Sionna Therapeutics, Inc. (SION) Earnings Call Transcript & Summary

Well, welcome, guys. Before we start, I'm just going to read a brief disclaimer. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So with that, Mike, Charlotte, Elena, been quite a year from successfully completing your IPO to announcing initial clinical data on two programs, which we'll get into in a little bit.

Maybe just to start us off, perhaps you can provide just a brief introduction on Sionna for those who may not be as familiar with you.

Yes. Great. Ben, thank you very much, and thanks, Morgan Stanley, for inviting us today. It's a pleasure to be with you, and thanks, everybody, for joining today. So I'm Mike Cloonan, I'm the CEO. Just a quick background on Sionna for those of you who don't know. So we are focused on cystic fibrosis. We have a very unique opportunity that we're going after, a target called NBD1, which I'm sure we'll talk about later in the discussion today. With that target and with our approach that we're doing around combination therapy, most specifically a dual combination, our goal is to transform the standard of care in CF and to get more patients to normal CFTR function, which we'll talk more about the unmet need and how that plays in today's market. But it's also important, not only given what our mission is and what we have the opportunity, to think back of where this story originated. So we spun out of Sanofi back in 2019, but the science goes all the way back to Genzyme. So this is a 15-year, in the making, program, research and development effort, and we wouldn't be where we are today hitting this very challenging target without the level of investments and the commitment that was made over that 15 years. And the reason I say that is we often get asked, "How did Sionna crack this target?" And it wasn't just Sionna, right? It was the level of investment, the perseverance, the strategy that took place between really three companies. And as you said, we're in a very fortunate position with a lot of exciting things that have happened and are on the horizon in the next 6 to 12 months. So excited to share the rest of the story today.

Well, thanks, Mike. And yes, the long-tenured investment is obviously starting to pay dividends. So that's great. So you mentioned it briefly, but maybe you could just talk a little bit more about the opportunity you see in targeting NBD1 in CF patients.

Yes. So let's start maybe just with the size and what the unmet need is. And so the size of this market, as many people know, CF is dominated by one player, Vertex. They've done a very good job, obviously, developing medicines to help patients, but we see an opportunity to solve some of the unmet need that continues to exist in CF. And that you can define that by quality of life, life expectancy. But one of the things that we are very focused on, as I mentioned, is getting more patients to normal CFTR function, normal protein function. Only 1/3 of patients today that are on the standard of care get to normal CFTR function. So that leaves 2/3 not at normal, but there really is an opportunity to drive more from there. And Charlotte can talk maybe later about what that actually means, getting more patients to normal CFTR function. And the way, as I said, one of the key parts of our strategy is focusing on NBD1. This is not a new target. This is a target that has been studied for many years. The biology is well understood. NBD1 is a region or a domain of the CFTR protein that has not previously been targeted in terms of hitting that target. But what NBD1? Why it's so important biologically? It is the #1 genetic mutation that causes CF is F508del. Approximately 85% of patients have a form of F508del. That mutation resides within the NBD1 region or domain of the protein. And what the mutation does is it causes NBD1 to irreversibly unfold at body temperature. So it's creating this instability in the NBD1 region, therefore, crippling the folding of the protein, the traffic into the cell surface and its overall functionality. So NBD1 is critical to a fully functioning CFTR protein and a normal CFTR protein. We have the opportunity with our two stabilizers, 451 and 719 to do something very, very different. And we know that if you can stabilize NBD1, you can drive significant improvement in CFTR function. And for us, if you can stabilize NBD1 and then just correct one other part of the protein, you have the ability to deliver wild-type levels of CFTR function.

Got it. Yes, tremendous opportunity. I think you mentioned kind of 1/3, 2/3 -- I mean, how many patients is that actually in terms of numbers?

Charlotte, do you want to talk about patients?

Yes. So worldwide, there's over 100,000 patients with CF, although it is a rare disease, it's a large, rare disease. In the U.S., that's upwards of 35,000 patients. So you do the math, 80%, 90% -- 85%, 90% of them have at least one F508del. So it's a substantial number.

Sure. Definitely, no -- definitely a large patient population, especially for rare disease and a well-defined one at that. So you briefly mentioned it, Mike, about kind of the combinations and your multiple programs. So maybe you can just talk about the different strategies you have to improve the outcome of CF patients.

