Prelude Therapeutics Incorporated (PRLD) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the 42nd Annual Goldman Sachs Global Healthcare Conference. My name is Graig Suvannavejh. I cover both U.S. and European biopharma names here at the firm. It's my pleasure to be hosting Prelude Therapeutics in a fireside chat this morning. And with that, let me welcome the company. We've got company's CEO, Kris Vaddi; CFO, Brian Piper; and Chief Business Officer -- I'm sorry, and Christopher Pierce, the company's Chief Business Officer. So with that, good morning, gentlemen, welcome to the conference, and we look forward to many more years of your participation. With that, for those who are perhaps newer to the Prelude story and you are recently -- relatively recently IPOed company, perhaps there are some who are unfamiliar with the Prelude story. So with that, maybe, Kris, if I could turn it over to you. And if you could just tell us a little bit more about the company, kind of maybe a little bit of its history and what you feel are kind of the core technologies or core areas of expertise?

Yes. Thank you, Graig. Thanks for the opportunity to participate in the conference. And as a background, Prelude is a precision oncology company. We're focused on small molecule, drug discovery and development for selected patient populations with highly unmet cancers. As a bit of history, we were founded in 2016. We raised our pref Series A in 2017 and IPOed in September 2021. We've been able to make a great deal of progress in a very short period of time with a number of molecules in the clinic. We have 3 clinical stage molecules that are all internally discovered and wholly owned and they're currently progressing through Phase I. And we have a fourth molecule that is in the IND-enabling phase that we expect to bring into the IND later this year. So if you -- when you think about -- I think about Prelude and -- versus -- in the space of precision oncology, I would say there are 3 key differentiators for Prelude. It's the team that we have in place. With -- the management team with really highly experienced scientists and drug developers. But not only had a really rich history of building really attractive small molecules, but a number of drugs that we've worked on have actually reached the market and have been very, very successful. I think that, I believe, is really a key sort of aspect of Prelude. And the second is our approach. We have a unique approach, I believe, which is really a target class agnostic or platform-agnostic drug discovery and development. By that, what I mean is that with our core competencies in drug development, drug discovery and small molecule chemistry, we're able to cross -- go across target classes to really build very differentiated and highly optimal molecules to bring to the clinic, which I think is important because in cancer, we believe that there are different pathways that require different types of interventions. And as a precision oncology company, we need to be well positioned to be able to do that. So that's been our philosophy from day 1. So we've grown to a company of about 90 people or so. But along the way, that's what drove us in terms of the types of people we were able to bring into the company. And so that I think that approach is, I think, is somewhat differentiated from a lot of great precision oncology companies out there, but some of them are focused on kinases and others are methyltransferase protein degraders. There are different approaches, but ours, I believe, is slightly different. The third part is our strategy, which is really -- we're building the company to continue to advance the molecules we discover into the clinic and potentially commercialize them in indications that we can, as a company, as a precision oncology company we can pursue, and continue to resource our discovery engine so that we can bring our new molecule, new IND every 12 to 18 months. So as I look ahead, Prelude is going to be a company with rich pipeline of very attractive molecules. And what we already have today kind of demonstrates that we are well on our way to be able to accomplish that.

That was a great overview. If I could maybe just dive in a little deeper, just when you talk about your differentiated maybe technology approach, certainly, there are lots of precision oncology companies. I think you and your team come from a rich history which I do think is important to highlight for investors. But can you talk about in terms of the guts of what you do, and that's not to suggest that different precision oncology companies necessarily have worse technologies, but in terms of what you do, can you talk a little bit more about that approach?

