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

Welcome, everyone, to the 42nd Annual JPMorgan Healthcare Conference. My name is Tess Romero, and I'm one of the senior biotechnology analysts here at JPMorgan. Our next presenting company is Scholar Rock. And speaking on behalf of the company, we have CEO, Jay Backstrom. Jay, over to you.

All right. Well, thank you, Tess. Good afternoon, everybody. It's a pleasure to be here representing Scholar Rock at this year, JPMorgan Healthcare Conference. I'm really pleased to have the opportunity to highlight the progress we've made since I joined the company a little over a year ago and to outline the exciting year that we have ahead. I will be making forward-looking statements. So I'd suggest you refer to the slide for my disclaimers. You may also refer to the section entitled Risk Factors in our quarterly and annual reports. For those new to Scholar Rock, we are a global leader in harnessing the life-changing potential of TGFß biology, and as a team, we're working tirelessly to fulfill our mission to create new possibilities for children like Christopher and Emily, who are living with SMA. We're very fortunate to know Christopher and his family through their participation in the TOPAZ Phase II clinical trial and to witness their incredible commitment to making their children's lives better every day, a commitment that serves as both inspiration and motivation for all of us at Scholar Rock. We are building a fully integrated therapeutics company on the foundation of 3 pillars: a revolutionary scientific platform that has produced a robust pipeline of innovative products; a focus on transformative therapeutics, starting with our industry-leading antimyostatin programs and with an experienced and disciplined team dedicated to delivering on the promise of our pipeline. Over the past year, we have strengthened our team and have been laser-focused on execution. Scholar Rock has been a pioneer in bringing a differentiated approach to harnessing the therapeutic potential of TGFß superfamily of growth factors. Utilizing our structural insights and industry-leading antibody design, our research teams have designed a pipeline of fully human monoclonal antibodies that selectively hit the right target, the latent or precursor forms of the growth factors as shown in the center of the slide and at the right time, prior to the activation of the mature active growth factor. Blocking and preventing the activation of the mature growth factor has the potential to improve efficacy. And by selectively targeting the pro and latent forms avoids off-target associated effects that have been present with targets such as hitting the receptor or the mature growth factor. We've made significant progress over the past year in advancing our growing pipeline. And starting with our industry-leading latent myostatin programs, in addition to our lead program, apitegromab in Phase III for spinal muscular atrophy, we are expanding our antimyostatin clinical portfolio into cardiometabolic disorders, starting with the Phase II proof-of-concept study in obesity with apitegromab and advancing a novel antimyostatin antibody, SRK-439 to IND. In addition, our latent TGFß-1 pipeline, we have completed enrollment in our Phase Ib program for SRK-181 in immuno-oncology, where we demonstrated proof of mechanism and clinical proof-of-concept in combination with pembrolizumab in heavily treated patients who progressed on a prior checkpoint inhibitor, and we continue to move our latent TGFß-1 program in fibrosis closer to IND. Finally, our novel selective anti-RGMc antibody is also moving toward IND for iron-restricted anemia, a program for which we shared data at the most recent ASH. So with that as an introduction, I will focus the remaining portion of today's presentation on our antimyostatin programs, starting with apitegromab in spinal muscular atrophy, which I'll also referred to as SMA. As a reminder, SMA is an inherited disease of the motor neuron caused by a mutation that leads to a deficiency in the SMN protein, a protein that is essential for the health and survival of the motor neuron. This protein deficiency leads to progressive motor neuron loss, which begins before birth and which in turn leads to muscle atrophy and progressive muscle weakness. There are currently 3 approved therapies for SMA. All are directed at increasing the amount of SMN protein and work to slow further degeneration of the motor neurons, but none target the muscle directly and do not reverse the existing muscle atrophy. So there's a potential to further improve function by directly addressing the muscle and a compelling scientific rationale for the role of apitegromab in this neuromuscular disorder. There's a broad spectrum of muscle weakness and functional impairment in SMA, where muscle weakness can lead to deterioration in mobility, swallowing and breathing difficulty and can cause debilitating fatigue. However, even in those who can walk without assistance such as the young boy pictured here, challenges remain. Given the lack of strength and endurance, individuals often must choose between activities and find that even small tasks can be difficult to perform. SMA is a global disease that affects over 20,000 in the U.S. and Europe, and the market is expected to grow over the next 10 years with more patients being screened and treated. Currently, it's a $4 billion market with each of the 3 approved therapies generating annual revenues in excess of USD 1 billion. We believe that the established market dynamics, a well-defined patient population, established treatment centers and the outstanding patient advocacy organizations who have been champions for bringing new therapies to those living with SMA all support our ability to enter this market as our first commercial opportunity. So as we enter 2024, we are on the threshold of a new treatment frontier for SMA, muscle-targeted therapies, an area