Structure Therapeutics Inc. (GPCR) Earnings Call Transcript & Summary

Great. Thanks for joining us, everybody. I'm Terence Flynn, the U.S. biopharma analyst at Morgan Stanley. I'm very pleased to be hosting Structure today. Just for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. Very pleased to have Ray Stevens, the company's CEO; and Jun Yoon, who's the company's CFO. Both are co-founders of the company so really appreciate you both taking time today to join us. Again, I think maybe just the best place to start out would be if you could just give a high-level overview of the company as well as the strategy and pipeline, and then I've got a number of questions that we can drill into. But again, thank you both for joining us today.

Absolutely, Terence. Thank you for having us. Really appreciate it. So Structure Therapeutics, many of you in the room know, we started this company with a passion around accessibility, healthcare and equality. What we love to do, my background, structure-based drug discovery is we love to go after validated targets that have biologics. I'm going to use peptides as part of that. And we love to use structure-based drug discovery to convert them into oral small molecules. We started working on GLP-1. It was a good place to sort of start working on about 15 years ago. We had a breakthrough, particularly in the incretins, including GLP-1 back around 2015. And that led to one of our lead assets, GSBR-1290, which is an oral small molecule, a GLP-1 receptor agonist for diabetes and metabolism. So with that passion of accessibility, we think this has been a great place to sort of anchor down. We think we have probably one of the strongest and broadest portfolios in the incretins for oral small molecules. So we have an oral small molecule, multiple scaffolds for GLP-1, GSBR-1290 being one of those. We have an oral small molecule for amylin. We'll be announcing a DC by the end of this year. We have an oral small molecule for GIP, and an oral small molecule for GCG, glucagon receptor as well as our apelin small molecule, which is more for selective weight loss that finished Phase I already, Phase II ready. GSBR-1290, lead asset. We had a data release back in June, very positive data release. We showed strong efficacy, no safety issues at all. So we think we have the safest oral GLP-1 out there. Very proud of our rat NOAEL of 1,000 mgs per kg. We'll be going into a Phase IIb in Q4, so right around the corner and excited about that Phase IIb study to get started. We do have both what we consider to be second- and third-generation molecules in this space. We think this is sort of important. This is a very competitive space. It's becoming more and more competitive, it feels like almost every week. And so having those -- taking that multigenerational approach and already being -- having second- and third-generation molecules puts us in a really good position.

Yes. Okay, great. We'll drill into a number of these points, but I appreciate the backdrop. I guess on 1290, obviously, as you mentioned, it's an oral GLP-1 receptor agonist. One of the questions we get frequently from investors related to all the orals is just manufacturing ease and scalability, given obviously some of the ongoing supply challenges of the injectable peptides. And so as you think about the profile of 1290 from the manufacturing scalability standpoint, just maybe high level, how should we think about this? And again, where are you in kind of building that process out as you get ready for the Phase IIb?

I'm going to interject here. This is a question that is Ray's favorite, but I'll go ahead and take that.

Okay, no problem.

But yes, so from our perspective, we think oral small molecules is going to be the ultimate winners for obesity and metabolism. This is a small molecule game. The peptides have taken a small market share, but you're already seeing the challenges there in scalability and manufacturability with peptides in this space. There's more than 800 million patients worldwide, close to 1 billion, more than 100 million in the U.S. And we've been able to demonstrate in our scalability the ability to manufacture or have the capacity to manufacture greater than 6,000 metric tons, and that will translate to more than 120 million patient supply. So from our perspective, this is an oral small molecule game and being able to manufacture there.

By the way, Jun and I have been working together for only about 25 years. So we -- he did take my favorite question.

Yes. It's like any good relationship. There's puts and takes, right, on both sides?

Yes, absolutely.

I guess to drill a little deeper into that maybe because, again, there's been some questions like Lilly gets this question all the time, orforglipron is just like -- it's a more complicated small molecule. And again, I think there's competitor companies that talk about, oh, it's going to result in lower yields and these kind of things. So when you look at your Structure, again, is it fairly straightforward chemistry? Or are there any nuances that make it a little bit more challenging than a traditional small molecule?