Yes. No, no, it's a great question. Given that we're not at specific technology or, let's say, we're not a kinase or a specific target class, it's a good question. And the way we think about it really is, we're really starting with the patient with a highly unmet need, right? And we want to work on mechanisms, targets that has some degree of validation, ideally clinical, but even advanced preclinical scientific rationale. Once we have that, regardless of however you have to go after that, we think of how we can build a differentiated molecule that can be truly to us the opportunity to serve that patient population we're going after. And if you look at our pipeline, maybe just to give -- that's more -- to speak more specifically, we recognize that for PRMT5, there is a need for a high brain-penetrant compound. And we looked at what's out there, and we think that we have the opportunity to have highly brain-penetrant molecule that could address GBM, which is a pretty bad cancer, CNS metastatic cancers, et cetera. And we've seen kinase inhibitors that have that brain penetration properties, highly succeed like ALKs or EGFR. So that's one. Our MCL1 inhibitor, which we -- is a very attractive target, there's clinical validation for this target in myeloid malignancies. But the current compounds that are in development are IV. So we've saw an opportunity to create an oral molecule. So those are just some examples, but it's really target by target, cancer by cancer. We look at how we can build a truly attractive molecule that can address an important need in a way that's perhaps differentiated and better. In some cases, you need much higher target engagement, and in other cases, you need oral brain penetrant. So it's different from one to other. But I think our ability to really build those molecules internally, drive that chemistry, understanding the sort of parameters that we need to optimize to get that molecule to have those optimal properties. Really if there is a secret sauce, I would say that's what it is. And we do more of lead optimization than lead seeking because we start with molecules, which have a certain degree of data behind them in terms of their access structures and sort of we know their binding modes, et cetera. And then we ask how can we make -- create better molecules.

Maybe we can go straight to your most advanced asset, which is -- it is a PRMT5 inhibitor, maybe folks may not be very familiar with that mechanism of action. But PRT543 is now advancing and perhaps there's lots of targets, novel targets in oncology. So maybe can you talk about the mechanism of action of this asset and where you think it may have a role in certain pathologies?

Yes, sure. So 543 is our most advanced molecule, but 811, PRT811 is not far behind. But maybe I'll speak about both of them together because they both target the same mechanism. So there's a lot of commonality between the 2. And then I can speak about how 811 may be differentiated, not only from 543, but versus others that are also competitive molecules in Pfizer, GSK as well as J&J. So these molecules target a methyltransferase. It's called PRMT5, a protein arginine methyltransferase. And as a class of enzymes, these are about -- we know them about their biochemistry, et cetera. But I think their linkage to disease and how they play a role in driving different oncogenic mechanisms has emerged about 4, 5 years ago around the time when we started the company and is continuing to refine. We're learning more about how to best use these molecules, how to more effectively select right patients in whom we -- these types of molecules could be effective, and that work is ongoing. So when -- what they do -- this particular enzyme does is it does a post translational modification of adding 2 methyl groups and resulting -- in a symmetric way resulting symmetrically dimethylarginine to various substrates. It turns out, that is a critical requirement for the function of a number of important oncogenic mechanisms, including transcription, splicing, DNA damage repair. So when you block this methylation with a selective inhibitor, PRMT5 inhibitor, you can interrupt that process and stop the generation of important proteins that support cancer cell growth and proliferation. So that's the science that's behind it. And when we look at broadly, you can see that there's a lot of validation by a number of companies, academic groups that demonstrated