Nuvalent, Inc. (NUVL) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. Thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analyst here. It's my pleasure to introduce the team from Nuvalent, including Jim Porter, CEO; and Alex Balcom, CFO. Just a reminder, the format for today is a fireside chat. So if you'd like to ask a question, please raise your hand, and we'll address your question in our discussion. Before we get started, I just need to read a quick disclaimer. 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, Jim and Alex, thanks for joining us today. And maybe I can turn it over to Jim, if you want to just make some quick introductory comments, and then we can go into Q&A.

Yes. I just want to say thank you, Mike, for the opportunity and for Morgan Stanley the opportunity for the conference. We're excited to be here and looking forward to sharing more about the progress we're making at building Nuvalent.

Yes. Sounds good. Maybe we just start with the sort of platform strategy question. Obviously, precision oncology, maybe you can talk about some of your unique capabilities, how that has translated into your early success now twice, and we're waiting for the third.

Sure, sure. Yes. Well, the company is about 6.5 years old. We're based in Cambridge Mass. The focus is, as you've pointed out, precision oncology. The foundation of the company has a deep expertise in chemistry, structure-based drug design. We focus on clinically proven kinase targets and the rationale there, there's 80-plus kinase inhibitors approved. So we know these mechanisms work, and we try to bring innovative chemistry to solve for the needs of patients and to understand where those needs are from the outset of the company, we formed relationships with physicians that have developed the earlier generation kinase inhibitors, understand from their perspective what are the limitations of those therapies? What are the needs of the patients that they treat? And we try to solve for them through innovative chemistry. And just a few short years, we've built the company up to where we have 2 clinical proof-of-concept datasets in our parallel lead programs targeting ROS1 and ALK non-small cell lung cancer. Both those programs received breakthrough designation by the FDA, both are in Phase II pivotal studies, and we have a third program in clinical development and a robust discovery pipeline behind that.

Maybe you can touch on some of the key challenges with existing kinase inhibitors?

Yes, sure. Yes, so we -- our approach is really guided by the physicians learning from them. And the areas they pointed out, in particular programs that we're interested in, kinase inhibitors often work well. They drive durable responses. But patients can become resistant and their disease will progress. So the immediate need is solving for those resistance mutations that have emerged beyond earlier generation therapies, those patients don't have options. So we try to come up with solutions that can address those specific resistance mutations. The other need -- often the earlier generation kinase inhibitors, they hit other off targets. And those other off-targets don't necessarily help with treating the disease, but hitting that off-target could lead to off-target adverse events or safety challenges. And the feedback from the physicians was: If you're going to make a next-generation inhibitor, we'd like to avoid those specific off-targets because they're driving dose-limiting toxicities in our patients. If you had more selective inhibitors, you can keep the patient on therapy longer, you can hit the target harder, drive deeper and more durable responses. And that's how you would open up a best-in-class therapy approach, where you can move up the treatment paradigm, make options for all patients with that given disease. So it's a pretty simple strategy. Really, the unique aspect is listening to the physicians and using the innovative chemistry to try to solve for it.

Yes. So a simple but effective strategy.

Sure.

Maybe just on resistance. Obviously, you kind of know what some of the resistance mutations are. But is there any way to sort of think ahead and kind of prevent other potential resistance mutations that could emerge in the future?

Yes. This is really one of the advantage -- great question. It's one of the advantages of working in a space that's so well that precedented and validated, it's we can learn from the literature, as I mentioned before, there's 80-plus kinase inhibitors that have been approved over the last 2 decades. There's so much learning from the literature of what are the limitations of the other therapies in this space. What are the types of resistance mutations that are likely to emerge beyond specific therapies? What are -- across a range of different indications? And quite frankly, there are learnings that we applied to our approach of not only let's solve for the ones that have been identified, but the ones that might be identified. And that helps guide our approach and our drug discovery efforts.

And you talked about sort of 3 programs you're moving forward, but you also have an active discovery. How do you -- maybe just at a high level, how do you sort of determine where you started with the first 2 and now the third and then where you go in the future?

