Spyre Therapeutics, Inc. (SYRE) Earnings Call Transcript & Summary

I am Sam Semenkow. I'm one of the senior biotech analysts here at Citi, and it is my pleasure to be hosting Spyre Therapeutics at Citi's 2026 Biopharma Back-to-school Summit. I'm joined by Cameron Turtle, CEO of Spyre. Cameron, welcome, and thank you so much for being here.

Appreciate you having us.

So maybe we just start a little bit high level. You made a ton of progress this year across the pipeline. We still do have a couple more readouts through the rest of the year. Can you just level set where the company stands today and what we can expect from you through year-end?

Sure. So broadly, our goal is to develop products that elevate the standard of care in autoimmune diseases. In general, our approach to doing that is developing what we think are best-in-class monotherapies, long-acting optimized antibodies against what we think are the best biologic targets in each indication. And then in most cases, we're quite interested in evaluating how these best-in-indication or best-in-class antibodies can be combined together to hopefully do better than we're able to do with the monotherapies alone. I would say in inflammatory bowel disease, that approach and strategy is most mature. That's where we started. We have the 3, I would say, near top, if not the top 3 mechanisms in the space, long-acting antibodies against each of them. Over the last few months, including this week, we've shared data from each of them that I think shows that they're at least as good in terms of best-in-class molecules in terms of efficacy and better dosing than anything else in each of those spaces. And at least I think in our a4ß7 case, maybe can even do better than the first-generation products in terms of efficacy. And then there, we've actually since about April of this year, we've been enrolling the combinations of those assets, which we think have a realistic probability of delivering efficacy that's above and beyond each of them individually. Beyond IBD, we're first exploring where TL1A should work. I think everyone who has TL1A is interested in this pipeline and a product potential. what indications will TL1A be excellent as a monotherapy? Or is it a combination component in these different indications. We're looking at a basket of rheumatic diseases. We reported RA results recently where the drug is certainly active and well tolerated. We didn't think it was sufficient to advance as a monotherapy in Phase III, though we do think it looks like a potentially good combination component. And then later this year in fourth quarter, we'll have both psoriatic arthritis, PsA and axial spondyloarthritis (axSpA) data, where we'll be making the same evaluation. Is this good enough to advance as a monotherapy? Or does it make sense to combine with the other great mechanisms in those spaces? And then we're also expecting data from others as well that inform our strategy. So I think in total, there are 7 TL1A proof of concepts this year. I've just talked about a few of them. We'll see the HS data shortly. We know it's positive from Merck. And then we expect to see atopic dermatitis as well as MASH data from Roche as well in the upcoming months. And again, in each of those indications, we should evaluate whether we think it makes sense to advance our molecule on its own or whether we should consider combination therapies. We made an initial bet in HS already, which is that we might be able to leapfrog the monotherapies by combining TL1A with bimekizumab or IL-17A/F. And we think that's a really exciting trial, again, like our IBD strategy, combine the best mechanisms in the space. And hopefully, we can do better than anything else that's out there today.

That is a lot to dig into. Thank you for that. Wonderful. Why don't we start with IBD then? And I know you've been asked this a lot, but the SPY001 data was better than I think what we've seen on the approved drug. And then you have the other data sets that are also looking quite competitive. So what is in your mind right now, now that we have monotherapy data for all 3 assets, the best potential combination? And how will you make that determination when you consider advancing one or more of those forward?

Yes. I think the obvious hint in terms of our certainty about which one is best is given by the fact that we're testing them head-to-head right now, meaning we don't know which of these combinations is best. I think we look at the biology of these and know they're quite orthogonal in terms of how they're benefiting patients with IBD. And we've tested these in a variety of animal models and see that all 3 are additive with each other. And so I think there's good reason to believe that they'll be additive clinically as well. In terms of which one, we don't know. That's why we're testing them head-to-head. I think we feel very -- increasingly good about the safety of all of these. Until recently, I would have put a4ß7 and IL-23 above TL1A in terms of our certainty of the safety, though I think in recent months, both in our randomized Phase II data as well as Merck said in Phase III that their TL1A was well tolerated. I think at this point, we feel pretty good about the safety of all of them and the efficacy of all these is good as well. I have a slight bias towards our a4ß7 containing combinations because I think it's an elegant solution to a gut predominant disease to have one agent that's acting in a gut-selective manner and the other being a broader immune suppressant. So you're functionally getting double suppression in the target tissue and then only single suppression everywhere else.

And I think you said in the past, you might just take that best one forward and advance it from there. Is there ever a scenario or an opportunity or even a need in the market where 2 different combinations might be necessary for some patients to cycle through?