that preclinically, you can demonstrate strong antitumor activity with this mechanism, right? So that's there. Now the real question is, which we are working on -- we and others are working on, which specific cancer types that you can go after. Because clearly, we know a lot of broad mechanisms may work preclinically in similar periods, whatever models. But when you go to the clinics, you really have to identify patients who are most likely to benefit because actual cancer itself is much more heterogeneous. So based on the science, based on the preclinical rationale, we've identified 3 categories of cancer types we think have the highest probability of success, right? So that's truly based on all the science that was done. We've -- obviously, like everyone else, we poured over all the data that's out there and tried to look and understand and develop internal preclinical data that guides us in terms of the specific cancer types we can target. And those typically fall into 3 categories. The ones that are really dependent on DNA damage repair, who we can select. We have great tests, validated tools in terms of homologous recombination deficiency, we can select. And these types of cancers like ovarian, primarily, and breast and prostate. There's now a great deal of data showing that PARP inhibitors are very effective in these agents. So in those cancers when these agents fail, it's because the DNA damage repair pathways are sort of compromised. And so by bringing PRMT5 inhibitors into that, we can potentially -- they contribute to DNA damage repair. So that's a class that we're looking at. That's where we're interested. I'll talk a little bit about our strategy -- Phase I strategy after we go through this piece. And then the second piece, which actually we've all -- one of the earliest data with PRMT5 was around mix because it's been shown mix-driven oncogenesis is critically dependent on PRMT5. If you stop PRMT5, you stop mix-driven oncogenesis. And that's kind of the genesis of our interest in this. This data came out in 2015, '16. And the data came out of GSK, showing that in adenoid cystic carcinoma, which is a rare salivary gland tumor, which has a fair amount of high prevalence of MYB fusion. We felt that -- and we've done additional work. And these work similarly. So -- MYC and MYB. And so we felt that there is a strong rationale there, and so we're focusing on that. Because there is already some clinical data, there's strong scientific rationale. And the third, probably most interesting and most probably evolving space is splicing function. So there's a lot of spliceosome mutation that exist. It's been well studied in myeloid malignancies. And now a recognition of our understanding the role of splicing in solid tumor results are continuing to rapidly accumulate. And what it basically is that spliceosome is an internal cellular machinery that is required to -- that cuts the introns out so that you can create mature mRNA that can be translated to proteins. And that splicing machinery is symmetrically dimethylated by PRMT5. So if you block that, you stop that process, right? So in cancer, there are mutations in this splicing machinery, like SF3B1 is one that you hear often about, SRSF2. So these mutations potentially allow these machinery in these cancers with the mutations to be much more efficient. So by going after the cancers with this splicing mutations, we can essentially enrich the patients who are more dependent on this pathway that can be blocked by PRMT5. So it gives us a handle. So that's -- and that covers a number of myeloid malignancies like myelodysplastic syndrome, myeloproliferative neoplasms as well as solid tumors like non-small cell lung cancer, UVL and others. And with the advanced genomic tool data now, people are going back and looking and digging more and understanding where these mutations exist, and we're already finding a number of those. So those are the broadly speaking the 3 areas. Actually, GBM also falls in the splicing area because it's been really -- very compelling evidence demonstrated that some of the key cellular drivers in GBM are particularly dependent on splicing, high splicing fidelity. So I think those are the ones that were most focused on asking the questions in the clinic and how best to develop these agents in these indications. Are there other drivers in addition to splicing, DNA damage repair that contribute to dependency on PRMT5.