Yes. So I think part of the root of the question is people keep talking about number of chiral centers. First, Lilly is a great company. I do not have any doubt whatsoever that they will be able to manufacture the oral small molecule. They've already committed to building manufacturing plants at risk already to the state. We do have -- it was part of our design principle. So our design principles were efficacy, safety, but we also thought at the very beginning about manufacturing. And one of the elements that we did not want to have to deal with was chiral separation. So when we designed the molecule, we made sure that we would not have that. So that gives us -- that alone is a 50% sort of loss in step. So those are the elements that we thought about was to make sure that we could manufacture this at the scale needed today. And as Jun said, 6,000 metric tons today, 120 million patients, that's a big part of the U.S. market that we can provide to you today.

Okay, great. And again, you talked about the Phase II data that you reported in June. Maybe just walk us through that data and kind of the key takeaways. I mean, obviously, everyone is focused on weight loss, hemoglobin A1c, safety, tolerability, discontinuation rate. So all those key metrics, maybe just take us through those and how you think about the ultimate profile here and then obviously replicating that in the Phase IIb.

Yes. So in terms of efficacy, the number that everybody keeps watching, what we reported out was between 6.2% and 6.9% at 12 weeks. That makes us very competitive. We really -- the closest comparator that we give -- that we make is to orforglipron. Again, a lot of respect for that molecule. Where we -- one of the things that we were very pleased to see is that we have the ability to go up in dose. And so we saw that dose proportionality sort of continue. So what we'll be looking for in our Phase IIb, we have what we consider to be our first product being regular strength GSBR-1290, that's 120-milligram dose. We're excited to go up in dose. The other piece that came from the data that we released back in June, June 3 was -- and again, I know this is a small end, but we saw a 10% weight loss in 34% of the participants. That was significant. That tells us we're already getting into that upper range. And then in our second subset of participants, we saw 9% weight loss, so I think very competitive weight loss efficacy. In terms of tolerability, this is a question that we get a lot of times. Our tolerability numbers at 12 weeks is comparable to orforglipron. Everybody knows in this field, when you go from a 12-week study to a 26- or 36-week study, you can spread out the titration. And as you spread out the titration, the tolerability improves, goes down. So we saw that with orforglipron. We fully expect -- there's no reason not to think that's what's going to happen with us. We have made the decision that we're going to go in our Phase IIb to once-every-4-week titration. That's where everybody ends up anyway is 4 weeks when they get to the Phase III. Lilly in their Phase III, they're doing 4 week. We decided just to jump to, let's start titrating every 4 weeks.

And you did -- just remind us, you did weekly in the 12-week study?

Yes. In the 12-week study, and everybody looks at this 4-week study, 12-week study and then you get some 26, 36. 12 weeks, you have to do weekly titration. You don't have a choice. And why do we do 12-week titration? We have 3 months of tox data for it. So that's our window. That's why everybody does it. But it's rushed. There's no question. And we're really looking forward to doing the once-every-4-week titration and starting out lower as well.

Yes. Okay, great. What about liver tox is, obviously focused just giving or [ loading glipron ] and some of the questions there. And so as you guys look at your liver safety profile, just remind us kind of what you saw and how you think about that relative to some of the other drugs.

Yes, Terence, and this is a great question. What you always, as a chemist, what you always worry about with small molecules is tox. But particularly, when I mention tox, I'm talking about off-target tox, not the GI side effects that we consider to be on target. So what we saw was we actually had three cases of very low elevated signals. One was in placebo so we can easily sort of dismiss that. That was in the placebo group. The second individual had an elevated AST, no elevation in ALT. And then the other real clincher for us was they had a highly elevated creatine kinase, all telltale signs that it's coming from muscle. When we followed up, the individual had a very aggressive workout schedule. So we do not believe that was -- and again, with the no elevation in ALT, there was nothing coming from liver. And then the third participant, there was a mild elevation. We tested them 4 days later. It came straight back down. So we think it was just sort of a sporadic event, not dose-related because we looked at very carefully the full 12 weeks. And there was that small spike that came right back down. So no liver tox issues at all.

