Scholar Rock Holding Corporation (SRRK) Earnings Call Transcript & Summary

Welcome, everyone, to the 41st Annual JPMorgan Healthcare Conference. My name is Tessa Romero, I'm one of the senior biotech analysts here at JPMorgan. I'm joined by Taylor Hanley and Adhiraj Chauhan from the team. Our next presenting company is Scholar Rock. And presenting on behalf of the company, we have Jay Backstrom. And really, we're going to have a 20-minute formal presentation here, but we will follow it up with some Q&A. So there is a webcast with a Q&A portal, please submit your questions, or we're going to have a mic runner as well in the room to ask live audience questions as well. With that, I'm going to hand it over to Jay.

All right. Well, thank you, Tessa. It's a pleasure to be here representing Scholar Rock at this year's JPMorgan Healthcare Conference. I'm pleased with our progress during the first 3 months as CEO, and I'm very excited about our future and for the opportunity to speak with you today. These are my disclaimers. I will be making forward-looking statements. So please refer to our SEC filings for the full disclosure of all the risks. One of the most common questions that I received when I first joined Scholar Rock was what attracted me to the company. The answer is simple and straightforward, Scholar Rock has all the elements for success. We have a revolutionary platform, a robust pipeline of promising products. Our lead candidate apitegromab with positive Phase II TOPAZ showing proof-of-concept in an ongoing pivotal SAPPHIRE study, is poised to be the first muscle-directed therapy in SMA. And if successful, will be the catalyst for Scholar Rock to become a fully integrated commercial company. A second product in clinic, SRK-181, being evaluated in combination with pembrolizumab, that if successful, could be transformational, and 2 additional preclinical pipeline candidates that are not far behind in the clinic. Adding to this, we have an experienced leadership team, the financing into 2025 with significant strategic optionality given our broad platform. If you followed Scholar Rock's journey, you know this portion of the presentation very well. For those new to Scholar Rock, the picture on the left of the slide depicts the scientific insight that is the foundation of our industry-leading platform, targeting TGFß superfamily of growth factors with the desired selectivity for both the target, that is the latent or pro form, and disease-specific context. This highly specific approach limits the off-target effects that can lead to toxicity such as bleeding and cardiac toxicities. We believe our approach having been borne out to clinic to date, should lead to a better overall risk benefit profile. This is a rich area of biology with broad therapeutic applications and given the central role the TGFß superfamily plays in a wide range of cellular processes, including growth and differentiation, immune regulation and fibrosis. The research platform has yielded a robust pipeline of fully humanized novel monoclonal antibodies, including our 2 clinical stage products; our lead program, apitegromab; a selective anti-myostatin for SMA; SRK-181, a selective context independent latent TGFß-1 inhibitor in immuno-oncology; and 2 other preclinical stage products, anti-RGMc for iron-restricted anemia, and a selective context-dependent latent TGFß binding protein inhibitor for fibrosis. We have an experienced leadership team with deep industry expertise. I'm joined here today by Ted Myles, our Chief Operating Officer and Chief Financial Officer. And I'm also very pleased that we recently enhanced our executive team with the addition of Jing Marantz, who joined Scholar Rock in November, as Chief Medical Officer. Turning to our lead program, apitegromab. We are positioned to be first in class and the next transformative therapy for patients with spinal muscular atrophy, which I'll refer to as SMA. Let me start by providing a brief review of SMA and share the compelling scientific rationale for the role of apitegromab in this neuromuscular disorder. As shown in the diagram, SMA is an inherited disease of the motor neuron whose primary function is to transmit impulses of the central nervous system to the skeletal muscle and directly control skeletal muscle movements. SMA is a disease caused by a mutation that results in the deficiency of the SMN protein, a protein that is essential for the health and survival of motor neuron. This protein deficiency leads the degeneration of the motor neuron, which in turn leads to muscle atrophy and muscle weakness. Despite the early intervention with the SMN-targeted therapies, patients may continue to suffer from substantial motor functional impairment because SMN-targeted therapies do not directly impact skeletal muscle to reverse the atrophy that has already taken place. As in most areas of medicine, targeting different aspects of the disease can improve outcomes. For SMA, a rational treatment strategy would be to target both the motor neuron and increase the amount of essential SMN protein and the muscle to improve muscle strength and function. Myostatin is a negative regulator of muscle growth and is an ideal target for a muscle-directed therapy since blocking myostatin leads to an increase in muscle mass and improved motor function. Unfortunately, myostatin has been a challenging target, and many programs have failed to demonstrate a positive benefit risk. We believe our Phase II TOPAZ study demonstrated that apitegromab's specificity of targeting the latent form of myostatin reduces off-target toxicities with the potential for a safety profile that would be conducive to long-term treatment in this young SMA population. Overall, an elegant solution. The spinal muscular atrophy is a global disease that affects between 30,000 to 35,000 in U.S. and Europe alone. It's classified by Type 1, 2 and 3, which corresponds to the age when the first developmental milestone was missed, and which also correlates with the severity of the disease with Type 1 or infantile onset being the most severe. The overall market opportunity is expected to be greater than $11 billion over the next 5 years, driven principally by the continued growth and use of the approved SMN upregulators. For reference, our Phase III registration study, SAPPHIRE, is targeting non-ambulatory Type 2 and 