Yes. So we only really talked through or discuss externally the 3 lead programs targeting ROS1, ALK and HER2 non-small cell lung cancer, a lot of learnings across each one of them because they're all within lung cancer, working with many of the same physicians, many of the same sites and the discovery approaches mirror each other as well. But the approach is really anchored in understanding from the physicians where the needs are and where the chemistry takes us. So we're not necessarily a lung cancer company, like, we'll go wherever the chemistry and the needs take us. And those 3 programs I mentioned, those were all discovered when we were a stealth company back by 2021, right? So we were a 12-person stealth company. We are working on these 3 targets, and we solved them. Everything we've been working on since in Discovery Research, we have yet to disclose. And the reason being, we like to make sure we have the solution before we discuss the problem. So we often get asked when will we nominate the next development candidate? And the answer is we don't know. Discovery doesn't work on a time line. You have to figure it out. But based on the past successes, we hope to be successful with these other programs we're working on, too. And there's a whole range of programs across a variety of different oncology indications that we're working on.

Yes. And just in terms of prioritizing your sort of lead programs versus discovery programs, is -- now you have 3, adding a fourth into the mix. Does that kind of make -- spread you too thin, for example? Or just how do you think about that?

Not worried about that. I'm not worried about that at all. We have an outstanding team that's very passionate and dedicated towards driving these programs forward. So the question was, could we take on more? Absolutely. I think we have a team that's very skilled at pushing these programs forward. And what the discovery efforts are already ongoing. If we have another development candidate, we will develop it.

Yes. And just how do you think about read-through from your earlier programs to maybe some of these earlier pipeline programs? Obviously, you've had some success. You sort of applied a similar sort of strategy in lung as you suggested. Are there similar strategies in the early-stage pipeline? Are there different strategies?

Yes. It's -- there's certainly learnings from one program to another. I will tell you that all discovery research problems are unique and past success does not predict future success, but it can guide and help. There's learnings that we can take on to our other programs. But all drug discovery challenges, I think, are unique, and they present their own unique challenges, and it requires skilled, talented researchers to try to solve them too.

Great. And maybe we can switch to your lead program, your ALK inhibitor. Maybe just talk about the current treatment landscape and where the unmet need is and kind of the things you've done to sort of solve for those?

Sure, sure. So there's 5 approved therapies in the ALK space, so a number of options for patients. And the obvious question is, why a 6? Why you need a 6? You can really think about it pretty simply in 2 buckets. When patients are newly diagnosed in the advanced metastatic setting, they receive alectinib, that is the standard of care. When patients progress on alectinib, the only drug that really works in this setting is lorlatinib. And when patients progress on lorlatinib, nothing works. There's no option for those patients. And the physicians urged us to go try to solve for that immediate need. There is no option for patients. These patients present with ALK mutations, something called single and compound mutations. None of the available therapies work there, that became our immediate challenge to try to solve for that. But with each of our programs, we're looking not just to address the immediate need, but how do you make a best-in-class therapy. And of those other therapies I mentioned, most physicians would tell you, lorlatinib is the most active ALK drug, but it gets the second line use as opposed to the front line because it hits a specific off-target, and that off-target can drive CNS toxicities and that those CNS toxicities are things that physicians and patients were looking to avoid. So if we could make a drug that avoids that specific off-target that has the other favorable attributes lorlatinib has, meaning good coverage of ALK mutations, CNS penetrants then we would have a better second-line drug than lorlatinib and we would have a better frontline drug than alectinib. So that's the general strategy, and we're looking to push that forward with the data that we're generating.

Yes. And maybe you can talk about some of that data, I think. Was it a year ago, you presented some of that data? And maybe just start with the response rates, and you gave a lot of different sort of subgroups and maybe just walk through maybe the key ones and how those compare?

Yes. So it was a Phase I study. And in Phase I oncology studies, often physicians are going to exhaust available options before they consider a Phase I trial, right? So patients have progressed through all the other therapies. So it's a very difficult, advanced heavily pretreated patient population different than any other ALK study that we're aware of. And we designed our drug to be active in that patient population and it was, right? Even in these very advanced patients, we saw the drug was active with patients that had taken the multiple lines of therapy, patients that had single resistance mutations, compound resistance mutations, patients that have disease in the brain. And importantly, the drug was well tolerated, and that was one of the things that we had heard was the limiting factor of lorlatinib advancement until this earlier line is those CNS toxicities, and we weren't seeing that with NVL-655. So we think it sets us up for pushing our strategy forward. And that was basically the key findings from Phase I.

Yes. Makes sense. And maybe just talk about early signs of durability and what you were seeing there?

Yes, sure. So in our last data presentation, what we showed was that all patients who responded to NVL-655, they didn't progress. And so that was really encouraging, but it was also an early look. And so a key focus area for the update that we'll share at ESMO coming up here is going to be on additional follow-up and durability and the learnings around those aspects from our Phase I study.

