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

All right. Let's go ahead and get started. Thanks everyone for joining. This is a fireside chat with Kymera Therapeutics. Happy to have with me Nello and Jared from Kymera Therapeutics. Thank so much for joining us. Appreciate it. Before we get started, I need to read this disclosure statement. For important disclosures, please see the Morgan Stanley research disclosures website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. With that let's dive into it.

Nello, good to have you here, both of you. Quite a lot to talk about in the pipeline and with your different therapeutic area focuses in I&I versus oncology. But maybe the best place to start is just kind of at a high level, some opening remarks from you on, where you've been focused for the business? What you think are some of the key milestones have been for the year? And Where you think people should be focused when they think about Kymera kind of over the next 12 months or so?

Yes. So I mean, let me start just by reminding everybody, so Kymera was founded with the vision to building a fully integrated biotech company that will use a technology like targeted [ product ] degradation to develop a new generation of medicines to address targets and diseases that have not been addressed by other technologies. . And so we have been totally focused in the past 8 years to identify the type of problem -- clinical problem, the type of targets that we believe is perfectly suited to use the -- to use targeted [ product degradation ] for and deliver really groundbreaking medicines and not just the incremental improvements over existing therapies. So maybe just to remind briefly to everybody, targeted product degradation allows you to use small molecules to degrade disease-causing proteins. And by degrading, I mean, eliminating disease-causing proteins from their cellular localization in a completely specific and selective manner. So it's really groundbreaking opportunities to go after proteins that are not addressable by, let's say, monoclonal antibodies because they're in the cell or by small molecule inhibitors because they don't have a catalytic site than a small molecule inhibitor can get to. So I think it's a -- I know this is probably more common knowledge these days, but I feel it's important to remind everybody that we have a unique opportunity to choose to use this technology to go after really difficult-to-drug or [ undrugged ] targets to unlock new space in terms of clinical and commercial opportunities. So what have we done in the space? We've been using, to be honest, target selection as our North Star. Our North Star has been working in pathways that have been validated, where there is human pharmacology, where ideally, there is human genetics, but going after, again, nodes in those pathways that have not been drugged or drugged well with other modality, where protein degradation is the unique technical solution and especially in the past few years, focused on areas with broad potential, both clinical and commercial. What we're most proud of in the past few years has been our ability to translate our preclinical profiles into the clinic. We've taken 4 programs into the clinic across oncology and immunology, and we've shown exceptional translation of PK -- with fidelity of PK, PD, safety and early efficacy. One thing that we're also proud of because not only is something that we've done first, but actually has opened up our path into immunology, has been taking the first program in the clinic in immunology. So we've learned what it takes to build immunology drugs, what is the regulatory path to derisk their development, what are the features and the work that we have to do for those molecules to be selective active and broadly active against different cell types. So with IRAK4, we've shown, for example, we [ integrate ] in the blood and skin, have impact in biomarkers and then finally have impact on disease states in both HS and AD. So going in the next 12 months, what we shared early in the year is our increased commitment to immunology. We've unveiled 2 new programs, the STAT6 [ degrade ] that we like to call dupilumab [indiscernible]. We've also disclosed our TYK2 degrader, which we believe has the potential to have biologics-like activity. And we said that this is the area where we're going to spend most of our time and money in the next few years. So we are just about to enter the clinic with our STAT6 degrader. And so next year, we'll have Phase I [ volunteer ] data and potentially data in patients as well, we'll address that as we get closer. With our TYK2 degrader, we should be in the clinic in the first half of the year with healthy volunteer data in the second half of the year. We have recently disclosed that Sanofi has expanded and extended our current Phase II studies in order to accelerate overall development timelines in both HS and AD. So in the next few weeks, we'll be able to add more color on timing and size of trials, et cetera. We have upcoming data results in oncologies. And one thing that I also want to say -- and I'm sorry, I'm taking way too long. Luckily, we have 40 minutes. All right. I got that wrong, too. I think one thing that I also want to make sure it's well understood, is our commitment to continue innovation. And our commitment to build a company that can deliver innovation over and over again will continue to be there and will be viewed as we continue to disclose new programs that are going in the clinic in the next few years. One probably starting from next year already.

