Upstream Bio, Inc. ($UPB)

Good morning, and thank you for joining us today. My name is Elizabeth Webster, and I'm on the biotech equity research team here at Goldman Sachs. And today with us, we have Rand Sutherland, the CEO of Upstream Bio. And Rand to start, can you introduce upstream, your lead assets and how you see the company positioned today and where you're most focused as we head into the second half of the year.

Sure. I'd be happy to. And Elizabeth, thank you for having us. It's really previlaged to be able to share the Upstream Bio story here today. So Upstream Bio is a clinical stage company. We're developing an asset called verekitug. Verekitug is a monoclonal antibody. It targets the receptor for TSLP. So we are active in a space that is, I think, getting a lot of interest from drug developers right now. But we do so with an approach that is actually unique in that space and that we target the receptor by virtue of targeting the receptor, we have a very potent molecule. We can spend that potency in 2 ways. One is efficacy and the other is dosing interval. And we are now emerging from Phase II studies in 2 major indications, severe asthma and chronic rhinosinusitis with [indiscernible] polyps, with an ambition to deliver efficacy that is best-in-class to do so with convenient quarterly dosing to provide that in a very broad population, irrespective of biomarker status, and to be able to do it with clean safety and importantly, for launch with self-administration at home via an auto-injector. So that's a very potentially competitive TPP for what we hope to deliver here. And we have these aspirations not based on sort of ideas, but on actual data from hundreds of patients coming out of Phase II, and I'm sure we'll get into those as we go through here.

Great. And before going to the individual programs, maybe just speak a little bit more about the choice to block the receptor for verekitug versus other approach targeting the ligand and mechanistically what that means for the clinical profile?

Sure. So the TSLP ligand receptor system [indiscernible] the TSLP receptors are [indiscernible] verekitug is that by virtue of targeting [indiscernible] we can actually completely shut down signaling through that TSLP pathway. We very early on after administering verekitug achieve 100% free receptor occupancy. And we've shown in preclinical studies and now early clinical and that mid-stage development that, that is associated with efficacy that meets or exceeds that of [indiscernible] in fact, all other biologics in the space does so with 4x per year dosing. And we believe that in large part, this is due to the fact that the receptor is expressed at quite low levels versus the ligand. And so even many half lives out in a fully human IgG1 that is not engineered at all for half-life extension, we have enough drug around to continue to have effect at quarterly dosing. So that's a very distinct approach from the competition, which in every other case is targeting the ligand, the circulating ligand is expressed at a much higher level than the receptor. And what's being done there rather than modifying the potency of the molecule is actually employing half-life [indiscernible] so there are different approaches to trying to provide efficacy and extended dosing in this space. Ours is unique, and we do believe from the basis of our data that is also potentially quite differentiated.

Great. We can get started with [indiscernible] maybe first. And earlier this year, you presented Phase 2 VALIANT study data in the severe population. Just to level set, can you kind of recap the highlights from that data?

Sure. So as you mentioned, VALIANT was our second Phase 2 placebo-controlled trial in a major indication, in this case, severe asthma. And the intent of the VALIANT trial was really to help inform the pharmacology further understand the pharmacology of the molecule and to inform our approach to Phase 3. And VALIANT did a beautiful job of doing that. So just at a high level, this was a study in around 480 patients in which we tested 3 different dose regimens placebo, 100 milligrams every 12 weeks, 400 milligrams every 24 weeks. And then as a sort of a low dose regimen, 100 milligrams every 24 weeks as well. And so we went into this study with the hypothesis that it was going to be really important to deliver efficacy that again met or exceeded that of best-in-class and did so with extended dosing. And we also went in with the belief that the most important thing to deliver here is efficacy. We know from a lot of market research from a lot of one-on-one with physicians and patients and payers that efficacy is king. Convenience is nice to have. It may actually result in improved compliance and drive better outcomes over time. But nobody is willing to make a trade-off of efficacy just to get to extended dose. And so we went in trying to understand what was the best way to optimize the characteristics of verekitug. And what we found was with the highest dose regimen at 100 milligrams every 12 weeks, that we were able to deliver a significant and clinically meaningful reduction in the annualized asthma exacerbation rate of 56%. That was accompanied by clinically significant improvements in lung function and symptoms, asthma control and also by important reductions in disease associated biomarkers like exhaled nitric oxide. Now we did also see degrees of efficacy with the other dosing regimens, but they did not meet our test of highest efficacy and durable dosing over a very convenient dosing period. And so for that reason, we've really now focused on quarterly dosing as the approach that we're going to take going forward in the program. we very much, again, want to achieve that convenient quarterly dosing and pair it with really top of class efficacy. So that's our ambition. coming out of Phase 2. And I would say that this is based not just on the data from [indiscernible] trial in severe asthma, but also for data in the vibrant trial with CRS with NP in which we also delivered really outstanding efficacy across all endpoints at quarterly dosing with that 100 milligrams [indiscernible] as well.

