on a potential backup molecule. Obviously, this is not a scenario that we'd like to see, but we have to obviously look at the data rigorously. I did share before what our expectations are. So hopefully, that's clear to the audience. If the feedback is different and say, we're not interested in IRAK4 as a mechanism anymore, and then in that case, obviously, that's a different scenario. Then the program will be coming back to Kymera, and obviously, we would be -- if we continue to believe in that program, we'd be more than happy to continue. I find this scenario to be very unlikely given the public statements that both Kymera and Sanofi have made on how important this pathway and this target is and the commitment that we have to explore this in the clinic.

Sure. So now moving to December 14, your presentation. What type of data should we see for the oncology asset?

Yes. So it's important -- I think about drug development and especially early development in 2 stages: you are derisking your ability to translate your molecule in the clinic, and then the second part is you want to be able to translate your biological hypothesis in the clinic. So the first part is the -- in this case, we have this amazing opportunity to monitor the activity of the drug real-time in patients. So does the drug degrade the target? Does it degrade it at levels that are approaching what we believe it to be therapeutically relevant? And does the safety profile continue to support development? So that's the data that we want to share at the end of the year. Like is the molecule doing what it's supposed to do? Is translation fidelity there with regards to degradation and safety so that as we go into next year, we can set expectations about clinical responses. And so that's what we expect for those 2 programs. And hopefully, also for MDM2, we hope to be on track to clear an IND by the end of the year as well.

Fantastic. So I think we're out of time. Nello, any final remarks from you?

No. We're excited about the company as we focus a lot on 474, but we have a broad pipeline of programs that are moving into and through the clinic. So stay tuned, and hope to see or hear from many of you on December 14 and beyond.

Nello, thank you so much. It's been a pleasure to host you.

Thank you.