Tourmaline Bio, Inc. (TRML) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining our second day of our healthcare conference here at Piper Sandler. Really excited to be featuring the team from Tourmaline Bio with us. Before I get started, Gerhard, I know that Sandeep was not unfortunately able to [indiscernible] able to do the fireside chat with us. For investors who maybe have not had a chance to meet you, if you could just maybe tell them a little bit about your current role and background and then we'll jump right into the question.

Perfect. Yes. Thank you very much, Yasmeen and thanks so much for having us and Tourmaline here at the fireside chat. My name is Gerhard Hagn. I'm heading Commercial and Business Development at Tourmaline Bio. I have been in the biopharma industry for 24 years. I'm a PharmD by training, gone through numerous commercial roles, market access had the chance to launch 11 products in the last 11 years, I spent an inflammation immunology. So I'm very pleased to be here at Tourmaline, where we are already in late-stage development and ready to go into a number of new indications in the near future. Sandeep sends his regards, our CEO, Sandeep Kulkarni, had surgery as you mentioned, so he cannot be here. But I'm honored to be able to represent Tourmaline Bio here today.

Great. Thank you. Maybe we'll start off kind of talking about IL-6 the therapeutic class and talk about the differentiation of towards 006. So I think a lot of investors recognize when they look at the landscape of IL-6 as there for approved products and 10-plus indications. So I think the question that comes up is like what is the differentiation of 006 that offers for this class versus others? And what is debuted in this differentiation to talk of what's differentiated in this product.

Yes. And I do want to start just maybe with a few words about Tourmaline Bio because we are a relatively young company, on the one hand, founded 18 months ago. We are -- but we are also late stage. We're also really in pivotal stage. So late-stage biotech focusing on inflammation immunology based here in Manhattan. And we've recently gone public through a reverse merger, started our first pivotal trial and have capital that will help us to operationalize until the end of 2026, which is well through our core inflection points in 2025. So this is a little bit out of the company before I jump right into the IL-6 class, which has been around for some time. I look at it this way, Yasmeen, there was a first wave of IL-6 blockers. Actemra, for example, mainly focusing on Rheumatology early on, and been quite successful. But now we are in the midst of what we call an IL-6 renaissance because there are significant new learnings and insights and many of those learnings and insights are really based on clinical data and human data, where we see signals of efficacy with IL-6 in a number of new indications. First and foremost, the 2 that we picked, which is thyroid eye disease as well as cardiovascular disease, but there are maybe more that we're actively exploring. So we're very excited about that. Our monoclonal antibody came from Pfizer and has what we believe is a best-in-class potential and properties that are really differentiated. Number one, it's a long-acting monoclonal antibody, very long natural half-life, which will allow us to dose every other month in thyroid eye disease subcutaneously and in cardiovascular disease even quarterly. Because it is fully human, we have very low immunogenicity to date. And it has a very high affinity binding affinity to IL-6, which would allow us to administer it in very small volume, less than 1 milliliter. So quite excited about that, and that all has come from Pfizer with a large efficacy and safety database of roughly 450 patients already dosed, which became very evident actually in our interactions with the FDA that safety data is already robust and should allow us to go really fast as it does because we are now going into pivotal TED and starting a Phase II in CV.

So you noted the asset came from Pfizer. If you could talk about what was the reason for Pfizer to maybe divest this asset one? And then two, if you could just briefly touch on the patent state of this product.

So it's actually quite interesting for me personally because I had spent 20 years of my career with Pfizer, and I happened to be in the inflammation immunology business unit at that time. Look, it's very common, as you know, large companies prioritize their assets regularly. Pfizer as well as many others. And at that time, the company prioritized the oral JAKs. Celgene was just launched in the U.S. was about to be launched ex U.S. And Pfizer at that time had a number of oral JAKs, JAK1 inhibitor, JAK1/TYK2, JAK3, IRAK4, just to name a few. So the prioritization was clear oral JAKs and monoclonal antibodies were deprioritized. And what we also see time and time again with large companies that some of these molecules are deprioritized for strategic reasons, but not necessarily for value reasons, as we've recently seen with the Roche deal and Telavant that also was an ex-Pfizer product. So we brought in a monoclonal antibody that is highly differentiated, and we're excited to be now in this late stage.