Okay, got it. The -- I think you're going to present some additional data here at Obesity Week, which is coming in November. Just high level, what else can we expect to learn beyond what you provided back at ADA?

Yes. So we haven't disclosed yet. Obesity Week, I think this year is going to be exciting. It's one that's -- it's a meeting that is growing, and so we will have some presentations there. More to come on that.

Okay, okay. Fair enough. The next step, as you talked about, is a Phase IIb obesity trial you're going to be kicking off here in the fourth quarter. Maybe just again, you talked about the titration and schedule difference. Anything else that we should think about as we think about translatability from that Phase IIa to the Phase IIb study, obviously, the duration is the other difference. But any other big features that we should be aware of?

Yes. I think probably the biggest is -- and again, I remember, we love our SAB. We have -- these are all thought leaders in the field of GLP-1s and metabolism. They were always repeating this mantra of start low and go slow. And so that's the philosophy of what we're doing. So we'll be starting out at 5-milligram dose. We will be -- in our standard dose study, we'll be going up to 120 milligram in steps of 4 weeks per titration step. So that's another sort of element. And then, what we're excited about is then doing an additional study on going up in dose as well because we have that room -- we have the safety window to go up. And we also want to explore how -- the goal of a Phase IIb is dose range finding, how high can we go to really sort of see the maximum efficacy.

And so that others, that would be a separate trial going above 120 mg right now?

Right now, the sort of strategy is we have our standard dose and then we have our extra strength dose.

Okay. And what would be the scope or timing around that extra strength trial?

To be determined.

Okay, got it. So would you wait to see -- is it fair to assume you'd wait to see some data from the Phase...

There's no reason. We're -- the way that we look at this, we are trying -- our goal is to get to market as fast as possible. And so we view speed as the essence. And so we're trying to figure out any way that we can accelerate things. And this includes parallel processing studies.

Okay. And again, you mentioned your animal tox is 1,000 mgs per kg. What does that imply for like an upper -- like how high above 120 mg could you go?

Yes, we are -- there's no way we're going to sort of even come close. We're already 150x over our safety margin. So we are -- we would never go up to the maximum level.

Okay. So how do you pick that level to go up? Do you just kind of do like push it as far as you can and see what tolerability is? Is that how you choose the upper dose or how do you figure that out?

Yes. Again, the goal of Phase IIb, dose range finding. And so we've done a lot of modeling, try to model already the 120-milligram dose, 12 week, we're already seeing between 7% -- 6.2% to 10% weight loss. And so we will -- we're still working on the exact sort of upper dose that we sort of want to go to. That's also a discussion with the agency. But we'll -- more to come on that.

Okay. And then I think you're also doing the tablet versus capsule, is that right?

We've already finished that.

Yes. So one for the Phase IIb, that's going to be the other...

We will do -- so we're -- one of the big -- again, one of the big pieces we're really happy about the summer was we're really happy with our tablet formulation. There's always this sort of risk. Our goal in that study was really just do we have similar PK. And we saw exactly the PK of the QD dosing once a day, the effects that we wanted. So we will -- all of our future work in obesity will be with the tablets.

Yes. Okay, understood. And then maybe just remind us of the kind of the diabetes portion, like where that stands and then how to think about the next steps on that product?

Yes. And so I've mentioned sort of regular strength. I've mentioned the sort of extra strength. The third is formulation that we're working on. And the way that we sort of look at this, there are some individuals that are more sensitive to GLP-1s than others. And individuals living with type 2 diabetes is 1 subset of that. Now why are they more sensitive? Many are on metformin. Many are on 1,000 milligrams a gram of metformin per day. They're on other medications like statins. So those are all things that can aggravate the GI system. And so we've been developing an alternative formulation for the more sensitive population. And so that includes individuals living with type 2 diabetes. And so we'll also -- that's another parallel study that we'll be kicking off as well, particularly for that population.

