RAPT Therapeutics, Inc. (RAPT) Earnings Call Transcript & Summary

All right. Good morning, everyone. Thanks for joining us here at the Goldman Sachs Annual Healthcare Conference. Thrilled to be joined today by the team from RAPT Therapeutics. Maybe I'll let you guys introduce yourself first, and then we can dive into the business.

Great. So first of all, thanks, Corinne, for the invitation. Really appreciate it. Excited to be here. My name is Brian Wong. I'm the CEO and President of RAPT Therapeutics. And I've been doing I&I work for the last 25 years.

And I'm Rodney Young, I'm the Chief Financial Officer at RAPT .

Perfect. So maybe we can start with the complexion of RAPT, which has changed quite a bit over the past year. Maybe you could provide an overview of the company as it stands today and discuss kind of what you view as the key value drivers over the next 12 to 24 months.

Yes. Great. So RAPT has gone through a renaissance. We are focused on I&I indications, particularly in allergic diseases. Recently, we acquired a new lead asset called RPT904, which is a next-generation extended half-life anti-IgE for a range of allergic disorders, including food allergy and CSU. And we acquired this from our Chinese partner called Jemincare, which is a multibillion-dollar pharmaceutical company in China. Very excited about this asset. We're pursuing really important indications such as food allergy and CSU and others. And we are planning to have -- to see some data from our partner in Jemincare in the second half of the year in CSU and in asthma. So that will be an exciting readout. We plan to start a Phase IIb study in food allergy in the second half of the year, which would take about 18 months to read out. And as Rodney will tell you, we're very well capitalized. So we managed to do a good raise at the end of last year and are fully funded through these key data readouts into 2027.

Perfect. So you mentioned that you acquired RPT904. What attracted you to this particular asset? And could you talk to why you felt Wrapped was really well positioned to do the development?

Yes, it's a great question. As you know, the company has been focused on allergic diseases for the past 5 or 6 years. We were developing a CCR4 antagonist for a range of allergic disorders, including atopic dermatitis and asthma. And we were planning to actually transition to Phase III and unfortunately, had a clinical setback. But our team and our capabilities are really focused on late-stage development in these indications. And RPT904 is particularly interesting because, first of all, it is -- we do think it's a best-in-class molecule. When we looked at the emerging field of food allergy, and we saw the sales of Xolair, which was just approved last year in February, we saw 30,000 patients in the first 2 quarters. This is one of the fastest pharmaceutical launches that we've seen in a long time. And that really got us very interested in food allergy and other areas. So we think 904 is the best-in-class, most advanced asset.

Okay. Let's dig in on that a little bit more. As an anti-IgE antibody, I guess, how does 904 compare to Xolair? And what do you view as sort of the target product profile for an agent that's going to come up against that kind of product?

Yes, great question. So I mean, first of all, Xolair has shown really outstanding efficacy in food allergy with a 60% to 70% response rate across all allergens and has shown good activity in CSU. What's exciting about 904 is that it uses the same epitope as omalizumab. So from that perspective, it's highly derisked. But it has better half-life through the YTE mutation, which is a commonly used mutation to extend half-life. We've seen it over double the half-life. And it's also slightly more potent. And so the target product profile that you mentioned is that we should be able to dose instead of every 2 to 4 weeks every 8 or 12 weeks and also be able to access patients where Xolair is currently excluded. So there are certain patients that are not included in the label.

Okay. So you talked about some of the technical modifications that enable this profile, but maybe you can talk about the clinical and preclinical data to date that supports what you're talking about in terms of extended half-lifes and greater potency.

Yes. It's -- yes, really important. So when we did our deep diligence, this is a molecule that from the epitope perspective, all the structural studies and biological studies show identical epitope to oma, which is really important in this space. But we did see greater affinity and greater half-life. So there was a healthy volunteer study that was performed by Jemincare, showing a 60-day half-life versus omalizumab's a 24-day half-life. And we think that translates into Q12-week dosing in most patients.