Kris, just maybe 3 follow-up questions on 543. And if you could take them maybe one by one. But first, given the mechanism of action, are there any expected toxicities that we should be looking out for? A second question I might have is, you did reference, GlaxoSmithKline. And so there is, I guess, a predecessor compound or a competing compound that is out there. And I guess the question being, can you help remind us how 543 aims to be differentiated and what the status of that GSK program or other PRMT5s are? And then a third question, and I can come back to this in case, you don't have to remind it. But I believe you are now in dose escalation studies or at least the first dose cohort has been initiated. Just wanted to get an update on kind of where we are in terms of the clinical experience for 543?

Yes. No, sure. I think those are all very good questions. So from a toxicology question that you had. So what we've seen today and again, it's also there's something common between 543 and 811 is that both molecules now we've escalated in the first dose escalation portion of the trial which is in unselected patients generally because we wanted to -- the goal of that portion of the Phase I is really to identify safety, dose-limiting toxicities. How well -- how high target engagement we can accomplish? Because we have a body of that and preclinical data that's generated by a number of companies, and we know what the bar is, right? We know -- we need to be able to inhibit the pathway to a certain extent. And there is a biomarker in the plasma we can measure. So a lot of preclinical work was done to understand what is the level of -- the biomarker is called SDMA. I may be referring to it a couple of times here, which is symmetric dimethylarginine that you can measure in plasma serum, which all of the companies are measuring. So we first asked -- we needed to get 50%, 60% inhibition in the plasma of this to achieve efficacy in preclinical models, right? That I think a number of us have done that. And that often translates to -- this is a more general market in the plasma. But when you actually look in the tissue, or tumor and stain by immunohistochemistry, you see much greater inhibition, but that generally translates to 50% or 60% inhibition in the plasma. Now. First question is, can we get there safely, right? So the answer is with our case -- in our case, with both 543 and 811 we can get there, and we can even get beyond it very safely. So that's a very important question. Otherwise, if you can't get there with this -- this is the first-in-class, right? So there's really challenging questions to ask. And other companies have tried doing that and couldn't get there, right, with different other mechanisms. So we know that we need to get there, and we've been able to do it safely. In terms of toxicity, what we've seen with 543, when you really exceed these levels significantly, you get thrombocytopenia. And now Pfizer reported it and J&J reported it. And GSK reported anemia. So bone marrow tox is going to become dose-limiting at some point. But we think that we have significant therapeutic window from when that happens. And that's really the only dose-limiting toxicity we have. And the thing about that is it's a single DLT that can be very readily monitored. And it is very rapidly reversible. So when you give them the patients a drug holiday and within a week or so, the platelets come back to baseline. And then they can go back on to the trial and continue at a lower dose. So we've been able to really study this with 543 very well in Phase I escalation and identified a dose where we can achieve this maximal target engagement with a very limited potential for thrombocytopenia. So I think that's what it is from tox perspective that we're looking out. With the 811, we've actually been able to achieve very high levels of target engagement, again, and we have not hit the DLTs yet. So we will -- we'll dose escalate. And we think we have a couple of more cohorts to go. We think we will get there. But again, it further exemplifies for us it's not just simply the target. There is the profile, the overall coverage, duration of coverage, those aspects determine how much target engagement you'll get and how much toxicity you will have. I think we've developed a fair amount of data internally that I think is helping us guide our further development, and we can compare it to other molecules and see. And that leads us into the question of differentiation that you asked next, which is oftentimes, the mechanism-based toxicities we're going to -- everyone will have. The question really is will we have -- that each compound has different potency and different PK profiles, right? And some compounds may have other off-target effects, which I think you need more data to really know, right? So what -- we're encouraged with the data we have so far. We have several patients that have been on our drug for a number of months and even beyond a year in some cases. So we are very encouraged that we have doses that give us very high levels of target engagement with well tolerated, very low GI tox, which could be problematic, particularly when you're talking about long-term treatments. So I think, all in all, the potential differentiation could come from -- in some cases, we have a very, very potent drug that you only have 2 or 3 doses in between which you're trying to manage the patients with, and these are very low doses. Then it doesn't give you enough optionality, right? So we've kind of predicted that in some ways and tried to optimize our compounds, design our molecules. So if you look at our doses, we are in 30, 40, 50-milligram type of doses with 543 and 600, 800 -- 500, 600-milligram type of doses with 811, which we think gives us enough flexibility. If a patient needed to lower the dose and actually have a different dose, I think our molecules provide us that flexibility, and that could be a potential differentiator. And the last question you asked about our progress. So just so we all are on the same page, our design of our both molecules is that to go through a 2-part dose Phase I. Part 1, which is dose escalation, where we start with a low dose, and we escalate to identify the optimal dose to take to part 2, which is dose expansion. Part 1 is in unselected patients, right? So for instance, 543 has 2 parallel cohorts, solid tumors and myeloid malignancies. Because the myeloid malignancy patients that come into these trials tend to have very sort of compromised bone marrows and so you need to be careful. So we've decided to not mix and have a parallel track to potentially identify different doses. It's quite possible, right? They may have different dose because solid tumors may tolerate much higher dose because they are normal marrow versus myeloid. So -- and the goal was to really dose escalate and identify the dosing frequency that gives us the right level of target engagement to take it to expansion. So these are unselected patients. We've completed that with 543 in both solid and heme malignancies recently and then opened the expansion cohorts. And we're looking -- I mean, they may be -- there are multiple expansion cohorts, but as I described before, they generally fall into 3 categories, splicing mutated either heme or solid tumors, HRD positive cancers and ACC, which has the MYB fusion, right? So those have started. 811, we are continuing to dose escalate. But we think we are very close based on all the PK and everything target engagement we've shown. So in the next few months, we think we can wrap that up and also start the expansion. So that's the overall clinical progress to date. And I'll just conclude that with saying that we are really excited about the doses we've been able to identify for -- to take forward because they give us the -- and again, I'm speaking from looking at other people's data that Pfizer just presented or had an ASCO poster discussion. We looked at the data. There's not a lot of detail in there, but we can learn a lot still. And we -- so when I speak about our doses we have selected for trials, I'm not only looking at our own data, but I'm actually comparing it with everything in the public domain, and that gives us the confidence that we have -- we are well positioned to ask these relevant questions in the selected patients.