And maybe just frame the impact of quarterly dosing for patients and clinicians and kind of any market research you've done about how that profile is being viewed by the clinical community.

Sure. So I think just to level set, it's important to understand that biologics currently available with the exception [indiscernible] are all dosed every 2 or 4 weeks. Those are also the most efficacious of the molecule is available. Of course, they different, which patients can get them, which efficacy [indiscernible] which parameters. And I make these points it's a complex landscape. And what physicians again and patients and payers all want before orderly dosing or twice-yearly dosing is great efficacy. But when you then do market research and you hold efficacy, let's just say, at a level equal to test buyer or potentially better than [indiscernible] and you start to extend the dosing interval, that actually becomes a very competitive profile. becomes one, at least in market research settings that can compete very effectively for a new prescription and which may, in cases where a switch is necessary, also be a competitive profile there as well. So extended dosing is nice to have, but it has to be paired with great efficacy. I keep making this point because we do think that there are challenges in this space and really have to be able to deliver both to have a competitive profile.

And then just remind us of your time lines for moving to Phase 3 and your interactions with the FDA.

Sure. So we have been prosecuting both of these clinical programs essentially contemporaneously all along. So we had our nasal polyps data in the fall of last year, of course, earlier this year, the severe asthma data, we've taken the time to very carefully model and understand those data in aggregate. So we have 500-plus patients worth of data. We've been looking at a number of things, including overall efficacy. We've been looking at dose response, and I know we'll talk about our plans for a dose going forward in Phase 3. We've been very careful about understanding the safety profile of the molecule, and we've now taken all of those data and actually contemporaneously are looking to engage with the FDA on the path to Phase 3 in both indications. We expect to be done with those interactions by the end of Q3 of this year and remain on track to dose our first patients in the Phase 3 programs in both indications smultaneously in the first quarter of next year. One of the things, and maybe we'll get to the commercial space a little bit, but one of the key attributes for access and forculary, of course, is having multiple indications. And so for us to be able to potentially launch with 2 indications at the same time, we think could be an advantage as well. And so we've been very careful to try to leverage the findings from each program to support the other, both from the standpoint safety and efficacy and want to move forward relatively again at the same time so that we could potentially launch with the label that can both indications.

Got it. And maybe just touching on that commercial front. When we think about kind of the reimbursement landscape and payer dynamics, how do you see that kind of playing out with the longer-acting agents assuming efficacy at par with [indiscernible]?

So this is all very forward-looking, right? Because we're a few years away from this. Maybe just to step back and comment on the space broadly and what we've learned over the past decade or so that biologics have been around. It's what's interesting today, even though they are now 7 biologics approved in severe asthma, they're all unique in some way. They target different aspects of the type 2 inflammatory process. They have been shown to be efficacious in specific subgroups. They have differing degrees of efficacy. And the value of that in terms of -- sort of physician decision-making is that you can actually look at a patient and you can ask, all right, based on the clinical status, the inflammatory status, what's the right drug for the right patient at the right time. And so the market has very much supported having this optionality because of the biology of the disease and how we try to treat individual patients. So it's kind of a heterogeneous landscape, but it's one in which there is enough white space occupancy by all these entrants that they can -- everybody, for the most part, has been successful from the standpoint of commercialization. What happens when [indiscernible] white space that others [indiscernible] so you really, again, want to deliver something that's unique, either from the statement of efficacy, eligible patient population, convenience, et cetera. And when we have seen that happen over time, particularly [indiscernible]. These are differentiated agents, and they have very successful launches. They are able, in the case of DUPIXENT to extend it to many, many indications. And they gained share actually not necessarily by eroding the share of others, but by driving the overall penetration. And yet despite all of this, penetration is still around 25%, meaning that there's 75% of patients who don't have access to these drugs right now. So we believe that you have to come in, you have to be differentiated. In our case, the ambition is to be differentiated on efficacy have that same broad label that [indiscernible] does. And then to deliver this convenient dosing, which may be actually associated potentially with greater compliance, greater long-term outcomes, and I think then gives when it comes time to compete for access and in the market, a very differentiated profile versus the other. So we think that all of these things matter. It's going to be really key, I think, for formulary access to differentiated in these ways. And then other things like pricing and sort of [ GTN ] and all these other things start to matter. But efficacy, number of indications, clear differentiation. If you start with those, you start on the front.

