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

All right. Good afternoon, everyone. Welcome to this session of the Morgan Stanley Global Healthcare Conference. I'm Judah Frommer, one of the SMID biotech analysts here. Let me just get through a quick disclosure before welcoming Kymera. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, welcome, Nello and Jared. And we appreciate you guys being here.

Thanks for having us, Judah.

So maybe for those newer or less familiar with the story, can you spend a couple of minutes on a high-level overview of your protein degrader platform and the technology that your products have been built on?

Yes. For the very few that are not familiar with Kymera, so the -- really the story behind the company is to use targeted protein degradation to develop a whole new generation of medicines. And where is the opportunity? The opportunity is the technology allows us to go after targets that have never been drugged before or drug or have been drugged poorly because we use a small molecule modality so we can get into the cell where 80% of targets remain undrugged or poorly drugged. And unlike small molecule inhibitors, we don't need to have a function with these molecules. We only need to elicit a binding event. A binding event through the heterobifunctional nature allows us to present a disease-causing protein to the proteasome that is the natural cellular machinery for protein recycling. So we present a disease-causing protein for degradation. And in doing so, we elicit a very strong pharmacological effect. So now what we've focused on for the past 9 years is to marry, as I like to say, the technology with the right problem. And so we focus really on undrugged targets, fully drug targets in pathways that have high degree of validation, targets that have strong human genetics and targets that lead to broad potential impact. We're talking about millions of patients instead of thousands of patients. We have started and this technology is disease agnostic. So our initial efforts were almost evenly split between oncology and immunology. As we continue to advance our pipeline, we actually saw a unique opportunity in the overall landscape. The opportunities to develop oral drugs with biologic-like activity. And this is exceptionally unique in immunology. We have several mega blockbuster drugs, amazing mechanisms. You can think about the TNF, the IL-17, the IL-23, the IL-4/13. These have validated biological pathways. And in doing so, they've helped millions of patients. But the challenge is there's still -- these drugs have generally low penetration, and there are millions of patients that are not accessing these highly effective advanced therapies. So with oral drugs that can mimic the pathway blockade of these biologics, we can change treatment landscape. So we've focused our wholly owned pipeline on pathways that, again, as I mentioned, are validated, but there are key drugs, especially key targets, especially transcription factors that have not been drugged before. So STAT6, for example, is the key transcription factor for IL-4 and 13. And so our KT-621 is the first-in-class oral STAT6 degrader for 100 million patients potential impact or more. IRF5 is another transcription factor in the type 1 interferon inflammatory cytokine, IgG pathways that also has been pursued for many years unsuccessfully so far, and we have the first-in-class oral molecule. And we have many others that we haven't disclosed. So that's the high-level view, orals with biologics like activity through protein degradation.

Okay. Great. That's a great setup for the conversation. And we'll spend most of our time on STAT6 as will not be a surprise to anybody. But starting with KT-621, we have initial data here, staying very high level before we get into it. I guess I'll ask you a question that I would typically ask later in the conversation. Key feedback you've received from KOLs and investors following that data, kind of how did level of excitement change once people saw initial data in humans?

Yes. I mean I think this is one of the very rare cases that I personally experienced where the feedback has been overwhelmingly positive. I think that we had entered the Phase I healthy volunteer study with expectations of degrading the target 90% plus safely and with an impact on Th2 biomarkers. What we were able to see went above expectations. We saw not only 90% plus degradation, we saw complete degradation in blood and skin at very low doses. We saw placebo-like safety, and we saw an impact on Th2 biomarkers like TARC or eotaxin that was similar, if not numerically superior than dupilumab. So it really told us that the premise for the program, the investment thesis so far was -- continues to be confirmed and also derisks the ongoing studies and future studies.

How would you characterize unmet need given the existence of dupilumab in the space? And maybe has that framework for unmet need changed since people have seen the data?

Yes. Look, as I mentioned, so there is -- if you look at the 7 major markets and you look at people that are diagnosed with moderate-to-severe AD, asthma, COPD, CNR, chronic rhinositis, EoE, et cetera. There are 7 or 8 indications which dupilumab has been approved in. There is slightly above 100 million patients. Dupilumab has treated about 1 million patients. So we clearly have 90% plus of patients that do not have access to advanced systemic therapies. And why not? The main reason is that these are expensive and difficult to challenging to reimburse inconvenient injectable biologics. There are no oral drugs in most of these diseases that are well tolerated and have the activity that these biologics have. So what I think needs to be appreciated is not only we can potentially compete with DUPIXENT for the existing patients. But more importantly, we can expand to the millions of patients that don't have access. So the unmet need is really to allow all patients that have these diseases to have a convenient, safe and effective oral drug. That, I think, will be a treatment shift. I know we're very focused in AD, but if we think about asthma, there is millions of children, young adults that are required to take treatments like inhaled steroids, et cetera, that do not address the underlying cause of inflammation and then actually being exposed to secondary effects, and unwanted effect that should not -- they should not be exposed to. So we feel very, very committed to changing how these diseases are treated, and that's the opportunity we have with the KT-621.