All right. And given kind of where you are with 543 and 811, which is a similar mechanism of action, but brain penetrants, is it fair to assume that perhaps time line-wise and when you'd be able to share clinical data might be in the second half or by end of this year?

Yes. So again, as I described, we recently concluded our dose escalation. And we are planning to present that data from this escalation phase later this year. And this data set that will have the PK, PD, the initial clinical activity, target engagement data. And everything -- and safety and everything that I've described about how it gives us the great deal of confidence that we're taking the best possible doses into the next phase. And beyond that, we will have, over the course of 2022, we roll out a cadence of updates focused on individual expansion cohorts. We talked about all the ACC or myeloid and solid tumors and expect to roll out as the data matures over the course of next -- throughout the course of 2022.

Okay. Great. We've got maybe about 10 minutes left in our fireside chat. So I just want to make sure that we give enough time to your portfolio. We spent a lot of time on 543. We've touched upon 811, which has, again, a similar mechanism of action. Anything else you wanted to add around 811 that makes it unique. And is there anyone else working on the brain-penetrant, PRMT5 inhibitor?

We -- not that we're aware of. But I'll say that 811, actually, in addition to being brain-penetrant is actually a really interesting molecule, in the sense that what we've also seen, looking at the data with now -- clinical data from multiple PRMTs is that it has a very unique profile that it makes it very attractive, not only for brain penetrant, but as a general PRMT5 inhibitor because of its PK profile, the therapeutic window and where we can get high levels of target engagement with less dose-limiting toxicities. That potential is high for 811. So we'll be looking at developing this molecule, obviously, initially in CNS cancers, including primary CNS and metastatic CNS, but we'll continue to evaluate its potential, again, comparing it to whatever is out there in the class. And it may have a role beyond just those CNS cancers. I just wanted to emphasize that. So we -- and it's also very differentiated so that -- I mean that gives it potentially an opportunity beyond CNS. So I would like to talk a little bit about our other pipeline as well because, as you said, Prelude is a company that from the inception was designed to build interesting molecules and bring them to the clinic, and we've been able to do that so far well beyond PRMT5.

So with that, maybe 1419, you touched upon earlier in the conversation about your MCL1 inhibitor, another unique and novel mechanism of action, don't know that much about it. But if you could tell us a little bit more about 1419?

Yes, definitely. So MCL1 belongs to a family of proteins called Bcl-2, family of anti-apoptotic proteins. Basically, what they produce, the cancer cells engage these to circumvent apoptotic process when they're challenged with chemotherapeutics or other targeted therapeutic agents. And so they've been known for a long time as key anti-apoptotic drivers. What got this class really exciting is that with venetoclax, the Bcl-2 inhibitor, that's now approved and really becoming a backbone therapy in AML, and obviously, is important medicine for CLL and others is that we can -- it's a protein-protein interaction that you have to interrupt. It's not a small molecule, easy to break target. So the field -- with venetoclax demonstrating you can do that, brought a lot of attention to this class, right? There is Bcl-2, MCL1, Bcl-XL being the 3 major anti-apoptotic proteins. MCL1 has been long known as a key resistance mechanism for Bcl-2 as one, meaning, in patients, if you look at -- or even in vitro, in cell lines, and other systems, when you treat these with Bcl-2, these cells upregulate MCL1. And that it's a classic mechanism. When you -- when we have multiple members, which can do the same thing, if you block one, the others come up, right? It's sort of a hallmark of cancer. But Bcl-2 has been a challenging target because it's actually -- you can't just take Bcl-2 inhibitors and make modifications and make MCL1 because it's a very different protein. So a few years ago, a lot of advance was made. And now 3 companies are advancing their MCL1 inhibitors. So there's 3 inhibitors in the clinic already. There's Amgen, AstraZeneca and Novartis, which has originally, I believe, discovered this earlier. So it turns out that they're all IV molecules. They have to be given by IV administration. We felt from the beginning that venetoclax is oral, and there is a trend toward more oral therapies for patient convenience and all of that obvious reasons. So we felt that we looked at the molecules, we looked at the chemistry, and we felt that we can really build a highly differentiated desirable oral molecule that can, in effect, give an IV-like profile, right? So there's a certain pharmacokinetic profile that's needed. So we've done that. 1419 is a really interesting molecule. It has very high solubility. It has good bioavailability. We've done -- we've presented the data in multiple models. So it's in Phase I dose escalation right now. And it's going well. And we expect the path for this really is to this year complete dose escalation, which we don't think is going to be very long based on the PK profile we've seen to date. And rapidly develop this both as monotherapy, but also one of the -- the way venetoclax is given is it's given in combination with azacitidine. That's where it shows. So we potentially need to dose this in combination with venetoclax or combination with azacitidine. So that is built into our protocol to be able to do that in Phase I. So that's really what the path we're on. And we've made a lot of progress so far on that program as well. Now it's a clinical stage program.