Got it. Okay. Great. Helpful way to level set on a couple of different fronts. Let me ask kind of a big-picture question back. It seems like the number of biotech companies, the number of biopharma companies nominating degraders into their pipeline is growing over time. I mean, given your experience in this space, what do you think a company needs to have in place to be able to prosecute degraders successfully through early- to mid-stage development at the very least?

Yes. So first, I would agree with you that targeted protein degradation is a must-have technology in a toolbox of a serious biopharma company. It's just that's a fact. And I think companies -- most companies that I'm aware of have either attempted doing it or doing it in partnership. I think what has killed, over the years, the early attempts of especially larger companies into innovation and innovative space like protein degradation, and you can go back and look at what happened in RNA interference history, you can look at ADCs, you can look at CRISPR; there is that initial enthusiasm of everybody is now working on this particular area before realizing the level of commitment, going to your question, needed to be a credible player in the space, meaning the commitment, the focus that is needed to master a new technology. I'm not -- I personally do not believe that targeted protein degradation is a commoditized technology. And I believe that has a low barrier to entry, but a high bar for success. And I think companies that are doing well are very, very few.

Understood. And there's also a little bit of congregation around similar targets across certain pipelines, right? What do you think drives that?

Well, I think Kymera drives a lot of that. I think if you look at our pipeline. We were the first with an IRAK4 degrader. Now there is at least another couple of companies. We are the first with the STAT3 agent, selective agent. There is a few companies that followed us. From what I hear, everybody is working on STAT6 these days, at least whenever I walk down the road, that's what I'm told by everybody. So I think there is a bit of there are innovators and there are followers, and that happens every time. And that's actually a sign of how much need there still is for like true innovation in biopharma. And it's also true that if you have something that works, there's always the idea "I can do it, and I can do it better." And that's not only true for protein degraders, look at how many CD19 programs and how many PD-1 the industry has gone through. I mean our industry is amazing for building [ inefficiencies ]. So I'm not surprised that we're also doing it in this space.

Fair enough. Fair enough. Okay.

Am I being too critical?

No, it's completely fine. Also a good segue into my next question around the stronger focus you placed for Kymera on I&I starting, I think, this past January through your R&D Day. I guess, how is that pivot progressing? And taking a step back, what prompted that shift to...

Yes. Let me not correct, but refine your statement. So our external articulation of our increased focus happened in January. Our increased focus in immunology goes all the way back to, I would say, late '19, early 2020. And that's actually the year in which we made a concerted effort to shift a lot of our resources into immunology. And so what's driven that? A series of factors: one, maybe the most important one has been our early success with IRAK4, our ability to translate exceptionally well the PK, PD that we've seen in preclinical with IRAK4 into healthy volunteers. It was the first time that, that had been done. And I think while now seems an obvious part that we took, it wasn't done without being nervous about the early outcome or at least aware of how important it would be. And so that gave us the confidence to say protein degraders can work really well outside of oncology, which before had been, and actually made us appreciate even more and do a bit of a deep dive into "Now that we know that we can do it, what are the key pathways and targets that we can unlock and become a real powerhouse in immunology?" And we found these, in front of us, opportunities like STAT6, like TYK2, like others that you'll hear about in the next few months, that I believe are this once-in-a-generation opportunities of having oral drugs with biologics-like profiles. And we believe that degraders are uniquely positioned to give you both the efficacy and if you pick the right target, the safety of biologics. And we change -- we can change the paradigm of the industry. We've been used -- if you talk to commercial consulting companies, the reflex is you're going to compromise on efficacy with an oral drug because that's the perceived notion. And I think what we're trying to change the narrative is with data is -- actually, no. With degraders, you don't have to compromise on efficacy. You can have biologics-like activity in oral drugs. And that's really what has been the driver behind everything that we've been doing and we're continuing to do.