Yes. So we -- as we saw -- one of the most recent announcements we had now a couple of months ago was we're going to advance both 719 and 451, our two NBD1 stabilizers. And we were very pleased with that Phase I data because both compounds exceeded our profile that we had set going into the Phase I. And that profile was defined by PK or exposure targets that are derived from our CFHBE assay, which we may get into a little bit later, and also the tolerability, both compounds very well tolerated. So we have this unique opportunity with two advanceable compounds to determine the strategy that would make the most sense for us that could leverage the differentiated profile of each compound, but that would also best support the development plan. So our prioritized path, as I mentioned before, is a proprietary dual combination, right? The standard of care today is a triple combination. TRIKAFTA is a triple combination, three drugs that come together. We are going after a double, so two compounds that could end up driving more clinical benefit than the standard of care. And so NBD1 is the foundation of that dual proprietary combination that I'm talking about. And in this case, we're going to advance 451 as the anchor to that dual combination. We're going to leverage 719 as our add-on to standard-of-care, proof-of-concept compound. And Charlotte will get into that in a minute in terms of what that proof of concept is designed to do. But we have two different compounds advancing in two different directions. 719 is the add-on to standard of care, proof-of-concept study. 451 is the anchor to the dual combination, and it really provides a lot of strategic optionality for us. Our prioritized path, the one that we are funding, is the dual combination. We will be data-driven when we get the output of that proof-of-concept study as to what we would do with the add-on. But it really does enable us to have strategic optionality.

Definitely -- it's definitely an interesting decision to progress both and something that we've seen before in other trials and other companies as well. So it makes a lot of sense. You mentioned it briefly, but I guess in the Phase I trials, I guess, how do the PK data that you observed kind of translate to maybe -- or demonstrate what you anticipated with your preclinical assays?

Yes. Charlotte?

Yes. So as you probably know, we run this cystic fibrosis HBE assay, which has been very predictive. And we -- certainly in Vertex' hands, and we run it in a way that's very, very similar according to all the published data from Vertex. And when we track back in our CFHBE assay, we track back to where we would predict the exposure, would be the -- the threshold or the zone of exposure would be targeted to exceed the CFTR function and hence, the lung function and clinical benefit. We are -- that's the zone that we're targeting, either, as Mike said, in the 719 add-on scenario and then in the 451 dual combination scenario. So we have hit and exceeded both of those targets for both 719 and 451. So that's the zone, either in the dual combination or in that proof of concept that we're zeroed in on, and we've seen that in the first parts of the Phase I, and that's what we're targeting.

Got it. Nice, as Mike noted, to have the optionality with both programs. So kudos to you guys. Maybe we can drill into a little bit on the trial design for 719 in your Phase IIa. If you could just provide additional detail there?

Yes. So the proof-of-concept trial will be taking patients -- enrolling patients who are already stable on physician-prescribed TRIKAFTA. And then in a 2-way crossover design, which allows us to be super-efficient, we'll give them 2 weeks, each of those patients 2 weeks of both 719 and then they'll get the other placebo. And so we'll have a comparison of the sweat chloride, which is the clinical biomarker of CFTR function. We'll have the comparison of their sweat chloride when they're not -- when they're just on TRIKAFTA versus when they're on TRIKAFTA plus 719. And that we intend to demonstrate quite clearly the unique mechanism of NBD1. So we know from our preclinical assays that NBD1 does something, as Mike said, very different in addition to and from the standard of care. So we'll be looking at that change in sweat chloride or expected improvement in sweat chloride. And it also will allow us then to be able to correlate back to our CFHBE assay predictions, and then we also expect to demonstrate that when patients are stable on TRIKAFTA, that there's still a lot of room to go in terms of improving CFTR function. So it hits a lot of the proof points for us.

Got it.

Maybe, Ben, just one thing to elaborate on what Charlotte said, why that's so important, that proof of biology, right? As you go back to NBD1 and its role, none of the approved modulators today from Vertex stabilize NBD1 directly, right? So -- and the way they're solving the protein is they're partially correcting the protein. We're trying to get to full correction of the CFTR protein. And as Charlotte said, by showing that sweat chloride improvement and improvement in CFTR function, it's going to demonstrate that NBD1 is synergistic with but different from components of TRIKAFTA.

Got it. Got it. Makes a lot of sense. I guess maybe a follow-up question to that on maybe just the trial design, and I get my head on this. But I know there's a washout period in the trial, which I found particularly interesting. If you could just maybe talk about that, and maybe if that's going to help with some of the measurements [ in the clinical trial ].

Yes, the washout is just because this is a 2-way crossover study. So each patient enrolled in the trial will get both the placebo and the 719. And in order to -- and of course, they're going to be randomized to either get one of those or the other first. And so they stay on their TRIKAFTA throughout the entire trial, but then whichever thing they get first, be it placebo or 719, then we have a period where they're washed out from whatever that -- obviously, the placebo doesn't really require a washout, but they don't know it. And we just -- we'd want to make sure that whatever change in sweat chloride has occurred, really from the 719 portion, is back to baseline by the time we do the second period. So it's a very common design element in the two-way crossover study.