Okay. In terms of the -- there's a healthy volunteer study. Can we -- how do we think about like the translation of data from China here in the U.S. in this kind of patient population?

Yes, it's really important. What's I think there's 20-plus years of experience now with approvals of Xolair in multiple regions. And I think what's really compelling is that the dosing table PK/PD, PD efficacy relationships, those are all maintained in all these different regions. So I think it's pretty safe to say that, particularly with this epitope, you can translate data from one region to another.

Okay. That's still my next question, but I appreciate it. And then I guess, what have you observed or learned from other extended path life programs in I&I that makes you feel like this is an attractive product profile?

I think what's really clear in I&I is that compliance and convenience are really important attributes, right, particularly for diseases like food allergy, where there's so much health care resource utilization. So if you have patients that are now more patients on the drug and more patients that are compliant to the drug, you reduce health care burden. And that actually is very attractive to the payers, to which Rodney can talk a little bit about. So I think from an I&I perspective, these are half-life extended antibodies are sort of perfect fit for these indications where convenience and compliance matters.

Okay. How do doctors think about or patients or any of your market research think about like the safety component of giving a long half-life agent in some of these settings?

So when we did our market research, we -- the TPP was similar efficacy to oma, both similar safety and efficacy, so including potentially the black box warning for the anaphylaxis. That did not deter anybody from either the prescriber perspective or the payer perspective. Most prescribers are pretty well attuned to using oma, and it's not been a deterrent to their use.

Okay. And then -- yes, that's very helpful. As you think about then the Phase IIb study that you're proposing here in the U.S., I guess, why did you decide on food allergy? There's a number of different places oma is used. So talk to us about that selection.

Yes. Again, when we did our research on where the biggest medical needs were for IgE-mediated diseases. food allergy came up #1 by far. I mean there's a lot of patients. oma is a really good drug for food allergy patients, but there's a need for a less burdensome version of it. So food allergy came up one. And we did -- as Brian mentioned, we noticed the rapid launch. So commercially very attractive. So it was pretty much of a no-brainer to go for food allergy first.

Okay. You mentioned that Xolair is not available to certain patients. I think it can be kind of difficult from a dosing perspective. So can you talk about the limitations of Xolair for the food allergy population?

Yes. There's roughly 25% of food allergy patients are off label. And that's because they either have too high IgE and/or high weight. And because of the short half-life and low affinity of oma, it just can't reach those patients. So they're off the label. So we think we can actually capture that really high unmet need population. And we can talk about it later, but that could actually have implications with respect to pricing as well.

Okay. So is that's the target population you're going after or just a population where you feel like this would be well suited that Xolair isn't?

Yes. I think we can expect a very broad label...

Okay. So talk to me about the Phase II trial design. What are some of the key parameters that you're looking at as you approach that clinical study?

Yes. I think what we are guided by is the recent Xolair OUtMATCH study, the Phase III study that was used as the basis for approval for omalizumab last year. So this is what they call a food challenge study, double-blind, placebo-controlled food challenge study. Essentially, patients are challenged initially to show that they're sensitive, then they're enrolled as a treatment period. And after in our study, 24 weeks, there's a second challenge to see that threshold, whether that threshold changes. And so we're essentially following the OUtMATCH protocol essentially. So using the same thresholds, we're looking at multi-allergen. So beyond peanut, we're looking at milk, egg and others. And we're planning to enroll about 100 patients. We're studying 2 frequencies, Q8 week and Q12 week versus placebo. And we're also planning an extension in a placebo crossover as well at the end of that period.

Okay. You mentioned -- I mean, you have the Q8 week, you have Q12 weeks, but you mentioned a 60-day half-life. So how does it work when kind of the drug [ disflow ] the half-life and you kind of end up in that last month, food allergy is the kind of thing where it's like very acute. If you have an emergency, it's a really big deal. So how does that work from a PK perspective?