3, which represents about 2/3 of the addressable population. Currently, there are 3 approved therapies for SMN, all of which are directed toward the -- directed toward raising the SMN protein. The SMN upregulators had a significant impact on the disease. And as mentioned, the market is expected to grow by greater than $11 billion by 2028 given the growth in the use of these treatments. Apitegromab, assuming success, is poised to be the first muscle-directed therapy for SMA that will complement and not compete with the approved SMN upregulators. From a commercial perspective, assuming successful regulatory approval, the launch of apitegromab will be leveraged by this established and growing market. The innovation that led to the SMN upregulators is to be celebrated as these treatments have enhanced and changed the natural history of SMA. However, as this slide shows, there is significant room for further improvement, and there is need for additional treatments, particularly muscle-directed therapies, since the ultimate goal is to restore and maintain normal function. So that I think the stage is set for apitegromab, and as I will share in the next few minutes, the Phase II apitegromab study, the TOPAZ trial, demonstrated proof-of-concept for apitegromab in SMA when added to nusinersen, and is the basis for our current Phase III SAPPHIRE study. As a brief review, I want to focus on the non-ambulatory SMA Type 2 and 3, ages 2 through 12 cohort, which is the main efficacy population in the SAPPHIRE study. And this analysis from TOPAZ, the addition of apitegromab to those in the background of nusinersen, resulted in a mean change from baseline, a 4.4-point improvement in the Hammersmith score. Notably, 56% achieved a greater than 3-point increase in the Hammersmith score. And while even a 1-point change in the scale is associated with clinical benefit. Improvements of this magnitude are very clinical, meaningful improvements. And importantly, as demonstrated on our review of the 24-month data, the improvement that we observed at 12 months continued to strengthen over time and was maintained in this 24-month period follow-up in both the 2 through 12 and the 12 through 21-year-old population. And to further support the robustness of the primary results, utilizing another efficacy assessment tool, the revised upper limb module that measures important activities of data of living such as drinking from a cup, was seen at 12 months and continued also to strengthen over the 24-month period. Turning to safety. Based on our preclinical safety and the specificity of the latent myostatin inhibitor, we did not expect to have any off-target toxicities. And as such, we did not see these effects. Overall, apitegromab was well tolerated. And now we have over 3 years of follow-up. There have been no new safety signals have been identified. And importantly, over 90% of the patients remain on treatment, we have yet to reach a median duration of therapy. So building on the success of TOPAZ, the SAPPHIRE study was initiated last year and is well underway. And we're tracking to complete enrollment later this year. As a reminder, SAPPHIRE is a randomized double-blind, placebo-controlled trial and will serve as our registrational study. The trial is enrolling on either nusinersen or risdiplam with the main population, children between 2 and 12, with Type 2 and 3 non-ambulatory SMA. Patients we randomized to either apitegromab 10 milligrams or 20 milligrams per kilogram or placebo in combination with an SMN upregulator. Stratification factors include age of onset of the SMN upregulator as well as their background treatment of either nusinersen or risdiplam. The primary endpoint is the mean change from baseline in the Hammersmith score at 12 months. We have additional secondary efficacy measures, including the revised upper limb module as well as an exploratory older cohort, ages 13 through 21. So the program has moved nicely from the release of the TOPAZ data to the ongoing SAPPHIRE study. We are on track to complete enrollment this year with data readout in 2024, and assuming a positive study and regulatory approval, anticipated commercial launch in 2025. In addition to supporting the SAPPHIRE study, we are currently opening up the ONYX study, which will serve as our long-term extension trial for patients from both the TOPAZ and the SAPPHIRE studies, and will continue to provide meaningful long-term follow-up data. In addition, as we move toward data readout, the team is in the process of developing follow-on studies to evaluate apitegromab in other patient populations. This will allow us to extend the potential benefit of apitegromab to the broadest patient population possible once we have positive top line data from SAPPHIRE. Overall, I like our momentum. We have clear focus on driving to the successful completion of SAPPHIRE. This is clearly our #1 priority. So turning to DRAGON, our immuno-oncology clinical program. It's remarkable how immuno-oncology has transformed the treatment of cancer with the checkpoint inhibitors becoming the leading class of treatments in this category between 8 million and 10 million U.S. patients on a checkpoint inhibitor. However, a high percentage of patients do not respond or are resistant to a checkpoint inhibitor, and there remains a significant clinical challenge. There is strong scientific rationale for combining a checkpoint inhibitor with a therapy that targets TGFß-1. TGFß-1 plays a key role in driving resistance through a checkpoint inhibitor by contributing to an immune exclusion phenotype, and data indicate that blocking TGFß-1 can overcome the immune exclusion. Similar to apitegromab, the Scholar Rock scientists designed SRK-181, a highly selective latent TGFß-1 inhibitor with the goal to address many of the key challenges that have derailed previous efforts to target TGFß, including being highly selective for TGFß-1, and this avoids blocking TGFß-2, which has been associated with cardiac toxicities and has stopped many in the development in this field. Like our foundation science, that targets the latent form, and it addresses all sources of TGFß-1 and not limited to targeting GARP alone. By combining target selectivity, targeting the latent form of the ß-1 isoform and disease context specificity, addressing all components of cancer biology, SRK-181 is uniquely