Good afternoon and welcome to the Morgan Stanley Global Healthcare Conference. I'm Sean Lyman, 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 have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have the pleasure of hosting Erasca with Chairman and CEO Jonathan E. Lim and CFO and CBO David Tchekhov. Welcome, gentlemen.
Thank you, Sean.
Now I invite you, do you want to make some opening remarks, or do you want to go straight to Q&A?
Oh, sure. Yeah, I'll make a few opening remarks. Erasca is really at a very exciting time in our history. We are a pure-play RAS-focused company to live up to our namesake, which stands for both erase cancer as well as eradicate RAS-driven cancer. Our two main molecules in our pipeline are ERAS-0015, which is a pan-RAS molecular glue. This is in phase one dose escalation in a trial called Auroras1. We also have a pan-KRAS molecule called ERAS-4001, which also is in dose escalation in Borealis1. We're excited about both of these molecules, collectively part of the RAS targeting franchise. In our pipeline, we also have ERAS-012, which is focused on EGFR, and that's a biologic. We also have naporafenib, which is a phase three program, which we're in partnership discussions for.
Wonderful, thank you. Maybe to begin with three macro type questions, the first one's probably particularly relevant to Erasca. With China's rising biotech innovation, how do you think about Erasca's competitive position here? Can you talk about the BD perspective that drove your decision to in-license 0015 and 4001?
Yeah, I think we're operating in a global industry, and certainly we have a lot of amazing attributes here in the U.S. Things also are happening in China where the science quality is very high. We're excited to be able to bring both molecules in. We're moving very quickly. I think what we do super well in the U.S. is high-quality science and clinical development to fully characterize molecules in the clinical arena. I think in China, there's a lot of great science coming out of there, a lot of preclinical molecules in this class. I do think that there's a sort of a handful of companies that are really focused on generating U.S. data, and along with the other company in this pan-RAS space, I think we're sort of right there in the mix.
Great, thank you, Jonathan. How are you currently leveraging AI or thinking about AI's future disruption potential?
Yeah, I'm looking forward to your sort of key learnings from all the companies that you talked to about this, as we mentioned before. We're certainly looking at it. In the early days of Erasca, we had a platform called Oprah, where we were using AI for some of our discovery efforts. We found that picking drugs was as much a human endeavor as an AI endeavor, as manifested by the number of different compounds that we've gone through in our history. I do think AI, you know, we're actively looking at how it can streamline both the efficiency and effectiveness of our back office functions and regulatory processes and sort of more routine tasks to free up our people to do what they do best.
I get the sense that many of our colleagues in the biotech space are doing similarly, but we're also eager to see how the sort of GenAI native companies are going to change the space.
Wonderful. Last question on the macro before going specifically back to Erasca, what has been the most impactful on Erasca from the regulatory side? Would it be FDA, MFN, tariffs, any sort of flavor you can feed us on those threads?
Yeah, so we've had great interactions with FDA, and I was part of the Commissioner McCarry's listening tour when he came through San Diego. This commitment to radical transparency, I think, is all great for our industry. Where the rubber meets the road in terms of regulatory interactions, nothing but great things to say in terms of our experience with, as exemplified by the two RAS molecules. We actually delivered the IND clearance ahead of our stated guidance for both molecules. The fact that we got clearance for ERAS-0015 ahead of our mid-Q2 guidance, and then the same for ERAS-4001 in Q2, really, for a company to be able to file and clear two INDs in short order within weeks of each other was really amazing. That's a testament not just to our team, but also the close collaborative nature with FDA.
I think MFN has colored how pharma views commercial paths forward. As we think about potential partnership strategies around our RAS agents back in the day, five, ten years ago, the playbook was partner ex-US, and then use that to fund US commercial. I think the model is evolving and it's still declaring itself, but I think MFN is coloring the nature of those kinds of strategies going forward.
Fascinating, thank you. Onto ERAS-0015, which is your pan-RAS molecular glue. The IND was cleared in May. Can you share how the phase one is progressing so far and any updates on enrollment?
