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

All right. Good morning, everyone. Thanks for being here on day 2 of the Morgan Stanley Global Healthcare Conference. We're very excited to have the team from Kymera here for this session. Let me just get a quick disclosure out of the way. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. All right. So with that, welcome, guys. And earlier this year, you celebrated your 10-year anniversary as a company. You're approaching another set of milestones now. So before we dive in, can we maybe give the audience a bit of an intro on the company and your degrader programs?

Yes. So first of all, thanks for having us. So yes, the idea when we started Kymera in May of 2016 was there is tons of biological data tying disease-causing protein to diseases. And we've really lacked the right technology to address many of them. And while we make so much progress with oligo-based therapeutics and obviously, injectable biologics and traditional small molecules, there was still a big gap. And I would argue there's still a big gap. Only, I think, 20%, 25% of the proteome has been drugged. And so we saw this new small molecule-based modality called targeted protein degradation as a means to expand the number of targets we can go after and ideally, obviously, fulfill some of the key unmet needs that are still out there. And so as people that might have heard about protein degradation is this modality that uses the ubiquitin-proteasome system, which is the cellular machinery responsible for protein homeostasis and directs against disease-causing protein. So we have focused -- we focused in the past -- over the course of the company in different areas across initially oncology and immunology in the past 6 years, focused really almost solely in immunology. And the idea was, again, at a high level, quite simple, lots of pathways have been validated in immunology, lots of extremely successful drugs have changed lives of millions of patients around the world. These are almost only, if not mostly injectable biologics. And so we found these opportunities to go downstream of these biologics intracellularly with oral degrader molecules to provide what we believed for the first time, really specific directed therapies that could deliver the best risk-reward profile for patients with immune inflammatory diseases. So our wholly-owned programs are a STAT6 degrader, which is downstream of IL-4 receptor alpha, the target of Dupixent, which is, I believe, today, the #1 prescribed drug in immunology. Another program that we're very excited about is IRF5 with KT-579, which is another undrugged transcription factor downstream of highly validated pathways in many immune inflammatory diseases. We have many other preclinical programs that we haven't disclosed yet, and we have a couple of partnerships, one in immunology with Sanofi and one in oncology with Gilead.

Okay. Great. So I thought maybe we'd start kind of in reverse order with that Sanofi partner program that's directed at IRAK4. So that program goes back to the early years of Kymera. Like you said, partnered with Sanofi. Can you talk about the discovery and preclinical efforts around that candidate? What were the specific issues you were looking to solve for?

Well, I haven't studied IRAK4 since 2023. So that's a very interesting, exciting way to start. So we started with the program with the idea of going after one of these key, again, undrugged nodes in immune-inflammatory diseases. In this case, IL-1, IL-18 -- IL-17 sorry, biology, a pathway that had actually upstream extensive validation. We had IL-1 biologics, even more recently from AbbVie that had some exciting data in HS. We had -- initially back then, IL-18 had some mixed data, but more recently, we've seen some interesting data from IL-18 in AD. We have recently seen some really amazing data of IL-33 from AstraZeneca in COPD, probably one of the most exciting data set of the year, I believe, in that area. So again, between then and now, we've seen these cytokines have impact across many diseases. IRAK4 is the central node downstream of those cytokines and responsible for the signaling. So it was actually an obvious target that has been pursued by many in the industry going after the catalytic function. We demonstrated that there was a scaffolding function that required a degrader instead of a small molecule inhibitor. And obviously, we advanced our first-generation degrader, KT-474 through Phase II. And then as a part of the collaboration with Sanofi, we decided to focus on the second-generation degrader, which is a superior molecule that now entered recently Phase I.

Okay. Great. And I guess maybe just kind of given the experience with the IRAK4 program, what have been kind of learnings that you've been able to leverage across the broader platform?

Yes. I would say the biggest learning and actually one of the reasons why we have decided to invest further and if not almost solely in immunology was driven by the early translation of IRAK4 degradation in healthy volunteers. And we saw that what we had studied preclinically, kinetics of degradation, safety, predictability of safety, predictability of degradation kinetics across different tissue types gave us the confidence that one can develop reliably degraders in immunology. We were the first company to do so back then. And so that's, I think, a big learning, even the, let's call it, the platform translation and fidelity thereof. And then the second part was actually how important specificity is to successful drugs in this space, how important dose selection becomes, how important the distribution of the molecule and the impact of that distribution has on the profile of the drug. And so this allowed us to develop this new generation of degraders. I would call 474 a first-generation degrader molecule with pros and cons and things that we learned from. And then this allowed us to invest and learn and optimize these degraders. And so I think KT-621, 579 and even 485, which is our second-generation IRAK4 degrader, have benefited from what we learned, and these are way better molecules than our first molecule.

Can we spend a minute maybe just on design of the Phase I study for 485, what the objectives might be there and how they could confirm further development?

Yes. So there's not a ton we can disclose given that this is a program run by Sanofi. But I think it's also, I believe, on clinicaltrial.gov by now. It's actually a quite creative Phase I study that has healthy volunteers and HS patients. The healthy volunteer portion is a more traditional SAD and MAD study with some interesting biomarkers. Again, we unfortunately can't go into it. And then there is an HS, let's say, proof of mechanism portion at the back of it. Obviously, we look forward to seeing the data when they are generated.

