Scholar Rock Holding Corporation ($SRRK)

[Audio Gap] here at the Bank of America Healthcare Conference. We're kicking off our very first session of the very first day. It's my pleasure to have with me Scholar Rock as our first presenting company, sitting up here on stage with me is David Hallal, who is, of course, Chief Executive Officer and Chairman. David, good morning. Thanks for making the trip from the East Coast. So maybe let's just do a quick overview of the company. Just give us a little bit of an overview of the focus of what you're trying to do and how you might be differentiated from other companies trying to do at least similar indications?

Thanks, Tazeen. Yes, we're super proud at Scholar Rock to have succeeded where 20, 30 years of failure preceded us. And that is that in 1987 when Myostatin was discovered, it was certainly something that just about every biotech or pharma company mostly the big pharma companies have tried to target and block because what myostatin is, of course, is the body's natural negative regulator of growing muscles. So the thought was if one could safely and effectively inhibit myostatin, one could then release muscle growth in the body that could be applied to a set of diseases and certainly, we're focused on rear neuromuscular. So we had an idea when we started the company at Scholar Rock, which was if we could do it slightly differently, we may be able to really harness this value off of our platform. And that is mature myostatin looks like other things in the body. When you look to inhibit that, you actually have off-target effects. We focus on Pro and latent myostatin. So we actually inhibit it in a chemical form that's very, very unique. And so we were gratified in late '24 to have the first ever Phase III clinical trial success with statistically significant clinically meaningful benefit in patients, children and adults with spinal muscular atrophy. And now we are poised to launch the first myostatin inhibitor in the history of our industry. And why that differentiates Scholar Rock is there really is no meaningful competition in front of us, even most recently, other big pharmas had failed to target myostatin successfully. And so what that really positions us to do is starting with spinal muscular atrophy and then a set of other rare and devastating neuromuscular disorders, we can play out this unique capability that we have as the world leaders in myostatin biology to hopefully address a set of devastating disorders that affect children and adults again as I noted starting spinal muscular atrophy. What that means for us really is an opportunity to establish ourselves as a leader in serving patients with rare disease with our core focus being what we know well and do well, which today, it is inhibiting myostatin.

Yes. So maybe let's dig a little deeper. You mentioned that other bigger companies have tried to go down this path and have had some roadblocks. So what do you think, in particular, differentiates your program that's allowed you to get to the stage where you're basically now just trying to complete a resubmission.

Right. Thank you, Tazeen. So ultimately differentiates us is this idea that we had that Myostatin, unfortunately, is homologous to other proteins in the body and when all of these efforts to target either mature myostatin or the myostatin receptor the trap programs have just led to suboptimal efficacy and/or safety and they've resulted in terminations of clinical programs, most recently the one from Roche in SMA and FSHD. So from our standpoint, we had this very unique way of approaching both pro and latent myostatin that gave us exquisite selectivity. And as a result, we think we had a molecule that we could move into any patients. And today, we'll get into this, we're even treating now toddlers and infants with our drug. So it's exquisitely selective and very, very safe. And so that's one is starting with a molecule that truly is differentiated off of our platform. I think secondarily, we chose well. We chose the right indication. We actually did a robust Phase I, Phase II, Phase III clinical trial program. We were informed every step of the way. on the right dose, the right interval, the right patient population to study in our pivotal trial. And as a result, I think it has set us up to demonstrate this incredible opportunity to transform the lives of children and adults living with spinal muscular atrophy and then sets up with a series of genetic and acquired myopathies and neuropathies. It gives us a set of different diseases to apply our success in SMA to over the years to come.

Okay. We'll talk about the resubmission in a second, but since we're on the topic of the drug itself, it's also differentiated in the sense that you're not trying to have patients swap out of whatever other drug that they might be taking. So maybe talk to us about the benefits of that, both for the patient and commercially speaking.