Got it. Makes sense. Thank you. You mentioned the sweat chloride measurements. I guess what other data points can we expect to see from the trial?

So we'll be looking definitely at safety and tolerability as well as PK. So those are really -- that's really going to be the suite of this.

Well, maybe we can talk about -- and we get asked a lot about FEV1, right?

Yes, yes.

So why not FEV1 in this study? And it's not designed for that. Maybe Charlotte, just explain why it's not FEV1 [indiscernible].

Right. Because we can leverage sweat chloride and the efficiency and the speed of sweat chloride change, we're really -- we can do a very small study with less than 20 patients in this -- and also leveraging the two-way crossover study design. And that really is just not powered at all for demonstrating an impact on FEV1. We'll be assessing it as a safety endpoint. But it's really -- in order to really do an FEV1-based study, which for -- certainly for the dual combination and if we were to go forward with the add-on, we would be doing that in the later Phase II.

Got it.

Yes. And we do believe NBD1 in our programs will drive FEV1 improvements, right? We're focused on sweat chloride, and that's the design of this proof-of-concept study. But when you think about dose-ranging Phase III parts of the clinical strategy, FEV1 will absolutely be part of that, and we believe we will improve FEV1 with NBD1.

Got it. Makes sense. And then I guess maybe just the last question on the trial. I guess, when should we expect to see data?

Yes. Elena, do you want to take that one?

Yes. So we'll have data from the study mid-2026, so mid next year.

Got it. All right, thank you. Well, obviously, I don't want to forget about 451. So maybe we'll have a similar conversation about it. Would just love to hear -- you touched on it, but just the decision to combine 451 with your proprietary program.

Yes. Maybe we didn't get into this yet, so it's probably worth stepping back with the Phase I data, what specifically drove us to this path of 719 one way and 451 the other? So as Charlotte said, both compounds exceeded both of the targets we had set, the add-on target and the dual combination target. So we could have picked either one of these compounds to advance. But when we looked at it, there were actually some unique PK profile differences between 719 and 451. And specifically with 451 since we're [ seguing ] there, 451 achieved higher levels of exposure than 719, at the highest doses we tested. So they weren't apples-to-apples doses of 451 and 719, but at the highest doses tested for each compound, 451 got higher exposure. And that's important when we think about the dual combination because with the dual combination, it is what it sounds like. It's two compounds coming together, one of which is NBD1. And then we're going to be testing that with two of our complementary mechanisms, SION-109, which is an ICL4 corrector and SION-2222, which is a TMD1 corrector. And that higher exposure that we're achieving at the higher doses enables us to drive, as per the HBE assay, higher levels of clinical benefit. And that's really important, right? In our own combination, now we're trying to drive improvement above the standard of care. We're not having the benefit of adding it to the standard of care. We're going directly against the standard of care. And so to achieve superiority, the higher exposure we can achieve with the NBD1 compound, the better [ to be able to ] deliver that efficacy that we seek. So that makes sense?

Yes.

So I'll let Charlotte describe what we're going to do now in terms of the healthy volunteer combination.

Yes. So we've tested both -- actually, we're taking two 451 together with two complementary modulators, two interface domain correctors, Galicaftor, which we obtained from AbbVie, which had already actually been in Phase II. And then our own internally developed SION-109. Galicaftor is a TMD1-focused corrector. 109 is an ICL4 corrector. And so -- and ICL4 has been through a full Phase I study of its own, single agent, as has 451. So we have solid -- for [ one up ] to Phase II data, but solid, say, at least Phase I data for all of them. And now we're going to take 451 and Galicaftor and 451 and 109, and we're going to put them together in sequential cohorts of healthy volunteers to look for safety, tolerability and really zone in on those PK zones that we talked about from the CFHBE assay that we clearly hit in the single-agent studies, and we just want to confirm that we're in the same place together and that the safety and tolerability is as we expect also from the single-agent studies. And then decide from then which of these we'll take forward into Phase II in patients.

Got it. Makes sense.

And we did announce just over a week ago that study has started. [ It's a ] healthy volunteer study...

Yes. Well, congrats on that. Nice achievement for you guys. And I mean, I know there are well-known targets and mechanisms, but if you can maybe just talk about a little bit more on the rationale or role of ICL4 and TMD1 and the rationale for that combination.

Yes. Do you want to talk about how they work together?

Yes. So when -- if you can picture the CFTR protein with its multi-domains and NBD1 kind of down in the corner, as Mike said, what F508 deletion actually does is not only cripple and unfold NBD1, but it also disrupts the interface domains. And so the whole protein as a whole doesn't assemble and then traffic and work correctly. And so ICL4 and TMD1 are -- they're both each two different interface domains. And so correcting -- we know from even data before there were modulators, we know that correcting just one of those interface domains together with NBD1 modulation or correction can achieve potentially wild-type CFTR function.

