Neumora Therapeutics, Inc. (NMRA) Earnings Call Transcript & Summary

Welcome to the first day of the BofA Healthcare Conference. I'm Geoff Meacham. I'm the senior biopharma analyst. I have Charlie Yang and my team on stage with me as well. We're thrilled today to have Neumora Therapeutics. With me on stage, Henry Gosebruch, President and COO -- CEO; and Bill Aurora, Chief Strategy Officer. So Bill, Henry, thanks, guys, for joining us.

Great. Excited to be here.

Henry, you want to just give sort of the -- for those that may not be as familiar with the story, just kind of a high level and then we get into some questions?

Sure. So we are a neuroscience-focused biotech company with 7 programs in development, 3 of those in the clinic. Our lead program, Navacaprant, is in Phase III studies for MDD, and it's going to be a very exciting year because we have the first of our 3 Phase III studies reading out in Q4 of this year. So a big year for us with a number of catalysts, both this year and next year.

Give us a history, I guess, on Nava, Henry, kind of where it came from and your thoughts on the mechanism.

Yes. So the kappa opioid receptor class has long been thought to be a very important class for neuro-psychiatric indications. There's been various attempts over the years to drug that class appropriately, but it's really just been recent times that the field has been able to find the right chemistry to adequately -- to drug it. And Bill will talk about that a little bit more. So we're very, very pleased that we have, from a pharmacology point of view, the best agent in the class. It came originally out of the scripts. It was licensed by a company called BlackThorn that we then acquired and we're very, very pleased to have that now advanced all the way in Phase III. I mean as we look at that class, given the clinical validation with 3 independent studies, we really think the class will be kind of what the Muscarinics are going to be for schizophrenia. We think the KORA class will be for MDD and a number of psychiatric indications following MDD.

Yes. So maybe just to follow on that, right? I think MDD is really pretty big indications, but obviously, there are a lot of drugs already in the space, generic or branded. There are other kind of new drugs getting potential approval relatively soon. So how do you think the KOR antagonism kind of works in this space and where you will fit -- potentially fit in terms of the human paradigm?

Sure. Absolutely. So when we think about Navacaprant and the KOR antagonist more broadly, we know there's different underlying neuro circuitry that's being targeted relative to the existing anti depressants that are currently approved. And in that context, we've got converging evidence preclinically, clinically that validates the target. To Henry's point, I have 3 dependent sponsors showing efficacy, utilizing cap opioid receptor antagonist, whether it be the NIH FASTMAS Study, whether it be the J&J Phase II study or our own Phase II study. Despite the fact that there are existing agents that are approved, the unmet need that remains is quite high, specifically in treating symptoms like anhedonia that we know are present in 70% of MDD patients. Anhedonia is associated and known to be a KOR prognostic factor for response associated with higher rates of suicide. And quite frankly, it's a residual symptom after currently approved agents were often used. In that context, Navacaprant really offers a step change relative to the currently approved therapies. Our Phase II data demonstrated robust efficacy across a range of MDD symptoms, including anhedonia, which we think is highly relevant. When you think about the commercial opportunity that comes with this. Its efficacy is certainly a big part of this, but benefit risk matters. Tolerability is also an important element when we think about this class of agents. It's really devoid of AEs like sexual dysfunction and weight gain. We didn't have those reported in our Phase II. We think these represent meaningful differentiating opportunities upon replication in Phase III for patients in their 20s, 30s, 40s to stay on product who often today are elected to both initiate and end up discontinuing prematurely due to weight gain and sexual dysfunction. So a large commercial opportunity. We've been able to confirm this through independent market research on the back of our Phase II data with LEK, really pleased with what we're seeing from the profile testing perspective.

Yes. So again, I'd just add to that, that there really hasn't been a novel mechanism in monotherapy in decades, right? So many of the new introductions have all been in the adjunctive setting. And so monotherapy is a far larger market. Again, as Bill talked about, these patients unfortunately cycle through a lot of older generics at this point. So we really hope to bring the first novel treatment to market and really change the paradigm and have a much better quality of life for these patients.

And what would be your expectation in terms of the trial succeed and then in terms of kind of where it will fit into kind of treatment in first line, second line? And how is that -- how do you think that will evolve?