And now let's move on to sort of TED, which is one of the lead indications you're pursuing. What led you to out of all the options of indications that eye and eye actually pursue to go for TED first?

Yes. It's a really good question. And as I said, we believe that we are in a true IL-6 renaissance where there's just many more opportunities now based on clinical data where IL-6 can make a real difference for patients. And when we assess the indications that are possible TED really jumped out because we found that there are over 40 publications to date and growing with tocilizumab use in thyroid eye disease. So over 300 patients dosed and treated, most of them were actually steroid-refractory, steroid experienced already. And once we consolidate all that information, we saw a clear sign of efficacy, proptosis reductions in the ballpark of the approved asset, but more than that, right, autoantibodies reductions, the inflammation, obviously, was taken care of with cash reductions and a very good safety profile. So we consolidated that and saw this as proof of concept. And when we approach the FDA, these meetings are very productive. We couple that with the extensive safety database that we already have in-house, and we were able to go straight into pivotal, which we now have initiated recently.

Okay. I guess for investors who recognize TED has been a very lucrative indication, high unmet need, being able to track the successful launch of Tepezza. They're also seeing a number of products entering development. So maybe could you drill down and understand like given the current -- what is the differentiation of TOUR006 it derived versus the approved product and versus the products that are in development for TED?

Yes. Thyroid eye disease is a very exciting market as I look at this for a number of reasons. So Tepezza certainly had a successful launch initially but also now entered into the third and fourth year into a weird launch uptake curve, which was actually declining again. And as we are listening to physicians and payers and patients and talking to thought leaders, it becomes very clear that Tepezza has reached a certain percentage of patients, which is 20% as publicly stated by Horizon and Amgen. But 80% of the moderate to severe TED patients in the U.S. are not receiving Tepezza, which really begs the question, why not? When you dig a little deeper and you look into the treatment journey and where do these prescriptions come from became very apparent that many of these prescriptions come from oculoplastic surgeons who come relatively late in the treatment journey. So general ophthalmologists, endocrinologists do not prescribe a lot of Tepezza's. So as a commercial person, I look at this and say, there's a lot of white space for new innovation, new MOAs to come in. The market is ripe for new innovation. And the limitations that we are seeing, and this is already explains probably some of those patterns are the side effect profile that has now emerged in the real world for the [indiscernible] class most likely as well as a lack of durable response, which is also emerging in the real world. Coupled with an IV complexity that is not so easy to deal with for patients and for physicians. So the way we think about TOUR006 is that based on the extensive clinical data that already exists with tocilizumab, we're now running a Phase IIb trial in first-line thyroid eye disease and will generate data that obviously will show proptosis reduction because that's the primary endpoint by the FDA, but much more than that. Many patients suffer from more than proptosis. They have high inflammation pain, diplopia. And the way IL-6 works has the potential to take care of many of those symptoms, therefore, have a much broader response as well as a much more durable response, coupled with a really good safety profile, we believe. And last but not least, the long-acting properties of the monoclonal antibodies should allow us to dose every other month for a total of 3 injections for the majority of patients. So comparing 3 subcutaneous at-home injections to the IV infusions. All of that package together, we believe should position us well in first-line use.

Could you maybe talk about, based on the market research you're seeing what the current rates are on fear of hearing loss or incidence rates that are occurring like do you -- like that is one of the key safety signals that has made physicians worried?

Absolutely, absolutely. And if you allow me, I don't want to specifically comment on percentages, but it is not uncommon for new mechanism of actions to enter the market being used in the real world. And after you use it in more and more patients that side effects, maybe a lack of durable response, these things are cropping up and popping up as they now do with Tepezza, which led the FDA to change the label. So the hearing impairment, including potential permanent hearing loss is a warning and precaution and it is believed to be an IGF-1R class effect. So which also leads me back to the IL-6 class even though we are now in the second wave, the fact that we have so much experience, 1 million patients dosed with IL-6 leads me to believe that we know the safety profile really well, and there is less of a chance that new signal will come up because the experience is so vast already.

No, that's very helpful. Could you maybe talk about hear you've initiated your TED study. What is -- what are the doses you're moving forward? What is the size of the study? And when do you expect to sort of have a half top line data?