Great. That's super helpful context. Just want to touch on CRS with nasal polyps. Maybe just frame kind of what you're looking, what the profile you're looking to achieve is in Phase 3 and I'm just reminding us of kind of what you've shown to date in that indication.

Yes. So CRS with NPE, it's not a disease that gets as much attention as severe asthma. It's certainly less prevalent, but it's still -- there's a substantial unmet need and substantial commercial opportunity associated with it. So it's essentially a form of inflammatory sinusitis. Patients get thickening of the lining of the sinuses and then the outgrowth of tissue called nasal polyps, those basically obstruct the sinus, they make it hard to breathe [indiscernible] difficulty with taste [indiscernible]. Historically, treatment has been surgery and steroids. And it's really only with the advent really of efficacious biologics that there's been sort of a new potential standard of care that's been brought to bear here. So this is a disease that is highly type 2 driven, and so we know if you can modulate this biology effectively, you can have significant clinical impact. And that's, in fact, exactly what we showed in our Phase 2 trial, the vibrant study. Again, placebo-controlled 100 milligrams Q12 weeks of [indiscernible] a 24-week study. In that case, we showed an almost 2-point reduction in the endoscopic nasal polyp score. We showed both clinically and statistically significant improvements in all secondary end points and most importantly showed a substantial reduction in the need for surgery and/or oral corticosteroid or systemic corticosteroid rescue. So that was a big win for us. It really showed the fact that [indiscernible] is very successful and [indiscernible] type 2 biology that translates quite meaningfully to clinical endpoints. And we are very optimistic that we are going to be able to show something quite similar in Phase 3. So we are moving forward quickly there. Of course, it may be the purest of the type 2 inflammatory diseases of the 3 that we're studying, but we know that there is clear read-through and we've actually shown in asthma subgroup data from our nasal polyp study that there is efficacy on both diseases when they are comorbid. And again, we believe that there's, I think, very derisked program here that's going to go into Phase 3 with the data show at the end of the day, but this could potentially be a best-in-class medicine for that disease, again, with being in quarterly dosing administered at home or potentially an office, we actually have done the work and the investment as part of our program all along to have both an auto-injector and a prefilled syringe. And I think that's important to recognize as about potential in-office administration and sort of an ENT or allergist setting versus at home, maybe more consistent with how pulmonologists practice.

Great. And then could you kind of speak to the translation you expect from Phase 2 to Phase 3 and how you're planning to manage placebo responses in the Phase 3?