As much as I'm hopeful that our combinations could deliver much better efficacy than monotherapy today, I think it's unlikely that we're getting to majority patients in long-term remission forever with our combinations. I would love if that were the answer. I just think that's quite unlikely, meaning I think it's still likely to end up being a cycling market. But IBD is a cycling market that is highly concentrated to the best products. If you look over the last decade, the top 3 drugs have taken almost 70% of the revenue here, and those top 3 drugs have changed. But as soon as you beat the prior standard of care on efficacy without a safety downside, those drugs take the lion's share of the market. I think it's credible that our combinations have the possibility of beating today's standard of care by a meaningful amount. And I frankly think all 3 of them have a decent shot at that in terms of being those next-generation top-tier products. And I think it will make sense to advance more than one if they're all in that top tier.

And have you started to outline for us what that bar is? Like how much higher do you need to go in terms of efficacy above some of these standards of care? I guess it's combination dependent, but how do we start to think about that?

Yes. I think we look at 2 data sets that help us inform what enough better looks like. One is the history of IBD. I think that's frankly more informative, which is we talked about the transition from the first generation products in the space, which were Humira, Remicade, Stelara. And now today, we see Entyvio, Skyrizi, Tremfya. And these drugs beat that first generation, in most cases in head-to-head trials with a delta of about 10% on clinical remission. I mean about 8% in Varsity, plus or minus 10%, depending on which of the IL-23p19 versus IL-12/23p40 studies you looked at. And so that 10% delta is about what we see when we survey gastroenterologists in terms of what a superior result to them looks like. And so I think that's our bar as well. We have to beat the best monotherapies by about 10 percentage points. And I think those drugs would then be superior on efficacy, hopefully no difference on safety. I think our combinations are more convenient than any monotherapy on the market today, and I expect we price them in the same range as a branded drug. If those -- all those pieces come together, I think you just have products that are the best in the space.

And so maybe we take -- spend a little bit of time on 003, the monotherapy data that you presented earlier this week. What stood out from that data set? You mentioned safety already being key. But what else stood out that convince you that this is just reinforced that it's a part of the combination?

Yes. So I think we started going into all these data sets with an expectation for them, which is in the TL1A and the IL-23 cases, we looked at these classes and see that, one, the molecules within the class are not meaningfully differentiated in terms of placebo-adjusted efficacy in either the TL1A or the IL-23 class. They're more similar than they are different. And particularly in the IL-23 case, the dose and exposure responses are quite flat, meaning we don't see this steep relationship between the amount of drug on board and efficacy. And this led us to expect going into our readouts with both our TL1A and our IL-23 that they should perform like the in-class molecules. There's no strong reason to believe that they would be better. That's a bit different than our expectation in going to the a4ß7 readout, where we did see a pretty strong exposure response for vedolizumab, both in their Phase III data and in the real-world setting, which is why we chose a higher dose to go after with our SPY001 readout. And again, all of these are -- they're 40-odd patient open-label studies, and so we take them with a grain of salt, but I think it supports the idea that the a4ß7 might be doing -- deliver greater efficacy and then the TL1A and IL-23 are similar.

And what about the potential for ADAs for the TL1A? I know that that's been a concern for some of the assets, but perhaps less so for you. Just walk us through that.

Yes. I think in general, I'm not convinced yet that we know that immunogenicity of TL1A has caused a reduction in efficacy. At least in the data we've seen to date is one of the best classes in IBD, if not the best class overall. I think there's some question as to whether the maintenance data is as good as you might hope it to be, and therefore, maybe that's an immunogenicity issue that's causing a reduction in efficacy and maintenance. I'm not sure that's necessarily true as they're either half-life issues in terms of dosing interval and these molecules or potency as well. Any of these things could basically lead to an incomplete target suppression in the maintenance setting that may not be ADA related. But we'll see more as we get, I think, these Phase III data sets from some of the other sponsors, especially Merck, for example, doubled their dosing frequency going to Phase III in the Crohn's study. And I think that will give us an indication of whether it was underdosed in maintenance and can you get greater target capture. And often, you can dose through an ADA issue, and so we might see that in the Merck case. So I'm not sure it's an issue yet. I don't think we've -- in terms of the range of the TL1As, ours is towards the lower end, more comparable to the Merck and Sanofi/Teva molecules. Some of the others have much higher rates of ADAs. I think they would make a strong case that they don't think it's impacting their efficacy.

And you brought up Crohn's. At what point do you think that Spyre could consider moving into that? What do you need to see what data set do you want in hand before that?