Maybe you could expand a little bit on ESMO and just what are the key data points, PFS and so forth? And maybe are there any specific subgroups we can look at? What's the bar? How to think about that? What's a good readout?

Yes. So I think as Alex mentioned, like the initial presentations, it really told you the punch line, but it was too early to really assess durability. I think in single-arm studies, often, for certain thing what regulators will look at is response rate, duration of response and safety. So it's an opportunity for us to share what we're learning on each of those variables. What's the bar? Well, in third line, nothing works, right? There is no option for those patients. That's actually where we received breakthrough designation by the FDA, sort of highlighting that there's a medical need and the early data is trending favorably in that setting. So any activity that's durable and well tolerated, that's -- I think that's in advance for that particular patient population. In second line, lorlatinib is a standard of care, and it generates roughly a 7-month duration of response in that setting. And we think there's limitations to lorlatinib in that setting. It's not -- there's a narrow index for inhibiting ALK mutations versus that specific off-target. It's called TRK and because of that, it was dose limiting in their Phase I study and trying to give more drug to cover those mutations was not possible, right? So we had known that going into the design of 655, is let's design a compound that has a wide index for hitting those mutations versus TRK, and that includes both single mutations and compound mutations. And we're sort of saw that -- we saw that play out in our first Phase I update, where we were seeing patients progress on lorlatinib with single mutations that was ineffective at covering or compound mutations that we're developing on lorlatinib and they were responding to 655. And as Alex mentioned, none of them had progressed by the time the last data cut off. So I think there's an opportunity to learn what happens with this updated data set. We didn't have many lorlatinib-naive patients, as I mentioned before, most physicians are going to exhaust the available options before putting them on a Phase I study. But the handful that we did have, the data there was trending favorably. So we share what we're learning in the second-line setting, and we'll also share like how that durability in the third-line setting may translate to what you might see in those earlier lines. And then ultimately, where we want to go is front line. And for front line, it's very clear precedent, you would need a randomized study. And we've known what we want to do for a while there, and we're on track to disclose our strategy this year.

Can you maybe just talk about breakthrough therapy designation, you received that earlier this year and just how that impacted your development?

Yes. We received actually for both programs, both our ROS1 and ALK programs. And I think it really speaks to like there's a medical need that the regulatory agencies have identified and typically, they grant a breakthrough designation if that medical need exists and you've generated data showing that you're addressing that medical need, and we received that for both our ROS1 and ALK programs. The advantages is it really provides additional opportunities to have lines of dialogue with the regulators about getting these drugs to patients as fast as possible. That's our ultimate goal is we want to bring these drugs to market to treat as many patients as possible. So having that open line of dialogue is a huge opportunity for Nuvalent on both of our programs. As we mentioned, we're trying to develop for all ALK and all ROS1 patients and having more ways to communicate with the agency is an important opportunity for us.

Maybe just talk about post the ESMO update, sort of next steps for the program?

Sure. Yes. So we're excited about the ESMO update. In addition to the Phase I data, we'll also be sharing a status and enrollment update from the Phase II portions for each of the programs as well. And as Jim mentioned, we're on track to share more details around our Phase III study design for the ALK program this year. And then beyond that, we've guided to having pivotal data from at least one of our programs next year and our first approval for at least one of our programs in 2026.

Just the Phase III strategy is frontline, correct? Have you mentioned anything about that design at all or what are the sort of key factors you're still trying to...

Yes. So we'll disclose the specifics this year, but we can share kind of how we think about the benchmark.

Yes. The ALK space were really guided by -- there's 4 randomized Phase III that have already been done in this setting. They've all been randomized 1 to 1. They've all been progression-free survival as the primary endpoint. They've all been roughly 300 patients. They've all taken about 2.5 to 3 years from start of enrollment to the line extension approval. So that's a good precedent to learn from. The standard of care has changed. It's no longer crizotinib, which each of those studies were run against, it's now alectinib. So we'll have a slightly longer study, a slightly larger study because the standard of care has changed. But it's a pretty great opportunity in the ALK non-small cell lung cancer is a disease, as I mentioned before, that has lots of treatment option. But often, these patients are diagnosed when they're younger, and though alectinib performs favorably, it's about a 2-year progression-free survival. If you're a younger patient in the prime of your life, 2 years isn't long enough, right? So it turns out that half the patients on alectinib will progress with ALK-resistance mutations. So on target ALK resistance mutations. And that really tells you that the ALK is a really interesting driver to target in cancer because the tumors are so dependent on ALK signaling. So if you make a compound that has broad coverage of ALK-resistance mutations, you can envision keeping the patients on therapy longer because you're going to limit the number of escape pathways for the disease, and driving deeper and more durable responses. This is not something we made up. This is something that's tried and true in the oncology space, like osimertinib is one of the most well-known examples in the EGFR space, EGFR lung cancer, where about half the patients on earlier generation EGFR inhibitors would progress with on-target acquired resistance. And osimertinib addressed that mutation and eventually supplanted the standard of care and the reason that's so interesting is, one, that creates much more durable options for patients, but also represents a very interesting commercial opportunity. So in the EGFR space, it took a $2 billion market peak sales and made it a $5-plus billion market and growing. So if we could take what is already an interesting market with alectinib, roughly about $2 billion a year in sales, and we can drive significantly longer progression-free survival, we think we can be a great option for patients and also represents a very attractive commercial opportunity for Nuvalent.

