Good afternoon, everyone, and welcome to the Morgan Stanley Global Healthcare Conference. I'm Sean M. Laaman, Head of U.S. Mid-Cap Biotech Equity Research here at the firm. Before we begin, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you do have any questions on that, please reach out to your Morgan Stanley sales representative. For this session, we have from BeOne Medicines the Chief Medical Officer for Solid Tumors, Mark Lanasa, and General Manager of North America, Matt Shaulis. I hope I pronounced that correct. You got it. I got it. Maybe, do you want to make some introductory comments, or I'll just go straight to our macro questions?
Happy to go to questions.
Yeah, great. Thank you. Starting with Mark, perhaps for the first two, with China's rise in biotech innovation, how are you thinking about BeOne's competitive position here? Will this influence your R&D and business development strategy?
Thank you, Sean. Thank you for having us today. BeOne Medicines, we're definitely a global organization. We now have 11,000 employees, based on six continents around the world. Our R&D and commercial organizations are global by intent. We recognize that we have particular strengths in the United States and in EMEA as well as in China. We think that that positions us well for the growth in impactful biotech that's emerging out of China. We do have a strong presence within our research and discovery organization within China, and I think that that gives us, shall we say, the opportunity for direct human-to-human contact and real human relationships that enable early insights into emerging data sets and also can lead to connections that can facilitate our business development discussions. Ultimately, though, our business development strategy is largely going to be about complementing our robust and growing internal portfolio of agents.
How are you currently leveraging AI or thinking about AI's future potential disruption?
AI is a really, really important emerging technology, and it's something that we're thinking about extensively within the development organization. Across the entire lifecycle of developments, we think that there's potential applications. Simple things in terms of, can help with medical writing and the development of the protocol, but then can that pull through into the scheduled assessments, which can pull through into building the clinical database, which then pulls through in the programming of the tables, figures, and listings, which then pulls through into the reporting. You can see how these things can all be interconnected. At our recent R&D day, we gave several examples of how we're using AI not only to accelerate the lifecycle for development, but also to enhance quality. For example, one area where we were using a lot of resources was in review of SAEs, development of narratives, and the review of those narratives.
200 to 400 hours a month, we reduced that by 90% to 20 to 40 hours per month. We recently have been able to compress our database lock times from DCO to lock from about 35 days, cut that in half to about 15 days. My favorite statistic is that for our SMC, our safety committee meetings for phase one studies, it used to take us two to five days, and now it takes us three to five minutes to make the outputs for those. We think that AI has a huge impact in terms of efficiencies in the development side. I will also add that on the discovery side, we haven't seen the same level of impact. AI is really good at analyzing large data sets and having unique insights and observing trends, but it hasn't been so good yet in coming up with a really innovative hypothesis.
For a scientist working in the lab, it's still largely the same as a human being coming up with a creative solution to a novel problem.
Wonderful, wonderful. Thank you. Matt, what's been the most impactful to BeOne on the regulatory side? Is it MFN? Is it tariffs? Is it the FDA?
Yeah, maybe I can just start by commenting a little bit on MFN and tariffs and then invite Mark to talk a little bit from a regulatory standpoint. Clearly we've watched the MFN situation evolve with letters going from the Trump administration to, I think, 17 different CEOs. For our part, we didn't receive a letter, but we know that the overall objectives are to lower prices via that MFN construct in the U.S. That can mean things like MFN for Medicaid or pricing on new drugs that follow that MFN construct, and even things like direct purchasing. While we're looking at this carefully, we're studying it and we're prepared from a long-range planning and an operational standpoint. We also know that there's not a binding commitment, and it will be a matter of what sort of voluntary concessions have been made.
I think for our part, we welcome a dialogue about access and balancing that with continued support for innovation. Similarly, I think that some things like 340B and PBM reform could be equally good topics. On the tariff front, this is a situation where we've been able to study impacts on manufacturing or the inputs to our R&D and believe that our strategy to have a global footprint around manufacturing, including a footprint right here in the United States, holds us in good stead. We have factored in any impact here into the guidance that we've already provided and don't see any additional material impact. Mark, maybe you want to comment on the regulatory front?