Sure. So in the work that we did on the back of our Phase II data becoming available with LEK, who independently did the work. The profile tested quite well. We're not anticipating or expecting a high degree of first-line use. We recognize that patients will typically have to go through an SSRI or a generic agent. And in fact, 90-plus percent of the use that's contemplated is second line, third line, fourth line and beyond. -- and then last when we think about the epidemiology in the U.S., 21 million patients suffer from MDD. Half of those patients are treated with pharmacologic therapy. A small fraction of those patients that are currently treated being candidates for Navacaprant really represents a sizable commercial multibillion-dollar opportunity, quite frankly, in the U.S. alone.

And, I guess, the competitive landscape, when you think about J&J versus Nava, just give us kind of your high-level thoughts about how you see the profiles as we know now in both monotherapy in the adjunctive setting, I know there's a lot of investor kind of uncertainty about which one is the more robust opportunity.

So it's important to understand that there's sort of 2 main differences. So one is development path. So again, we're in monotherapy. They're in the adjunctive setting, and we just talked about the monotherapy setting is far larger and therefore far more commercially attractive. So the development plan is one area of differentiation. The 2 studies, by the way, will likely be right around the same time. I mean it's sort of unclear exactly who's going to come first, but let's just say they will likely be on top of each other. The development plan path is one area of differentiation and pharmacology is the second part of differentiation, and I'll have Bill drill a little bit deeper on that.

Sure. So from a pharmacologic profile perspective, Navacaprant is 300-fold more selective for kappa over new opioid receptors. The 80-milligram dose, which we've been able to push to 80 and attain 90% receptor occupancy, which we believe high degrees of receptor occupancy for G-protein-coupled receptors in this indication are quite important, allow us to be able to have those high degrees of receptor occupancy, well avoiding new receptor AEs that could be present if we were less selective. In contrast, Aticaprant is 30x more selective for kappa over new, which has meant that they've taken the 10-milligram dose forward in their MDD studies, not been able to push the dose a whole lot higher because of the new mediated AEs that can be observed at trough over a 24-hour time period end up in the low 70% range for receptor occupancy. Clinically, in Phase II, what we saw was a higher rate of new mediated AEs as a consequence with the Aticaprant program at about 8% diarrhea as an example, whereas we had no adverse event at a rate 5% or higher in our Phase II, a tolerability profile that is quite favorable and actually a higher rate of discontinuations on placebo versus active in the Navacaprant Phase II trial.

Makes sense. Let's talk a little bit about that. When you have the Phase II data goes with kind of how you would prioritize what you changed or what you tried to enhance in Phase III to raise the probability of success, both tolerability as well as efficacy.

Yes. Yes. So we've done a number of important modifications. So one set of modifications is trial design and then the second one is trial execution. So on trial design, we were focusing in Phase III just on the moderate to severe population. That's the population that's typically studied in MDD that follows FDA guidelines, and that's where we saw the biggest effect in Phase II study population. We changed the endpoint to a 6-week endpoint from an 8-week endpoint. Again, there's literature that the longer you follow these patients, placebo response can increase. So we think 6 weeks is the optimal time point to see the best effect without placebo rising up. And then we switched to the moderate scale from the HAMD-17. So we inherited the HAMD-17 scale from the Phase II, but we think the moderate is much more suited to our pharmacology. So those are the 3 major design changes. And then there are a number of clinical trial execution changes we've made that we didn't really do in the Phase II that should enhance the probability. So one obvious one is we're running 3 studies, so that's a big one, we only need 2 to succeed. But we are doing central raters as one example where we've take a lot of attention to site selection and really try to identify the highest quality sites. We are independently reviewing each patient's medical record at Neumora. So not just relying on the site or the CRO, but we've independently invested in colleagues that are reviewing each medical record. And we are also -- we've also built a real-time data analytics capability where we can look at each assessment in real time and observed trends and make sure that we could intervene to the extent there's some irregularity seen on a real-time basis. So again, it's design changes from Phase II to Phase III and then it's a number of trial execution steps that should really enhance the probability of success.