positioned for best-in-class potential. The proof of mechanism for SRK-181 was demonstrated in a preclinical bladder tumor model where the combination of the murine version of SRK-181 and a checkpoint inhibitor was shown to overcome immune exclusion in the tumor microenvironment is evidenced by the influx of effector T cells shown on the right side of the slide. So with that as the basis for the scientific rationale, the DRAGON study was started. It is our ongoing proof-of-concept study comprised of a dose ranging, dose finding and cohort expansion design. The Part A has been completed. We are now in Part II or Part B, the cohort expansion portion of the study, evaluating the combination of SRK-181 plus pembrolizumab in patients who were non-responders to a prior anti-PD1/PD-L1, and it failed standard of care therapies, a relapsed/refractory population. Cohorts of interest in the Part B were those cancers with the highest expression of TGF data, including bladder, clear cell, renal carcinoma, non-small cell lung and melanoma, and we're currently in the process of amending the protocol to include a head and neck cohort. To date, the safety is as expected for this patient population on the background of checkpoint inhibitors. We've not observed any significant off-target toxicities attributed to this SRK-181. And as we shared at the Society for Immunotherapy of Cancer Conference, the SITC conference in November, the preliminary data are encouraging, considering the trial is enrolling patients who failed prior therapies. And we've seen a subset of heavily pretreated patients who are remaining on treatment beyond 6 months. And as can be seen from the waterfall plot, there have been objective responses observed in this setting of heavily pretreated patients with 2 PRs in the renal cell cohort, 1 from Part A; 2 and 1 from the Part B portion, which is currently enrolling. So far, the DRAGON study has replicated the findings that we've seen in the nonclinical setting with respect to safety, target engagement, PK and objective responses. We look forward to providing further updates including additional biomarker work as well as clinical updates over the course of 2023. So in summary, there's strong scientific rationale for targeting TGFß-1 in combination with a checkpoint inhibitor, to overcome immune exclusion environment and to enhance the effect of the checkpoint inhibitors. SRK-181 was designed to avoid these off-target toxicities, avoids the geospatial constraints associated with goal/targeted strategies. We are encouraged by the data we've seen to date in this population that is felt a checkpoint. Assuming we demonstrate positive proof-of-concept, there is a clear clinical path forward and significant commercial opportunity given the size of the oncology market. So as I stated from the start, we have a rich pipeline that includes 2 additional product candidates: 1 focused on fibrosis, and the other on iron-restricted anemia. So we do have more in the pipeline and more to look forward to. Starting with our program in fibrosis. Once again, there is compelling scientific rationale for a latent TGFß inhibitor in fibrosis, considering the TGFß plays a key role in the fibrotic process across a wide range of diseases. Given our science has deep structural insights and exceptional understanding of the underlying biology, we've developed monoclonal antibodies that can target TGFß-1, specifically to the context needed. And in the case of fibrosis, we've targeted latent TGFß binding protein that is involved at the site of the problem, the extracellular matrix. Our protein engineers have produced a library of monoclonal antibodies with sufficient specificity that can selectively bind and distinguish between sources of TGFß, whether the extracellular matrix or the regulatory T cells. By binding only to the latent TGFß protein associated with the extracellular matrix, the formation of collagen can be blocked at the source and importantly, not block the regulatory T cells' ability to suppress underlying inflammation since inflammation is a key driver of fibrosis. Data from a preclinical study utilizing an Alport model demonstrates the effect of our lead candidate on reducing TGFß signaling, as shown through the percent Phospho-Smad reduction and on reducing the extent of fibrosis as measured by hydroxyproline staining. So as I look at the fibrosis program, there are significant opportunities across a number of indications. We've yet to declare our direction, but I do believe the opportunities are rich. And next, I'll expand a bit on our product candidate for iron-restricted anemia. Again, the scientific rationale is compelling for blocking RGMc or hemojuvelin, since it is the central regulator of hepcidin, which in turn is a key regulator of iron. Elevated levels of hepcidin leads to reduction in serum iron and can result in iron-restricted anemia. So the biology is well defined. Once again, our protein scientists and our research team have generated a well-characterized fully humanized monoclonal antibody that has shown clear PK/PD effects as measured by iron biomarkers and it's a well-characterized product. And similar to fibrosis, there is a wide spectrum of diseases associated with iron-restricted anemia, affording significant optionality regarding a path forward. Further, rapid proof-of-concept can be established based on clinical biomarkers, allowing one to rapidly assess dose and move quickly into registrational studies. So to conclude, going into 2023, our future looks very bright, and we are very excited to execute. We have a platform that has delivered multiple differentiated programs. We are focused on delivering on the promise of apitegromab, and are positioned to be the first muscle-directed therapy in spinal muscular atrophy, our market expected to exceed $11 billion by 2028. We will continue to drive the DRAGON study to deliver additional data for our differentiated SRK-181 program in immuno-oncology. We have the financing into 2025 and a pipeline that is poised to follow and to build on the success of our current clinical programs. And we have an experienced leadership team and a dedicated focused team to deliver on our objectives. And as I started, I believe we have all the elements for success. Thank you. At this time, I would invite Ted to join me, and we're open to questions.