I'm really thankful you mentioned that Tazeen because I often hear that while there have been innovations brought to the SMA community over the last decade. And these are very, very important therapies that have brought massive innovation to a community that desperately needed it. But all of those new therapies focused on motor neuron survival and motor neuron health, and certainly, Biogen ushered that in and Ionis with SPINRAZA. So over the last 10 years, we've seen this innovation coming. But really, spinal muscular atrophy, the principal organ affected by the disease is the muscle. And so when one is trying to improve the lives of patients living with spinal muscular atrophy, two things have to happen, One, one needs motor neuron health, but the other is they need muscle health. And so one entire side of the motor unit, which is comprised of the motor neuron in the muscle, there has been no innovation. So our idea was if we could address the muscle component associated with this disease, we can make a meaningful difference for patients. And so I think one thing is really clear in our Phase III SAPPHIRE trial really underscored this. If you're treating a patient child or adult with SMA, 2 things you should want to do. One is you should want as much SMN protein as possible to address motor neuron health and you should probably try to eliminate myostatin, which is the body's natural negative regulator for muscle growth. If you can do those 2 things, biologically, plausibly, you can provide the best outcome for patients from the perspective of motor function. And we're really excited to be -- we think now just a few months away any time now from ushering in the next wave of innovation for patients living with spinal muscular atrophy, which, of course, is the first and only muscle-targeted therapy that has been successful in a Phase III trial, and that's [indiscernible].

Yes. Okay. So now let's go back to the business ENHANZE, which is the resubmission process, right? So -- how are you feeling about that? Where are you in that process? You've talked about this now at length on multiple earnings calls, but we're here now. And is it your expectation that by year end, you will have a commercially available drug.

First of all, I want to thank you for your patience, Tazeen, because I think you initiated coverage like right before some of all of this began with our fill/finish facility and ultimately, the delay that we have had. So maybe just walking back the audience to where we were. We had this incredible Phase III data that we presented in Q4 of 2024. We submitted our BLA in January of '25, and the FDA, given the high level of innovation of the first-ever muscle-targeted therapy that was studied for patients living with SMA granted us a priority review with an action date of September 22, 2025. So we were poised to launch the drug in Q4 of last year. And then, of course, we disclosed on August 6 that there was a general site inspection at our fill/finish facility [indiscernible] Indiana, which is owned and operated now by Novo Nordisk. And this is a plant that has had some dust-ups before on inspections that were impacting other therapies, including around the time of the pandemic. spike back from Moderna. And so we had thought and hoped that their Novo Nordisk's response to those observations would get us through to the other side by September 22. That was not the case. So we received a CRL solely based upon the state of compliance at our fill/finish facility. That then followed an official action indicated classification of the facility in a warning letter, which usually can lead to a prolonged path to remediation of that plan. So all of that happened in Q4. At the same time, we had a really productive, constructive and collaborative in-person Type A meeting with the FDA in November of 2025. And recall where we were at that time. It was the longest federal government shutdown in the history of this country and yet we were granted an in-person meeting with the FDA. So all the leader leaders of the FDA were there. Novo Nordisk came in, the leaders from Cure SMA were there as well. One thing that came out of that meeting is that we believe there was a shared understanding of the unmet need that still existed for the SMA community despite the level of innovation targeting the motor neuron and that there was a shared sense of urgency to try to get this resolved for a [indiscernible]. And so they've been working the FDA with Novo Nordisk pretty aggressively, which has led to a reinspection of the facility just recently. But at the same time, we looked ourselves in the eyes. We look at the SMA community, and we said we've got to be better on this application than we were on the last one. And we should actually have an alternative to Catalent, Indiana. And so we worked very, very hard on a second fill/finish facility. And so really in close collaboration with the FDA from November of which was our Type A meeting to our Type C meeting in March of we aligned with the FDA that we should resubmit our BLA with not only Catalent, Indiana, but also a second fill/finish facility, one that we have, I think, beat speed records to stand up that facility, and we are going to have commercial drug that will be releasable as early as early Q3 from that second fill/finish facility. So we were very pleased last week on our Q1 call, to let you all know that our BLA has now been accepted by the FDA with not only Catalent Indiana, but 2 fill/finish facilities. The reinspection has taken place now at Catalent, Indiana and the FDA by their own guidelines has 90 days to evaluate that inspection and determine if they can reclassify that facility. But within that same 90 days, we're going to have drug ready to go from the second fill/finish facility. And overall, we were granted a Class II resubmission with an action date of September 30. So what we have been guiding is that we see with either or both of these facilities, a path to approval by Q3, and we're very, very excited about that. And I can assure everybody that we will have plenty of apitegromab launch supply for Keith and team should 1 or either 1 or both of those facilities be approved within our application.

Okay. Thanks for all that color. So there's a lot of moving parts between now and September. And so questions that we tend to get are, are there experiences where FDA can -- or you can point to where FDA has had a similar scenario where there was the potential of 1 or 2 facilities that they would need to look at in order to get to an approval date.