Okay. Great. And you touched on it, but I guess just kind of given the interesting data we've seen in certain type 2 indications you talked about, but then non-TH2 targets in atopic derm like IL-18. I guess, whether it's specifically for 485 or other potential shots on goal in the space, where do you see a product like this potentially fitting into standard of care for a disease like atopic derm?

To be honest, we're so focused on KT-621. This occupies less than 5% of my mind. given that that's a wholly-owned program. It's probably the best program in immunology today. And so I think what Sanofi and we, to some extent, do with IRAK4, it's not center of our mind right now. What I will say is there are opportunities. I would probably say AD is not probably the best place for IRAK4. But I think HS is an interesting place. I think asthma, COPD are exceptionally interesting places. But again, because we don't control it, although we're trying to influence and given where we are with our programs, we don't spend a lot of time on it.

Makes sense. All right. So switching to, like you said, the program that occupies, I think, most of your and investors' attention, obviously, KT-621, your oral STAT6 degrader. Maybe just some numbers around the unmet need that you could solve for here. How big could the opportunity be?

Yes. Look, I think this is -- thanks for the question because this is probably the most underestimated aspect of the program. I think the mistake we all made, and we used to make it in the past. Now, we don't really have many excuses to still make it. But we always think about Dupixent. Dupixent is a $25 billion drug. And so we can take a fraction of that. And that's actually the wrong way to think about the opportunity here. Actually, the opportunity here is that these diseases -- and we can start with AD first, but asthma, COPD, EoE, chronic rhinosinusitis with nasal polyps, CSU, et cetera. I can come up with 9 at least. These are diseases that actually have been put on the map in many, if not in most cases, by the work that Regeneron and Sanofi have done with dupilumab, meaning that they provided a solution to diseases that were not either well characterized or well treated. And so, as a result of that, these are still under-served patients, mostly because one drug for as great as the drug can be, can never serve all patients, especially when it's an injectable drug. So let's use AD because it's easier. And let's use the U.S. market because we're here. So there is about 6 million to 9 million patients with moderate to severe AD, depending on the publication you read. So this is not our number. This is market research. And let's say, for the sake of argument, I'm going to use 8 million -- I like a full number. So there's 8 million patients with moderate to severe atopic dermatitis. The patients that are today on advanced systemic therapy, which means Dupi, Lebri, RINVOQ and a couple of others are roughly 400,000 patients. So there is about 5% penetration of this advanced systemic therapy onto the moderate to severe patient population. So the question we asked when we did this market research is why is there such a low penetration? Other companies will come up with different numbers, but these are actually unbiased numbers that are out there. So the answer that we get from patients and prescribers is the feeling, the perception that they're not severe enough. Again, I'm not saying they're actually from an EASI score. I'm saying from a perception, they're not severe enough to want to be on an injectable biologics or an oral drug with black box in the case of RINVOQ. So that's like the big barrier. And then we ask the next question is, what type of drug would change that behavior and the answer is a safe, effective oral. So I think the opportunity for KT-621 is to build a market that is multiple of what these injectable biologics have built. And so I don't want to come up with numbers because it just doesn't make sense. You can come up with any numbers. But that 400,000 patient number is a $25 billion market. So think about if we increase the penetration from 5% to 10%, from 5% to 15%, from 5% to 25%. And it's not just 621. I think we need more drugs to expand the number of patients, but we believe our drug is best positioned to be first-in-line, post-topical to serve as many patients as possible. So that is probably in the realm of no other drug that is being developed today, either in immunology or outside of immunology, maybe besides obesity, which is a whole different world.

Right. And maybe just help us get up to speed on 621's clinical profile. Specifically, how did the preclinical work translate to the clinic? How is the drug's profile shaping up? Dupixent clearly is the right comparator. But within the context of Dupixent, how did that preclinical translate to clinical? And then what's the drug's profile versus the key comparator?

Yes. Maybe I'll start with the preclinical-clinical translation. I'll let Terence comment on the -- let's say, forward-looking drug profile. So I would say that scientifically, when we disclosed this program in January of '24 -- it seems like 10 years ago, but it was only a couple of years ago. And we've done work for more than half a decade on this target. And the fascination we had is what I was saying earlier is that -- actually, there aren't many programs or there haven't been in the past either of a downstream transcription factor that has such a one-to-one direct relationship with a receptor. And so we felt the STAT6 beautifully could replicate IL-4 and 13 biology. And so we've done so much work and some of it hopefully will be published soon on mechanistic understanding of STAT6 degradation versus IL-4 receptor blockade, how does the biology play out. And what we've seen preclinically and early clinically is this consistency of IL-4 and 13 blockade with a STAT6 degrader that is comparable to what we've seen with receptor with dupilumab. But maybe Terence can comment more on the clinical profile, et cetera.