Yes. So I think it's a bit of a different answer in CRS with NP versus severe asthma, partly because of the nature of the Phase 2 studies and I think the robustness of the data from the CRS with NP study versus the more sort of, again, sort of pharmacology informing approach that we took in Phase 2 in severe asthma. So again, forward-looking statement, but I think that there's a high degree of [indiscernible] of the data that we saw in Phase 2 in CRS with NP forward to the Phase 3, we would look to recapitulate the same magnitude of efficacy, do it in a very similar patient population. And again, try to across the board show impact on endoscopic nasal polyp score, nasal congestion score. Actually, we looked at CT indices of sinus inflammation. There are a lot of sort of symptoms and quality of life indicators. And then again, this important clinical end point of need for surgery or rescue steroids. So that will be the approach, and I think a high degree of translatability there. I think as we look at how the Phase 2 was designed, recall that the statistical power in that study was really focused on the primary endpoint of reduction in asthma exacerbations over the course of a year or annualized. And so we feel that those data are quite translatable all of the secondaries, all of the subgroups were more exploratory in nature. They're there to help understand how the drug might perform in Phase 3. And so what you see, and this is true really across many of the biologics programs and severe asthma is that while the Phase 2 is helpful in informing the design of Phase 3, some of the statistical import of the subgroup analyses are really quite fragile robust. So I would not predict to say that we will see one thing or the other as directed by Phase 2 and Phase 3 in severe asthma. But what I will say is that we are very clear about what things that we need to do are coming out of Phase 2. So the first is we've learned from our Phase 2 data that there is clear evidence of exposure response. And so for that reason, and I think we'll get this in a minute, we're potentially going to take a higher dose forward in Phase 3 to really drive the magnitude of efficacy, both in severe asthma and CRS with NP. And we're also going to look very carefully at what we can do in Phase 3 to make sure that we have adequate background exacerbation rates in the placebo and treated arms such that we don't run into a situation similar to what we ran in our Phase 2, where the exacerbation rate was so low, for example, in the low EOS group in our Phase 2 that there just was no ability to break through that and show efficacy. And you can do that by changing exacerbation requirements inclusion criteria standpoint, you can do it by looking at sort of how standard of care therapy is applied. You can look at it, look at it and modify by where you go in the world. And so there are a lot of approaches that companies take going from Phase 2 to Phase 3 to really help enrich the signal so that you can then break through that with an efficacious therapeutics.

Great. And you mentioned the dose work that you've done expand on that and how to think of the PK and the PD of the molecule.

Sure. So again, we're fortunate, and I think unique amongst the competitive landscape to have now hundreds of patients of data coming Phase 2 and going into Phase 3. Again, the antibody is a fully human IgG1. It was actually a product of Regeneron's Velocimmune platform. So it has a fully human IgG1 half-life of around 20 days. So no half-life extension there. The PK, I think is quite well understood. It's really, again, the potency that drives the pharmacodynamic effect with regard to biomarkers and the clinical efficacy that we've seen in our clinical trials. So we, I think, understand this very well. And what we've learned from these hundreds of patients' worth of data is that when you look at the relationship, so if you just take, for example, the highest dose regimen of 100 milligrams Q12 because you're administering this to a population of humans and humans are variable, you're going to have some patients who get a higher exposure and some patients who get lower exposure even holding the dose regimen constant, and when we take the overall population and divide it in the third, and we just compare very simply the highest exposure [indiscernible] to the lowest exposure to [indiscernible], what we see is that there's a significant additional degree of efficacy when I say significant, not statistically, but clinically with regard to the magnitude in our asthma trial of FEV1 response and in our CRS NP trial of nasal congestion score response. What we see is as you push the exposure, you push the efficacy. And so our approach to the upcoming negotiations with the FDA is to share all of this work with them. We've seen this not just in the kind of sort of qualitative analyses that I've discussed with you, but really in very precise quantitative modeling from a PK and PD standpoint and understand that by pushing the dose potentially as high as 400 milligrams every 12 weeks, we can get that potentially additional efficacy and very clearly maintain patients above not only the concentration levels that are needed to meet that sort of highest tertile level that we observed the Phase 2s, but also well above the EC90 for [indiscernible] nitric oxide in the population. So we can do that 400 milligrams in a simple 2CC administration because we have a very formulated concentration, a very concentrated formulation. And again, we'll do that with a PFS or an auto-injector launch. So we'll know very shortly if the FDA agrees with us with regard to this. Again, we don't think that this is too speculative because it's based on again, very robust data sets, very high-quality modeling. And the ambition again is to push the efficacy as high as we can and deliver convenience [indiscernible].

And in your dosing regimens for Phase II and potentially Phase III, just kind of remind us whether there is increased dosing in the induction period. And what that regimen is.

Yes. So we're very fortunate that induction is not required here. We get very robust at 100% occupancy of [indiscernible] receptors within 2 weeks, actually sooner -- and so you do not need to load or do any kind of induction to get efficacy. And we've pretty clearly seen that. There is some element of dose response even at the first time point of measurement in our Phase 2 trials. And so for that reason, again, we're going with potentially a higher dose here. But yes, we do not need to induce. And so that's actually from the standpoint of the overall convenience and I think potential performance in the commercial space quite potentially differentiating.