There's a few, if I may, that are also within this window of what's been happening with us. So -- you guys may have noticed beyond EYLEA HD and EYLEA HD prefilled syringe. Regeneron had a cancer therapy in October. -- that they actually had 2 fill/finish facilities as part of their application, Catalent, Indiana. And I think they had one through their relationship with Sanofi. And when it became very clear in October of '25 that Catalent, Indiana was not going to be reclassified in time. They dropped Catalent, Indiana without any time line hit and they were approved with the other facility. And so within the contours of our Type C meeting in March of '25 with FDA, we did talk about that, that this can, in essence, be a horse race. What helps us get approved the fastest because of this high unmet need for the SMA community and the shared sense of urgency for apitegromab to be launched for children and adults living with SMA. And should one look like it was outpacing the other we could actually move on to an SBLA, but let's get this drug approved. Now what has happened is this 90-day window post reinspection and how fast we've been moving at the second fill finish facility, these lines are starting to sort of overlap with one another. And so we'll just remain in close contact with the FDA on this progress. And look, I would love nothing more than something fast and with both. But at this point, our commitment is to the SMA community, and we'll take either one at this moment in time. So we can get to the children and adults that desperately want this innovative therapy ofpitagrimab to be added to their current treatment regimen.

Okay. And then just to clarify 1 thing you said. It's within that 90 days, FDA does come back for whatever reason they might have additional questions, do you believe that the time remaining would allow for that second facility to meet their standards and get approved by your September PDUFA.

It's an excellent, excellent point. We believe because the FDA -- so I noted last Thursday, but I haven't not here and I think it's important to say this to our audience is that all of the epitogramab that is required for review and approval from the second fill/finish facility has been vialed. So it's like there isn't really anything in front of us. The data the FDA will have from the product that has been vialed and -- and like I said, the drug is already to be released upon approval as early as several months before the September 30 PDUFA date. So you start to see a lot of July. There's a July with a commercial drug that's available from the second fill finish. There's a July, mid- to end of July that is that back end of the 90-day window for the FDA to deliberate on whether or not to reclassify the facility. And so all of those things may be aligned. But -- let's just say the FDA woke up and said, we want a clear [indiscernible] Indiana. We would move the second fill/finish facility into an SBLA, and we would launch with Catalent, Indiana. And vice versa, we're not going to give up on Catalent [indiscernible] they say, look, you made meaningful improvement, but a warning letter is serious business. We want to keep you here for a little bit of time, see how you -- we may not require another inspection but see how you work through your remaining issues if that were to be the case, then there definitely would be the case where you could see Catalent Indiana becoming an SBLA and us approving with a second fill/finish facility. So Again, we're hopeful that it's both, but let's see how the days progress. And I want to be publicly thankful to the FDA because they really have been extremely flexible with us in terms of understanding the different paths to approval as quickly as possible.

Okay. Great. So understanding that the most important thing is to get the drug available for patients as soon as possible. Longer term, do you have a preference for which facility you think would be your primary facility?

I do. And it's largely business model related. So our second fill/finish facility, which I should know is a U.S.-based facility. It's in great standing with all regulators -- they have a long-term and recent positive inspection history. And in fact, some of their most recent therapies that have been approved, the FDA waived the PLI, which is actually interesting as well. And as I noted, they have about 3 dozen approved products. And that is their business model. As you may know, and -- but I think it's worth describing, Catalent, Indiana was owned by Catalent, which is now owned by Noble Holdings. This is a little confusing, but let me clarify that. But when Novo Nordisk needed more fill/finish capacity after Catalent was acquired by Novo Holdings, Novo Holdings then sold 3 fill-finish facilities to Novo Nordisk. And they are now part of the internal operations of Novo Nordisk, which really has no interest in being a third-party CDMO. So we know and we have known that they're going to exit the CDMO business, so we would be migrating our operations from there anyway. And so I think overall, our ambition would be long term to have both because having redundancy is always a good thing from a supply chain perspective, but it is that second fill/finish that looks like the long-term supplier, and we'll be thoughtful about this and credible commercial demand that I expect from Keith, and how much redundancy we do want to have in the supply chain over time. Hopefully, that's helpful.

Yes, that is. Part of the reason I ask is because I wanted to understand the role that the Indiana facility is going to play for your European application.