As it relates to regulatory, certainly we're aware, from reading the news, of the changes and changes in personnel that have been happening at FDA. That said, with a portfolio of our size, we are in contact with the FDA across these programs all the time. If I was only assessing it based upon the feedback we're receiving from FDA, I'd say there's basically no change. There's been no change in cycle times, review times, quality of feedback. I find that reassuring because, you know, we think it's in our interest and everybody's interest to have a high-functioning FDA as a partner.
Wonderful. Thank you. Maybe to turn to the revenue. So BRUKINSA, I think, is north of 50% new patient starts now, and, you know, clearly outpacing, certainly IMBRUVICA and CALQUENCE. How do you think about the momentum in that that product goes from here? It still seems, for example, like there's still quite a lot of revenue generated by IMBRUVICA and losing share to BRUKINSA. How do you characterize that and what's the next inflection point in the U.S.?
Sure. Look, I think that we're really encouraged with the progress that we've made so far with the overall number one BPK, across the utilization of the class in B-cell malignancies. We're continuing to grow. It's really on the basis of the product's differentiated profile due to that broadest label. We also see that we're fueling the growth overall for the class. BPK class at about $1.8 billion, growing at around 11% back in the second quarter. Then our performance is driven by underlying demand growth, about 35% as compared to the same second quarter a year ago and about 10% sequentially. You know, we just continue to see it that it's the best in class profile, including the only molecule with head-to-head superiority data versus another BTK. We're supplementing that with additional data sources to further elucidate some of those advantages.
We're seeing that, when we look at our outcomes in the clinical study setting, we tend to have better PFS, and we're seeing also a longer DOT. We think that DOT combined with the new STARs is going to continue to drive some growth.
Got you. Thank you. You recently announced some positive, top-line results from sonrotoclax in mantle cell lymphoma. Can you run us through the current treatment landscape and what we've seen in the space, what you see as the bar for that? Why don't you jump in on that one, Mark, and then I can maybe add some comment?
We're very excited about the data with sonrotoclax, which should provide the first approval opportunity for our novel BCL-2 in relapsed, refractory mantle cell lymphoma. There are no approvals for BCL-2, and either no BCL-2 formal approvals within mantle cell lymphoma generally. In that relapsed space, the new approved therapies are pirtobrutinib, a BTK inhibitor, as well as cellular therapies. Because of the limitations of access to cellular therapies, pirto is the more commonly used option. We think that sets the bar in terms of regulatory standard for an accelerated approval. Not ready to share our data yet today, but we're very comfortable with the data that we have seen that it will support a favorable regulatory review, and we look forward to having those conversations.
I guess in the refractory MCL and CLL, I think you've had the submissions accepted in China. How should we think about the path forward for global regulatory submissions?
Sure. Pretty straightforward, right? I think it was in the second quarter that we had the relapsed refractory mantle cell submission in China. It'll be later this year that we'll do global submissions. Of course, I think that bodes well for review and then subsequent approval sometime next year, right here in the U.S.
Sure. Thank you. I guess I'm where I become, I'm interested in your story, but where I become really interested is the potential in the combination of BRUKINSA and sonrotoclax. I think that could be a really underappreciated part of the story if the data pans out the way that we think it might. Maybe, a bit of a reference if you could sort of map out what you see on venetoclax in combination with obinutuzumab. Is that the predominant portion of the market? I think what happens generally when people analyze your business and look at the opportunity for sonrotoclax, they might benchmark it against venetoclax and say, if it gets one for one, then maybe it's a $3 billion drug. I think what might get missed, if it's in combination with BRUKINSA, it could be more than double that in theory.
You're looking at many billions above what market expectations might be if that combination were to work. Maybe, correct me on that thinking or challenge me on that thinking and say, why wouldn't I be thinking like that?
