Praxis Precision Medicines, Inc. (PRAX) Earnings Call Transcript & Summary

Welcome to the UBS Virtual event. I would now like to pass the call over to Ash Verma.

Great. Yes. Thanks for that. Good day, everybody. My name is Ash Verma. I cover SMID Cap Biotech and Spec Pharma here at UBS. And our next company at the UBS Virtual CNS Day is Praxis Precision Medicine. And with me, I'm really excited to have Marcio Souza, who is the President and CEO; and Tim Kelly, who's the CFO. So thank you, guys, for joining us.

Thanks for having us.

Yes. Good morning, everyone.

Yes, that's great. And for the audience who are listening in, if you have any questions that you would want us to ask, feel free to send them my, I can weave into this discussion. But kind of like a 25-minute fireside chat, and we discuss another key programs for Praxis. So maybe it will be beneficial if you can just kind of give a brief update on the business, like what are the key highlights of some of the pipeline programs. And just if I can sort of pinpoint to one specific area. I mean, look, I think there's a lot of focus on using genetics and translational tools in guiding drug discovery and development. Just like as you look at your approach, right, like how do you use that in your pipeline? What are some of the facets to keep in mind across your platform from that perspective?

No, absolutely, Ash. And again, thanks for having us. I think that's literally on our wheelhouse, what you just mentioned. So maybe I will start there, right, like we do have like a number of drugs in development right now like 4 drugs in late stage like pretty much the same number moving into the clinic in the next 12 to 18 months. And one of the things we have in common across all of them is really first looking for genetic evidence that the targets or the way we interact with the target is like pathological can be reverted through like drug, ASO or a small molecule or you name it approach. I think we've been taking this approach of like using genetics to inform drug development and then sometimes going as far as in the case of the oligos on using like the true genetic information to modulate the targets or taken a step back. And in the case of, for example, sodium channels, in general and understanding genetics of pain, genetics of epilepsy, genetics of you name it, right, to inform the development. But being very, I would say, liberal and broad about how we apply this. A lot of the team, and particular, like Steve, our Co-Founder and CSO, has basically dedicated his life to genetics and specifically like how to modulate this target. So we have the legacy, but a lot of us outside of Steve as well has been doing this for a very long time in terms of how to use genetic to inform. So it's pretty like, I would say, deep in our heart and hands on how we move those things forward. But at the end of the day, it only matters if you translate this to patients. So I think we're always taking that step forward to understand very early on in the programs, whether or not the hypothesis playing out to be correct in terms of the modulation and then taking that a step further. So 3 programs in epilepsy are in late stage right now. Wrapping up the essential tremor program, as sure going to discuss that as well and a number of programs moving into the clinic, including 3 ASOs for different genetic conditions, including one, that's more linked to autism and to stay more on the development encephalopathies and some bank programs as well that we might be moving to the clinic in the next 18 months or so. So a lot of stuff going on. And as this renaissance in CNS really continued to move forward.

Yes, that's great. Yes, there is a fair bit of excitement in this space definitely, especially like anything to do with using genetic advances in drug development and discovery. So thanks for sharing that. Maybe I guess like if we go over some of the key programs that you have perhaps like starting with relutrigine. So here, if you can just kind of explain -- so sodium channel modulator, but like you -- I believe you sort of position that this is differentiated versus some of the other competitors or prior attempts at this. So if you can expand on that, like what's the mechanistic differentiation for your program?