Okay. And maybe just one more on the healthy data. I guess safety versus efficacy profile that's been demonstrated thus far. Did one surprise you more than the other? Or the molecule behave kind of as designed?

I mean I think from a safety standpoint, we are expecting to see a clean safety profile based on what we knew about preclinical models of STAT6 knockouts in mice or what we have seen in our preclinical tox where at all doses, even high doses giving us complete degradation in higher species and rodents, we weren't seeing any tox. And so I think we were expecting also given the fact that STAT6 is so specific and selective for IL-4 and IL-13, and we have such a selective drug that we could use at low doses that we would have a clean safety profile. So I think it was -- we weren't surprised, but it was nice to see that confirmation. I think on the activity side, again, I think we knew this was a very potent degrader that we should see very potent effects on STAT6. I think we tend to underestimate just how potent our degraders are going to be in vivo based on our preclinical animal data. And so humans always end up sort of outperforming, so to speak, nonhuman primates and rodents. So we were very happy to see just how low we had to go in our dose to even get less than 90% degradation in blood, and we were very pleased to see that the level of degradation that we saw at relatively low doses, 50 to 200 milligrams in blood and skin were essentially the same. We could completely degrade the target in both of those compartments.

Okay. Great. And then moving into the Phase Ib in AD patients. You did recently announced you'll be adding a second dose. Could you walk us through study design there, the rationale behind that decision and particularly in the context of, I believe, already having selected your Phase IIb doses? What's it helping you do?

Yes. Let me just -- I'll let Jared talk maybe more specifically about the study design and they create the inclusion and exclusion criteria, et cetera. Just a high level about the goal of the study and the reason for the study. So just reminding everybody, what's on critical path for registration is to do a dose-ranging study and then a Phase III registrational studies. So dose-ranging studies in our development plans are the Phase IIb study. So for us, initiating timely Phase IIb study in AD and asthma are the priority of the company. Based on literally the required data to be generated ahead of the Phase IIb study, we could at the earliest time possible, start our Phase IIb studies in 4Q of this year. So we had an opportunity between the healthy volunteer study and the IIb study to evaluate our drug in patients. And so we have 3 goals from this Phase Ib study, confirming degradation in patients in blood and skin, understanding the translation from healthy volunteers to patients to then select the right doses for the IIb study and then demonstrating that STAT6 degradation in patients with AD can have a pathway blockade and clinical endpoints that are comparable to upstream biologics based on the mechanism of STAT6. So obviously, the third goal is kind of independent of the doses to a large extent. What we wanted to do was really use an opportunity given that the study was moving at a relatively rapid pace to translate instead of only 1 dose for my volunteer to patients, but 2 doses so that we will see the translation more robustly across multiple doses and our -- and derisk our Phase IIb dose selection. So it was an opportunity not to have questions as we're making $100 million-plus investment into these large Phase IIb studies. Maybe, Jared, you can speak to the study design and the other kind of more clinical goals.

Sure. So I think the aim of this Ib study was to quickly and efficiently show initial proof-of-concept in AD patients. So we designed the study that was going to be approximately 20 patients. Initially, one dose, then we added on the second dose to look at it as well. No placebo control because, again, for us, the primary objectives were being able to demonstrate, as Nello said just a moment ago, degradation in skin and blood safety as well as impact, hopefully seeing a direct impact on biomarkers in blood and in skin where our placebo control really isn't necessary, while also including clinical endpoints even without a placebo control, it still gives us the possibility of being able to detect a clinical signal. This was a 28-day study. So 28 days, if you look at the dupi 16-week study, even 28 days is sufficient to see an impact on TARC, one of the key circulating Th2 biomarkers to see an impact on Th2 skin transcriptome and to see impact on key clinical endpoints like EASI and pruritus. We were -- the aim was to enroll moderate-to-severe AD patients. So all the usual criteria, for example, EASI at 16 or greater or vIGA at 3 or greater, et cetera. It was really designed to allow us to get that population of patients and to really show the impact again on degradation, on biomarkers as well as on clinical endpoints and to look for connections between those 3 different buckets of activity in addition, of course, to showing safety and as Nello said, being able to sort of confirm our dose selection for Phase IIb.