Yes. So let me start with the last point, the top line data first half of 2025. That is really important. So we're now actively enrolling. And again, this is the first of 2 pivotal trials. So we're very excited about that aligned with the FDA. We have it powered in a way just to show proptosis response that we believe will be clinically really meaningful. So we have 78 patients across 3 arms. We're studying 50 milligram and 20 milligram versus placebo and really important through 3 injections, months 0, 2 and 4. And if this works out, most of patients should have their TED controlled and then there's an extension arm for proptosis nonresponders, which is also important because many patients with thyroid eye disease have very severe symptoms, but not necessarily proptosis. We're hearing from many treaters that diplopia inflammation and pain is really important, even though proptosis may not be so obvious.

Okay. Have you guys publicly talked about what the study is powered for?

No, we have not issued the guidance on this specifically, but we will do this in the near future.

Okay. Got it. The other question will be as soon as you have the data in the second half 2025. Is it at that junction that you can start engaging with the regulatory agency to discuss sort of the second pivotal design? Or is there an opportunity given the unmet need to just start the discussions earlier and come back to the investor community and share sort of more color on the path to approval.

So just to clarify, it's first half of 2025.

Oh sorry first half I apologize.

First half of 2025 when we expect data from the trial that we call spiriTED and actually, we've had our interaction with the FDA already in May of this year. And we aligned with the FDA on our clinical development program for thyroid eye disease, including this Phase IIb as well as the future Phase III. So we are ready to roll. And those meetings have been productive with the FDA, and we are now actively enrolling patients.

Great. Thank you. Maybe now we transition to ASCVD, the cardiovascular opportunity. I guess, could you maybe help investors understand what do we know about IL-6 and ASCVD? And why, again, you chose 006 for this indication?

Yes. No, thank you for turning the attention to CV because we're very excited about this opportunity. I've just come back from AHA in Philadelphia, and inflammation is becoming a much better known risk factor in atherosclerotic cardiovascular disease. So just from a big picture point of view, right, for decades, there have been numerous risk factors identified LDL obesity, diabetes, hypertension for all of which we have tools, right? Cardiologists know how to treat, how they measure inflammation, interesting enough, has really emerged for over a few decades now as a very important risk factor. And this is not just based on translational research, but also genomic data as well as outcomes data that clearly shows that IL-6 or CRP, which is the downstream biomarker is a very important risk factor for cardiovascular events, including CV TED. And in some studies, it really specifically called out that if you lower IL-6, you can achieve risk reductions that are extremely meaningful. So the excitement is there for this field. And I think the evidence is aligning. What we don't have yet are effective and safe tools. And I think this is where TOUR006 can come in as well as one other IL-6, which is being investigated by Novo Nordisk. This is really important because they are now in Phase III already, and there are 3 large Phase III outcomes trials currently enrolling patients with the first one reading out in 2025, it's called the [ SUS ] trial. What we are doing now with our monoclonal antibody is to go into a Phase II biomarker trial and show that our molecule reduces CRP very effectively, which we believe is well and doing this on a quarterly administration cycle, whereas Novo Nordisk is monthly. So come 2025, our goal is to look at the Novo Nordisk data. We expect strong efficacy data based on what we've seen so far with a monthly IL-6, and we want to be Phase III ready with our quarterly IL-6 in 2025.

Could you maybe talk about what you hope -- I think a lot of investors may have not had a chance to look at the [indiscernible] study. Could you talk about what are you -- what expectations are to see in that trial?

Yes. And I go back to the outcomes trial, where we already have data, which is the CANTOS trial from that Novartis ran with canakinumab, an IL-1 inhibitor which downstream inhibits also IL-6. And the outcomes that we saw in that study was an overall risk reduction of the total population of MACE of 15%. Now if you think about the PCSK9s and many other outcomes trials, including the SELECT trial with semaglutide, 20% is more of the benchmark. So that alone was maybe not overly exciting. However, once you go into the prespecified patient population of the patients who had lower CRP as well as lowered IL-6 we saw response rates or risk reductions in the tunes of 25% or even 36% so much higher than many of the other outcomes trials. Now running the Phase IIIs now with an IL-6 that directly blocks IL-6, we believe will not only lower CRP very significantly. The IL-6 that Novo Nordisk now has shows it between 80% and 90%, but then also translate into very substantial risk reductions, both on the relative side as well as the absolute risk reduction, which would be important for payers in particular to see. So we're excited about looking at this data when it becomes available. We want to be ready with our own asset that is quarterly administered and Phase III ready when the data reads out.