And that would be a Phase IIb as well?

That's still work in progress.

Okay. Okay, got it. And what would be the kind of time lines around that?

What we're trying to target everything for is completion by the end of '25. So we feel comfortable with kicking off our Phase IIb regular strength study with the data readout by Q4 '25. Same thing with sort of extra strength, and we're trying to tie in the formulation as well, so we finish everything by '25, teeing us up for the Phase III.

Okay. What -- and can you comment at all about what specific changes making to the formulation that would might get more amenable to this population?

Yes, there's a lot of difference. And again, formulation technology has been around for a long time. There's a lot of difference there. There's immediate release, there's gastric restriction, there's extended release, all of these things. So we're exploring. And we know that Pfizer and Lilly is also exploring. To me, I look at this as, it's all about the molecule, it's about the formulation and it's about the titration. You have to tie all these together to really have the patient experience be as good as possible.

Okay. Would there be another IP play there as well? Is that something that you'd consider?

Yes, absolutely.

Okay. Okay, got it.

And that's another point that we do think constantly about the IP in the space, again, very competitive, so both on all the levels.

Okay. Maybe just the next topic is just the Phase III development plan. So how should we think about that? And how does the Phase II fit into that? And anything you can share at this point around?

Yes, let me give that one to Jun.

Yes, and I can jump in there. So as Ray said, developing our molecule as fast as possible is priority #1. And so we are looking for ways to accelerate smoothly into a Phase III with our Phase IIb study, so that's ongoing. That's something that we're working with the agency on and we'll look for ways to rapidly go into Phase III. But Phase III also is going to be very significant, so partnership is something that we've talked about. It's an active process. We are looking for a strategic partner that will enable us to do late-stage development and commercialization. Obesity, metabolism is a space that's very large and as a primary care commercialization space. So we, from our standpoint, want to do everything that we can to be Phase III-ready. So the Phase IIb studies, the 120 max, the high dose formulation, drug-drug interaction studies, tox studies, manufacture Phase III registrational product so that when it comes to Phase III, we're going to be ready to move right into it. And with a partner, we want to do a lot of different parallel studies, right? It's -- this is a space that's not just going to be for obesity, but there's combination studies to explore as well in adjacent areas.

Yes, okay. Is it -- should we look to Lilly's orforglipron program as kind of a potential proxy? I mean, again, they're focused obesity, type 2 diabetes, but it sounds like you guys even maybe want to go broader than that. But is that like a good kind of first step that we should look at?

Yes. I think that's a good proxy. But the way we think strategics are looking at this, too, is the broader cardiometabolic play, right? So how does a GLP-1 as a backbone therapy fit in with other cardiometabolic combinations to really make a difference in the space. Not just about weight loss, it's about what difference you can make in other cardiometabolic diseases in addition to combinations with incretins, right? And that's going to go into GIP, GCG as well as amylin molecule that we're also excited about.

Are co-formulations a possibility like we saw in the cholesterol market?

Absolutely. So in addition to the formulation work that we're doing, we are looking at combinability of 1290 with, again, other agents.

And that's fixed dose combination, that's one example there.

Yes. Understood. Okay. Okay, great. What -- I mean, it might be too early to speculate on this front, but it's a question we get oftentimes just for the space. So just comparative arms for these Phase III trials, like as you think about the evolution, obviously, because I think Lilly has made the point, at least in type 2 diabetes now, it's very hard to do a CVOT, placebo-controlled study, right? They're doing Mounjaro versus Trulicity, for example, they use an active control. So as you think about that in the context of a broad Phase III, I mean, how does that factor into plans or is it still kind of too early to speculate?

It's a little early, but those are things that we're going to have to look at, right? I mean, what is the right comparator, whether it's an existing molecule that's out there, which is right now just an oral peptide, right? There aren't any other oral small molecules out there, right? So those are the things that we'll look at.