Okay. Great. And we feel the question, and I'm sure you've got it as well, kind of the idea of splitting 20 patients into 2 cohorts and effectively testing 2 doses in half the number of patients. But I think the study protocol does allow you to dose more than 20 patients. So how are you thinking about I guess, kind of final end within those 2?

Yes. Look, I think it's important to recognize this is not a powered study for a clinical endpoint. I believe we have enough power to look at changes in biomarkers because those are really -- they don't carry, let's say, a placebo effect. I think it's important not to get too hung up on the number of patients per cohort, given that the questions for us are quite clear. Do we degrade the target? Does the degradation lead to a biomarker changes and do the biomarker have an initial impact on clinical endpoint. We're never going to be powered to scientifically compare to other studies. So whether you have 10 patients or 15 patients per arm, I'm not sure it's worth the effort of protracting a study instead of focusing on the IIb. It is true we have the protocol that allows for more than 20, and we'll probably have more than 20. But I'm not sure there is a meaningful difference between 10, 12 and 15. If you look at the early dupi study, if I'm not wrong, the 3 doses they had 8 patients per dose, and they were able to show what they wanted to show, which for them was really the early translation of this new mechanism into patients. So I believe we have what it takes with the existing protocol to accomplish our goal.

Okay. Maybe for both the Phase Ib and the IIb, can you give us a sense of enrollment conversations, how those go with investigators and patients, I guess, sort of supporting the demand for -- an oral safe product?

Yes. So maybe there is 2 aspects of the enrollment. I mean the Phase Ib is a 28-day study with 2 required biopsies. So this is in every type of disease setting, this is a hard study to enroll. Patients will have limited benefit given the short duration. We have no extension of study. So it's a tough value proposition for any patient. Having said that, we've had quite a bit of interest. I think there are patients out there that are still naive that are excited about. And obviously, I'm not speaking for patients, but from what we're gathering that there is interest in an oral option. I think what we've -- obviously, we're aware and continue to learn, and we've said it already publicly, and it's not even based on the experience, but on recent studies in atopic dermatitis, the population is evolving. When DUPIXENT was developed, if you look at mean entry EASI level. We're talking about 30, 32, 31, 29, 33. Now if you look at the past 5 studies in AD, we're looking at, what, 24, 25, 26. So -- and that's only natural as there are treatment options, which they weren't back then. And so we always have to keep in mind that the patients are different. We have all the tools to appreciate the treatment effect of a drug even with different population. We just have to be really smart at data analyzing, which hopefully, is the case for the whole industry, but I can say that it will be always.

Okay. And just following up on the Phase IIb doses. Have you said whether you'll communicate those with the Phase Ib readout? And should investors be assuming that the Phase Ib doses are encompassed within the Phase IIb doses?

So let's start with when we disclose what. So we haven't disclosed the Phase Ib doses, but we will do so when we disclose the data. We assume that we will do the same for the IIb. We will not disclose doses when we begin or run the study, but we will do so when we release the data. We don't see a reason why we should share the doses ahead of time. I don't think there is any benefit for anybody to know, and we just will be disclosing a competitive piece of information for no reason. I think maybe what I can say that the doses are within the range that has been explored in healthy volunteers.

Okay. Helpful. And then how are you or how should we be thinking about dose effects, whether that's in the Ib or the IIb? How important is that aspect of the data generation here?

What do you mean by doses?

It whether we'll see more of the benefit in higher dose...

Got it. Yes. So obviously, the IIb has been designed as a dose-ranging study. And the doses that we select we expect to see difference between the lowest dose and the highest dose. I do not want to comment on the Ib.

Yes. That makes sense. And then just in terms of the sequencing of that data communication that you pointed to in reporting out the Ib data versus starting the IIb.

So great question. So reminding everybody that when we enroll the last patient on the Ib, that patient would be on the study for 28 days. There would be a 2-week follow-up. And then there'll be a 6 weeks or so time needed to collect all the data. So from last patient, last visit to our ability to have all the data is a couple of months. So it is -- because of all of this, it is possible that we will begin the Phase IIb study before we disclose the Phase Ib data. But we remain committed to do both of those things in Q4.

Okay. And have you said kind of the where and how you'll communicate the Ib, would it just be?