Switching over to COPD. You're running a Phase 2 placebo-controlled study and the moderate severe patients with quarterly and then I think biannual dosing. Can you just talk about your confidence in the TSLP mechanism in this indication and differentiation for [indiscernible] here?

So we were actually really excited by the data that Amgen AZ produced [indiscernible] in COPD because I think just very simply, they show great efficacy in that trial. And that, of course, was paired with efficacy that had been observed with Dupixent and also even with IL-5 like Nucala and COPD as well. I think if you just step back to the biology of the inflammation in COPD, we touched on this a little bit. It's probably the most heterogeneous of the 3 indications that we're targeting. There's clear type 2 driver inflammation in this disease. There's also a lot of type 1 inflammation as well. We know that TSLP has an advantage in working across both of those pathways of inflammation. And we believe that actually this maybe of all the diseases is the place where the potency profile of the molecule could be the most translatable. Again, we'll see what happens with our data. We initiated, as you mentioned, the Phase 2 trial, again, placebo-controlled, testing multiple dose regimens in COPD. And that study has actually enrolled quite well as we got the data from our Phase 2 studies in CRS with NP in severe asthma and as we learn more about this dose response, and as we decided from a strategic standpoint to potentially take a higher dose regimen forward in CRS with NP in severe asthma, we've elected now to truncate that final bit of enrollment the COPD study, use the patients that have been enrolled and the dose regimens that are being studied to really help us understand more about the potency of the molecule in this disease, understand the translatability of that potency to efficacy signals, but also not necessarily wait for those results to initiate a Phase 3 trial in COPD, again, contingent on dose regimen, sort of selection and alignment the FDA. So that actually is a good thing for us because it allows us to get a lot of information out of this -- out of the Phase 2 program in COPD, but it doesn't require us necessarily to get initiation of Phase 3 and COPD on that, given how much we from the program. So we've been very careful about trying to be able to leverage the maximum amount of information from the program at large as we move forward in these various diseases, and we see an exciting opportunity here learn more about the data as they start to emerge. And we expect that in the second half of next year, 2027, we will have a fairly robust understanding of the performance of [indiscernible] COPD from that program. and again, are potentially prepared to move forward quickly in Phase 3 as well.

And -- do you anticipate ultimately to have both quarterly and biannual on the label? And then just how are you approaching that kind of alpha spend that you mentioned around potency in COPD evaluating both of those kind of dosing frequencies?

Yes. I think it would be surprising to see in COPD greater or more durable efficacy really at any of the dose regimens versus, say, CRS with NP and just rank ordering that based on the degree of type 2 inflammation. So we do believe that by taking a high-dose regimen forward with quarterly dosing, we can deliver efficacy in COPD. We need Phase II data to help reinforce that. But we are not in any of the indications contemplating having multiple doses or dose regimen by a single dose regimen. Again, we need to maximize efficacy, we do not believe that there is any -- and this is not just a belief, but again on the basis of a lot of market research and data, we do not believe that the difference between Q12 and Q 24, Q 26 week dosing is substantial when it comes to any trade-offs that might be required. And it is important to look at sort of what is out there from the standpoint of the data. If you look at our data, while we did deliver actually reasonably significant reduction at Q 24 weeks in asthma exacerbations. When we look overall at the data, those data were not as durable. And we started to see loss of symptom control, lung function control with [indiscernible] dosing. That actually has been replicated in the clinical programs of the long-acting IL-5. And there's some early clinical data from some of the long-acting TSLP ligand targeting antibodies that use half-life extension that raised questions about the durability. So we do not -- nobody wants to take the risk with us and patients and physicians I'm talking about here of having a loss of efficacy just to get to [indiscernible] months. So we believe that quarterly dosing is quite competitive, it is incredibly valuable when paired with optimal efficacy, and that's what we're going for. We're putting our nickel down, and we believe that, that's the best profile. And we believe that it actually may be the best profile that any of the competitive landscape [indiscernible] deliver.