where Scholar Rock has led the way. Despite the availability of the SMN therapies, substantial unmet need remains. The figure on the left displays the extended Hammersmith functional scores, which range from 0 to 66, and the 3.9 point increase shown in dark blue that was achieved with nusinersen. As can be seen, there is clear room for further improvement and a need for additional treatment options. Both patients and caregivers want the new therapies to be able to increase muscle strength, to be able to improve their activities of daily living, to maintain and preserve the existing functions that they've already gained and to be able to go through the day with less fatigue. All should be achievable with a selective muscle-targeted therapy that can safely lead to gains and strength. Apitegromab, a highly selective fully human monoclonal antibody targeting latent myostatin offers significant potential to address these unmet needs. Myostatin, a negative regulator of muscle growth is an ideal target for a muscle-directed therapy since blocking myostatin leads to an increase in muscle mass. Apitegromab specifically inhibits myostatin and has the potential to build muscle and strength to improve patient outcomes. Again, Scholar Rock, who is at the forefront of evaluating the potential benefit of selectively blocking myostatin in SMA with our Phase II TOPAZ study evaluating apitegromab in patients on a background of nusinersen therapy. As demonstrated in TOPAZ, treatment with apitegromab demonstrated sustained functional improvement beyond that which was achieved with nusinersen alone and is the first and only muscle-targeted therapy to demonstrate clinical proof of concept in SMA. Displayed are the results at 36 months for the nonambulatory patient groups aged 2 to 21 from TOPAZ, the same patient population that was included in the SAPPHIRE Phase III study. As we reported at Cure SMA in June, treatment with apitegromab led to functional gains in both valid functional scales, the Hammersmith reflected in the upper left, the Revised Upper Limb Module or RULM shown on the left top right of the graph. And importantly, these gains that were achieved at 12 months were sustained over -- and/or improved over the 3 years of treatment. In addition, improvements were also noted in activities of daily living and a reduction in fatigue as shown in 2 patient reported outcomes. These improvements seen at 36 months aligned with the areas of importance for patients and caregivers from improving muscle function, all by blocking myostatin selectively. With respect to safety, overall, apitegromab has been well-tolerated as reflected in over 90% of patients still on treatment now as we enter into 4 years of therapy. The safety profile is consistent with our approach of blocking myostatin, hitting the right target at the right time since it avoids off-target effects that can occur with other approaches. And to date, the most frequent reported adverse events were consistent with the underlying population. It is noteworthy that there are no reports of treatment-related serious adverse events, no reports of hypersensitivity or infusion reactions and no reports of positive antidrug antibodies. So building on the success of TOPAZ and SAPPHIRE, our Phase III randomized placebo-controlled registration study was designed to incorporate the key learnings from TOPAZ, including the selection of the patient population, the nonambulatory Type 2 and 3 groups, the age where we range from 2 to 21, the endpoints and the dose, all in order to optimize the probability for success. As we previously announced, we successfully completed enrollment of SAPPHIRE that included patients on either nusinersen or risdiplam. And in addition to the primary endpoint, which is the main Hammersmith change from baseline at 12 months, the additional end points include the revised upper limb module as well as WHO milestones and patient-reported outcome measures. So as we enter 2024, we have an important and exciting opportunity ahead as we are on the threshold of bringing a new class of treatment, muscle-targeted therapy that has transformative potential to change the standard of care and to meaningfully impact people living with SMA. We look forward to reporting the top line results for SAPPHIRE expected Q4 this year and to continue to gain long-term safety and efficacy from ONYX, the open-label long-term extension study. Moving forward, we are planning to expand to reach more patients living with SMA by scaling for our commercial launch in 2025, conducting additional clinical studies in those under the age of 2, including those on gene therapy, and in the ambulatory population, as well as developing a subcutaneous formulation. So we'll be very busy but also a very exciting time for Scalar Rock as we go forward into 2024. Now I'm pleased to provide an update on our cardiometabolic program. Probably need no reminder to indicate the significant public health impact that obesity has. It's now recognized as a top global health issue, representing a large market with growing numbers. And by the year 2030, it's estimated that obesity will affect over 1 billion adults and over 250 million children and adolescents. This is a costly chronic disease associated with more than $170 billion in excess costs annually in the United States alone. Given the serious comorbidities that are associated with obesity, primarily heart disease and type 2 diabetes. The GLP-1 receptor agonist have been highly effective in reducing overall weight. But the weight loss strategy is associated and challenged by tolerability issues and lack of durability, but also importantly associated with a significant amount of lean muscle mass loss ranging anywhere from 25% to 40%. The goal of weight loss should ultimately to be sustainable loss, and we believe that maintaining lean muscle mass is essential for healthy and sustainable weight management. To illustrate that, the preservation of