Yes. I think most likely, given the nature of the study and our desire to release the data quickly after we've collected the data, the availability of conferences, et cetera. So most likely, it will be a company-sponsored event, very much like the healthy volunteer data.

Okay. Helpful. And then maybe just backing up sort of high-level question on the space. I guess, how would you characterize Big Pharma's current interest in STAT6 degradation? How do you think about potentially partnering opportunities if there's the right time for that? Or are you committed to doing this on your own?

I think STAT6 is -- there is, in my mind, 3 targets in the biopharma industry today that have like the potential of a mega blockbuster drug. STAT6 is one of those 3. I won't comment about the other 2. And so it's not surprising, given that there is a lot of smart people everywhere in big and large companies that from what we understand, STAT6 is one of the hottest targets in the industry now where you either are trying to develop your own asset or you're trying to partner with the existing companies. And actually, this is one of the very few targets that as far as I'm aware, at least most assets out there have been partnered already in preclinical stage. If we were a different company, our assets would have been partnered already. So there will be no biotech with the STAT6 asset given, again, the potential impact of this drug. Going back to the second part of your question, we've made it very clear to our colleagues in other companies that we have no intention of partnering this program for the foreseeable future, for sure, through the Phase IIb data. I think at that time, once -- I think after Phase IIb, we'll have a very clear understanding about the efficacy of this drug, where it stands in the -- where it will stand in the treatment paradigm. And at that time, depending on our cost of capital, we will make those determination of going all in alone or partnering some aspect of this program. If you ask me, I would prefer no partnership ever, but we'll do what's right for the value creation of the company.

Okay. Maybe another way to ask the competition question. Is there a competing asset you see out there that makes you nervous? Or is the competition more in-house with your next-gen asset?

Yes, yes. I was going to reply that, but you told my joke. Yes, I think -- so we have a second-generation asset that we've decided to, for now, let's call it, parked in IND ready. And I think this speaks first and foremost, to the level of investment we've made into STAT6 franchise, the opportunity of the franchise, the gap that we have with our -- I don't know that competitor is the right way to say. Maybe with the suitors. And we have it because -- and we continue to do chemistry. I'll just put it out there so that we don't get trapped in another roundabout conversation on this next-generation molecule. We believe in 3 things. Until you have a drug approved, you continue to invest. Companies like Alnylam, Vertex have shown you how much value you can create by continuing to work on the existing program. Until we know what the payer landscape looks like, we want to have the option to use different molecules for either different indications, different severity of diseases. And to be honest, we want to have an insurance policy at any given time. So it's extremely difficult. Even for us, that are the best in STAT6, not only the first to find something better than KT-621. And to be honest, the next molecule is not better. But we will continue to invest to make sure we'll remain first and best.

Okay. Great. And I did promise we touched the other programs. So maybe if we just touch on IRF5, could you help us with an update on that program, kind of key elements of the therapeutic potential for that program and any development time lines you'd highlight?

Jared, do you want to take that?

Sure. Yes. I mean IRF5, in terms of -- starting off in terms of where we are with the program, we're in the midst of IND-enabling studies. The plan is for that program to enter Phase I in healthy volunteers in the early part of next year with data readout next year as well. The value proposition for that program, IRF5 is a target that's been very attractive to big pharma and biotech because of where it sits as a cross-section of multiple different toll-like receptor pathways leading to control of type 1 interferon response, control of autoantibody production by B cells and B-cell activation and the production of multiple different pro-inflammatory cytokines. So a lot of intense interest in IRF5. The problem has been trying to drug it because there are many different IRFs within that family and many different isoforms even of IRF5. And so I think the other compelling aspect about IRF5 is the strong genetic association with a variety of different diseases, including lupus, rheumatoid arthritis, IBD and other interferonopathies. So I think all of that makes it very attractive. Our data with our very potent, very selective IRF5 degrader has shown in our preclinical models of lupus, very strong activity, looking better than most of the other approved or active drugs in the space. We have ongoing studies in RA as well as in IBD. So we see this as potentially first-in-class, best-in-class for IRF5 and a drug that can really change the treatment landscape for diseases like lupus, RA and other interferonopathies.

Okay. Great. And then just touching on IRAK4, there was an update there with your partner moving to a new molecule, KT-485. Do you see any implications for the overall probability of success or time lines for that program and that mechanism?