Yeah, we don't give play-by-play updates on enrollment, but what I can say is I can give you color. We have five sites up and running. They're marquee sites. The investigators are super excited about ERAS-0015. We're enrolling well. I think we're, in terms of enrollment, very happy with where our starting dose was. We also are on track for our 2026 data readout for that molecule.
Wonderful. Jonathan, can you run us the preclinical profile that you've observed to date with that molecule and what makes you excited about it?
Yeah, so there's a lot to, you know, going for it. I think at the core, relative to the benchmark molecule of RMC6236, ERAS-0015 has an 8 to 21-fold higher binding affinity to cyclophilin A. As a molecular glue, it binds CYP-A with much higher affinity to go from the single moiety to the sort of, you know, goblet in terms of coupling with CYP-A. I call it the Pacman molecule. You just have a lot more Pacman molecules hunting for RAS to form the tripartite moiety, and that's why it's called a molecular glue. As a result of that 8 to 21-fold higher binding affinity, it opens up a lot of key advantages. One is the 5 to 10-fold higher cell-based potency. The other is being able to see tumor regression at one-eighth to one-tenth of the dose of the comparator molecule.
From a tumor residence time, what's interesting is this higher binding affinity to CYP-A. Because CYP-A is naturally overexpressed in multiple solid tumor types, you just get a lot more of 15 into the local tumor environment. The tumor residence time is much longer for ERAS-0015, which if you're fighting cancer, you want more of your drug in the tumor environment as opposed to the peripheral tissues. All of those are key advantages. When you couple that with the PK advantages that we see, where we see higher exposure in terms of % F across multiple small and large animal species relative to the comparator, and longer half-life as well as better solubility in both fed and fasted conditions. The totality of that is what gets us excited in terms of being positioned to show what that molecule can do with clinical data next year.
Wonderful, thank you. Can you talk more about how ERAS-0015, its potential to demonstrate a better GI tolerability profile?
Yeah, so what we know is that GI and RAS, for instance, are probably on target. Now with GI, as you're specifically calling out, what we don't know is how much of the GI tolerability issue from a pan-RAS molecule is on target versus drug burden. If the pill burden of, let's say, a 200 to 300 milligram dose versus a drug that's tens of milligrams, does that make a big difference on GI tolerability? We think it will, but to the extent of deconvoluting that today without data from on target, it's just hard to say. You'll probably see better GI tolerability, but to what extent, we'll all have to stay tuned for that.
Thank you. How are you thinking about the rash adverse events observed in the space? If it's likely that we'll see with ERAS-0015, given that it's on target, do you have any rash prophylaxis built into this study?
Yeah, we want a clean experiment in the phase one setting to just see what does this drug do without any prophy. If we do see rash, which we anticipate we see rash, that's something that can be addressed to your point with prophylaxis. We have plenty of experience as a company where with naporafenib, for instance, that's an NRAS-mutant melanoma targeted drug. That's something where we instituted mandatory primary prophylaxis, which was both local or topical as well as systemic treatment. We were able to manage those rash severity and frequency significantly. We're undaunted by rash as a company. I think what's been characterized in the pan-RAS space is not too dissimilar from what we've seen in the NRAS-mutant melanoma space. We'll be well prepared to address that if and when relevant.
Wonderful, thank you. With the initial Phase 1 Auroras1 monotherapy data expected in 2026, can you talk about what you hope to be able to observe with a molecule based on your preclinical findings?
Yeah, so I think if what we've seen preclinically translates in the clinic, what we want to see is comparable, if not better, safety and tolerability to what's been seen in the class. On the PK front, if we can see sort of dose-proportional increases in exposure across multiple dose levels, that'll be really great to see. That's kind of a core thesis of sort of better PK in the preclinical realm. In the clinical realm, if we can see signs of activity at a fraction of the dose of what's been characterized, that'll be a home run. Call it that one-tenth to one-fifth of the dose of the comparator.
Thank you. How are you thinking about monotherapy pathways going forward versus combinations?
Yeah, we'll be looking at both. I think with monotherapy, you know, that path has been charted really well by, you know, the other company. I think with us, we'll be looking at those indications within the big three, but also combination strategies within the big three. All options are on the table. We'll probably want to focus on standard of care initially with the big three tumor types and also look at other investigational agents.