Great. Let's just jump right in here because we only have 20 minutes. So maybe I'll start us off here. The press release pointed to enrollment completion this year with top line data next year. So just to confirm, it sounds like this is the primary analysis of SAPPHIRE. Was there a decision made not to take an interim analysis on the study?

Is this on? Okay. Just testing. The first thing is, is the mic on, right? So let me answer that. It's interesting. I think the optionality to do an interim analysis for clinical programs is a really nice thing to build in. But I think the decision around whether the interim is performed or we wait for full data really is a function of the time between when that 50% patient gets to the 12-month mark and when we complete full enrollment. So what we mentioned in the press release is based on total enrollment. And I think for a single trial, there's sufficient benefit for having the full data set available to go forward with regulatory interactions, payer interactions, to really fully understand our data. So right now, we're planning to do full enrollment, but I think we have the opportunity to see where things go based on our recruitment.

Okay. Okay. And any other kind of color you can provide on how recruitment has gone?

Well, in 3 months that I've been here, I've been very pleased, to help me to start there. I think the heavy lift -- I've done a lot of clinical research and run studies. The heavy lift by getting the centers open and really start to get patients on trial. The beauty of this population of SMA, it's a pre identified patient group. The centers know where their patients are. So once the centers are open, patients are identified, patients come on and patients continue. We've seen -- I love the momentum that we have gone into 2023.

Maybe it makes sense just to dive in a little bit on a framework for thinking about SAPPHIRE, in particular around the primary endpoint. So Jay, you talked a little bit about the design of SAPPHIRE. So what is the bar you need to hit on a placebo-adjusted basis between your active and your placebo arms for kind of a win here on the study? And could you remind us what the powering assumptions are that were implemented around the primary endpoint?

Yes. I'll start with the power. This is a registration pivotal study, and so it's going to be a 90% power type trial. So we've got adequate power to see the difference. And I would say what does a win look like. When we say we have positive results, that's a win because we've powered the study for a significant difference that would meet both regulatory agency interaction approval as well as what we believe is sufficient for really talking about meaningful change. And you saw what I shared with TOPAZ. 56% of the patients had greater than 3-point increase. We had a significant number that had 4-point in the overall cohort. So I feel good about where we are. As a placebo-controlled trial, we won't have to worry about what the background is because that will be by design addressed. So I'd say when we hit the positive endpoint, we will have hit the bar.