Tazeen is raising a really important point that hopefully I can clarify for our audience here in Las Vegas as well as tuning in remotely. So unlike the FDA, and EMA. We have not had any delay and/or the equivalent of a CRL. Okay. We're still on file with EMA. And in fact, the European regulators have been really flexible also, and we like the state of where we are with our MAA in Europe. But the difference is because we haven't had a rejection, our application includes Catalent, Indiana only today. Now they're obviously because they have a mutual recognition program with the FDA. They're waiting for that facility to be cleared, and then we would imagine we get on the agenda for CHMP and then were approved and we launched in Europe, starting in Germany in the second half of this year. That is our guidance. We remain firm on that guidance. EMA is well aware of the second facility. The second facility is in very good standing with EMA. We're talking to them about the same elegance of what we have with FDA and wanting to make sure that we have that same level of optionality. But today, the MAA only has Catalent [indiscernible] in the application, and we are discussing with the European regulators, the nature of the fill/finish facility, all the good work that's been done, the agreement with the FDA and how that could work to provide us that same belt and suspenders approach to an approval in Europe that we currently have in the U.S.

Okay. So now let's talk about the commercial opportunity. So we know Keith Woods from his previous [indiscernible]. So as you mentioned, you've set up a good team to do the launch. But maybe walk us through what you think the initial uptake is going to look like. So included in that would be questions around negotiating with payers, presumably, you've already had some early discussions about that and maybe talk about range of pricing if you could.

Sure. So 1 of the things, I think, Keith and I would say and have said is we would not have wanted a delay for even 24 hours. Given our own time that we've taken to be with the community, be with patients, be with families, be with parents, be with the patient advocacy groups. They were clamoring for this therapy given the strength of our Phase III data. But if one were to kind of make lemonade out of this, how when we brought Keith in at the end of April, and of course, he's done incredible work with us at Alexion, and of course, his best work yet was at [ argenx ]. He really didn't have time to make all of the I think execution and planning decisions that he would have liked to have made before September 22 of '25. So how do you use that extra time to actually make sure you got the team, you have the plan and you have everything in place to support every one of the stakeholders from a patient, health care provider and payer perspective. So we've been using that time wisely. And I think as a result, Keith has spent a lot of time on the access programs has spent a lot of time on the -- getting beyond just national payers into regional payers and making sure that they understand what [ apitegromab ] can offer to them. And as a result, I think we're more well positioned for the commercial launch today in these next weeks and months than we were back then. What do we expect? Sometimes when something is ready for an approval, like we were all thinking the review was reading positive for an approval in September of 2025 and it doesn't get approved. The demand for it just increases. And I think what we've seen is almost 100% of the SMA community, I think, Keith, as you quoted, 95% of SMA patients say their #1 need is more muscle strength and motor function tied to their irreversible muscular atrophy that they're currently facing and [indiscernible] wasting. So almost all patients want to address their muscle component of their disease. And nearly 3 quarters of all neurologists acknowledge that dual modality is the way to go for the SMA community, treat the motor neuron as well as treat the muscle. That's a really nice setup for demand. And then I think as you apply state, Tazeen, there is that payer side. And there's usually like a little bit of time before you get to that steady state of conversion time and conversion rate. will they want to limit an approval for reimbursement to the Phase III criteria or the label that we have. And we believe it's not a matter of if, it's when the payers are paying according to the label that the FDA grants us. But there's a miscellaneous J gold. There are formularies to work with. There are infusion schedules. This is an every 4-week infusion, as you all know, where 95% of our patients that have been in our long-term extension trial remain on treatment. We think that says a lot about the value proposition. But I think the demand will be there. I think the I'll get to pricing in a second. I think it will take a little bit of time before we get to sort of that steady state of conversion time and conversion rate that makes this a little bit more predictable. But one thing is for sure. The SMA community does not take no for an answer. They've been through this before when they've been waiting for their SMN targeted therapy. And I think we're going to, between physicians and patients and payers -- and of course, with Scholar Rock support, which is our access program that we've set up to walk every individual patient through the reimbursement process, we think the setup is quite well for us. And then finally, regarding pricing. I've been asked about this quite a bit. And while it's a little premature to talk about the specific price, what I would say is we always think about a couple of things. One, the rarity of SMA. So there's only a few thousand patients in the U.S. living with SMA that have received an SMN targeted therapy, about 7,000 of those and another 28,000 around the world. That's number one. Number two, the severity of the disease without our therapy. So despite this high level of innovation of these SMN targeted therapies, patients eventually plateau and start to progress or revert to the progressive form of SMA, where they're losing motor function year-on-year. We saw that in our Phase III trial. We see that in their long-term extension routes. And yet with apitagramab, what we saw was a move from a loss of motor function to a return of a gain of motor function for the entire population of patients and nearly a 4x greater likelihood of patients having a 3-point improvement in the highest bar that you could have, which is the Hammersmith motor function scale in SMA. So we think the value proposition is there. So I think we can price proudly I think we'll be reimbursed at that price. I think it's very much reflective of the value that we're going to be providing. And I do think the community and the patient size is not so large that the budget impact will be significantly great. So demand will front run the access side, but I think overall, we're really excited about the long-term prospects to serve these 35,000 patients globally for many years to come.