Yes. It's really important to get protection for patients throughout the entire dosing period, right? And so when we modeled this, -- we looked for levels of free IgE, which is the target -- the pharmacodynamic target below a certain threshold that's been very well established. And so we made sure that every dose at every level of patients that have different IgEs were below that threshold.

Okay. So you mentioned the primary endpoint is a food challenge. I guess what are the target efficacy parameters for that endpoint? Like what would be a good outcome for a Phase II?

Yes. And again, this is great because Outmatch shows us the way. But essentially, for peanut, you look for a threshold of 600 milligrams. This is essentially 2 peanuts. So -- and for other allergens in the OUtMATCH study, it was 1,000 milligrams. So patients achieved those thresholds. -- then they're considered a positive responder.

Okay. And so it's a percentage of positive responders.

Yes, exactly.

Okay. And then how -- can you talk about the Phase III that would kind of come from that? I assume Outmatch again provides you an analog, but can you talk about how that works?

Very similar design, larger, of course, to build up the safety database, but would be a double-blind, placebo-controlled food challenge study, roughly 24 weeks. And we'd have to have a discussion with the FDA about the size, but the Outmatch study was approximately 180 patients enrolled.

Okay. You've talked a little bit about this already. But in terms of the market opportunity in food allergy, how many patients are there? How should we think about pricing and the nature of this market?

Yes. It's a really big opportunity. I mean, on the order of atopic dermatitis, if not larger. So there's roughly 17 million Americans diagnosed with a food allergy, including 6 million children. And about 1/4 of those, so over 4 million are severe. So probably the most susceptible to a severe reaction if you have an accidental exposure to the food. So that's really the target population that we'd be looking to. Sorry, I forget the rest of the.

No, maybe I'll dig in a little bit.

Yes. So again, oma works really well. We would think that probably about 40-ish percent of that target addressable population would be willing to take a shot or a treatment. So you're talking about nearly 2 million patients, 1.7 million to 2 million patients that we would be looking at. And we think we could probably get about 40% to 50% of that.

Okay. You mentioned pediatrics. Obviously, it's a huge part of this market. How do you think about like designing for a pediatric patient population? Are they going to be included in your Phase II? Or does that come down the road?

Yes. Likely, we need a discussion with the FDA, but likely it will occur in our Phase III study. We're looking at children as young as 4 years old.

Okay. What do you need to do from a safety perspective between now and the Phase III to enable that?

I think that the Phase II is very much in line with generating that safety data that would be compelling to the agency to allow us to move to younger children. So that's exactly how we designed the study.

In the pediatric population, you mentioned that one of the reasons people wouldn't be candidates for Xola is weight. One of the reasons is the other is weight. So like are pediatrics better or less well served by Xola? How should we think about the adults versus pediatric patients?

Yes. I think the big challenge with pediatric patients is they tend to be higher IgE or a lot of them tend to have higher levels of Ig, which requires a more frequent dosing. So a lot of them are going to be on the Q2-week regimen. And so for both the kids and the parents, that's pretty burdensome. So we think the less frequent dosing, in particular, for the pediatric population is going to be very attractive.

Okay. One of the things that people like about Xolair, it works for some like asthma, which is often concomitant with food allergy. So how do you think about that advantage? And how would you solve for it in terms of your development program?

Yes. I mean I think this is a pipeline in a product type opportunity. I think it's very attractive to have a broad label. Patients often have asthma and...

Atopic dermatitis, peanut allergy, all of the...

Exactly. So I think we're starting with food allergy and CSU, but I think our ambition is to have a broad label as possible to make attractive to that patient.

What about delivery? How is Xolair delivered today? Obviously, Q2W is common. Do you have to go to the doctor's office? Is it an auto-injector, a subcutaneous -- and what do you think you would want to show it to be competitive from just a delivery mechanism perspective?

