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

Great. Thanks for joining us, everyone. I'm Terence Flynn, the U.S. biopharma analyst here at Morgan Stanley. I'm very pleased to be hosting Structure Therapeutics. Joining us today from the company, we have the company's CEO, Ray Stevens. Ray, thanks so much for being here. Just before we get started, for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Ray, I thought I'd turn it over to you for some opening remarks before we go into questions. But thanks so much again.

Yes. Thank you, Terence, for having me here. So at Structure Therapeutics, we started this company really focused on accessibility, making medicines that can be transformative that can be made for the masses. And so at Structure Therapeutics, we're really focused on right now, the GLP-1 area. We have 3 different programs. Our aleniglipron is our lead program, our oral GLP-1 small molecule that we believe to be potentially best-in-class oral GLP-1, and we can talk more about this during the fireside chat. We have a data readout at the end of the year, both ACCESS and ACCESS II. Our oral amylin small molecule, as far as we know, this is the first oral amylin small molecule. That molecule is set to go into the clinic by the end of this year, and we think there'll be multiple sort of -- we're focusing on multiple oral amylin small molecules, both DACRAs and SARAs. And then we're also very focused on combinability, being able to combine our oral amylin or our aleniglipron, our oral GLP-1 with other medicines, whether it's combining GLP-1 with amylin, GLP-1 with GIP or our oral amylin with the PCSK9 or an SGLT2. So we think this is really -- we think that we're one of the pioneers, one of the leading companies for oral small molecules in this very important space.

Great. Well, we'll dive into a lot of that. I guess, just at a first at a high level, a lot of focus on the obesity market and kind of the forward outlook. I think the way we model it is a 70-30 split injectables versus orals. Lilly has made some comments recently about their view of the oral opportunity. You guys are obviously investing in orals. Maybe just provide us with your latest outlook on how you see the market evolving when we do have more options, both in addition to what we have on the injectable side.

What's most important is patients are finally going to have options, and this is really, really important. We know the injectables, they have really started the whole field, tremendous breakthrough medicines. I think it's going to be oral small molecules that are really going to expand it. So the way that we look at this is what's really going to drive the market growth, primary care physicians. Primary care physicians, what do they want? They want medicines. They largely sort of want oral pills that they can prescribe. The #1 question we ask a lot of physicians as we think about our next-generation molecules, what do you -- help us design the next molecule. And they say the #1 thing that they want for their patients, flexibility. They want to give their patients flexibility so that if they are feeling any GI side effects, they can reduce the dose or cut a dose in half. So we think about all those things. So in terms, Terence, nto your question, we view the market, patients are going to have options. We know the discontinuation rate of going from an injectable. Right now, the injectables are 50% after year discontinuation rate. We think that's a really important market to address. And then again, coming back to the primary care physicians, we see 70% of the market will be from primary care physicians. They will prefer the oral pill approach to at least start. And then as the field continues to evolve, we may see if they want more weight loss, they may decide that they want to switch over to an injectable or those already on injectables, they may want to switch to an oral. So again, those are other opportunities that we see going forward.

Okay. Great. Maybe we'll talk about your lead asset, aleniglipron now, an oral GLP-1 non-peptide. As you mentioned, the current option on the market from Novo is a peptide molecule. And so maybe you could just provide us a view on your profile and some of the Phase IIa data you've generated before we get into some questions around the upcoming data.

So our Phase IIa data that we released would have been now about 1.5 years ago, we announced that Phase IIa study was a 12-week study. So weekly titration where we go quite rapidly. We had 6.2% to 6.9% weight loss. We had low AE-related discontinuation rate, no safety issues at all. And so we're very pleased that really set the foundation for us to be able to sort of go into the Phase IIb and to design the Phase IIb. What it also showed us was 120 milligrams was really the maximum that we could go to in a 12-week study with weekly titrations. And so as we started thinking about our Phase IIb, that's why we split it up into both an ACCESS and an ACCESS II study, where the ACCESS study is focused on 120-milligram dose, the ACCESS II allows us to go up to even higher dose to potentially see even more efficacy. So we'll go up to 180 and 240-milligram dose.