lean muscle has many benefits for overall health beyond maintaining strength, especially in the setting of associated comorbidities. Specifically, muscle is a metabolic organ, it increases basal metabolic rate, it enhances glucose uptake, it enhances insulin sensitivity. And given the crosstalk between adipose tissue and muscle, reduces visceral body fat, all important for healthy weight management. Scholar Rock has had a long interest in the role that myostatin plays in cardiometabolic disorders. The figure illustrates our differentiated approach to selectively inhibiting the activation of myostatin and is worthy of taking a bit of time to review it, considering the number of different strategies that are now approaching targeting myostatin. As shown in the upper left, apitegromab and SRK-439 block the latent form of myostatin and prevent the activation of the mature growth factor. So by blocked, myostatin doesn't go to the active form nor does it engage in the receptor, so there's no signaling. By selectively targeting the pro form of myostatin, we avoid inhibiting other growth factors, including GDF11 or Activin A, since both potentially have detrimental effects. And if you look at the facts that can be present or possibly present with GDF11, it can lead to skeletal of kidney formation defects and potential negative impacts on bone. And Activin A clearly has an impact on reproductive biology. So strategies that target the receptor, the Activin RIIB receptor, for example, blocking that will affect the signaling pathways not only from myostatin but for GDF11 and Activin as well. And by impeding those signaling pathways are at risk for bringing additional potential toxicities, they may not be necessary for the effect on myostatin alone. Again, by selectively blocking myostatin and only myostatin, which is the Scholar Rock strategy, we avoid interfering with the GDF11 and Activin A signaling, and this should lead to improved safety. And we believe that safety is paramount, especially in the setting of weight loss therapy, considering the history of drugs in weight loss that have been highly effective but have been restricted because of toxicities and a negative unfavorable benefit risk. Approaches that target the receptors or the mature growth factors, including monoclonal antibody strategies or ligand traps cannot achieve the same level of specificity as can be achieved by selectively targeting the pro and latent form of myostatin. We leveraged our extensive expertise in myostatin's structure and biology to develop SRK-439, a molecule designed specifically for the patient population with cardiometabolic disorders. SRK-439 is a preclinical candidate in development with the potential to address the muscle loss associated with weight loss. It selectively binds to the pro or latent form of myostatin and has other attractive properties, including high in vitro affinity for pro and late myostatin and is optimized for subcutaneous formulation with the potential for a low dosing volume, all features which we believe are favorable going into a population of obesity and cardiometabolic disorders. We have been conducting preclinical studies in the cardio metabolic area for years and have utilized well-established diet-induced obesity mouse models, including with SRK-439. Shown in the graph on the left is a percent change in lean mass from baseline, and on the right, the percent change in fat mass. Adding SRK-439 to Semaglutide, which is shown in the mustard colored graph on the left, has demonstrated dose-dependent increase in reversal of lean muscle mass associated with improvement in fat mass loss as well when we add SRK-439 to GLP-1 receptor agonist alone. These results provide the scientific rationale and support the hypothesis that inhibition of myostatin in combination with GLP-1 receptor agonist driven weight loss may lead to the retention of lean muscle. So to summarize, considering our long-standing interest and expertise in the role that blocking myosin can play in cardiometabolic disorders, we see an opportunity for safe, durable weight loss by adding a highly selective anti-myostatin to a GLP-1 receptor agonist to preserve lean muscle. Our preclinical studies provide strong rationale for the combination and that we believe that our approach of hitting the right target, the pro and latent forms of myostatin and hitting only myostatin will avoid off-target effects, contribute to a favorable benefit risk profile, so critical in a setting of obesity and cardiometabolic disorders. We are aggressively moving forward toward a rapid proof of concept in obesity with apitegromab in combination with the GLP-1 receptor agonist, while at the same time advancing our SRK-439 toward IND. Together with our lead program in SMA, we have several important milestones over the next 12 months, including data being presented for SRK-439 at the Keystone conference in February, the start of our proof-of-concept study in obesity targeted for midyear and the readout of SAPPHIRE expected in Q4. So in closing, it's an exciting time for Scholar Rock. We have excellent progress and momentum in 2023 by completing the enrollment in SAPPHIRE. We expanded into the cardio metabolic disorders with our anti-myostatin programs, and we had a successful $98 million public offering, which extends our projected runway into the second half of 2025. Building on this success as we go into 2024, we are focused on advancing our antimyostatin cardiometabolic programs, as I just described. We are looking forward to delivering the top line results for SAPPHIRE in Q4 and initiating key activities to build our commercial organization in preparation for potential 2025 apitegromab launch. So we have great momentum going into 2024, excellent catalysts and milestones coming forward in 2024. And overall, a potential transformational year for the company. Great time to be at Scholar Rock, a very exciting time for all of us. So thank you.