Yes, absolutely. So relutrigine, just like we're talking about a couple of seconds ago, right, it came from the idea that when you see small chains on certain currents that go through like sodium channels and modulate those hyperexcitability in general in the brain, oftentimes like starting from a genetic origin. You have very large disturbance of the system, like a lot of seizures, a lot of complications coming from that. And what we know is, like we know for many decades, right, how important sodium channels are for hyperexcitability, for moods, control, from a number of things. But what we didn't know before, I think that the jury was out for a while on the central ones, right, since their peripheric ones as well that are used for pain control, for example. If it was better to completely block it or it was better for attempts to fully modulate and really only interact with their hyperexcitable states. And of course, it's easier to just fully block it. So for a long time, that's where all the research was going and even going one step further and [ trying the form ] specific ones. And I think those attempts, while they have a lot of like potential credits that is due to -- it's incomplete. What we see with most of the first, second, third generation, is that, yes, we have some activity, but we hit the toxic current, I would call that way pretty quickly. So the therapeutic index is not that wide. So we end up limiting the drug activity due to toxicity or to other drug properties on that case. And then the second generation, I would say, of the approach was more of a can we block, for example, at NaV 1.2 or NaV 1.6 or one of those channels specifically. And those attempts were made and they were not very successful either. We took a different approach, right? If you look into at the hyperexcitable states as more of a network effect. So what we really have to do, in our view, is to try to stop this propagation or initiation of the action potential when the neurons are on this like convulsive "status" or hyperexcitable status. And that's what we derived. We came up with a number of molecules we tested in animals, and you might have seen that was quite exquisite. The results, and then we move to your typical how volunteers, like quite wide therapeutic index. We're feeling really good about it. And then on the case of relutrigine that you mentioned, right, we just completed, as you know, our first proof of concept in patients. And what we decided to do was to really go for one of the hardest, if not the hardest DEEs to treat, right, develop epileptic encephalopathy, where these patients are having like uncontrollable seizures, like all the time, very refractory to treatment and so on. And what you've seen on that cohort of 15 patients was quite exceptional results, like over 40%, 46% reduction into countable motor seizures and 1/3 of them, so 33% were seizure-free at the end of treatment, which that alone is impressive. It's unprecedented and so on. But maybe it's more impressive that when you follow those patients over time, they continue to do really well, and it continues to be fairly safe. And the reason why I bring that up is that there's a little bit of a confusion sometimes in epilepsy when people are thinking about a number is important, right? So yes, 46% is super important and 30%, but it's even more important to be able to keep those patients receiving the treatment over time since a lot of discontinuations, a lot of the breakthrough comes from actually safety events. So based on that quite exceptional results we have, including the long term over 70% reduction in seizures in the long term. We decided to expand that. We're running a registrational program right now for the same molecule, it's enrolling really well, and we're looking forward to get the results of that no later than the first half of next year.

Yes, yes. I mean I think like the data, like you pointed out, like this proof of concept on relutrigine. It shows pretty promising efficacy, like the way that you think about it? Is this more of a sort of like an efficacy play or is safety, a differentiation factor for you versus the -- like the standard of care or competition?

Yes. We're somewhat lucky that we don't have to pick which one right here. I think if you were to pick for the DEEs particularly, it is important to give additional benefit on what patients have right now, like that seizures are -- uncontrollable seizures, what cause to that or other issues that end up, unfortunately, shortening their lives a fair bit. And of course, from a quality of care, quality of life, in general, it's horrendous, right? When you have more and more seizures controllably and so on. But of course, safety is quite important. And we're lucky enough that on the space with SCN2A and 8A and DEEs in general as well as we're expanding this program towards, there are very little to know through competition. There are use of different drugs, but there is nothing approved for most of those conditions, right? So we're really looking here is to bring something that was tested on this population first and foremost that we know to be efficacious and we know to be safe that patients can hopefully have a much like longer life and a higher quality of life as well.

Yes, yes. And then in terms of the cohort 2 that you have right now, right, so that's the first half '26 expected readout. Just if you can help me understand like what are the differences that you have, if any, in this cohort 2 versus what the data that you presented late last year?

Yes, absolutely.

And just characteristics, those type of things.

Yes. So the design of this study is very, very similar from a structural standpoint. So in that regard, I think we can make some certain comparisons. There are a few, I would say, quite important change here. So the first one is the ability to dose on top of 2 other like partial or complete sodium channel blockers. We restricted to one before. I think as you're going through the first inpatient study, we wanted to be a little bit more cautious in terms of the potential toxicity. I think we're a lot more comfortable right now and so far so good on that regard. And the second one is, what we learned is we started with 0.5 milligram per kilogram per day of dosing. And there was one moment in the trial around 8 weeks that patients were allowed to or physicians who are allowed to move the dose to 1 milligram in a blinded fashion, of course. And what we learned is when we did the like preliminary PK/PD modeling there is that the association is pretty clear on higher dose or higher exposures may I say, and seizure control. So since we learned that, and there was no true safety concerns that we're having, we brought in the 1 milligram per kilogram per day dose at day 1. So that is the -- really the 2 chains. I would say nothing really else changed here. So if anything, we should see a faster emerging of efficacy, I'm not sure how much faster we can really be. Since we are already pre-efficacious at month one as you might have seen, but give the chance for patients to respond even better here.