Understood. Great. I guess let's just kind of build on the I&I theme then. 474, you mentioned that there was recently a decision by your partner, Sanofi, to expand the Phase II program. Could you unpack for us kind of what drove that decision? What data you've seen from the program so far? What data they sought to inform that decision? And how the scope of the Phase II could change based on that?

Yes. I mean a good thing, we all looked at the same data. So what we have underpinning the strategy was really exciting early data from Kymera showing really robust degradation in blood and skin and early proof of concept, you can call it, in both HS and AD. And I think both companies felt it was impressive early data, exciting early data, encouraging early data. So I think what happened recently is what happens in drug development, where you have an ongoing, let's call it, proof-of-concept study in HS and AD, I think you realize that there is an opportunity to accelerate because I think the time is now for oral drugs in immunology. I believe Sanofi agrees. And so the opportunity was instead of doing a proof of concept in a dose-ranging study, was to actually combine the two into a single seamless study. And so in order to make this transition, Sanofi decided -- elected to look at interim safety and efficacy to make it a data-driven decision. I can't go into what was seen or not seen, but I can say that what was seen gave Sanofi and us, obviously, they're driving the program; the confidence that the increased investment is worthy and that -- of the program and that now is the time to expand the study. And so the expansion of the study is really focused on adding more doses, which is a regulatory requirement to then transition into a Phase [ III ] study. The main difference besides the additional doses and patients that we will see on clinicaltrial.gov in a few weeks, I believe, is also that, obviously, the timeline of the actual Phase II study will be extended because it's a [ standard ] study, but the overall timelines have been decreased substantially. And hopefully, when the clinicaltrial.gov posting will go live, the new one, we -- there'll be a new completion date, and we can talk about the new timelines to [ data ] now of this expanded study.

Got it. Got it. Okay. I recall that you previously outlined a pretty big indication set where 474 could go within the I&I space. What do you and Sanofi need to see to make a decision on where else to go besides HS and AD? Is it necessarily dependent on data, like the next kind of data from these 2 indications? Or are these discussions kind of ongoing right now?

Yes. I mean, look, this is always a tough question for me to answer because we have a very good relationship with Sanofi. They've been great partners over the years, and they have us -- they allow us to have a seat at the table, Jared actually and his team at that table, to decide and discuss and prioritize indications. That has gone well. And as I've said in the past, we have a clear plan for what those are, which is they're actually quite obvious indications for this pathway. I think what has not been fully fleshed out is when the next study will start. And I'm just going to let Sanofi comment on that, not to get in trouble once again.

Fair enough. You also have an opt-in on this molecule, right, and opt-in that you can exercise at some point. Talk us through kind of how exactly that opt-in works and when might be a good time for you to make a decision around that.

Yes. I thought when we signed this deal, this was a very clever approach that we took to say -- we were back then an early company with limited resources, and we said, we transition the program to Sanofi. But in the presence of outstanding data, and remember, this was -- it still is a big program for us; we wanted to have an opportunity to own 50-50 the U.S. market. . And instead of having to make that decision early in development, which is happening in many of the more recent deals that I've seen, we were fortunate enough, maybe good enough, to get the deal done in a way that we can actually make the decision after we see Phase II data and right before a Phase III campaign is being started. So that timeline is still there. And we have an opportunity to look at data and make that decision. Maybe one thing I want to clarify for everybody, the opt-in is into the global development program. It's not indication by indication. So once we opt-in, we're in across all the potential future indications.

Got it. So that would be -- you'd be opting in for all the indications that have been nominated to that point?

And futures. Anything, the whole global program.

Got it. Okay. Great. That's helpful. Can we pivot to 621 and 294 then?

Sure.

I think everyone might appreciate kind of your guidance on how best to interpret the initial Phase I readouts for those molecules coming next year. And maybe also a bit of color on kind of what you've seen preclinically to give you conviction that this was the right direction to go in.