Okay. Okay, great. Maybe just moving on to the earlier-stage pipeline. Again, Ray, you touched on some of these. But maybe just what are the next milestones here? Particularly, I guess, there's some interest in the amylin access in general. So maybe just remind us of kind of what you've done so far? And then what are kind of the next milestones we should look for? And then kind of the related question is just Novo is going to have some late-stage CagriSema data. What are you going to be looking for to kind of learn more about this pathway?

Yes. So Jun took one of my favorite questions was on manufacturing. I'm taking this one. Amylin, so -- and again, for the investors sometimes, Ray is really excited about amylin. Does that mean he's not excited about 1290? I'm still excited about 1290. That is going to be a drug. Amylin is fascinating. So we have -- so what we have right now is an oral amylin small molecule. We had a big breakthrough about 5 years ago. Again, it was largely structure-based on structural biology and structure-based drug discovery. It is a much more challenging target than, I would say, the incretins, GLP-1, glucagon, GIP, bigger binding site, more complex biology. And so with all that, some people have even said it's not going to be possible to make a small molecule for amylin. And I can sit here and smile and say, we've done it so I know that is possible. We will have a DC by the end of this year. So we're quite excited about that. And we won't just have one DC. We're actually taking -- even when we were working in the early days of GLP-1, we took a multi-DC approach. 1290 just, it shined again with the safety window and the efficacy that we saw. So similarly with amylin, one of the differences, though, with amylin small molecule, it will be the first amylin small molecule in the clinic. To the best of our knowledge, we have one of the only oral amylin small molecules right now, but we know there's a lot of competition coming on this. So we shared in our 10-K earlier this year molecule [ ACCG 184. ] That was -- you look at the curve that was in there and we saw similar efficacy of [ ACCG 184, ] the amylin oral small molecule to semaglutide. When you add these two together, that was my sort of holy s***, 28% loss in the DIO mouse 28-day study. And so the synergistic effects are just really impressive. One of the questions that we're asking ourselves is, clearly, GLP-1 can be a monotherapy. We actually think amylin has the potential to be a monotherapy as well, so there's two different products there. What we like about amylin is this possibility of it can have better tolerability. It can have better selective weight loss. That's the hypothesis that's out there. But we also have the ability to combine them. And then whether GLP-1 1290 is our backbone or our amylin is our backbone, we can look at both of those, and there's a lot of opportunities in life cycle management and everything. So you can expect we'll have multiple DCs in this space, looking at a number of different sort of properties as we develop it, DC by the end of the year and expect to be in the clinic by the end of '25.

Okay. And what about the CagriSema?

Yes, so Novo will be releasing later this year to the CagriSema data. And we just saw data from Zealand a few months ago with their pure amylin molecule as well, which is very good data. What I'm looking forward to with CagriSema, one, efficacy, obviously, we want to see that. Tolerability is kind of a bigger question. I'm not so obsessed with the percent weight loss number. I'm more going to sort of be paying attention to the tolerability of CagriSema. I'm also quite curious what they're doing in that study is they're also, at the end of the study itself, they're going to be studying people, I think, from week 68 to 97. They're going to be looking at when people go off drug, how do they respond? And I think that's -- I'm glad that Novo has been very, very thoughtful about looking and asking these questions when people go off drug because I think this is a bad tangent. But over the weekend, I had a lot of friends over and several of them are on GLP-1s. Their biggest anxiety is what happens when I stop taking this drug. Am I just going to -- is it going to be this rebound effect? And how is that going to affect me? So I'm glad that Novo is asking this question. So that's the data that I'm looking forward to seeing. The cardiovascular data won't come out for a few years. But those are the pieces that I'm really looking forward to watching. I do think that it's going to be challenging with their co-injector system. I think that's -- and this is where I think a fixed-dose combination again, Jun said this when he took my manufacturing question, at the end of the day, this field of metabolism, this is a small molecule field. Just the sheer magnitude, the size of this market, peptides just can't keep up and the injectors, the plastic injectors, the waste, everything will finish, this is a small molecule game, and this is perfectly, I think, suited for an oral small molecule.