Yes. I think it's either a syringe or an auto-inject. Right now, the first 3 times you get the shot, you have to do it in the doctor's office just because they want to observe the patient. I think with less frequent dosing, that would just be a lot easier for the patient. So we are looking at syringes, auto-injectors, et cetera. And again, we assume at least the first time would probably be in the doctor's office. But after that, it would be self injection where the parent, I guess, inject it.

When does the auto-injector development or syringe development kind of come into play in your development time lines?

Right now, I think prefilled syringe is where we're going to be focused on at least for the Phase III. And then during that time, we'll be developing devices and auto injectors as well.

Okay. So data spend is gated on probably a Phase II. Yes, perfect. And then in terms of like indication expansion, you talked about CSU. So maybe tell me why that's the right next move beyond food allergy?

Again, when we did our research about where the greatest need was, food allergy was one, CSU was two. Again, oma works really well for CSU patients who are refractory to antihistamine, but there's room for improvements. And again, we think 904 can be that improvement. That's the next one we want to look at. Our partner, Jemincare, is also running a Phase II trial in China in CSU. So that day, as Brian mentioned, that readout should come later this year. And we're obviously anxiously awaiting that to help us determine what our next steps.

Yes. And we're looking at Q8-week and Q12-week, which was the same dosing regimen in our food allergy study. So it should be informative.

Okay. Remind me the scope of the data we'll get from China, I think it's CSU and asthma. So talk to me about what the results we should expect there are...

Yes. So for CSU, it's a pretty large study. It's in 135 patients, it's set in Q8 and Q12-week versus omalizumab as the reference arm. And so it should be pretty interesting from an efficacy and safety standpoint, and we think it will help sort of validate the YT mutation for these diseases.

Okay. So are you looking for it to be similar in efficacy to Xolair with more convenient dosing?

Exactly. So yes, our basic scenario is that we see similar efficacy to omalizumab at Q8-week with an upside of several efficacy at Q12-week.

And upside of better efficacy at 12-week?

Same -- Similar efficacy of oma, but now at Q12 weeks as opposed to oma's Q4-week dosing.

Okay. And will that inform your dose selection, like will you continue to do the 12-week regardless of that outcome? Or is that going to be a key question?

It's a point. I mean, I think we're probably planning to study Q12-week regardless of the CSU data. But I think if we can glean any information, there's probably opportunities to modify the dosing.

Is there any reason to think that Q8-week, Q12-week would work differently in the different populations? Or if it's good in CSU, it's good in food allergy and vice versa?

I think for omalizumab, where there's a lot of proof and a lot of translation, it should read through pretty well.

Okay. Understood. In terms of then like when you could kick off a CSU study, when does that happen here in the U.S.?

Yes. So if the -- if we meet our bar, which is similar efficacy to omalizumab at Q8-week, there's a possibility pending discussion with the regulators that we could go directly to Phase III, which would greatly accelerate our time to approval.

Talk to me about that because regulators today, obviously, there's a lot of NDA and particularly on the like China translation and clinical data. What do you think -- how do you think they'll interpret Chinese dataset as it relates to moving into registrational trial?

I think we've had the benefit of 20 years of experience with Xolair. And what we've seen is that in terms of PK/PD translatability, dosing table looks similar, patient populations are similar, baseline characteristics are similar. So I think there's a high degree of comfort from the agency in translating the data back and forth between China and the U.S. and Europe.

Okay. But that would only apply to CSU because they've not done food allergy in China?

Food allergy is approved in China.

Okay. So then why -- can you -- why would you do that in CSU, but you're not doing that?

Oh, I see. So obviously, we just in-licensed and built this partnership just late last year. And Jemincare is already in the middle of a CSU -- only in the back. And so those are ongoing study in asthma and CSU. We are layering on top of that food allergy. And actually, Jemincare has expressed interest in other indications, including food allergy. So I think there's going to be a lot of synchronization between the two companies. And then, of course, we're waiting to see their CSU data to determine how we're going to proceed in CSU ex China -- outside of China, which could be a Phase III trial.