Yes. So let me take the second, and I'll let Jared kind of talk about the clinical studies. I've rarely seen, if ever, a preclinical profile of a molecule that has such a robust data set in terms of PD efficacy across a plethora of systems, in vitro, in human systems in all species that we looked at. So what we -- I think what we were able to demonstrate is that if you degrade STAT6, you're able to block IL-4/13 signaling completely and you're able to [indiscernible] in terms of pathway engagement, what an upstream biologics can do and especially what an IL-4 receptor alpha like dupilumab can do. And that is, I believe, again, the first time that has been shown, even with just preclinical data, that you have an oral molecule that can basically match the ability of the biologics to block that pathway. So we're going into the clinic with the excitement of really translating that profile into humans first, into healthy and then into disease patients. And to be honest, our bar is to have this dupi-like molecule in an oral pill that we believe has the opportunity to change the treatment paradigm. Maybe we'll get to that in a second, and Jared can speak to maybe our Phase I and...

Yes. So in terms of the design, our Phase I healthy volunteer study is a [ SAD/MAD ]. So not dissimilar from what we did for IRAK4, KT-474. The MAD portion will be 14 daily doses. I mean really, our primary objective of the study is to show that we can fully degrade IRAK4 -- excuse me, STAT6 in blood and in skin. So in the MAD portion, we'll be looking at STAT6 in both blood and skin and the SAD just in blood. But I think it's very important for us to sort of reach that objective because we know from our preclinical work in some of these workhorse disease models of AD and of asthma, we've shown that we can reach dupi-like activity or even activity that sometimes is even superior to dupi in these models when we degrade STAT6 by at least 90%. And we believe we can achieve that sort of degradation even beyond 90% in the clinic fairly readily with the doses we plan to interrogate in Phase I. So I think the aim is show that level of degradation, 90% or greater, in blood and in skin, show acceptable safety, predictable PK. And we also have the opportunity to look at some Th2 biomarkers because even in healthy volunteers, there's some low level of Th2 tone, and you can look at biomarkers like TARC and IgE has been shown, for example, Regeneron has shown with DUPIXENT in healthy volunteers. And you can see modest 20% or so reductions in IgE, 30% to 40% reductions in TARC with dupi and healthy. And so we think we can use these as exploratory biomarkers in Phase I to show similar levels of modulation with our STAT6 degrader 621 to go along with showing, using very quantitative PD assays, this robust degradation of STAT6 in blood and skin and very importantly, to show the safety that is going to allow us to really derisk the program to the next step, which is then moving rapidly from healthy volunteers into patients.

Got it. Got it. At what point do you start thinking about the right indications to move into? And what helps kind of guide you on that decision process? Is it purely just what you're seeing in the Phase I readouts next year? Is it also kind of a consideration of commercial opportunity? Kind of what -- how is that going to unfold?

Well, look, I can start. Essentially, we're following sort of the dupi blueprint, right? Essentially, we can take a look at the various indications, where DUPIXENT has been active and it's approved. And those are certainly indications where we feel our drug should go. If it's capable of having activity comparable to dupi, which we believe it is, and having safety that's comparable as well. I think we're very interested in starting off with the larger indications, so I think indications like AD, asthma and COPD, not necessarily prosecuting them all at the same time. But I think it is important for us to sort of to get to these indications as quickly as possible. So I think starting with the larger indications and then moving on to the other indications that may be smaller, but that are still indications that are important, we think we can have transformative activity.

Yes. I think maybe just to add one comment, thanks, Jared; is our focus is to do, obviously, a rational data-driven development part. But the overarching themes, I guess, there are two. One is how quickly can we get to Phase III and how broadly can we address especially the large indications. . And I think for people that have seen under CDA, our development plans, I think we strongly believe that this is as competitive as you can be with any -- with anybody with any type of resources to do it right.

Got it. So is this -- is it fair to say that indication selection, at least for the first round of indications for both molecules, it sounds like it could be a 2025 decision, at least internally for you?

I mean, I think we've already -- like assuming that the program translates as we expect and hope, those decisions have all been made already. What we've decided to do is just not to talk about our plans just because as we just discussed, there is a lot of following out there. So I don't think we need to share with people, unless it's material for our investors. And then obviously, we'll make sure everybody is aware of what we're doing. But we don't have to do that so much ahead of time.

Got it. So I'll reframe the question then. So I guess is the public disclosure of the indications actually next year?