From a biological basis, is there -- what's the rationale why an amylin might not see the same degree of rebound as a GLP?

So different points in the sort of cascade. So I think about my cartoon, I'm a chemist, I'm not a biologist, but I think about how GLP-1 hits the beta cell. It releases insulin, it releases amylin. You have a different biological response. I think of it as GLP-1 is like a hammer hitting really hard. Amylin is softer in terms of its touch. I think that helps with tolerability. I don't know whether it's really going to help with the rebounding. I don't understand the hypothesis behind that. But I'm glad that they're asking the question, and it will cause people to dig in deeper into that. And they must have had a reason for sort of asking this question. Again, they're smart people. So we'll see when that data readout comes.

Okay. Maybe just moving on to the oral landscape. We talked about orforglipron. Danuglipron still, I think, TBD. We'll see some QD data next year. But maybe just the other players like Novo's Amycretin and the CB1 and then you've got Viking oral peptide and then Roche [indiscernible] asset. So maybe just remind us kind of differentiated features of yours versus those others that we haven't talked about yet that are coming kind of further behind.

I'll jump in here. So with regards to the oral GLP-1s, we categorized them in three buckets, right? There's the peptides that have been formulated into oral. We still think that those are going to be challenging because you still got to scale peptides, right, even though you're -- even if you can formulate it as an oral. And we've seen those challenges with Rybelsus, right, for instance. The other two categories, which you mentioned are the oral small molecules that are based on the danuglipron scaffolds. And then the third category is the oral small molecules based on the orforglipron scaffolds. The danuglipron field is very crowded. As you can imagine, there's a lot of competition in that space. That's an easier scaffold to work with and to derivatize. We worked on it ourselves. We continue to build IP around it and it's something that's still very active. 1290 molecule is going to fall into the orfor-plus Novo scaffold category, right? So we've got elements of orforglipron in our molecule to get to the efficacy. We've been able to demonstrate that in our 12-week studies. And we feel that's an area that's less competitive. There's just not a lot of other players in that space, given the complexity around orforglipron, but we've been able to overcome a number of those challenges there with our Novo scaffold. And we continue to build IP around it as well.

What about CB1?

Yes, exactly, Terence. I was just -- I've worked on CB1 for a number of years, and I'm fascinated by the whole endocannabinoid signaling system. But what makes me nervous is rimonabant was pulled. And now if you sort of reduce that peripheral, you reduce that sort of CNS effect, where is the effect coming from? That's one question. Second, the incretins just work so well. What do we have to achieve with CB1? Do you got to get even more weight loss? Is that really necessary? We know incretins are safe. They've been on the market now. it's now going on 20 years, 20-year anniversary will be coming up next year. And so to me, I'm obsessed with safety. Again, a drug that's going to be taken by more than 100 million people for extended periods of time, do you really want to take the risk on safety, incretins, GLP-1, amylin, I'm going to sort of include an incretin family? Why take the risk?

Okay. All right. Maybe just to wrap it up in the last minute, just what are you focused on this fall that you're excited about either from your own pipeline or other things we talked about CagriSema? Anything else internally that you have -- that we should have on our radar screen and externally?

Yes. I think the -- so obviously, the Phase IIb, kicking that off, very excited about that. The amylin DC, excited about that. The combination advancement there that we're going to start to see. And we didn't get a chance to talk about, we are excited about GLP-1 small molecule with glucagon. We think that is a product, particularly for liver disease. And so we think that there's multiple products, all of which are progressing. So again, we come back to -- we think we probably have one of the strongest and broadest pipelines in this area, multiple scaffolds, multiple targets, all progressing really, really well through the pipeline. So a lot of activity through the end of the year and 2025 is going to be really busy.

Great. Well, thank you, Ray, Jun. Really appreciate the time today. Thanks for joining us.

Absolutely. Thanks, Terence.

Thank you.