Yes. And I think the age 2 to 12 group was decided on as the mean efficacy population. So maybe you could just walk us through why that was?

Yes, it's a good question. It's why I try to highlight that in the formal presentation. And I think there's a couple of ways that I would frame it. I think what we understand about SMA is time matters and earlier intervention is better because time equal motor neurons, and you have further degeneration than patients who are in a harder place to kind of recover from that. So if you think about that, then that would suggest that intervening sooner rather than later is better, which means younger. So I think inherently, a younger patient population might have the best opportunity to benefit from both the SMN upregulators, but also from our program. But on top of that, when we took a look at the TOPAZ data, in a way in my mind that reinforced what I just shared because when we looked at that cohort, that age group really had the maximum benefit, looked like they showed the greatest increase in Hammersmith scores. And I think it's very consistent with what we would have potentially anticipated. And so as you think about running a Phase III trial, you want to select a population that's on that trial that has the better -- greatest opportunity to show that effect and that benefit. And that's the reason for the SAPPHIRE design.

Yes. And can you talk a little bit about your placebo arm performance expectations? As everyone knows, just to remind folks, it's on top of background new centers and/or risdiplam. So maybe you could just talk a little bit about that?

Yes. We -- it goes a little bit back to your question about kind of what are the treatment effects and powering assumptions. I mean, I think there's a couple of things. When we looked at the TOPAZ data, for example, we do know that there's a nice effect of nusinersen early in treatment, but I think it's pretty consistently agreed that there is a plateau effect and you tend not to see that same bump. So to try to discern treatment on top of background without the placebo, you really make sure that makes sense. But I think it's been well shown in TOPAZ, I feel very good about that proof-of-concept data. For the randomized study, it's basically proportionate. So we're controlling for the stratification factors of time of introduction of the SMN upregulator age. That will prevent sort of the randomness in data, and I think that will keep things smooth. I think the expectation would be that we wouldn't see a continued increase in the placebo, right, not would expect because of the time they're on it. But if it did, it should be proportionate to both treatments. And again, we need to show this borne out in clinical data. But I think adding apitegromab early is a good thing. So technically, we should see that benefit even further. But those -- that's kind of the approach.

Any questions from the audience? Okay. Then I'll just jump in here with one. So what are the most important efficacy measures to physicians? I mean, we know -- we've talked a little bit about your primary endpoint, but are there any other secondary endpoints that you think are particularly relevant here?

Yes. We included in the study, and I didn't go through all the detail, but we did include in the study as secondary measures, things that are considered important but also for measures that have validated scales, right? So that's the Hammersmith one. That's validated. It's been used in prior regulatory approvals because that's the primary -- the revised upper limb module that I referred to. That's another important one. And it's really interesting to -- if you kind of go through and see what that measures, I gave a hint of that. Can the child move a coin across the table as a measure of strength? Can you lift your hand to mouth? Can you put -- I mean, these are basic fundamental activity of daily living. And to be able to have that effect and measure and show that, that's meaningful, right? That's meaningful. But I have to tell you also to put it into context, if you're thinking about getting to a place of independence, being able to control the motorized control of a wheelchair matters. So there's a lot of benefit within the scales, and we're including the validated ones. Developmental milestones, et cetera, are included. But that's the richness under there. I think that's the challenge that these children facing, which quite honestly, from the company perspective and why I said about our team, everybody that's working on this program from Scholar Rock feels this and doing everything we can to get it across because if, in fact, we're successful, I do think we have an opportunity to make a difference.

Okay. Yes. And as we think about your data coming sometime next year, I guess, what do you see as the key risks -- risk or risks to the study? And what keeps you up at night about the study being a positive one?

Candidly? Completing enrollment. I want to get that done, right? And that's why I said I feel good about the momentum going in because that is -- quite honestly, you think about it, there's so many things that could impact that beyond our control. That is where I am. But I think once we get that done, I feel very good about the way the team is overseeing the trial, trying to assure that the data quality meet what's expected of us. And then I think we have a very good reason to believe that we'll have a positive study. But until you turn the card over, there's always a little bit of that uncertainty. There are things that keep us awake all the time. That's our job to worry but then to also implement strategies to reduce things. But I feel good about where the -- honestly, I feel very good about where the trial is. I feel like we have a really good probability of technical success, and we get to that milestone of completing enrollment. And we're kind of -- it just feels like we're on the clock.