Public disclosures of indications, type of studies, sequence of studies will happen as we continue to advance the program starting from 2025.

Fair. Fair. Okay. Great. I guess final question then on these 2 programs, and then we'll move on to other items in the pipeline. Given you mentioned some of these indications could be sizable, therefore, some of these studies could be sizable; do you feel the need to involve a large biopharma partner for either or both of these programs anytime in the near future?

So we actually recently completed another relatively small financing. So we have about $930 million in our bank, which is both a lot and a little, depending on your plans. But we are well financed to run many, many studies that will get us through key inflection points, including dose-ranging studies in important indications. So we don't believe that actually would be either value-add or will reduce timelines if we engage other parties between now and Phase III. I think once we are planning Phase III studies, hopefully, we will relatively soon -- and depending on what the world will look like, our access to capital, our cost of capital or opportunities in front of us; decisions will be made about what is the best path to value creation. What we're trying to do as a company is to give us the optionality to make the decision of what's right for the company and for the program and not what we must do because we either run out of money or because we made the wrong decision. So conserving optionality as much as possible and then make it data-driven decision, both scientific data and any other data that can influence those decisions.

Understood.

So no partnerships in immunology for the foreseeable future, we're talking about for the next few years.

Got it. Got it. Okay. So given this emphasis on -- stronger emphasis in recent times on I&I, what is your internal threshold now for investing more dollars into oncology, either new programs or the existing programs for STAT3 and MDM2?

So our threshold bar has been clarified, I would say. We've always set the bar, but I think the past couple of years has given us an opportunity to really set the bar very clearly. And so in order for us to invest both now preclinically and clinically, we have to fulfill the criteria of not only the target selection, but we need to fill the criteria of a clear path to proof of mechanism, proof of concept that shows that the drug is best in that particular pathway or mechanism and that we have large addressable populations that are measured by hundreds of thousands, if not more, and not by hundreds or thousands of patients. So with that in mind, I think you should expect that whether it's oncology, immunology, programs where we have limited patient impact will probably be pursued likely in partnership. Programs that we believe have broader opportunity set, we're going to try and retain for as long as possible. And ideally, in some cases, all the way through. One other thing that I will say is that our discovery engine is not only focused on oncology and immunology, I would say that immunology is probably now 80% of what we do, both now in terms of resource spend as well as type of targets that we are focused on. But we are -- we always believe that degradation is a disease-agnostic technology. And I think our capabilities are definitely disease-agnostic, at least preclinical. Right now, we're building lots of immunology capabilities in terms of -- clinically, but there are areas that are now ripe for the technology, areas that have become now extremely large addressable population in cardiovascular and obesity, in those spaces. So obviously, you should expect us spending time in that space as well. Nothing that we'll disclose probably in the next couple of years, but that's definitely an area that we're interested in.

Got it. Got it. I guess on the point of broader R&D productivity, what should people look for in terms of the cadence with which you will nominate new pipeline programs, whether that's I&I, oncology or something else?

I think at least 1 new IND per year. You should expect 1 new program per year last year. We had 2 programs that I believe the year before, we didn't disclose one. So we're still on the same track. Next year, we'll have a least 1 program, maybe 2. And the following year, the same. So that's the cadence that we should expect. And as long as we continue to execute, we don't foresee that being less in the future.

Understood. Okay. In the last couple of minutes left, maybe we should talk a little bit about the catalyst path for the oncology part of the pipeline. So maybe we'll start with 333. Jared, over to you. I guess, what's the most, I guess, recent data cut you've seen there? And what are some of the next steps? And what should people look for in the balance of the year?