Yes. It's our strong expectation that we'll advance whichever programs advance from the SKYLINE study will advance in both in UC and Crohn's. I mean we know each of these mechanisms works in both UC and Crohn's. And I think over the data over the last few months, both from J&J and AbbVie from the DUET studies and the TargetCD study, give us pretty good confidence that combinations work quite similarly in UC and Crohn's as well, including a4ß7, including IL-23 and including TNF. So I think you have mechanisms that are the same as or similar to ours. I think we have good confidence that they're going to show additive efficacy in both of these indications. And so our expectation is whichever winner or winners we're advancing from the SKYLINE study will advance in both UC and Crohn's.

Got it. Okay. And when you -- you've alluded to this in the beginning, but when you think about the competitive landscape, there's a bunch of different combinations out. Some of them are oral and injectable. Some of them are clearly not fit for purpose necessarily like yours have been developed, some are bispecifics. I mean what is specific for why Spyre chose the co-formulation approach to start there? And like what are the advantages there versus all these other approaches?

Yes. I mean I think it's fair to say that we were a little bit at the right place at the right time when VEGA came out. And basically, we've been working in this space for 30 years, looking at different mechanisms and hitting this therapeutic ceiling. And then the combination comes out and shows that if we add these mechanisms together, we break that. And we were there picking development candidates against the 3 best mechanisms in the space and could pick them not just for best-in-class for the individual molecules, but could pick antibodies that co-formulate incredibly well at high concentration that we could run combination tox for and prove that they're well tolerated together to run these animal pharmacology studies as well. And I think that setup leads to what the differentiation here now, whereas most other players in the space basically were combining what they had in hand when Vega came out, and that has tended to be a mix of things, includes orals and injectables, which some people for one or the other, no one wants both. I think that's tricky from a pricing perspective, combining antibodies with different half-lives. And so the dosing intervals are challenging, combining antibodies that were not designed to co-formulate together, and it's certainly no guarantee that any 2 antibodies are going to be stable with low viscosity and the same pH and excipients as each other. We have that. It's not guaranteed that others get there. And then also our ability of having these all at the same time has let us run this what I think is a pretty efficient and innovative development program to get them there quickly.

And on the regulatory side, how should we think about demonstrating the efficacy from each of those? What's the latest from FDA on requirements for approving the efficacy from each component?

Yes. So I think in general, we believe that we have to test contribution of components. We need to demonstrate the monotherapies beat placebo and the combinations beat the monotherapy components. Statistically, benefit would be the best, of course. And that's the design of the Skyline study is to accomplish that. So we have all 3 monotherapies against placebo, and we have all 3 combinations that can be compared against placebo as well as their monotherapy components. Obviously, we're hopeful that we're going to hit that in this trial. And I think if we do on any of the -- we have 3 shots at this as well, I think that sets up a relatively straightforward pivotal path. I think we actually have a reasonable idea of what that path looks like, learning from precedent in the space, most obviously J&J, who they ran a number of Phase II studies with their combination, aiming for contribution of components, frankly, didn't quite hit it in terms of -- in a single study showing that the monotherapies both beat placebo and then the combos beat the monos. That never was quite accomplished on a primary endpoint and yet their Phase III looks pretty straightforward. It's a 2-arm Phase III. It's actually the first non-placebo Phase III in IBD. I think that's a very important precedent and actually helpful precedent because a non-placebo-controlled Phase III both gives you an active comparator, which could be incredibly helpful from a pricing and access perspective. And no placebo Phase III is going to enroll much more quickly than a placebo-controlled Phase II.

How much risk do you think in your study there is to proving that we're hitting on contribution of components?

I mean I think the study is well designed to achieve the deltas that we expect to see. I mean we know pretty well what the monotherapies will show versus placebo based on our data and others. The combination additivity, this is -- these are all first-in-class. I think we have a reasonable estimate of how much we think they will win by, and we're testing that. We also have 3 shots at it. So I think that gives us pretty good odds of having at least one that shows it.

Is there anything else we're missing from the IBD conversation, do you think, before we move into rheumatology?

I don't think so. I mean I think we've proven all the pieces of our portfolio work. I think we'll see how good the combinations add up. I think all the evidence is pointing towards these are likely to provide some additivity. I think additivity in the 10% range, I think, is very achievable between these multiple mechanisms, and I think that would be enough to shift the market towards these products in a meaningful way.

When do you think we could get more granularity on when the study will read out in '27?

Yes. So we've been enrolling the combo since April. So we're 5 months into the Part B enrollment. I think we feel very comfortable with our '27 guidance. We'll probably provide a narrowed window, I would expect towards the end of this year, early next year when we're a bit further along.