So maybe just kind of focusing on the Phase II data, right? I think there are some kind of questions around like the statistical analysis, using like MRM versus LOCF, based on kind of what change you presented and also kind of based on what you have presented before. Maybe just tell us a little bit about kind of how you think about that in terms of whether the difference in statistical analysis impacting kind of the readout that you have and how that kind of -- and how you think about in terms of Phase III analysis which one to use and how do you think about that?

Sure. So for a Phase II program in our statistical analysis plan, we had prespecified that if it's a scenario where we had more than 10% of patients with missing data, the LOCF would be the analysis that we would rely on. We were transparent in reporting the MMRM, which then pivoted to LOCF based on the SAP, the statistical analysis plan. We've reported the data accordingly. Importantly, when we think about the results for the Phase II study to be in the final efficacy population, patients had to have a baseline MD, had to have received one dose of medication and they had to have one post-baseline MD assessment, which in that Phase II study, the only time points post baseline were week 4 and week 8. And so in that context, the results that we've reported on the data are consistent with our SAP with that as the underpinning.

Okay. And do you think that, just using the -- if you were to do the mixed model method, would that have a negative effect on that -- on those data? Or do you think it will actually still be kind of comparable in terms of what you've seen?

We were really comfortable with what we saw in our Phase II study. We had, subsequent to those data, a very productive end of Phase II meeting that really helped to align and give us confidence in moving forward with the Phase III program. Importantly, in Phase III, we have earlier time points for assessments that we'll have, as we would anticipate less missing data when you've got a week 1, a week 2, a week 4, and a week 6 endpoint, and you're not operating in a COVID environment, right? And so when you put these factors into play, we expect certainly for Phase III scenario where we would have less missing data than we did in Phase II.

Got it. Then if we were to think about kind of the adjunctive setting versus the monotherapy setting, changes how we pursuing the adjunctive setting and why you guys are doing the monotherapy? Like maybe tell us kind of why you're doing that and how would -- kind of which one would you say is kind of more difficult per se in terms of the bar of achieve a successful trial?

Sure. I'll start and then Henry, by all means, chime in here, which is when we think about the overall market opportunity, whether it's published data, claims data, the vast majority of patients are treated in the monotherapy setting. We know clinicians are quite comfortable switching within class and outside of class within the antidepressant category. And as such, 60% to 85% of the patients are treated in monotherapy and often there's switching that occurs multiple times before folks go to the adjunctive setting. As Henry pointed out, the adjunctive setting is much more crowded, with a number of atypical antipsychotics that are moving in that realm, whereas the monotherapy setting, there's been less innovative approaches offered and really represents a large opportunity. What we know is that agents that have demonstrated robust efficacy in the monotherapy setting, market research, published data, KOL feedback would all triangulate. If you've demonstrated robust efficacy in monotherapy, clinicians are likely to utilize the product in later lines of therapy, including in the adjunctive setting. The converse isn't necessarily true. An agent demonstrating efficacy only in the adjunctive setting, there still remains a question. If the agent possesses sufficient horsepower, if you will, to demonstrate efficacy in the monotherapy setting and in the absence of data, that will be a higher hurdle. So we started with monotherapy for those reasons. It doesn't preclude us from ultimately thinking about moving into the adjunctive setting through whether it be a company-sponsored or investigator-initiated set of studies that will allow us to further explore efficacy in that patient population.

And I'd just add to that, I mean, keeping the patient first and foremost in mind that the premise here really is to bring a therapy forward that is much safer and the tolerability, much improved over existing generic. So in the adjunctive setting, by definition, you're dialing in whatever those AEs are that come with the generic versus already is, again, in the monotherapy setting to, again, really change the treatment paradigm and hopefully avoid this constant cycling that these patients have, really keep somebody in an effective therapy that's well tolerated and safe for an extended period of time. So that will really be a step change in quality of life and make a big impact. And I think that's another big reason we prefer monotherapy.

And I know, Henry, a lot of investors tend to look at Neumora versus J&J versus CAPLYTA. There's lots of companies and drugs out there, but it's not a zero-sum game, right? So maybe help us with kind of how you see the bigger picture from access, reimbursement, unmet need perspective.