Yes. And the duration there, those are 36-week studies, right?

Correct. That's correct.

Okay. And maybe just remind us the titration. I know there's some differences in terms of the titration versus you mentioned you're doing pretty rapid titration in the first study. So how does that change in the IIb?

Yes. So when you have a 12-week study, again, you only have roughly 6 weeks that you can really titrate up and then you have 6 weeks for being on the maintenance dose. So you do have a very rapid titration. What we've also learned from the peptide field is titrations work best for this class of medicines really roughly every 4 weeks in titration steps. Peptides have shown us this again and again and again. As we look at orforglipron, they've done the weekly titration in 12-week study, 36 weeks, they went to once every 2 weeks to once every 3 weeks. And then when they went to Phase III, they went to once every 4 weeks. So what we decided to do in our Phase IIb was to go straight to once every 4-week titration step. We think that's what the body really needs to adjust. We think this titration scheme is really the right solution, part of the solution for addressing tolerability.

Okay. And what are the specifics on timing? Like are you going to release both of these at the same time? Is this a sequential readout? How are you thinking about the timing of those readouts?

Both ACCESS and ACCESS II studies will read out at the same exact time at the end of the year, 36-week studies. Yes. So we're looking forward to that towards the end of the year.

Can you give us -- is it this like December readout, January? Is that....

I get that question from investors all the time. They want to know what is the exact sort of date. What we're guiding everybody towards is the end of the year.

End of the year. Okay. All right. Fair enough. And then how about the amount of data in the press release? I know there's a lot -- oftentimes a lot of debate about how much you can present versus having to withhold for a medical conference. So maybe just walk us through kind of current plans in terms of how much data is going to be in the actual press release.

Yes. So we'll be releasing, obviously, the efficacy data. Everybody will be looking for that data. We'll also release the tolerability data and very importantly, the safety data.

Okay. And on the estimands, is this one where you have both of those estimands in there? Or how do you think about that...

So we're reporting the top line data. We'll be reporting the primary estimand.

Okay. Okay. Okay. Got it. Okay. Great. I guess the other question we get a lot, and I know you probably got this a lot today, is just the benchmarking data. So we look at orforglipron, there are some changes made Phase II to Phase III. As we benchmark your data, what's the best data set that we should look to? I think in Phase II, they had a 36-week study showed like 9% to 15% roughly, placebo lost 2% or something. Is that a fair comparison as we think about cross-trial comparisons?

Yes. So again, the usual caveat, cross-trial comparisons are difficult. We think that the right benchmark is 36 milligrams at 36 weeks. So really easy to sort of remember that 36, 36. The -- there's really 2 data points there. So we think in terms of efficacy, we have the Phase IIb study from orforglipron at 36 weeks. So that's sort of one number. And then we will see next week at ESAD, September 17. We're looking forward to seeing that number. We'll get a chance to see in the 72-week data, we will, like most people will look at the curve and draw a line from 36 weeks and see what is that number. In many ways, we think the Phase III data is a better comparison on efficacy because it's the same titration scheme once every 4 weeks. They're also on maintenance dose for the same period of time as our aleniglipron. So we think that's really the right benchmark for efficacy, but we're saying it should be a range, both the Phase II data, 36 weeks, 36 milligrams in the Phase III taking that cut. It's more challenging to do that in tolerability. And the reason for that is in the Phase IIb, they had a very -- a more rapid titration just once every 2 to 3 weeks. That's why I think they saw sort of the higher efficacy. With the 4-week titration, we're not going to get a cut in the 4 week -- in the Phase III data. We're not going to get that cut at 36 weeks. We really just get the top line data at the end. We will see the time course. They typically present that data, how tolerability changes over time. We see most of the events happen at the beginning and then it gradually comes down. So that's going to be a little bit more difficult. So we think the right comparison is probably the Phase IIb where we have the full data set of 36 milligrams at 36 weeks. The one other variable that does come into play is with orforglipron, as they -- in their Phase IIb, going to the Phase III, not only did they extend the titration, but they actually also came down in dose. Our goal in a Phase II study is really to find the upper -- what is the dose -- how high can we go in dose. We don't -- we know when we go to Phase III, we always come down in dose. And so that's one more variable that we can -- as we think about Phase III, we have that opportunity to go down in dose. We're really looking for the upper dose limit.