Yes. Okay. And then in terms of the patients, so this is a little bit more geographically diverse, I believe you're using like U.S. and Europe patients. Does that have any like bearings on trial outcome there?

No, not really. Actually, it's identical to the previous one. So we did have about half and half U.S. and Europe before, our core center in Madrid that's been recruiting for this. And in the U.S., we expanded a little bit the actual footprint in the U.S. for this, just because like the more interest West than we had originally. So we expanded that, but it's still U.S. and Europe only. I would say mostly because of the pace of the enrollment that we've seen since we started like last quarter, we've seen quite nice pace of enrollment. So we didn't think there was enough time to expand to other geographies outside of Europe and the U.S.

Got it. So I'm assuming that like if you are targeting like first half '26, you are at some point like first half of this year, get this trial enrolled completely. Is that a fair assumption to make?

Let's just play this back, right, to the 16-week study, we tend to clean data pretty quickly. So if that is one possibility. And I think that's why we're saying no later than first half of next year versus say first half, I think if things continue on the pace we have right now. It's probably on the earlier side of the guidance. If it's, for any reason, slow down a little bit, that's more on the later side of the guidance there. But it goes to say like we're very confident on the pace of enrollments that we have right now.

Yes. Is there a possibility that the data can come this year, by the end of this year, let's say?

It is, right? I want to be careful for that not to become an expectation because it shouldn't be an expectation, but it's on the realm of possibilities right now.

Okay. All right. And then, yes. I mean, look, I think investors generally tend to kind of like set bogeys on where -- what a trial is going to do based on like the [indiscernible]. And you have shown pretty decent motor seizure reduction in your cohort 1. Is that a basis that relutrigine can generate that type of efficacy in this cohort 2? Or any sort of like nuances to consider the outcome?

Yes. So and this is completely uninformed. So what I'm going to say, meaning uniformed by data, right, since this is a blinded study going on. But the way we described this drug before and the expectation for use in SCN2A and 8A. I don't believe it changed because we generated data, right? It's like what we discussed before was anywhere around 25% or more seizure reduction would be like really exceptional since they don't have any control right now. Of course, now that we show that number higher on seizure freedom, people would expect even more from particularly Wall Street. But if I bring back to patients, right, like that's what they needed and that's what they still need. Of course, we would like to replicate what we've seen on the previous study are more, and we try to stack the cards in that regard by moving the dose, for example, to be higher, but it's also biology, right? Every new cohort we put in, so not necessarily guiding for the same numbers because then it becomes a Wall Street game versus at the end of the, what he wants to get this drug approved and get to patients and then everyone would be happy here.

Yes. Yes. Okay. All right. And then just like broadly speaking, taking a step back from SCN2A and 8A, so you have this broader DEEs that you're studying in the EMERALD study, right?

Correct.

I think I heard at one of the recent calls that you say you have the regulatory inputs that they required, so you're ready to start that?

Yes. We are. We just finalized the protocol. We are interacting with the sites right now and getting this up and running this coming quarter. So we should be up and running second quarter this year. If we can gauge by the interest, I think there's going to be a pretty quick enrollment. We'll be talking a little bit more in the coming weeks about the final specifics on the protocol and expectation for enrollment and so on. But I think for now what I would say, it's a very broad coverage of DEEs. What we're trying to do is to define phenotypically having 4 more countable motor seizures, the month before randomization or the 4 weeks prior to randomization and really not having any history of exacerbation of seizures with similar mechanism or something like that. That's kind of the key inclusion, exclusion. There are a few others, of course, and we're happy to see how regulators in general are evolving in terms of understanding that those patients really need to control seizures. That's the most important thing and everything else is going to come after that, right? The quality of life and the different scales, developmental and so on, once you control issues. And that's what we believe relutrigine can do really well for those patients.