Okay. I think so you provided us a picture of 3 clinical stage assets. You talk about building a company with a broad pipeline. I know you have other pipeline interests as well. I don't think we have time to go through the other novel compounds that you have, but just in terms of a corporate philosophy in terms of bringing new targets and molecules into the clinic, what is that philosophy at Prelude?

It's truly, as I said, because from the beginning, we believe that we have real strength in discovering and developing very attractive, optimized and differentiated molecules. I think we've demonstrated that by the data today in a very short period of time. So our strategy is really continue to resource our discovery engine and continue to bring attractive molecules to the clinic in indications that we believe there is an opportunity to rapidly advance these molecules and take it to the late-stage development. So we look at overall clinical development path for each of the new mechanisms we look at and try to prioritize them where we have the opportunity to move these molecules rapidly and build the company. That's really what we're focused on doing here.

Maybe just a few last questions. One, just on the financial side and maybe, Brian, this is really more directed towards you, but can you remind us where the company is on cash right now and what your cash runway looks like?

Yes, sure, Graig. So we've finished the end of Q1 with a little bit over $360 million in cash, and that gives us runway well into 2023. So certainly, through some key catalysts and data readouts that we expect, as Kris alluded to, at the end of the year and early into first half of 2022.

And just over the next 6 to 12 months, I know we've talked about different data sets, but could you crystallize for us kind of what we can expect from the company over the next 6 to 12 months? And then I'll have one last question for you, Kris, afterwards.

Yes. I think our goal is to first present the data from our dose escalation phase later this year from 543 and 811 and continue to roll out the data from the expansion cohorts in selected patients over the course of next 12 to 18 months and advance new molecules into the clinic. We expect to bring our CDK9 inhibitor to the clinic this year and launch the clinical trial. So I think there's going to be a steady stream of data releases and progress over the next 6 to 12 months.

There is really 1 particular or 2 particular data sets that you think are important for investors to pay the most attention to or is it just the overall progress that you're making?

I think -- I mean, it is really the data that's coming out of the clinical trials currently is where I think investors will gain more confidence in these molecules, their mechanism and the clinical activity, their safety. So I can't pinpoint to 1 or 2 things, we have a lot going on. So I think I ask people to stay tuned as the data comes out.

Okay. And then my last question for you is a bit bigger picture. I've been asking all of my companies who've been presenting, and Kris, since you're the CEO, what -- if we're doing this fireside chat in 5 years from now, where would you like Prelude to be in 5 years?

Great question. I would like us to be a company with truly exciting pipeline and molecules that are -- have demonstrated in a registrational phase trial, activity and clinical benefit and B, either closer to or on the market with our lead -- most advanced compounds and a pipeline that addresses -- continuing to demonstrate true patient value that is expanding, and a leading precision oncology company.

Great. With that, I think, and given our time, we'll end our fireside chat right here. I want to thank again, the management team at Prelude Therapeutics. And I want to thank you, the audience, for dialing in. So with that, have a great rest of your day, and have a good rest of the conference.

Thank you.

Thanks.

I appreciate the opportunity.