Sure. Maybe I can just provide some broader perspective about fixed duration, then also where we see, you know, BRUKINSA and plus sonrotoclax getting into that. We do believe in the promise of fixed duration. We've also commented previously about the three requirements that are needed for success: deep and durable remissions, strong PFS, and of course, a strong safety and tolerability profile. We've also commented previously that some of the other regimens, including AV and even to some extent VO, have opportunities for improvement. Particularly when you look at MRD rates, we saw AV in the mid-20s with our MRD rate, and then phase one data for BRUKINSA plus sonrotoclax had shown MRD rates up in the 90s. We think that is going to translate into a really strong efficacy profile. We've also seen, ultimately, that some of the limitation for venetoclax relates to its clinical profile.
I know, you know, Mark Lanasa has often commented and we often have a dialogue about the overall potency for sonrotoclax, also its selectivity, and the short half-life relative to venetoclax, we think all lead to a clinical profile that could have better ramp and monitoring and lower risk of TLS. We think that venetoclax has been fairly stable with strong academic utilization, and some use in the community setting, but the clinical profile has limited it in that community setting. We think that BRUKINSA plus sonrotoclax could potentially address some of that, not only because of efficacy and safety, but also potentially because of the ability to improve the convenience for both clinicians and patients. That's a little bit more of the long-term perspective.
You know, we believe in BTK mono now and the limitations of fixed duration, but are really hopeful about, ultimately, a best-in-class profile for BRUKINSA plus sonrotoclax.
Thank you. If we think about venetoclax plus CALQUENCE, you've been the regulatory submission, I believe, fairly recently. How do you think about that firstly as a potential risk to BRUKINSA sales, if at all? Secondly, as potentially something that could trail the place for you even when you come to market with your combo between sonrotoclax and BRUKINSA?
Sure. Happy to comment back on those sort of three criteria for success, with a deep and durable remission, strong PFS, and safety and tolerability profile. Those are areas where we don't think that the AV data has really met higher benchmarks. Also, when we look at that study, we see that it's really in a young, very fit patient population and also lacked some of the risk factors for everyday utilization. We think those are some of the challenges. On the other hand, the BTK mono data has been very impressive across that setting. There might be some utilization, but we think in the long term, the way that Xanu and Sanro will meet those criteria and potentially be a little bit easier to use is when the real game changer can happen.
Perfect. Thank you. You've noted that you don't see significant near-term uptake for fixed duration therapies. We're kind of moving on from that, but how are you thinking about sonrotoclax and zanubrutinib fixed duration combination, possibly replacing acalabrutinib mono?
Yeah, so I think it's more a matter of how the landscape is going to evolve in the future. We not only look at line of therapy, we also look at patient types. We've seen really strong clinical data in Del-17P and TP53 with Xanu mono, and then there could be some opportunities in other patient types for Xanu plus Sanro. It could be the case that it's successful in that Del-17P plus TP53 population, but we'll have to see how that ultimately plays out. We do know too that, in the case where we do transition to more fixed duration, we'll of course have the opportunity for two molecules to be used rather than one. We think there'd be good revenue capture there. The other thing that we think about is how the landscape may evolve.
We think that there's going to be opportunities by virtue of us having three molecules in CLL to have a true CLL franchise leadership strategy. That can mean BTK mono or Xanu plus Sanro, fixed duration therapy, but then also potentially opportunity later in lines of therapy for our seed activator.
Sure.
Go ahead, Mark.
I think that the question in a way is there's fixed duration therapy, then there's continuous therapy. The question is, will some patients move from continuous over to fixed duration? That's possible. There's also the question about the entire ecosystem of frontline therapy that you could view chemoimmunotherapy, which we view as an inferior option at this date given the data we've had in Sequoia. There's still a substantial proportion of patients who are receiving what is a fixed dose or fixed duration therapy. With a really compelling new fixed duration therapy, we could be building that market. We could be increasing the share for a BTK plus BCL-2 combo in the frontline. It isn't necessarily just pulling patients away from continuous, but actually creating a new market or creating a larger.
Got you. I guess you've got a number of, on the heme space, a number of pivotal trials to kind of read out. How are you thinking about preparations for commercial launches?