Well, I would say that the team at Kymera did an amazing job with the learnings of the platform over the years to deliver a superior molecule. So I would say the probability of success is increased by having a molecule that is void of any potential subclinical finding that we saw in Phase I in terms of QT that is more potent and better distributed. Obviously, in time line, there will be an impact, but we've learned a lot from KT-474 and all the learnings will be applied to the -- hopefully, by Sanofi, obviously, with us, definitely would be applied. We hope Sanofi will do the same to the development of 485 and both the pace and how -- which type of patients and type of trials that we will advance. So I hope that overall, also the time lines of these assets development will be faster than what it was for 474.

Okay. That makes sense. And then maybe you could just help us with cash runway and which activities are contemplated within that runway that we have.

Yes. So we have, as of July, just about $1 billion of cash. This will allow us to get into the second half of '28 and really cost everything that you see on our pipeline, both Phase IIb studies, all the work that we're doing on IRF5, including a proof-of-concept study in patients for IRF5, other work on other programs that we haven't unveiled yet. And importantly, will help us set up and initiate Phase III studies with 621. So obviously, we thank all the investors that have contributed over the years and also recently to allow us to set the company up for maximal optionality going forward.

Okay. That's great. Before I move into kind of our mini survey questions, if there are any questions in the room, feel free to raise your hand. We do have some mics that are available to folks. Before I go into the mini survey, I guess, anything within the story that we didn't highlight that you'd want to point out to folks that maybe people are missing?

No, I think we've covered everything. Maybe the only one asset we haven't touched on is our CDK2 collaboration with Gilead. It's for us, as an immunology-focused company, not on strategy to advance on our own, but it's a beautiful asset, a beautiful molecule, if I can say so, that is moving into, hopefully, soon enough into Gilead's pipeline, and it's a testament to also our molecular glue efforts that we haven't discussed at length.

Okay. Great. So the next little portion here is, like I said, a survey we're asking all of our biotech teams to try to get a sense of some thematic issues across the space. Biotech seems to be more exposed to external and macro factors of late. So we're asking, like I said, all management teams, these 3 questions. The first topic is China and the rise in biotech innovation there. How are you thinking about your competitive position here? Will the rise in China biotech influence R&D or business development strategy in any way?

Well, I could go on for hours on this one because I'm actually quite passionate about this particular topic. So not to go all the way back. When I moved to the U.S. 21 years ago, the simple reason was this is the country where meritocracy, hard work allows you to do incredible things. I think the moment in which we stopped focusing on hard work, innovation, and we rely on others to do that for us. We're giving up a huge competitive advantage. And I know we talk about -- a lot about the importance of the impact on national security. This is a national security issue. If we lose the position we have in innovation in any field, including and foremost in healthcare, this is a big problem we have. And we should just go back to investing into basic science and making the concept of working really hard to be successful a sexy thing again.

Great.

With regards -- sorry, I know you have more. I told you I can go on for hour. With regards to competitive -- with regards to Kymera, we do really, really forefront biology and chemistry. It will -- there will be programs where there is more competition, but I don't believe it's going to be something we have to deal with closely, at least in the foreseeable future.

Okay. Next topic is AI. How are you at Kymera leveraging AI or thinking about AI's future disruption potential, both on the positive and negative side of what's going on in the company?

Yes. I mean we use all aspects of how machines can help us be more efficient. What we don't do is talk a lot about the cool things that AI can do without data, right? So I think it is a train that we cannot afford not to jump on, but also we need to be practical and solution-oriented. So I know some companies, they use tools, they call themselves AI-powered companies. So we are AI-powered company as well. But we use it in a practical solution-oriented manner.

Makes sense. Last one is a little bit broader, but from the regulatory side of things, some of the topics that have been listed that are impacting businesses in the space, changes at FDA, pricing debates, tariffs, I think for you guys, the toll penalty has come up as an area of focus. Anything on the regulatory side you'd highlight that is.

All of the above. I mean, first, every time there is change, we need clarity. I think we, as humans can adapt to almost everything. Think about the COVID days, what we adapted to. We can adapt to almost anything. We just need clarity. And more importantly, we need a level playing field. I think right now, that's what we're lacking. We're lacking a level playing field between small molecule and biologics. It's completely unfair, and it's probably one of the most uninspired policy that I've ever seen. And then another piece is leveling the playing field in the reimbursement space. I think we need to support innovation, and we need to allow biotech companies to compete with large companies. They use tools to avoid competition. I think those are the 2 most important things, and they are critical for the innovation that biotech companies can bring to the table and more importantly, to the success of these companies and to the ability of small companies to grow into established companies.

Great. There are no questions in the room. I think we'll stop there. Thank you for the thought for being here.

Thank you.

Thank you.