Yes. Maybe just on the commercial opportunity. Is this something you plan to launch on your own? Are you considering partnering and what would be the time frame on that?

Yes, I can share how we think about that. So I mean, overall, we're in great shape. We have runway into 2027. We have the team that's experienced in executing these studies as well as the Phase III study for ALK. And -- so that gives us a lot of flexibility. There's potentially the opportunity to leverage a strategic partner as we think about global commercialization, specifically outside of the U.S.

Got you. Okay. Maybe we can shift to the ROS1 program. Maybe talk about the unmet need there and kind of how your molecules profile is sort of stacking up?

Yes. It's actually a very similar story to the ALK story, right? These are diseases that are related and they're both driven by particular oncogenic fusion and the needs that have arisen beyond other therapies are related. So we took a very similar strategy discovery wise to solve each one of these programs. So in the ROS1 space, the current standard of care is a drug called crizotinib. Crizotinib is not highly brain-penetrant. So patients will progress with CNS disease. And also, they'll progress with ROS1-resistance mutations, and they turned out to be pretty much similar resistance mutations than what occur beyond alectinib and in the ALK non-small cell lung cancer space. So when those resistance mutations emerge, there's not a great option for those patients. The other drugs that have been developed in this setting, some of them have seen as penetrants. Some of them have some coverage of those resistant mutations, but they happen to be very potent TRK inhibitors, right? So same challenge that I mentioned before with erlotinib in the ALK space is that there are actually dual track ROS1 inhibitors, it track more potently than ROS1 and therefore, the patients experience these CNS toxicities. If you've not seen the broad uptake of those dual track ROS1 inhibitors in the ROS1 setting to displace crizotinib. So the physicians have outlined for us is what's truly needed here it's a drug that can hit the original ROS1 infusion, can hit the ROS1 resistance mutations that are the disease resistant pathways, have excellent CNS penetrants to you can limit or treat the patients that have CNS disease. And importantly, be selective for ROS1 as opposed to the structurally related off-target track. And those are all chemistry problems, and we're a chemical company. So we came up with a solution. Our solution is zidesamtinib and it's a beautiful molecule, it can do all those things, it can hit the fusion, it can hit the mutations, it can get into the brain and can avoid tracking. We're excited about that program.

Yes. Maybe you can touch on some of the early clinical data you shared.

Yes. Just like with the ALK program, the Phase I update is a very advanced patient population. These are patients that have exhausted available options. They've taken the other things that nothing works in this patient population, but we designed zidesamtinib to work in this population, and it did. It did. It was active in all the patients -- I'm sorry, in the broader patient population, if you look at the subsets where patients would have mutations or patients who have CNS disease, or they've taken a number of therapies or regardless of what prior therapy they took approved or investigational, we still saw responses with those patients. And -- so we're quite encouraged by that. It was active in the brain, and it was -- importantly, it had the safety profile that we were looking for that was avoiding those CNS toxicities that the other drugs were showing. So we had transitioned this trial to Phase II as of September of last year, and that study is ongoing, where we have registration-directed cohorts in both TKI-naive and previously treated patients.

Maybe sticking with ROS and kind of the ESMO update and just what should we expect there? I mean it's been a while since you've shared some of the data, will include some of the Phase II data as well as the Phase I?

So similar story to ALK, how we're thinking about the updates for ROS1 at ESMO. It will be focused on data from the Phase I study, which is fully enrolled. And as we talked about with our ALK program, we think we told you the punch line with the initial presentation, but that was an early look that we shared for ROS1. And so the focus here will be on additional follow-up and learnings around durability. And then we're also looking forward to providing an update on the status and enrollment from the Phase II portion of the study.