Yeah, I think that we're in really great shape, frankly. We've built out all the right infrastructure from sales and marketing, market access, and medical affairs approach and accomplished a tremendous amount with BRUKINSA in literally just the two years since the CLL launch. That gives us the reach that we need with hematologists in both the academic setting and in the community setting. We think that we're set up for real success with these next launches. I would say in general, that applies to sonrotoclax as well as to the degrader in future years.
Sure. I've got a few solid questions or solid tumor questions. Yeah, sure. On 43395, the CDK4 specific, before getting into the guts of the science, I just wanted to tease out from you, when you started the trial, I think you were three years behind Pfizer. You've really narrowed that gap to, I think at the R&D day, you said 18 months if I'm not mistaken. I think you're planning on a registration study to commence this year. Yes. I think Pfizer has started a phase three this year. First of all, how do you get so hot on their heels? Secondly, why aren't you even hotter on their heels?
We have done the math. If we're reading all the publicly available data sources correctly, we believe that our first patient dose with our selective CDK4 inhibitor was approximately 40 months after Pfizer's first patient dose. We have built this large operational infrastructure. We're CRO free. When we put all of those resources behind it in terms of the global footprint and all the right teams and whatnot, we can move very, very quickly. To date, we had the first patient enrolled in that study in, I believe it was December of 2023. As of today, we've enrolled over 400 patients. As you stated, Pfizer enrolled the first patient in their global phase 3 study in frontline, I believe in March. We believe that we can initiate a frontline phase 3 study approximately 15 months after Pfizer.
We've reduced that gap from 40 months to 15 months, which is a really tremendous reduction, which makes us, I think, much more competitive in that future treatment landscape.
Perfect. Could you remind us the benefits of hitting CDK4 and sparing CDK6? What are some of the benefits that you hope to show over drugs like Ibrance?
Yeah, so the CDK4/6 inhibitors have been transformational in the management of patients, women who have hormone receptor-positive breast cancer, with the doubling of PFS in the front line and improvement now of overall survival. That said, they're not without some disadvantages. The key disadvantage is actually hematologic toxicity. There are some other side effects as well that can lead to dose interruption and down dosing. It turns out that most of the therapeutic benefit, at least preclinically, comes from the inhibition of CDK4. CDK6 drives most of the hematologic toxicity. The core hypothesis is that by improving both potency for CDK4 and selectivity for 4 over 6, you can improve efficacy through increased and deeper inhibition of the target, but you can also improve safety through reduced hematologic toxicity that then triggers dose interruptions.
We believe that our data to date is supportive of that hypothesis, that we have been able to progress nicely through dose escalation. We're well within our target efficacious range. We've seen evidence of efficacy that we shared at R&D Day and at San Antonio last year, both as monotherapy and in combination with fulvestrant. We continue to see objective responses emerging from our ongoing phase 1B investigations. We're seeing efficacy and also a dramatic improvement in the hematologic safety profile compared to the currently available CDK4/6 inhibitors. We think the preclinical science to date is bearing out. We understand that we're going after a high bar, that PFS in the frontline setting is approximately two years, and we're looking to have superiority over that. It's an aspirational goal, but we think the data is trending in a way that we can get there.
What would you say to someone that said to you that you needed to hit six to confer efficacy as well as four?
That remains to be seen. We believe that hypothesis as well. We have a CDK2 small molecule inhibitor that is progressing through early development. One of the targets of new molecules that will enter the clinic prior to the end of the year is a CDK2 selective degrader, potentially first-in-class molecule. It is known that when patients are exposed to CDK4/6, that can lead to upregulation of cyclin E, which activates CDK2. The question is, is that something you need from the beginning, or is it something that you could add if that resistance pathway emerges? There is also the really important question about going from a doublet to a triplet and having a really good safety and tolerability profile.
CDK2 has not been without its challenges in terms of safety, but again, we're very committed to CDK2 as a target, and we'll be looking to build triplets of ovarian suppression plus CDK4 plus CDK2, either as later line or an early line treatment option.
Sure. Two parts to the next question, but could you just please remind me what you showed for your CDK4 drug at the R&D day? What were some of the high points that gave you some confidence that that's still worth pursuing?