Yes. Again, I think we hit on some of these themes already. I mean, first of all, we're really pleased to see these new approaches come in the market. It's a huge market. It is still very underserved, as Bill talked about. At least half, if not more, of available patients don't even seek therapy, given some of the AEs that they're faced with. So we're pleased with those new approaches. We'd like them to succeed. I think more voice in the market generally has helped these type of markets in the past. From a reimbursement perspective, Bill talked a little bit about some of the market research we've done. I think our profile really tested really well. It's a novel pharmacology, right? So it's not another atypical. It's truly a novel mechanism of action. It addresses Anhedonia, which, again, the current agents and even the ones in development, don't really adequately address. And it's got the safety and tolerability that I've talked about. So that tested quite well with payers. Obviously, we need to demonstrate that profile in Phase III and then we'll engage in those discussions once we have that package together. But I think there's a big opportunity, and there's a big opportunity also just to attract more patients into the category and then keep them on therapy much, much longer than the current medicines have the opportunities to do.

That's helpful. Let's switch gears to 266. So let's talk a little bit about [indiscernible], and then we'll get into some questions.

Yes. So 266 is our M4 program, our M4 PAM program, that we advanced to the clinic late last year and started a SAD/MAD study. We were about 30 or we're exactly 30 healthy volunteers into that SAD/MAD study when we saw a toxic nonclinical study that we've run at the same time. We reported that finding to FDA and we were put on clinical hold just about a month ago or so. So it was disappointing to us, given that we didn't see any of the same safety issue with the 30 healthy volunteers, but we're working through with FDA that clinical hold. And we think we have a good path in that dialogue. At the same time, also, we have a nice portfolio of earlier-stage M4 PAMs. And we expect to advance one of those into the clinic next year as well. So it's really a broader franchise approach. Again, we hope to be able to work with FDA to get 266 off of clinical hold. But we also have quite a nice play with the additional M4 PAMs that we are advancing to ID.

And I know -- is there a reasonable expectation that you think that, that could be done this year? Or you just don't know, I guess, given FDA dialogue can be unpredictable?

It's hard to speculate. I'd rather not speculate on this now. But we're confident in this that we will have one of the follow-on programs in the clinic next year so that we can be confident in how exactly the FDA timing works out on 266. It's hard to speculate.

Got you. Okay. And then on 511, when you think about the Alzheimer's and a lot of the foundational therapies today, agitation still ends up being a fairly actionable kind of outgrowth of the disease. Talk a little bit about 511 and give us some perspective on the mechanism in the profile.

Yes, I'll start with the commercial opportunity and Bill will cover the mechanism and how we're approaching that. So it is a very large area of unmet need. So agitation, frankly, is one of the key reasons patients get admitted to care. It is really underserved at this point. There's really only one agent in that area, and that agent carries a black box warning. So there's a big need to have a safer medicine for those patients in that setting. So we're quite excited about starting an efficacy study on that mechanism very, very soon. And I'll have Bill talk a little bit more about what gives us the confidence in that mechanism and how we're approaching that.

Yes, absolutely. So with V1a, it is a vasopressin 1a receptor antagonist with far greater selectivity for V1a over V1b versus V2 or oxytocin. So the profile in that regard is quite selective. What we know is from nonhuman primate studies, we've been able to show there's a reduction in anxiety, startle response, aggression. And in that context, those preclinical data that helped to support and underpin some of the confidence mechanistically around why we believe there may be an opportunity clinically with a profile that could be quite favorable from a benefit risk point of view. To Henry's point, the existing agents that are available have quite a bit of baggage, if you will. So being able to see the unique pharmacology, a differentiated mechanism of action, with an underpinning towards aggression, anxiety and some of the clinical data demonstrated with this target through other sponsors gives us confidence in moving this forward.

Yes. So we're going to initiate that study here in the second quarter. And similar to what we did with bipolar, we actually press released that initiation today, which hopefully we'll talk about here in a minute. We'll provide more detail on what that study looks like and the timing and so forth when we've kicked off that study.

Maybe just to talk about like the competitive landscape, right? I think you have KarXT. I believe [indiscernible] into this as well because just kind of thinking like the different income mechanism on why you think the 511 will be a better product [indiscernible].