And maybe a similar question just on the durability and maybe PFS as the sort of key endpoint, but what's sort of the bar there?

Yes. So in front line, crizotinib is a standard of care. It drives about 18 months duration of response. And as I mentioned, half the patients are progressing with ROS1 resistance mutations and others are progressing with CNS disease. And we try to solve for that. Interestingly, crizotinib used to be the standard of care in ALK non-small cell lung cancer. And 4 other drugs have shown, they're significantly better than crizotinib in that space, but it's still remains the standard of care in ROS1 because no one had ever developed a drug specifically for ROS1 patients. They've taken other drugs that they've repurposed for other targets and try to develop them for ROS1 patients. Zidesamtinib has been designed specifically for ROS1 patients. It solves for all those other needs. And I'd point to like the data generated in ALK from a drug like lorlatinib, right? It has coverage of ALK mutations and CNS penetrants. The same reasons that patients are progressing on crizotinib and ALK the same reasons they're progressing on ROS1. Well, lorlatinib has like a hazard ratio of 0.19 in ALK non-small cell lung cancer versus crizotinib. What if you can do something like that in ROS1, right? You're talking about taking what is today, an interesting market, maybe crizotinib doing roughly $400 million in sales. How much bigger can it get, right? Like how much more durable responses can you drive by covering those resistance pathways or limiting the escape mechanism to the disease in the brain? We're really excited about zidesamtinib and what it might be able to do in that frontline setting. Now our Phase I data is not TKI-naive patients, right? These are all patients that have exhausted available options. But our objective here is to tell what we're learning from a durability perspective where these patients don't really have any options available to them. What kind of responses are we seeing? How durable are they? Are we seeing the safety profile, et cetera? And how does that guide how you think it might perform in those registration-directed cohorts that are ongoing, both TKI pretreated as well as TKI-naive patients.

Got you. We have about 6 minutes left. So maybe we can shift gears to 330 and maybe just give us a little bit more background there. And I think you just started the Phase I study, so maybe talk about that design.

Yes. So HER2 lung cancer, so HER2 is a target that most folks have heard of. It's a well-established oncology target. There's been drug development against HER2 for the last 2 decades in many approved therapies. HER2 lung cancer is a little bit different than those other HER2-approved therapies because it's primarily driven by something called exon-20 insertions. And some of those other HER2 drugs have been tried to be repurposed for HER2 lung cancer. Well, it turns out they have a narrow index for inhibiting exon-20 insertions compared to wild-type EGFR. And wild-type EGFR is the dose-limiting tox here. It's well known that if you inhibit wild-type EGFR, you get skin toxicities, GI toxicities. And the outcomes for those repurposed drugs have been pretty dismal, poor response rates, poor durability because it's not -- it’s difficult for the patients to tolerate these drugs to drive deep and durable responses. So that was the clear need we're trying to solve for from -- that we heard from the physicians is design a drug that has that wide index for hitting HER2 exon-20 versus wild-type EGFR. That's an interesting chemistry problem. It's in our wheelhouse. And in addition, because it's lung cancer, unfortunately, lung cancer patients are the patients that are most predominantly going to get brain metastases, the disease will metastasize to the brain. So you need to design a drug that can cross the blood-brain barrier and NVL-330 does both of those things. It's broadly active against HER2 mutations, particularly exon-20 insertions, has the wide index for wild-type EGFR and it's highly brain penetrant in preclinical studies. So we're excited about it. We just started the clinical study earlier this year. It's called the HEROEX study. It's focused in lung cancer. I will tell you that that's where our near-term interests are. But 330 also happens to be an excellent HER2 inhibitor broadly. So HER2 is a driver in lots of different tumor types. And we can consider those opportunities down the road as well.

I guess, when is the next update for this program?

Yes. So I mean, we were excited to announce that the first patient was dosed earlier this summer, back in July. And so we'll take the same approach as we have with our other programs where we'll follow the progress and be data-driven and want to be able to tell a meaningful clear story of what we're learning. So we'll provide more updates in the future.

Maybe just back to the first 2 programs, the ALK and ROS and I think you mentioned providing some pivotal data next year. Is it for 1 program, for both programs, how should we think about that?

Yes. We haven't shared just yet, which program. It could be either of the programs. We've shared that enrollment has gone really well. We've been pleased with how it's going across both of the studies. So we'll look forward to providing more updates in the future.

Okay. It looks like we're just about out of time. So why don't we wrap it up there. Looking forward to ESMO coming up here. And thanks, Jim and Alex for sharing your time with us today.

Thanks so much.

Thank you.