Yeah. What we have been looking to achieve in terms of PK, PD, safety, and efficacy. For PK, what we have shown is nice dose proportionality, a half-life of 10 to 14 hours, which well supports our selected twice daily dosing. For PD, we have a clear pharmacodynamic marker in terms of reduction of TK1. We've achieved the target level of TK1 inhibition, which is a marker of cell cycling, which is the mechanism of action of an 80% reduction. For safety, as I mentioned, we have a really nice hematologic safety profile with extremely low rates of grade 3 neutropenia or anemia. For efficacy, we are seeing emerging responses, objective responses, confirmed responses. The mechanism of action of these drugs is largely cytostatic, cytotoxic. It can take some time for responses to emerge.
We're gladdened by the data as they continue to emerge, and we look forward to sharing more data later this year and next year as well.
That'll be at San Antonio.
Yeah.
Great. Can you draw some comparisons between it and Pfizer's shot on goal?
Preclinically, our molecule is a little more than four times more potent as a CDK4 inhibitor in a preclinical cellular assay compared to a thermocyclone that conveys greater 4 versus 6 selectivity. Their molecule is about 20-fold selective 4 versus 6. Ours is about 35-fold selective 4 versus 6. It is still early days. Pfizer has disclosed data. They've not disclosed a really large body of evidence, nor have we. We think that based upon the available data, we do see an emerging improvement in the hematologic toxicity profile that we believe is related to the greater 4 versus 6 selectivity.
Right. How are you addressing concerns around toxicity and resistance?
The main toxicity that we've observed with our selective CDK4 inhibitor to date is GI toxicity, specifically diarrhea. The majority of patients receiving the drug do have diarrhea of some grade. That said, virtually all the cases are grade one or grade two. In the dose optimization phase, as we presented at R&D day, there have not been any discontinuations or dose reductions related to diarrhea. It's been very manageable by the investigators, and they said that the profile that we're seeing is entirely consistent with that of a frontline drug. In terms of resistance, it's simply early days. This is something that we'll be looking to characterize both in this study and beyond to understand what are the treatment emergent mechanisms of resistance to a more potent, more selective CDK4 inhibitor.
Sure. I guess sort of looking more forward on this one, how do you see the timelines evolving? We've seen some data at San Antonio, and what are some of the proof points?
In our most recent earnings, we guided that our start date for a second line and later study has shifted into 2026. That is simply to give the data a bit more maturity so we can have confidence around the dose we're selecting. We have a single dose both for later line and for frontline, and we would also look to start a frontline phase three study in the middle of next year. The later line study could actually move relatively quickly because PFS in that population is probably only about six months with currently available therapies. The frontline study would be, of course, much larger with an anticipated PFS in the control arm of approximately two years.
Sure. Thank you. I'm back on the commercial. At the most recent quarterly, the pregnancy numbers were really solid. What stood out to me, in particular, though, was a real solid performance in Europe, which I think might be generally underappreciated by investors. If you do some benchmarking, BeOne Medicines could be thought of as underweight Europe compared to other companies. First of all, just to verify that, and then, how do you realize that opportunity in Europe? Is it an expanded sales force? Is it just a matter of time before that just continues to deliver the numbers that we just observed?
Yeah. I think in Europe, we've made really great progress on, you know, sort of a coverage and reimbursement front. We also think that we're, you know, right-sized commercially and from a medical affairs standpoint in order to continue to achieve really robust growth. As we look across all the regions in the world, you know, we continue to see, you know, Europe as a good source for continuing to support overall global growth.
Awesome. Thank you. I do get still a little bit of email on BRUKINSA. You know, just to get your view on why or why it might not be a competitor in first line, why you think it might remain in second or later lines of therapy, and maybe to talk a little bit about your head-to-head trial with the degrader.