Sure. So from a pharmacologic point of view, I've highlighted where we think V1a could fit in pharmacologically, the preclinical models and the limited clinical data that give us confidence. We think this is a very large market. The unmet need is extraordinarily high. And I think the opportunity for multiple agents with differentiated mechanisms of action is quite real. These agents, including the muscarinic, including V1a receptor antagonism needed people to generate that clinical evidence and data. But when we think about the profile of V1a receptor antagonism, it's not been associated with things that like sedation, lethargy, things that could contribute to [indiscernible] or be problematic in this population. It's early days. We need to replicate some of these elements, but certainly represents an opportunity for multiple market participants with different mechanisms to be successful in this market.

Yes. And look, we're really, really pleased to see some of the Alzheimer's disease-modifying agents really coming forward. That's a huge improvement for patients, but it will actually increase a much larger -- increase the size of patients living with Alzheimer's and therefore, being -- facing the agitation much more than you had in the past. So there'll be a be an ever-increasing need for these type of treatments. And again, we hope to play an important role in that.

And then as you mentioned, I mean, with advancing the clinic, I mean, just maybe just help us, Henry, with what you think success looks like kind of the next phase?

I think success, similar to what we do on bipolar today, is for us to see a clear signal that gives us confidence to advance to a much larger study. We're probably not looking for a large enough statistically significant type of impact. But we want to really, really test the hypothesis and do that in a capital-efficient way where we can see a signal within 12 to 18 months. And again, we'll be able to share more when we initiate the study.

Yes. And Geoff, to amplify Henry's point, these are studies that are not designed to show a statistically significant difference from placebo. But in fact, intended to elucidate with the effect sizes that will inform the next phase of development. So it's a really efficient way for us to be able to advance the program in a timely manner.

Got you. And from a BD perspective, when you think about the pipeline, how much of a priority is it to continue to bring in new assets? And maybe just help us at a high level with kind of how Neumora, from the platform technology itself, can really differentiate itself among all the other -- the companies out there.

So I'd say the history of Neumora is really through a very creative business development to assemble this current portfolio where 5 of the assets that we have came ultimately through business development, too, were internally developed. So we can do both. We have a data sciences platform, where we've onboarded a tremendous amount of data that gives us insights into the appropriate patient populations and maybe targeting some of these mechanisms in a much more sophisticated way than historically the field has done, that does give us an insight as we look at external opportunities. So I would say, given what we have in our pipeline, so some of the things we just talked about, obviously, Navacaprant for MDD and bipolar, the M4 PAM franchise, the V1a, our preclinical portfolio. I mean I'd highlight NLRP3. We're actually getting a lot of questions where we just announced a really nice partnership with Parkinson's Virtual Bio, one of the sort of big Parkinson's players. We have a [indiscernible] program. So frankly, I'm having a hard time looking at things on the outside that compete with our -- the strength of our internal assets. So at this point, it's really -- we're very, very pleased with the programs we have. Really all of our effort is focused on advancing those. We'll keep our eyes and ears open for external opportunities, but I'd say the bar is very, very high to compete with our internal programs at this point.

And from a BD perspective, the goal here is still to retain economics on partner as long as possible? Or what's the decision point for you, guys?

No, no, absolutely, absolutely. I mean we're in a fortunate position that because all of our programs are novel assets. So we have actually intellectual property protection, and this is very important to understand it's composition of matter protection. It's not a method of use or other tricks in the book. It's a composition of matter to the 2040s. And so we have a really attractive commercial runway, and that gives us a chance to explore these other indications we've talked about. So our plan certainly is to execute against that plan to bring additional indications forward. And we just brought on a Chief Commercial Officer, where we're pretty deep into commercial planning. And certainly, next year, as we unveil the Phase III in Q4 this year and then the second and third Phase III in the first half of next year, we'll be investing more in the commercial infrastructure and prepare for launch. So I think this is a market where we can make a big impact and I'm quite excited to do that.

Awesome Well, Henry, Bill thank you so much, guys. Appreciate the dialogue.

Great. Thank you.

Thank you.