Okay. What about asthma, because that's the other one. Is that something you guys would like to do?

Yes.

Yes. Asthma was third on the list [indiscernible] where the biggest unmet needs are. So we definitely are interested in asthma. Just although from our perspective, right? It's obviously a lot more challenging development program. I mean the longer trials, bigger trials and all that. So for us, we kind of need to titrate where our capital needs are going to be in things. But obviously, we want to see the asthma data from Jemincare and then we'll kind of figure out our path from there.

Okay. Sorry, I'm skipping around so much. But on the CSU Phase III, is the Phase III, what does that trial design look like?

Yes. So I think when you look at other Phase III trials are typically in that 300 to 400 patient range, looking at UAS7 as the primary endpoint. Typically, 12 weeks is the top line data.

Okay. 12 weeks for registrational studies. And it seems then if you map that, you could get CSU before you got to -- So how do you think about then maybe like that sequence of events?

If we go to CSU...

If we were to go to CSU, Phase III in CSU -- yes, I think we would likely get to the approval in CSU first before food allergy. And that could have some potentially positive implications for the way we think about pricing and things like that. Because, again, we would see 904 is being really well positioned in the CSU market. oma already is the first choice biologic for the antihistamine refractory population. And given, again, if our TPP plays out, we think 904 would be really well positioned to take that place -- first choice, place.

Help me think about the competitive landscape, maybe in CSU and you talk about food allergy. Obviously, there's Xolair. What else is approved during development? And how are you thinking about kind of competitive positioning on just oma?

For CSU?

For CSU and then we'll do food allergy.

Yes. So for CSU, obviously, Dupi has just been approved, although oma, at least the clinical trial data, right, shows better efficacy than dupilumab. There's other products in development, the C-KITs, some BTKs. Those -- the C-KITs actually show pretty good efficacy as well, perhaps better than oma. But some question about the side effect profile. Our research suggests that oma and 904, given how effective they are, they would probably be the first choice over the C-KITs and the BTKs. So our assumption is we would be the well positioned to be that first choice in the CSU biologic.

Okay. And then maybe in food allergy, you think Xolair, obviously, is there anything else in development that you're monitoring?

There are other anti-IgEs potentially coming in food allergy space. We're not aware of any that are as far along as we are, short 904 So again, I think the main competition as we look forward is going to be oma itself as well as the biosimilars.

The BTKs are also have shown efficacy in food allergy and very quick action. I think the question is sort of the long-term safety of those drugs, particularly when you talk about really young kids, your target population.

Yes. Chronic dosing. And so then as you think about computing with Xolair, obviously, you've got to fit it half-life. But are there any other things that you think you can do to sort of gain share in this market particularly being relatively later in a smaller company?

Do you want to...

Yes. I think other than -- in addition to the less frequent dosing, which is a really big deal, right? It's much less burdensome to be able -- if you can dose 4 to 6 times a year as opposed to maybe 13 or 26 times. Other really big differentiated factories if we can show efficacy in that -- those oma excluded patients because that's roughly 25% of the food allergy population. So that's a big fraction of patients whom we think we could address a good portion of that. And again, for prescribers and payers, it's really important as well.

Keep in mind, actually, Xolair is not approved in food allergy in countries outside the U.S. And so I think there's a very high unmet need in Europe and another countries as well.

What about pricing? Obviously, I think Xolair is priced for sort of like the breadth of indications. So how would you think about pricing given you also aspired a broad set of indications?

Yes. I think so by the time we get on the market, obviously, biosimilars will be -- will have been approved and very likely will have driven down the pricing of branded Xolair. Again, the differentiating factors that we aspire to have, right, the less frequent dosing, the treating of the oma excluded patients that should give a real clinical difference relative to oma and the biosimilars, which we think should be rewarded with better pricing. And in our market research, payers have said, "Yes, if you can show that, that's really important, that's really valuable." They'd be willing to reimburse at premium -- potentially at a premium to the branded of oma.