Sure, thank you, Jonathan. I'm just moving on to ERAS-4001, which is your pan-KRAS inhibitor, which also cleared IND. What are the key differences between ERAS-4001 and other KRAS inhibitors that you observed in the preclinical data, and what gives you confidence in this program?
Yeah, thank you. Yeah, so the ERAS-4001 is the pan-KRAS that we enlightened in May of last year out of China. As you mentioned, we cleared the IND in Q2 of this year. We're really excited about this compound. There haven't been clinical structures or at least many clinical structures that have been disclosed in this space. It makes head-to-head comparisons more difficult, unlike what Jonathan was talking about in the pan-RAS space. What I can say is what we like about the compound is a number of different attributes. It's got very good in vitro potency, especially against KRAS G12X mutations, G13, as well as wild type, which is actually very important when it comes to wild type amplification as a resistance mechanism. It also has activity against both the GDP and GTP state of the molecule. Single digit nanomolar potency against both, albeit stronger against GDP state.
The molecule also has very good in vivo activity across multiple CDX models. The PK properties, to one of the points that Jonathan mentioned earlier about just the importance of PK in the space as a whole, you know, the PK properties for this molecule look pretty favorable, including the fact that it has good oral bioavailability across multiple preclinical species. One additional point is the fact that our molecule seems to be on a different scaffold than many of the other players in the pan-KRAS space. That could be a particular advantage for us.
Great, thank you. On this molecule, how is it specifically designed to overcome resistance mechanisms?
Yeah, so if you look at, for instance, the mutant selective molecules, many of them go after not only, or specifically a mutation of selection, call it G12D or G12C, but they actually spare wild type. Our pan-KRAS molecule ERAS-4001 actually has activity not only against multiple mutations, but also against wild type. Wild type, as I alluded to earlier, has a tendency to drive resistance via wild type amplification. It's one of the things that you may see, for instance, in a molecule that spares wild type is while you may get responses and a reasonable response rate, the question is, does that translate into durable responses? One of the things that we'll look to see when we have clinical data on this program is does having wild type activity lead not only to, you know, perhaps a better response, but also a more durable response.
Got you. Looking at how ERAS-4001 shows activity against GTP- and GDP-bound KRAS, can you remind us of the importance of this versus competing compounds?
Yeah, so if you look at KRAS mutations, G12C is the one mutation that is more commonly found in the GDP state. The other G12X mutations, as well as G13, are more commonly found in the GTP state. Having an inhibitor like ERAS-4001 that has single-digit nanomolar potency against both GDP as well as GTP states allows us a breadth of ability to go after different mutations. I had mentioned earlier the fact that this molecule does have good preclinical activity, for instance, against the various G12X mutations, not only C, which, as I mentioned, is more of an off state, but also D, V, C, A, S, so various G12X mutations.
Wonderful, thank you. With initial Borealis1 monotherapy data next year, what are you particularly hoping to see?
For this data set, what we've said is that we'll share safety, PK, and initial signs of efficacy at biologically relevant doses. We want this data set to be a meaningful update that, for us to be able to interpret the data, but also for all of you to be able to interpret the data. It'll probably be dozens of patients for us to be able to have some sense of what we can do with our molecule. We'll, of course, be watching the competitive landscape as we imagine that others in the space will also be disclosing data at some point and using both our own internal data as well as what we see externally. That'll help guide our future development.
How are you thinking about these molecules potentially in combinations going forward?
I think that's actually similar to what Jonathan was describing with regard to ERAS-0015. I think the importance here of evaluating both the monotherapy, but then also looking at combinations is really important, including combinations, for instance, with standard of care. For instance, with EGFR or other standard of care agents that could be particularly important here. It's certainly something that is top of mind for us.
Okay, and just in comparison to ERAS-0015, with ERAS-4001 designed to spare HRAS and NRAS, and ERAS-0015 being observed to bind RAS in all three isoforms, how are you thinking about the two different approaches here?