Yes. So if I look at their Phase II, the orforglipron discontinuation rate, it looks like due to AEs, I think it was 10% to 17%. So that's kind of the range, I guess, what you're saying is don't look at Phase III because that was a longer study. If we look at their Phase II, again, it was 10% to 17%. So...

Yes. I think that -- so in the Phase IIb study, they had 2 different -- at the 36 milligrams, they had both a once every 2-week titration, and once every 3-week titration, I think the numbers are 10% to 21%, the numbers that I recall. So we think that it should be in that range.

Okay. Great. And then I think the other thing that you guys announced relatively recently was like an extension on ACCESS II because I think you've talked about the titration period, you're ramping up, and so you won't be at the top dose for a long enough time. And so as a result, you added on another, I believe, 8 weeks on to the back end of that study. So maybe just talk to us about setting expectations for ACCESS II given that dynamic that you're still in like the ramp and so patients aren't going to be at the higher target dose for the same period of time. It's not truly like 36 weeks, I guess.

Okay. There were 2 different announcements that we made. So first of all, we did announce an open-label extension on the ACCESS study. And that's really being driven by the challenges, including the placebo group in these studies, you know that you're in the placebo group within the first 4 to 8 weeks because you're not seeing the sort of weight loss. And so we think this is something that the whole field continues to sort of work on. So we decided to add that open-label extension for those individuals that are in the trial, they could get access to it in an open-label extension. In the ACCESS II, those are 2 different studies where we're looking at 180 milligrams and 240 milligrams. And we're hoping to see that increased potential in efficacy. What we're really looking for are 2 things. One, are there tolerability changes as we go to 180 and 240. So an individual who has been on 120 milligrams, as they go up in dose, do we see a change? And that's something that we just announced last week that our IDMC has met. They've approved us going up to 180 and 240 based on what they've seen from safety, both on target and off target. So that's one of the goals. In terms of efficacy, we're really looking still for directionality. The question that we're asking is, should we go to 180 and 240 at -- in the Phase III. And so if we see directionality changes, improvements in efficacy, then that will give us the confidence to increase the dose in the Phase III study.

You're saying up to 180, 240.

So we're doing 180 and 240. So we'll be at 180 for 8 weeks and 240 at 4 weeks. And then with this extension, it gives us an additional 8 weeks. Because we have the extra time, we decided to take that time to give us added information so that we can answer that question as best possible for the Phase III.

And will we get -- when you guys put out the data, will we get those curves so we can look at how this slope compares for those higher doses?

So what we'll be reporting on is, again, the efficacy, the top line data will be the top line. The curves will probably sort of reserve that for a future meeting. But we'll give the -- obviously, all the efficacy numbers, the tolerability numbers and the safety numbers.

Okay. Okay. Great. And maybe the other thing, I think, maybe just speak to what this implies for the safety, tolerability of the program as a whole, if you guys are going forward with these open-label extensions. You also announced another series of trials. Like what's the other takeaway in terms of the, I guess, big picture, safety of aleniglipron here?

Yes. So we did announce that we have 3 additional studies coming on, 2 of which actually have already started in Q3. So we have the -- what we call, the switch study or maintenance. And the question that we're asking here is if you're on an injectable and you want to switch over to an oral, can you go at a sort of same high dose? Or do you have to retitrate and start over again? We don't know the answer to that. So we want to do that as part of the sort of switch study. That's being done again, we're -- with the increasing confidence of aleniglipron, and again, we think we have potentially best-in-class now that we've seen all of the orforglipron data, that's an important question to ask. The second study that we announced was a body composition study, the old mantra, never ask a question in Phase III that you haven't pretested before. And so we want to add that body composition study. So that's the second study. That's a 40-week study. And then the third study is a type 2 diabetes. We've done -- gone in type 2 diabetes overweight up to 90 milligrams. We have not gone to 120 milligrams or 180, 240. And so we want to -- in the label, we want the label to be as broad as possible, and we don't want to exclude individuals living with type 2 diabetes. Many of them, 90% are overweight. And so by doing this diabetes study at the higher dose, it will allow us to -- it will inform us to design the Phase III appropriately so we can have the broadest label possible.