Sure. Maybe I could start out, Mark, and then transition to you. I think this morning's news had been a positive press release from Lilly. I think it's important to contextualize that as a study compared to BR and also one that excluded the Del-17 patients. Similarly, if we look at Bruin 314, that's a study with a non-inferiority design on ORR. The feedback that we continue to hear from clinicians is that while there's value in having that option, it's likely sequenced after patients will have seen other mechanisms. Of course, you made reference, Sean, to some of our clinical trial designs, and we've decided to do a head-to-head superiority study of our degrader versus Pyrido. We're confident in the benefit that the Cdap degrader can bring to patients. We think that that would be another potential rationale for having Pyrido after other mechanisms.
Certainly with some of the way that the market has grown through more innovative agents that offer better PFS, we think that there's the potential for there to be more patients in those later lines of therapy. It could still be a viable place for innovation and clinical development activity. We continue to have a lot of confidence in our CLL franchise strategy across BTK, BCL2, and now that real confident move with the degrader in the later line of therapy.
your pipeline assets and any potential out-licensing opportunities?
I'm sorry. Just to add a couple of things. One is something you've seen from us is the PK. BRUKINSA was designed to have around-the-clock coverage of BTK. As a covalent inhibitor, we feel that there is really not anything left on the table. We'll see what the data ultimately shows from Lilly. We think we've set very, very strong benchmarks in our SEQUOIA and ALPINE studies. As Matt said, we have technical confidence in the likelihood that our degrader will be superior to pirtobrutinib head-to-head. We shared that data at R&D Day. So far, we're seeing a longer progression-free survival in a more heavily pretreated patient population. The last point, to a point you made before, is that the special treatment-naive study of BRUKINSA plus sonrotoclax, we enrolled that study in just over a year, 600 to 700 patients in frontline CLL, really, really efficient.
We have similar enthusiasm from investigators for these two phase 3 studies with the degrader. We think we're going to be able to deploy our operational resources and quickly enroll both of these phase 3 trials.
Sure. You've seen a similar pattern as what we've observed with the CDK4 and the compression of timelines between the first to market. You've seen that kind of again with the degrader. Maybe talk us through the situation or the comparison with Nurex and when we might see more data from the degrader program.
From our degrader program?
Correct.
I'm sorry. I don't know the answer to that question in so far as next disclosure.
I think we'll have more disclosures coming at congresses and meetings in the future. Just overall look for the degrader opportunity in the near term after, you know, Sanro, so in coming years.
Okay, great. Mark, we've talked about the CDK4, but you know, given we've got a couple of minutes left, if you look at your portfolio on the solid side, what's the program? You're probably going to say they all excite you, but what's the one program that really excites you beyond the CDK4?
Yeah, so we highlighted four programs at R&D Day. In addition to CDK4, it was FGFR2B, the B7-H4 ADC, and the one I would highlight is our PRMT5 inhibitor. That's an MTA cooperative PRMT5, and we're excited by a really favorable safety profile, great PK, strong PD, and we're observing responses across multiple tumors. Our molecule is designed to be CNS penetrant. We're again leveraging our operational capabilities to move as swiftly as we could to close the gap, the development gap with our competitors. We look forward to sharing data for that molecule in 2026, and are excited about the potential of that molecule across multiple tumor types.
Yeah, wonderful. I'm not sure if this is a question to ask now, but I'll ask it anyway. You know, if I look at the business turning to profitability for this year, and I mean, clearly there's a strong top-line growth story, and you have trouble getting a good handle on what's going to happen with OpEx over the next few years. Particularly, we've got such sort of a robust pipeline that, you know, I want to say that you're actually making money at the bottom line. I'm just wondering if that's the way to think about it or the cash flow that is generated will be ploughed more back into the pipeline.
I think it's safe to say that we'll continue to take a balanced approach. There's extensive innovation opportunities in the pipeline, and we'll continue to do things like out-license from a BD standpoint in order to drive capital, but also make really strong investments in the pipeline.
Great. We're just out of time, but I'd invite you to either make a closing remark or is there anything that I didn't ask that I should have?
I think you covered it all. I think for us, things like a CLL franchise leadership strategy, as we've outlined with multiple molecules, and then the opportunity to roll those really strong performances into future innovation are a lot of the sort of direction and trajectories for us to come.
Thank you for your time, gentlemen. It's been a pleasure to host you. Thank you.
Thank you.