Is it possible for investors who are new to kind of quantify or put into context of like -- what is the typical CRP reduction with current therapies that we have seen? And how much better is it with the class of IL-6? Like are we talking like what folds better CRP reductions are seen?

Yes. So I would go back to the recently published SELECT trial because this has been obviously a landmark trial and semaglutide also reduced CRP somewhere between 30% and 40%. And what we are seeing with the IL-6 class because you directly inhibit IL-6, which is measured by CRP reduction, the monthly IL-6 inhibitor used by Novo Nordisk reduces CRP somewhere between 80% and 90%. So much more substantial CRP reduction as you would expect. So we believe we can expect something similar with our IL-6 and with the big differentiation that it is quarterly administrative, which just mean, if I may add to this, is really important in cardiovascular disease when you think about chronic secondary prevention adherence of patients to these preventive measures is critical. And over and over again, we see data that quarterly injection over monthly has a big difference for adherence and compliance.

No, that's great. And do you expect -- so then in -- have you started your biomarker study yet in this population?

We have aligned with the FDA not just on this trial, but on the clinical development program. By the way, the interactions both on TED and in CV with the FDA have been very productive. It really allowed us to go fast because we already have safety data of 400 -- roughly 450 participants. And now that we are aligned, we are fine-tuning the design and we will launch this trial in 2024 to be, again, ready in 2025 when -- so it reads out, our own data readout, we want to be ready to go into Phase III.

Could you talk a little bit about the design? Like what is -- which doses would you be moving? Is it the same dose as you'll be moving forward in TED? Like what the dose ranges are and what the size of the study is. And obviously, CRP and IL-6 will be [indiscernible] biomarker we measuring what else you're looking at? If you could just kind of brought strokes of the design.

Yes. So we haven't issued guidance yet on the specifics, but it is fair to assume that the primary endpoint will be CRP reduction because that's what we try to prove. And very importantly, we try to do this with a quarterly subcutaneous low-volume injection.

And timing would be what at a 6-month time perspective on 6 months or...

Yes, we haven't disclosed that, Yas, we will issue guidance on this, but we will start the trial next year in 2024, and we can expect data in 2025.

Okay. As we look also into 2024, there are quite a bit of catalysts in the space. Could you maybe talk about -- we talked about the 2 studies reading out in 2025. But what are some of the key data points that you're tracking for the class of IL-6 that could allow also pipeline expansion. So could you maybe talk about that?

So 2024 for us will be internally speaking, a year of focus on clinical execution excellence, right? Really important that we stay on track. And of course, we have all the intentions to do so, so that we can get to the 2025 inflection points. In addition, we understand that the IL-6 class has a much more holistic impact on pathogenesis of many diseases. It lowers the production of auto antibodies and it calms down the inflammation. So with that, we believe we can -- we might be able to go further than, for example, the FcRn class. So we're watching that space closely. There is satralizumab, an IL-6 inhibitor reading out from Roche in myasthenia gravis, for example, 2024, among other trials., So we're watching that space, the FcRn readouts, of course, but we are focusing really on our own on the clinical execution. We have an exciting 2025 with readouts of the spiriTED trial as well as the cardiovascular side of things. And we want to be Phase III ready on the cardiovascular side in 2025.

Okay. Great. But maybe just last question. What is the current cash and run rate, I think you mentioned already, but just remind us again.

Correct. Yes. So we had on the day of close, which was October 20, we had cash -- a cash position of $218 million. And this will finance our operations until the end of 2026, and that's well beyond our inflection points in 2025.

Great. Well, I want to thank you for being able to efficiently cover a lot of topics in a short period of time. I just want to say thank you on behalf of all of us here at Piper Sandler for a great discussion. Thank you, Gerhard.

Thank you very much.