Yes. Okay. So I wanted to just switch gears real quick to vormatrigine. So here -- so I know you've talked about the mechanistic differentiation and you have some proof-of-concept data here in the PPR study.

Right.

How much of that efficacy benefit is sort of like replicable you think in the focal and generalized epilepsy space?

Yes. So the main reason why we did the PPR study, right, is we wanted -- we're seeing this I would say, quite incredible efficacy in preclinical models, which, in the case of epilepsy, they are very predictive of efficacy in humans. To the point that it's so much more precise and potent and selective in those models that there is not even -- if you put on the same scale, there is not even a competitor there, right? It's like you see those are very differentiated molecules. And we wanted to make sure we're not drinking our own [ colace ] and put that in a human and make sure that what's replicating. I think it would be easy for me to say, oh no, we had all these patients responding, therefore, but it's not what it's done for. It's really like smart proof of concept, we check the box, moved on. The real truth now from an effect perspective is on the studies that are going on right now, like we have RADIANT coming up soon by mid-year, and then we have POWER1 coming up by the end of the year, and that's where we're going to see the effect of this drug, which will, of course, we expect to be like quite good. That's why we're moving this forward at the pace we are in patients with focal onset seizures and in patients with while a small cohort, but we should see some with generalized seizures as well. And that's going to hopefully continue the now legacy for vormatrigine showing really exceptional therapeutic index and overall protection of seizures in general.

Yes. And these like upcoming results like for RADIANT or POWER1, like what should be like our investors consider good data to be?

Yes. So for RADIANT, right, what we should be looking for here, so we're going with a dose that is very clearly expected to be therapeutic with 30 milligrams per day. So that should be pretty clear, the results in terms of like the individual distribution of patients achieving like more than 50% seizure control, for example, which tends to be a little a nice benchmark. But the overall results should be clear from both efficacy and safety, right? I think, as I said at the beginning, in relation to relutrigine but it's the same here for vormatrigine, it may be even more so. The #1 reason why patients discontinue drugs right now and why the market is so big on focal is because of safety. So a drug that is safer should be enough if not saying that it's going to be only safer, but should be enough to drive quite substantial markets. So if you can get actually both, can get our cake and eat it by having an efficacious drug and safer than the overall landscape in this space that would be quite phenomenal. And then the controlled study by the end of the year just gives -- of course, it's always good to have placebo-controlled data to understand what it does on top of best standard of care when placebo is involved as well. So they serve different purposes. I think one is understanding where we are in the general effect and the other one is a comparison like on different geographies and multicenter for RADIANT is as well, but a little bit more limited in the number of sites. And POWER1 is just a larger, more easier to generalize from an FX perspective study.

All right. Okay. All right. That's great. We are almost out of time. So maybe just talking about like essential tremor. So yes, I saw the update. I think like you mentioned that IDMC recommended to stop the study for futility. Just anything that you can just kind of characterize like what happened there? What are the next steps? What to think about the future of the program?

Yes, absolutely. So I think the way we're approaching this, right, and we're asking everyone to take a similar approach is just consider that this is 0, remove it from your model and so on that as we spend like the last several minutes talking about it and we only cover 2 program barely, right? There is so much more in the company, it's probably more of a distraction than anything else to talk about essential tremor these days. In our side, we just kind of want to wrap it up, the programs. We're going to look into the full results in Q3, and will take from there basically. But I think right now, the 99% of the focus is really to get these epilepsy programs like to the fruition that would like to see them generating more data, getting them to potential NDAs, including like potential NDA next year and helping patients. And if that is something to be discovered on [ ECU ] want to cross that bridge, we'll talk again.

Yes. No, that's great. That's fair. All right. Perfect. Good. I mean thank you so much for this. Thanks for your time and looking forward to staying in touch and learning more about your pipeline.

Thanks for the invitation again, and sincerely appreciate it.

Yes. With that, we can wrap up this session. Thanks, everybody, for listening in.