Okay. And then on the commercial infrastructure side, when we spent time discussing atopic derm in the past, you'd always talked about being comfortable with the clinical development capabilities. But when you got to commercialization and a larger market opportunity, wanting to think about a partner. How should we think about this for, again, large indications in I&I?

It's -- our thinking is similar. It's a portfolio in a product basically, right? So you have multiple therapeutic categories that you potentially would be marketing to. So there, it's a little harder for a smaller company to address all of that. So obviously, a partner could make sense, but the devil is always in the details.

Okay. At what point in time would that make sense to you in terms of looking for a partner, can you get through Phase III in all of these indications? Or -- does it make the sense to look past the proof-of-con data?

That's a good question. I mean I think normally, once you have the IIb data and you're starting to go into the Phase III, that's probably the sweet spot to start talking about potential partnerships.

Okay. And you, I think have said that you have cash run rate into the first half of 2027. What activities specifically are embedded in that guidance?

So primarily, we made sure we get to the end of that Phase IIb trial in food allergy. The wildcard is the CSU program because -- again, we're waiting for the -- to see the Jemincare data. And as we said, it's possible we could go into a Phase III trial there. If that is the case, we didn't project that in that runway calculation. So we've likely need to raise additional capital for that.

Okay. And you would still want to preserve cash beyond the food allergy -- additional capital, you wouldn't pull forward the run guidance?

Yes.

Yes. Okay. You -- I think I have disclosed that you're working again on a next-generation CCR4 antagonist. So I guess, where do you get confidence in that mechanism, given the clinical challenges you're into last year?

Yes. No, we still remain excited about CCR4 as a target. And even though our Phase II trials were terminated early. And obviously, because of that, not as clean as we had liked, but I think we've seen enough information from there to be really excited about that pathway. And we still think there's a high unmet need for an oral drug for a range of Th2-driven disorders like asthma, like atopic dermatitis and others.

Okay. How is this next-generation drug differentiating versus your prior 193?

Higher selectivity, higher potency and larger safety margins.

Do we understand now having spent some time with the data, what led to the safety issues that you had?

There was only one event, -- there was talk about one event, right? It's hard to draw make correlations and something like that. But I think in theory, we know enough where I think we know exactly kind of how to improve a molecule and reduce that risk dramatically even further. So I think the next-generation molecule, which were planned to, we're still very, very close to making that declaration should have all those...

Okay. So in terms of time line for that program.

Assuming that everything is on track, we should be in the clinic next year.

Okay. And I guess in terms of like development priorities, previously with atopic dermatitis, is that what we should expect first again?

So we haven't disclosed the data yet. I think our perspective is that the target is still very promising for a range of Th2 different disorders.

Okay. And how would it fit relative to the priorities in terms of capital allocation. We just talked about runway where does this asset any clinical development fit?

Yes. I mean I think 904 food allergy is very clearly the top priority, and that's the one we're going to make sure we get to the finish line on. Beyond that, we'll have to see -- if we're going to a Phase III in CSU, that's going to be a pretty high priority, too. But as Brian said, we're pretty excited about the opportunity for an oral CCR4. So if we have a chance to take that into the clinic for a range of Th2 disorders, we'll have to figure out a way to do that.

Right. Anything else you want investors to understand about the business today and the path forward from here?

I think you were very thorough correct. But no, I think -- yes, I mean I just -- the bottom line is that there's now 50,000 -- over 50,000 patients in food allergy alone for Xolair in the first 4 quarters. I think that just tells you how high the unmet need is. So we're extremely excited about having a better molecule. And obviously, there's data this year, which we're excited about and then 18 months later, data in food allergy.

Great. Well, I appreciate the time this morning. I think we got through a lot. Appreciate it.

Yes, you very -- thank you.

Thanks.