There isn't -- from a target perspective, when you look at TMD1 versus ICL4, either one of them combines really well with NBD1 and can get to that wild-type level of CFTR function that Charlotte is saying. So it's -- we're sort of agnostic to whichever target to go after. It's more the compound, right? So 2222 Galicaftor is TMD1, 109 is the ICL4. It's really going to be the performance of those compounds, not the target per se that we would select to combine with NBD1.

Got it. And maybe just following up on that. I mean, what will you look for in the Phase IIa that will drive the decision of moving one versus the other?

Well, it will be the Phase I healthy volunteer study that we're going to be doing, the [ Phase IIa, so 719 ], yes. So we'll be looking for -- actually all the things that we were looking for in the earlier Phase I, we'll be looking for safety, tolerability, and we had a very high ceiling for all of these compounds in that, and then also just where we can get in terms of the target concentration zones together in a combination.

Makes sense. And I think we touched on a little bit, but we mentioned the ability or the potential to achieve wild-type function. I guess why is that just so much more important than, let's call it, normalized function?

Yes. Well, it is normalized function. And you'll hear others in the field talking about achieving better CFTR function. There really hasn't been a tool to date before the NBD1 to -- at least based on the in vitro assays, really to drive into those substantial zones of normal. If you look at the waves of improved CFTR modulators so far, they've moved patients sequentially to better and better CFTR function to the point where 1/3 of them now are in the normal range, but 2/3 of them aren't. And over those waves, as the CFTR function has gotten better, the outcomes have gotten better, both short term in terms of FEV1 and quality of life, but also long term, as Mike was alluding to, long-term outcomes, rejection in transplant, lifespan, survival. So that's sort of pointing an arrow right towards if -- there hasn't really been a tool to get us to that, but if you can, that shows us what you can potentially do.

Definitely. Yes. I mean we were talking about the patient populations earlier, so that would be pretty tremendous. And then I guess last question on this trial, but I guess when can we expect to see data from this as well?

Yes. So we'll have data from the study also mid next year.

Got it. So two trials reading out in mid '26. Is that right?

Yes.

Yes. Maybe, Elena, also talk about just what the next news flow -- like what will be the next [ balance ] -- we have that data mid-'26, but what do we expect?

Yes. So as we discussed, we've already initiated this combination Phase I healthy volunteer study that supports the dual combination. That data will report out mid next year. And then the next step with the dual combination will be to go into a Phase IIb dose-ranging study in patients with CF. On the add-on to standard of care, as we talked about, we'll have data from that study mid next year, and that study will initiate in the second half of this year.

Got it. Great. And it sounds like a lot going on. I guess, maybe just a question on kind of current cash position and cash runway.

Yes. So we ended the second quarter with $337 million in cash, which will take us into 2028. So extends us way beyond these next set of data milestones, 18 months plus post -- after data.

Got it. Great. Yes, I mean, fortunate to be in a cash position and kudos again on the IPO earlier this year that helped enable that. So that's great. I know I have a little bit of time left. But Mike, I don't know -- or Charlotte, Elena, is there anything else maybe you'd like to apply to [indiscernible]?

Yes. I mean just a couple of [ things ]. One is we're very excited about where we are. Great question from you, Ben, in terms of the progress of the company and the progress we made. We've executed at a very high level to put ourselves in this position, right, with this unique first-in-class mechanism NBD1, two different compounds progressing in two different directions. Data catalysts coming within 12 months, as Elena said, in mid-2026. The one thing we didn't spend maybe a second on was just -- we talked about the size in terms of the patient population, right, the 100,000 patients but the size of this market, right, how meaningful this could be to patients to have a new option with a new mechanism that could potentially be differentiated and maybe even best-in-class, right? And for us, this is an $11 billion market today, right? As we know, that, Vertex owns and dominates. It is growing to $15 billion in the near term. And what we know is as we go back to that unmet need of 2/3 of patients not being at normal, our focus has been on how do we deliver new potentially more efficacious options for patients, drive more of them into the normal CFTR function range. And we think that could be transformational for patients, but also a significant commercial opportunity for Sionna, when you think about that $11 billion going to $15 billion market with a single player.

Yes, definitely, large opportunity, especially potential for best-in-class. And always -- there's always been second -- second entrants to overthrow incumbents. So a lot of opportunity and potential there.

Agree.

Well, guys, thank you for the time.

Thank you, Ben.

Yes. Thanks for kicking off our conference here.

Pleasure.

And looking forward to catching up.

Thank you, Ben. See you around.

Thank you, guys.