Thank you, Jay, for the presentation. So we are going to kick off a little Q&A session. Please just wave your hand if you do have a question and you'd like to ask it live. So Jay, you talked a little bit about some of the key learnings from the Phase II TOPAZ trial, specifically in the patients with type 2 nonambulatory SMA. How does that inform what we might see in the pivotal SAPPHIRE study expected to read out in the fourth quarter here?

Yes. Good question, Tess. I mean, I think what I feel good about as we were designing SAPPHIRE is that we did have TOPAZ that could inform sort of how we designed it, as I mentioned, the patient population we look for. When we looked at the nonambulatory group, what we saw overall was a 4-point increase, some range within that, which really gave us great confidence as we went into Phase III, that would be able to design a study that we could show an effect that I think if we look at clinical meaningful impact, it's a 3-point change. And so we thought we had a really nice opportunity to demonstrate that. I think to add to that, though, is what I tried to illustrate and it's really clear as we talk more and more to the patient community, the measures on these validated scales are really important. But even small gains in function matter so much to the community to really have a significant impact on their lives. So I think anything in that range of 1 to 3 is really important. But the nonambulatory group really showed us the greatest treatment effect size that we thought could really maximize our potential in a Phase III study.

And as you think about the spectrum of endpoints that you're collecting in SAPPHIRE, we know the Hammersmith is your primary endpoint. How well-powered are you to show that 3-point endpoint? Or would you agree that you are well-powered?

Yes. It's a Phase III study, right? I think we want to be sufficiently powered to be able to demonstrate the effect. And I think we certainly feel very good about the powering assumptions under that 3-point change without question. What I also illustrated and I think if you look at the TOPAZ data, and I really like the one slide that shows the scales, the Hammersmith, the Revised Upper Limb Module and the PRO instruments, really shows the consistency and robustness of results, again giving us confidence that as we go forward into the SAPPHIRE study we'll see similar effects.

And what endpoint are the most important when you speak with physicians?

Yes, it's interesting, right? I think the Hammersmith has been clearly sort of the established, that would almost suggest the gold standard measure, considering its history, it was the registration endpoint for nusinersen. I think that really kind of matters. It has a range of activities that it measures. But the revised upper limb module, the more I look at this really is an interesting measure, particularly as we think about nonambulatory patients because it really is a measure of upper-limb function. And if you think about the activities that one needs to do potentially if you're wheelchair-bound, it really is, can I raise my cup, can I comb my hair. And in fact, in the pictures that I showed of the patients kind of trying to explain sort of what it means to have the disease, the young woman that was illustrated in that graph, we actually had a video that we shared at the investor event that we held in the summer. And she was commenting on having to be able to raise her cup, right? So if you can strengthen that activity, that's a powerful scale as well. So I think, to me, when you look at it, it's the totality of the data. I think the Hammersmith is clear. I think the Revised Upper Limb Module is complementary, gives us different sense of activities that patients really think they need to be able to do to meaningfully live independent lives.