Yes. So a comprehensive preclinical package put together that showed that the asset completely and exclusively degrades STAT6. And of course, we've put together a nice biology package building on what's already there in the literature that STAT6 completely and exclusively serves the signaling of IL-4, 13. So many transcription factors serve multiple masters. STAT6 is extremely focused. So this provided a rationale to develop 621, which moved into clinic in healthy volunteers in the last couple of years and at a range of doses ranging from a little over 1 milligram a day up to 200 milligrams a day, we have a nice biomarker that allows us to directly measure degradation of the target STAT6, both in blood and in tissue. So we saw that the asset can produce near complete degradation of the target in blood and in tissue at doses -- most doses over 1 and a bit milligrams a day. So this provided a rationale to complete a single and multiple dosing studies in healthy volunteers and bridge that into patients with disease. So we conducted a Phase Ib study called BroADen, where we took 22 patients with moderate to severely active atopic dermatitis and dosed them with either 100 milligrams or 200 milligrams once a day. And those data were shared at the American Academy of Dermatology earlier this year. And the idea was to see if that degradation story and particularly the relationship between dose and degradation in tissue would replicate in disease where there's much more STAT6 activation. And what we saw was that it was and each of those doses produced complete degradation in blood and in tissue. But of course, we then had the opportunity to look at downstream biomarkers and even downstream of that disease activity in skin and downstream of that disease activity or features of disease activity in people who also had related type 2 diseases. And the whole thread lined up. So biomarkers like TARC and eotaxin that are type 2 related and downstream of degradation moved as you would expect for an advanced therapy asset blocking the type 2 pathway. Disease activity improved in line with what you would also expect in skin. And as we just presented at the European Respiratory Society in Barcelona a week or 2 ago, people with -- a proportion of people who had asthma saw movement in biomarkers and PROs and people with allergic rhinitis also saw improvement. So as Nello said, while the biology seems to tell us that there's a very reasonable reason to expect that this would produce efficacy exactly in line with the most efficacious advanced T2 biologics. The market is telling us that, that would be great, but it's not necessarily what the market needs for a successful offering for human health or indeed for business case.

Okay. Great. And I think for a Phase Ib data set, I think the handicapping on biomarker degradation and what would be viewed as good data for the Phase Ib, you guys clearly surpassed the very high bars that were set. But I guess in terms of what you saw in the Phase Ib and potential for that to translate to a larger study in running BroADen-2 at this point. How confident are you in the translation, specifically in atopic derm from a smaller data set to a larger one?

I mean this is a once-in-a-lifetime program. I think you have a great molecule, very well behaved, highly specific with pristine safety preclinically and through the end of Phase Ib, biology that is congruent with what we understand of this pathway. So this is probably as confident of a translation that one can have going into this Phase IIb data. There is not a lot of surprises here on how things have evolved to date. So obviously, I don't know what the number will be, the numbers will be. But again, we've seen consistently over the past few years that every time we ask the question, is STAT6 degradation sufficient to block IL-4 and 13 in a disease relevant manner, the answer has always been yes. And so I think we're going into this Phase IIb study expecting that we'll see the type of efficacy that first, we've seen in Phase Ib and that we've seen also with dupilumab in the past. Again, you can't really do cross-trial comparisons, especially if you're a decade later. But I think that's why we keep saying we expect it to be in that ballpark because that's what the biology has been telling us for years and years and years. Now again, we keep saying the market is telling us we don't need that. That's great, but we still expect to be in that ballpark.

Right. You said there haven't been surprises, maybe biologically, I think you guys certainly surprised the market with pace of enrollment into the Phase IIb. So maybe just describe what you've seen in terms of interest amongst patients and investigators relative to expectations when you were at trial initiation stage. And we've talked about expanding the population of addressable patients to potentially include milder disease. Any early signals of that as you enroll patients?

So first, let me say, we're not expanding to milder patients. I want to be sure and repeat again that what I talked about earlier, about 5% penetration is still in the moderate to severe population. And so the drug will be -- if everything works out, obviously, we believe first line post first-line post-topical drug for all moderate to severe patients. So with regards to what was the excitement that we saw, I mean, I think there are 3 -- maybe 3, 4 main reasons. One, as I mentioned, even based on the market research that we've done, there is a huge amount of excitement, and we've seen this in both AD and asthma actually for an oral drug by patients. There is a level of understanding comfort and knowledge of investigators about this pathway. Obviously, Dupixent has been dosed to children as young as 6 months old. So obviously, this is not the same target, but it's the same pathway. And so there is a level of comfort with this pathway, which obviously we will have to continue to earn with our own data. And then I think we had exciting early data, both the Phase Ib, the healthy volunteer, the preclinical data for the sciency-focused investigators on our study. And then I think the team have done an amazing job being extremely high touch. We visited all countries and met almost every single investigators and show the passion and the rigor that we use to run our studies. And so all of those things have come together to have basically hundreds of patients that wanted to enter a study. And obviously, we're limited by our protocol.

Right. Okay. Great. And you talked about kind of the ability to compare to older studies. I think one area of concern amongst developers that comes up is high placebo rates that have been seen in atopic derm studies. I guess between the enrollment criteria and study execution, can you talk about how you're managing that risk in BroADen-2?

Yes. Maybe, Terence, do you want to take that?