And speaking of the competitive landscape, what are your thoughts on some of the either co-formulated IL-13 T-slip therapies for the IL-13 class in general here. And just is there any efficacy that's kind of left on the table, so to speak, with a single target?

Yes. I think the short answer is that it's hard to know because we haven't really seen much in the way of data from anybody yet. I think the soonest that we'll get a read on this is probably from bispecific program, [indiscernible] in severe asthma. They have data that we are all expecting to see here in the second half of the year and at which at top line at least, have been reported to be positive. They did Phase I multiple ascending dose trial in asthma, very similar to ours and actually showed very similar degrees of reduction of [indiscernible] nitric oxide versus ours. So how that translates to differential efficacy we'll see. But that rather than speculating, I think once we have those data, we'll have the answer. I would note that there are other data sets of TSLP, IL-13 combinations in type 2 inflammatory diseases that haven't actually shown additive effects. Those data are mostly from atopic dermatitis programs. And there was even the study that Sanofi Regeneron published few years ago, combining dupilumab with an anti alarm in the itepekimab anti-IL33, which did not demonstrate additive efficacy in severe asthma over that achieved with [indiscernible]. So it remains to be seen whether -- if you're targeting TSLP, which is upstream of everything else, and you're doing it really, really well, I think there is an open question around whether or not you get any additive efforts [indiscernible] targeting things downstream. So we'll see. There are Pfizer's trispecific data in atopic dermatitis, which may have demonstrated at least from the 75 standpoint efficacy. So I think we're learning more about this, and there are data sort of Pfizer's trispecific on the positive side, a lot of other data, not demonstrating differential efficacy. And I think [indiscernible] more here soon. So -- but having said that, what is very clear is that [indiscernible] delivers efficacy as good as test fire or better into type 2 indications with quarterly dosing -- the only way we could have done that is via potency. And again, we have a high degree of belief that, that will translate with appropriate design and appropriate dose selection into Phase 3.

And in the last few minutes here, remind us of your cash position and runway and how you approach capital allocation across your pipeline.

Sure. So as of last quarter, we had almost $300 million. That continues to fund us through 2027. And what that fund is actually really sort of a max plan for everything that our ambition. So that's sort of the initiation of our Phase III program, the continued in severe asthma and CRS with NP. It's the continuation of our Phase II program. And as I mentioned previously, we are very fortunate to have a formulation that is very close to, if not -- I mean, we still have to do PPQ and everything, but the commercialized formulation, we are making heavy investments in device, as I mentioned, and we believe that these are all critical for a successful launch. I would note that our understanding, that also puts us in a very differentiated position versus much of the competition. And so we will continue to fund all of that as we forward. And in terms of sort of approaches to raising additional capital, we, of course, have a lot of tools available to us, the equity markets. We are constantly talking with potential partners about approaches to dilutive funding and we'll be very thoughtful and careful there as we move forward.

And to close out, what do you think about the -- are there any aspects of the story here that you think are underappreciated the moment by investors?

I think it's -- we feel that there's a dislocation between the value that's being reflected in the stock market right now and the value of the company. This asset has been extremely well studied. It is -- derisked is always a fraud word because you never know until you know. But again, we are unique amongst the competitive landscape and that we have many hundreds of patients' worth of data. We understand the pharmacology, this molecule. We -- I think, have a very rational and reasonable approach to the FDA interactions that are upcoming here. And I think with the other point is that we've really executed quite well over the history of the company. And so we are in a position to have a potentially quite differentiated molecule not that far from now. And back to the market dynamics, if we can deliver that [indiscernible] will be a very differentiated molecule. It will potentially transform the care and patients who don't have access now and are not being treated with biologics. And we're very optimistic and excited about what's to come next. I do think there's a lot of competitive noise right now. There are a lot of things going on. There are a lot of these open questions, and they need to be answered. And our approach has been, we're going to answer them. We're going to provide the data. We're going to make it public, we're going to share them, and we're going to give people a reason to believe. So we're extremely excited. We have a lot of work in front of us, but we do believe in the potential of [indiscernible] be a transformative medicine in this space, and we really are working hard to deliver that.

Well, with that, thank you so much, Rand, for joining us today.

Thank you. We appreciate it.