And I think a question that we've gotten for many a year is just how to think about the control arm. What are the key datasets that help underpin how you're thinking about how the control arm will perform on the Hammersmith to achieve that treatment effect size that you're hoping to see?

Yes. I think as you try to look at sort of how you assess the control arm, you're left with basically what the published literature shares. There are some existing data sets you can look for. And I think, as you know, what we've done, if we took a look, we've had the nusinersen data that we've shared, we've shown in our CHERISH and SHINE studies, you get a nice lift on these therapies and then you get a plateau effect. And so we looked at that over time. It's really a function of how long patients are on treatment. But when you get to about 15 months of nusinersen, you're pretty much what gains you achieved, you're probably unlikely to get more. And so we looked at that data to really kind of help inform, right? So I think that's -- from talking with our experts, looking at the data, I think those are reasonable assumptions that you're going to see flat, although it's an inherent progressive disease, and there is a potential for the control arm to actually lose points.

Okay. What has been the physician feedback around the safety profile of the drug?

Well, it's such a good question. So we held an event in June, and we were highlighting the features that we thought are really important for apitegromab. And Tom Crawford at the end chimed in and said, "This is the cleanest safety profile I've ever seen." Right, so that's a Tom Crawford quote. It's extraordinarily clean. And again, that's, I would argue, by design. I mean the points I've been emphasizing on selectively targeting myostatin really should translate into the safety profile that we're seeing because if you knock out myostatin, you get increased muscle and less fat, that you don't get any other untoward safety effects. And so that's what we've done nicely. And so really what we're seeing in the safety profile, as I mentioned, are things you would expect from children with viral infections or scoliosis that follows the disease. But it really looks extraordinarily clean, and that resonates with the physicians working with the study.

I think the retention rate we've seen in TOPAZ is a really good proof point for safety and possibly efficacy as well. It's well over 90% into 4 years. These are patients that are not easy to move around and get to a center, and families are continuing to bring them in for treatment on a regular basis. That high retention rate speaks volumes for us.

And undoubtedly, there are risks associated with any clinical study. What do you see as the key risk or risks to SAPPHIRE? And like how do you mitigate those? And where have you been particularly focused as you think about your program and learning from programs that have preceded you?

Well, if one looks at sort of the top reasons for clinical studies to fail, which would be the risk that you're discussing, they kind of rank order patient population with heterogeneity such that you have an effect, but you dampen that effect because of different response rates, so heterogeneity can affect it. As I described TOPAZ, we selected a pretty homogeneous population because we're selecting the nonambulatory group. So I think we controlled for that heterogeneity in our trial design. Not getting the dose right and FDA is very big on sponsors getting doses right. I think also has a risk. But we did a dose ranging. We had 2 milligrams, 20 milligram saw a nice dose effect. So I think we control for the dose risk. Sometimes, we do an endpoint in a proof-of-concept study, say, response rates, for example, in oncology, and then you go to survival or time to event endpoints, and that effect doesn't change because you changed the endpoint. We didn't change the endpoint. We studied Hammersmith. We maintained Hammersmith in the Phase III. So I think we controlled for that endpoint piece. So we control for another -- a number of events. And then the other thing that you need to control for is if there are differences in potential subgroups, you want to protect through stratification, and we stratified by nusinersen versus risdiplam. And what we saw in the TOPAZ, time to getting the SMN therapy matters. And so we also stratified for that the children get it before the age of 5 or after the age of 5. So we really factored a number of those things in to control risk. And we had a Phase II to inform the design. So those, to me, are the key mitigating risks. It's a risky business, right? I think drug development is not for the faint of heart. But I would argue that knowing that is a validated target, that we know that if you had myostatin, you should get the function, we saw functional improvement. All of those things, I think, give us high confidence that we have a reasonable chance of getting a positive study.

And assuming you do have a positive study in hand, what are the next steps for Scholar Rock getting apitegromab available to patients?