So what do you think the level of awareness is among patients because this is a small community, but a very educated community Obviously, you don't start detailing until you get approved. But on where you are, should we expect a bolus of demand upon approval?

So demand is probably going to be measured in the enrollment in Scholar Rock's support, which going to be some combination of -- and it has to happen this way, right? The patient has to want the therapy and the physician has got to want to prescribe the therapy and then they enroll in Scholar Rock support. So that will be that first indicator. Keith is still determining exactly what launch metrics he might share. Obviously, revenue at the end of the day is what you all care about. And look, I think demand will front run revenue. That's just the way it is usually with these rare disease launches, especially when it's an IV infusion, and it's a miscellaneous J code. But I do think that there will be -- the awareness is high, as I was mentioning. And I really can't wait to have a trade name or a brand name for the drug because, unfortunately, the SMA community cannot say apitegromab. Actually, half the people at Scholar Rock cannot say [indiscernible]. Nobody knows how to pronounce it. So what they say is they just want Scholar Rock. They call our drug Scholar rock. They can't wait for Scholar Rock to be approved, and I think that's really cute. -- the adults call it the juice, which is altogether a different thing. And -- but I think the awareness of this therapy is quite high. I think the delay is actually even heightened the awareness, and the leadership at Cure SMA has kept us front and center, will again have a very, very strong presence at the Cure SMA Annual Conference in Orlando in June, will be as well represented as any company. And Keith, as you know, and VCAS, we just had a great presence at SMA Europe also as we get ready to launch outside of the U.S. It is there for sure. And we think we're just the right team and the right company and it's the right product. And this is something that I think the SMA community is very much looking forward to.

Okay. We'll keep saying apitagrimab and so people can get...

Yes. You and I are going to keep saying [indiscernible].

Of course, it's going to take a little bit of time to record as low revenue, but looking at other rare disease launches as a comp new patient start forms, whatever information you're going to be providing in the early portion. I think people are wanting to know. It sounds like from what you're saying that the demand is going to be there, that you will see the translation pretty quickly from approval to doctors wanting to get their patients on it. I don't want to put words in your mouth, but am I interpreting that correctly?

I think there's reasonable demand on day 1. I think it is just the combination of sort of like rate and conversion time from the payer side, and we'll be patient because it's going to be a matter of when and not if the product gets reimbursed, and I think the setup is quite nice for us. But I would just advise folks to not get crazy about what the revenue curve looks like because these things take time to do it right. And I think that we're well set up to do with the right way over time for the community.

Okay. And last question really quickly, cash needs, balance sheet strength.

So we were very thankful in our call last week to announce that our cash balance was $480 million at the close of Q1, that was fortified by a pull down on our debt facility of $100 million in Q1 as well as leveraging our program for another $98 million. I think the combination of the $480 million, the clarity now on an accepted BLA with 2 fill/finish facilities the ability to pull down another $150 million off the debt facility at approval. And of course, we do have a priority review voucher, which we intend to monetize at approval as well sets us up very, very well, not only -- and I know we didn't get to the pipeline, but not only to support the commercial launch of [indiscernible] in the U.S. and Europe, but also to keep fueling the pipeline that [ Akshay ] is we're focused on with FSHD with the OPL study in infants and toddlers with subcu [indiscernible] and with SRK-439, which is our highly innovative high potency, low volume high initial myostatin inhibitor, which is in Phase I, and we'll have some data on that later this year also. So we want to continue to build what we believe is a very special rare disease company -- our super power is myostatin biology. We think we're well positioned for growth through the end of this decade and well into the next. And I look forward to working with Tazeen and the Bank of America team and keeping you all apprised on our progress.

Okay. With that, we're out of time. Thank you, David.

Thanks, Tazeen.

Thanks, everybody.