Yeah, we actually really like having both the pan-RAS and the pan-KRAS. We think it sets us apart from a pipeline standpoint, being one of the few companies that has both. I think we like these orthogonal mechanisms. As you know, one of them is a molecular glue, the pan-RAS molecule. One is a switch II pocket binder with ERAS-4001, the pan-KRAS. As you mentioned, the ability to bind pan-RAS, so not only KRAS, but H and N versus the cell activity of going after K only with the pan-KRAS molecule and whether that leads to a better tolerability profile. We like having multiple different approaches, and especially as the field evolves, if it turns out that one molecule has its swim lane here and another molecule has its swim lane there, we're well positioned in a way that many companies are not because we've got an answer either way.
Thank you. For both programs, how are you thinking about the market opportunity and unmet need for key indications that you plan to prioritize in development?
Yeah, unfortunately here, the unmet need is huge. There are so many patients that are diagnosed annually with these tumor types, 2.7 million patients with RAS mutations, of which 2.2 million are KRAS mutations. The unmet need here is quite large. We think that there is certainly room for multiple players in this space. We're excited about being at the forefront both in the pan-RAS and the pan-KRAS space with our two molecules.
Wonderful, thank you. I think you've touched on this already, but I'll still ask it. Following up on the combination piece, how are you thinking about the possibility of combining ERAS-0015 and ERAS-4001 together? Can you walk us through the rationale?
Yeah, I mean, as David mentioned, we're excited about having these orthogonal mechanisms. The way we think about it is if you're giving sufficient single agent activity with ERAS-0015 or vice versa with ERAS-4001, then you're just going to ride that out alone and in combination with standard of care. If you need to pursue more of a belt and suspenders approach, and there may be certain use cases for that, then it would be nice to be able to put those together. You either give both of them at full strength or maybe you dial one of them down and really, you know, hit the target hard. We're open to all of that. It's nice to have sort of that risk mitigation built in.
Wonderful, thank you. I'm just moving across to naporafenib. Can you remind us of the key data presented to date and what drove your decision to partner this program?
Yeah, so naporafenib is the pan-RAF molecule that we brought in from Novartis in December of 2022 after they'd completed the phase one and two studies. In terms of the key data that had been shown to date, at the time that we brought in the molecule based on the Novartis data, they'd shown about five months of median progression-free survival relative to, for instance, chemotherapy or single-agent MEK at about 1.5 to 2.8 months. With the combination of naporafenib plus trametinib, you're getting about a 2 to 3x on the PFS. Also, on the median OS side, you're getting about 13 to 14 months with the combination versus about seven months with either single-agent MEK or chemotherapy, so about a doubling there on the OS. In NRAS-mutant melanoma, this molecule has shown historically very good data in terms of PFS and OS.
In addition to that, Jonathan alluded to our experience with rash and mandatory primary rash prophylaxis. When Novartis conducted the studies, they did not include rash prophylaxis as part of their clinical protocol, and as a result, they did actually have a relatively high rate of rash. One of the things that we wanted to do was to see if we could improve upon that. At the triple meeting last year, we disclosed data from our CCRAFT-1 study that showed with the implementation of primary rash prophylaxis, we were able to decrease the rate of rash pretty significantly. The rate of AEs also went down pretty significantly, and then the RDI, the relative dose intensity, which is a measure of how much drug a patient actually receives versus what they're supposed to receive, that went up pretty meaningfully.
Call it 50-60% in the Novartis trials to about 99-100% in our CCRAFT-1 study. We feel that that molecule, both from an efficacy standpoint as I described from the historical Novartis data, and now with that safety tolerability improvement with the implementation of rash prophylaxis, the molecule is in a really nice spot. To your second question about why the decision to seek a strategic partner, we actually really like this molecule and continue to be very excited about it. That said, as I mentioned in May of last year, we brought in the pan-RAS and the pan-KRAS molecule, and these have the potential to address a huge amount of unmet need.
We as a company, after we successfully put both of the RAS franchise molecules through their INDs, decided that it was a good time for us to go all in on RAS and see if there was a more natural home for naporafenib.
Wonderful, thank you. On the partnership aspect, do you have any updates or could you give some dialogue on how potential discussions could be going?