Okay. Great. One -- before you go to the Phase III program, I just wanted to ask one I forgot to ask is the baseline characteristics of your study. So maybe just remind us, Phase IIa to Phase IIb, any baseline characteristic differences for your study or then when we're making these cross-trial comparisons to the Lilly orforglipron data, anything that you'd call out high level that we should be mindful of when we make these because I know sometimes it's baseline BMI can matter, geography can matter in terms of tolerability sometimes. So what other things should we be mindful of when we make these kind of comparisons?

Yes, both ACCESS and ACCESS II are both being done 100% in the United States. The baseline characteristics will be similar to other 36-week studies. So we do tend to go with higher BMI. The question that we're really asking is, what can this drug do? How well can this drug work? And so we really want to test it in that higher BMI population. So we look at that. With the demographics, what we look at is what is the demographics of the United States is the U.S. study. So we try to align that to the U.S. census numbers.

So that -- and I think in these obesity, historically, there's actually been more females than males that enroll. So is that what we should expect as well?

Yes.

Okay. Okay. Got it. Okay. Okay. Great. On the Phase III program here, maybe just high-level thoughts on kind of design, scope, comparator arm. I mean those are all the questions I think people are focused on, partly because of what you noted, there's other options out there now for patients. So how do you kind of design the program but also manage the reality that if there are patients on placebo that are not seeing the weight loss, then there are other options available to them. So how are you thinking about navigating that environment?

The FDA in January gave really good clarity as to chronic weight management studies. It's the first update since 2007. And as part of that sort of update, 4,500 participants, 1,500 on placebo. So we have clarity of that. No cardiovascular outcome study required. That was also, I think, good news. It really highlights the FDA is looking at obesity as a pandemic. It's a real problem that needs to be solved. And so they're trying to see more of these medicines get developed and get to market as fast as possible. So we have no cardiovascular outcome study requirement. The all -- we're doing all the sort of Phase III preparation work right now, readiness. That's all underway, and that includes these additional studies that we sort of have ongoing. So we're doing all the prep work there. The placebo group, I think that this is a growing challenge that the whole field in general is seeing. And so we have to sort of consider this. Part of the reason we're doing the open-label extension on our Phase IIb is to learn from that and how that can sort of help guide us as to how best to do the Phase III clinical trial.

And then one other thing that I think has been coming up is there's this announcement of the FDA priority -- FDA Commissioner priority to review voucher programs, new program. Is that something that you guys are thinking about at all? Or are you considering? Again, I think it definitely gets speculated that maybe there could be obesity drugs that could go down that path. I know you guys aren't there yet, but it seems to me like another iteration of the breakthrough therapy designation program, but any thoughts on that?

Yes. So thinking about oral small molecule GLP-1s, there is a lot of tailwinds that we've had in 2025, tremendous tailwinds. And I include the orforglipron data as part of those tailwinds. We see that WHO has now included GLP-1s, which I think is an important step, the priority voucher. The new FDA guidelines was, I think, a really good step forward to defining what's needed to address the obesity pandemic. And so I think all of these tools and all these changes, there's a lot of frustration in the field in drug discovery in many different fields. But I think in the field of obesity, recognizing the pandemic sort of status nature, recognizing the problem and recognizing there are some solutions. They need to be developed as efficiently as possible and to give the patients as many options as possible. These are all tailwinds that we're fortunate in today's age, we're fortunate to be able to ride on.

Yes. And then maybe the last one before we go to the rest of the pipeline is just thoughts on a potential partnership collaboration here. Obviously, the data is an important card to turn over, but how do you think about this? Because obviously, a Phase III program is going to be pretty broad in scale when you think about the different -- beyond just chronic weight management, you're talking about diseases like OSA, chronic kidney disease, these kind of things. So how do you think about partnership collaboration?