The most recent data cut was back in June at the EHA meeting for STAT3. I think there, we showed, I think, very robust knockdown of STAT3 in blood and in tumor at doses that were well tolerated. We actually have completed dose escalation without having reached an MTD, but we really came up with a recommended Phase II dose really based on having maxed out on knockdown in both blood and tumor. We saw fairly remarkable responses in lymphoma, including cutaneous T-cell lymphoma and especially Hodgkin's lymphoma, where we saw several complete responses with those patients going on to hopefully, curative transplant. So our aim for the rest of the year is to enroll additional Hodgkin's patients, multiply relapsed Hodgkin's patients onto the study, try to get a better sense for overall response rate and tolerability among those patients. And then later in the year, probably at a medical meeting, perhaps at ASH, to provide sort of a final update on the study in terms of final sort of PD and safety for the program, the sorts of responses that we're seeing in Hodgkin's and then provide guidance on potential next steps. As Nello alluded earlier, those next steps might involve a partner, especially if it's potentially development in Hodgkin's lymphoma, either as a monotherapy in third line or as a combo PD-1, combo in second line or greater. So that's what to expect for 333.

Got it. And a similar question for MDM2. Kind of where do you see that program going? What's the right patient population to think about there?

Yes. I think MDM2, we also gave an update at ASCO in this past June. We've actually -- with MDM2, we have 2 different arms. We have lymphoma [ cell tumor ] arm, where we have an AML arm. We've actually shown very nice on-target pharmacology at doses that are well tolerated and not showing the usual toxicity that you see with MDM2 small molecule inhibitors like myelotoxicity. We've actually seen clinical responses in both solid tumors as well as in hard-to-treat AML subsets. So what we're doing for the rest of the year is continuing to dose escalate. It's possible we might complete dose escalation by the end of the year, but it's also possible that might continue if our safety profile is still favorable, in which case if we're continuing, we may wait until sometime early next year before we present the next update on the program clinically. I think we have a large effort preclinically aimed at trying to identify solid-tumor patient populations in particular, who may be very sensitive to this approach, trying to identify biomarkers of sensitivity. We're planning on presenting those data at -- probably at the [ triple ] meeting this later this fall. So that will give folks their first opportunity to see all the work that's been done to try to identify patient populations who are more sensitive to the drug that might help us enrich for those patients, not just for the remainder of Phase Ia, but also as you move beyond Phase I into the next stage of development.

Got it. Got it. Great. I guess a final kind of catch-up question for you. You mentioned different disease verticals where the platform could be used and I know you're not providing specific guidance now, but what are some other logical areas where the Kymera platform could be useful, whether that's cardiovascular neurology? Just what's the natural steps [indiscernible] have been designed.

Yes. I would say maybe let's just stick with immunology a bit, just to give a bit of a better sense of what areas we're interested in, right? We've shown -- so TLR -- so Th1, Th17 with IRAK4, probably likely the best TH2 drug with STAT6, IL-23 type 1 interferon with TYK2. You'll see another target next year in a contiguous complementary area in rheumatology. A couple of other areas of high interest for us are kind of immune system resetting, again with oral drug, and all the antibody-driven diseases with oral drugs. I think with the 6 pillars, the idea will be to have, if not the best immunology pipeline in industry, at least the best oral immunology pipeline in the industry, with potential to combine also, which is something we're already working very actively on, not clinically. So that's important. I think it's an important piece of information to think about what's coming ahead. Again, as I said, outside, there is areas of [ neuroinflammation ] that are interesting. I think now that [indiscernible] has been characterized as the disease with validated pathways, I think it's perfectly suitable for oral degraders. I think that would be another area of interest. And there is still opportunities for genomically defined diseases that I think degrader could work really well. So I think some of these will take a bit longer to be fully fleshed out and communicated. But time will tell.

Got it. No helpful context. Final housekeeping question for you. Maybe one for Bruce. You mentioned $900 million in cash that was your most recently reported cash balance. In terms of runway that provides, the level of pipeline development that contemplates, kind of where does that get you? And where do you get the programs?

$930 million will get us now into mid-'27 as opposed to before, which were in early part of '27. Importantly, actually, allows us to have many inflection points across many of our programs. Obviously, IRAK4, with 474, STAT6 actually multiple data [ results ], both in healthy and multiple data results in patients, TYK2 the same, as well as novel programs in the clinic. So we're positioned to create value and to actually not having the pressure of financing in the -- for the next data readout that we have.

Got it. Great. With that, we'll close out. Nello and Jared, thank you very much for joining us.

Thank you.