What I would say here is that, you know, we're encouraged by the discussions that we've had to date. The nature, as you know, of BD, especially cell-side BD, is that it's speculative. At this point, we're not giving specific guidance on timing or, you know, how things are moving in the process. We've been encouraged by the discussions that we've had.
How should we think about traits? How do you think about ideal traits for a partner and for further development and commercialization of naporafenib?
Yeah, as I alluded to, the unmet need in the RAS space is huge. I would say that the unmet need for a molecule like naporafenib is still pretty high, call it several hundred million dollars. If you're a pharma company that is looking for something that is in the range of several hundred million dollars, this could be a very attractive asset. I would also say that if you're looking at something that is kind of a nearer term opportunity, given that this molecule is in its phase three study right now and could actually generate near-term revenue for a hypothetical partner, that's another area of a trait for a partner.
If you think about geographies where a partner might be playing right now or might want to, and might want to expand or might want to get into, if you think about where NRAS-mutant melanoma, which is kind of the primary indication that naporafenib is going after, if you think about where NRAS-mutant melanoma is most frequently seen, you think of markets like US, Europe, Australia, in fact. If a partner already has an existing presence there or wants to get into one of those markets, this could be another attractive trait. Maybe the final point I'll mention too is just with regard to the ability, if you have an existing sales force, to be able to just drop another product into the bag, is another trait for a partner that could be really attractive.
Great. It might help us think in the context, you know, how would you think about potentially modeling this? It's a bit of a tricky equation because things are a little uncertain on naporafenib from my perspective. How would you think about some parameters or some goalposts to think about modeling this?
Could you be more specific on the question?
Milestones, royalties.
Oh, yeah.
Yeah, yeah.
Yeah, I mean, I think we are open on deal structure. I think the most likely deal structure, the most common deal structures in these kinds of situations are exactly what you said in terms of an upfront, milestones, royalties. I think given the stage of the asset, given the advancement that we've been able to do with the program since we've had it in our hands since 2022, I think we've done a lot of great work in terms of, for instance, as I mentioned, the improvement in the RASH profile, the regulatory interactions that we've had to gain alignment on the CCRAFT-2 pivotal study. There's a lot of good work that I think we've done and we're looking for partners who can recognize the value that we've already brought and could potentially bring.
Sure, thank you. Moving on a little bit, included in your pipeline is ERAS-012 that targets EGFR domains 2 and 3. Can you provide any color on the program and sort of what makes you excited about it?
Yeah, so ERAS-012 is our bispecific biparatopic antibody that goes after EGFR domain 2 and domain 3. Just for some context, the approved EGFR antibodies like cetuximab and panitumumab go after D3 specifically, which is the inactive form of the protein, versus D2, which is the active form. We think that by targeting both, that could actually lead to better antitumor activity. Domain 3 tends to be where EGF or ligand tends to bind. Domain 2 tends to be the one that leads to dimerization. By targeting both, we anticipate that that could lead to better activity against, you know, this, you know, mutation or otherwise. I think the other thing that's worth noting is this is still an early program in our pipeline. This is in discovery stage, but we continue to be excited about it.
Wonderful, thank you. Can you remind us how much cash you have on board and how much runway that provides?
Yeah, we made an announcement in May of this year where we were able to extend our cash runway out to the second half of 2028. We ended the most recent quarter, which was Q2, with $387 million of cash. We feel well capitalized to be able to really turbocharge development around our RAS programs.
Right, and that excludes any contribution that you may get from a partnership with naporafenib.
That's correct.
Okay, I've come to the end of my questions. There's still a bit of time left, but is there anything that I didn't ask that I should have asked, or what message would you like to leave investors with?
I think you've covered it. I mean, we've really been talking to a lot of investors today and we have a full dance card, which speaks to the huge interest that there is in our story. I think we're well positioned this year for showing data next year for both assets. I think we've talked about what to expect around the phase 1 data, the kinetics of enrollment, which is good for both trials. Just stay tuned. Thank you very much for all the interest.
Thank you, Jonathan. Thank you, David. Appreciate you coming.
Thank you.
Thank you.