Yes. Right now, Structure Therapeutics, we are laser-focused on the data at the end of the year. At the end of the day, data speaks, data is going to tell everything. So that's where -- at Structure Therapeutics, that's where our head is at. We also know that we have to do a lot of Phase III preparation work. And so we're making sure that aleniglipron is as prepared as possible for those Phase III studies. We continue to have dialogue with many different strategics, and we'll continue having those dialogues, but we're laser-focused on that. Coming back to your question about there is so much opportunity. Again, with the FDA, the guidelines are very clear in chronic weight management. And we feel comfortable doing a chronic weight management in Phase III. What we cannot do is 8 more Phase IIIs. And so we would like to have a strategic to really help us expand the number of different indications that aleniglipron can go into. And most importantly to us, what really drives us at Structure Therapeutics is accessibility. We want to be measured by the number of people that get access to these medicines. And these medicines help that we believe having a commercial partner is really, really important. And so that's something that we prioritize.

Yes. And maybe I'll sneak another one in is just the scalability. I think we kind of alluded to this earlier, but you guys are non-peptide versus peptide. So maybe just remind us why that's important, what that means in terms of scalability, scope because, obviously, there were some challenges last year on the injectable side in terms of capacity. And so why is scalability important? And what -- how do you think about that from aleniglipron standpoint?

The peptides have been breakthroughs, and they really established, created the field itself. So I think that's been tremendous. Small molecules, I think, really will expand. And the reason for that is with the peptides, we've seen my understanding of sales, if you look at the script data, it has been somewhere around 5 million. Now we don't know the compounding numbers, but from Eli Lilly and Novo Nordisk, it's been in that sort of 5 million range, and it will grow to sort of 10 million. We know in the United States alone, the need is 100 million. It estimates by 2030, it will be 25 million to 30 million will be on this class of drugs. So how do you meet that challenge? With small molecules, right now today at Structure Therapeutics, we have the ability to make 6,000 metric tons. What is -- what exactly does that mean in terms of patients? We can make enough material today to supply the needs of 100 million patients at 120-milligram dose. And so small molecules, traditionally, they've always been the solution for making a medicine at scale for the masses. And so I think that small molecules and aleniglipron included in this, it's really a medicine that's been made for the masses to have the large to really hit that. And then I think about -- we just talked about U.S. numbers. I really worry about the global numbers. The estimates are by 2030, 1.3 billion people will be overweight or obese. This is, again, is a growing pandemic. How do we fit the needs for that? One of the things that I hope changes as we continue this dialogue in this field is we transition from focusing on a specific weight loss number to focusing on how can we really help all the people that need these medicines. So I think that's where the oral small molecules, they really have that potential. The reason why I like the orforglipron data that we've seen this summer is it's a molecule that can be made for the masses. 70% of people need 10% weight loss. They don't need 25% weight loss. And so I think that, that's where at Structure Therapeutics, we're focused, both in terms of having a potentially best-in-class oral GLP-1 with aleniglipron, but also importantly, the combined ability. And to the last point of small molecules versus the peptides, small molecules give us that ability to combine whether we're trying to combine it with our oral amylin with our oral GLP-1 aleniglipron or combining with a PCSK9 or an SGLT2 with our GLP-1. We have that ability for combined ability to really do all that for life cycle management and product evolution.

Great. That's a good segue to your next asset, which is 2671, your oral amylin, which you talked about a little bit at the beginning here. But maybe just remind us why amylin is interesting, like why are so many companies focused on amylin? And then from your profile, what are you trying to deliver? Because we've seen some data now from some of the injectable amylins. Novo had some data for their cagrilintide. Lilly had eloralintide. We haven't seen anything from the oral, obviously, yet. You guys are going to be one of the first there. So what's the kind of target profile? So why is amylin interesting? And then what's the target profile that you hope you can deliver in the clinic?

First, the reason there's a lot of interest in amylin is, is there the potential that it can be more tolerable than the GLP-1s and selective weight loss as well. There's been this discussion between selective fat loss versus muscle loss. So these are the 2 things that are being probed in studying this. There is right now a number of different molecules. We call them both DACRAs, dual amylin calcitonin receptor agonist, and SARAs, selective amylin receptor agonist. And I'm often asked the question, which is better. We started out working on a DACRA. We use cagrilintide as kind of our benchmark to try to achieve that. So our first molecule, 2671 is a DACRA, a 1:1 ratio between amylin and calcitonin. The preliminary data that we have to date, preclinical studies looks really encouraging. And we also like the data that Novo Nordisk has shared on cagrilintide. It's been in a large population. It's a safe molecule. We know this mechanism is safe. So we like that. We like the decrease of -- the improvements in tolerability have also been shown. We also like petrelintide from Zealand, we're watching very carefully. Eloralintide is a more selective molecule for amylin. And so at ADA this summer, we were intrigued by that data. So what we're trying to do with the oral small molecule, same thing that we did with the GLP-1s and same target product profile as well. We want to see -- we want to develop an oral once-a-day small molecule medicine that can be made for the masses with this thesis that it may have potentially better selectivity on weight loss and a better tolerability profile. So we see 2671,our oral amylin first-generation molecule as a potential for monotherapy. And then we also like the -- we think about the combinability as well.

And what can you say about like once a day versus twice a day at this point? Any insights there?

Yes. One of the things that's really important is from a target product profile, we believe it needs to be a once-a-day drug. And so we think about -- there's often a question about the PK parameters, half-life. What we ask ourselves is we're really driven by where is the efficacy coming from AUC. The -- we care about the C trough. What is the exposure at 24 hours to make sure that it is truly a once-a-day drug. So we monitor that very carefully. We care about that. And so we'll use the same exact parameters that we use with GLP-1 with amylin to make sure that we have coverage at 24 hours. So it is a once-a-day dosed drug.

Okay. Great. And maybe the last one on this topic is just as you think about the next step after a Phase I, would you pursue both mono and combo? Obviously, you can do that internally. You could go an oral with an injectable. How would you think about like the scope of opportunities for like a Phase II program, just given there are so many different options?

Yes. There is -- and I'm glad you used that. There's a lot of different options. So again, we view our amylin both as a monotherapy for moderate weight loss. And one of the big questions we always ask physicians, again, about the next-generation molecule. They say, we want good weight loss, but we really care about tolerability. And so with that as a driver, we think about the amylin profile as a monotherapy. If you want more significant weight loss, we've already seen by combining these 2 mechanisms, then we can have that combination, we can have that increase in weight loss. So we see our aleniglipron together with 271, and we've done a lot of preclinical studies. We just had a poster presentation at ADA this past summer, showing that synergistic complementary sort of effect there. So we see it in combination. And then not to sort of forget, we also have the GIP and the other molecules, small molecules where we can also do combinability to give us even more enhanced effects.

And what's the time line on those other targets, GIP, APJ, those ones, how far out are we from getting one of those to a lead?

Yes. So I'll take -- so we have leads for all of them already. We really prioritized amylin given the opportunity that we're seeing. And don't be surprised if we announce another DC for amylin. We think being the first mover in this space, it's important both to increase our probability of success. We will put multiple amylins into the clinic. We think that's really important, multiple chemical scaffolds. We'll also put both a DACRA and a SARA, as we were talking about before, into the clinic. We really want to sort of place multiple bets in the amylin space. And then we also think about the, again, the combinability aspect of it. So 2671 will go into the clinic at the end of this year. Again, don't be surprised if we announced another DC on amylin. And then GIP, GCG, glucagon, we continue to process those. We've just really prioritized amylin given the data that we have to date.

Okay. Great. Well, maybe I'll just turn it over to you to wrap up here for us, Ray, but anything you want to leave us with as we think about the forward, obviously a very busy time for the company.

Yes. I think in closing comments, obesity is a pandemic. Patients need options. Patients really need options. I think oral small molecule pills really will be part of the solution that will help the world community. So I think this is a really important aspect. At Structure Therapeutics, we've really tried to focus on accessibility, again, making molecules that are available to large populations. We think that's the right place for us to focus. But I'm most excited about the whole field in general, having these different options and progressing these medicines to really get them to the patients and the physicians who are all waiting.

Great. Well, thanks so much, Ray. Pleasure having you here, and best of luck.

Absolutely. Thank you, Terence.

Thank you.