For our next session, we have a fireside chat Q&A with Keros, and it is my pleasure to introduce Jasbir Seehra, CEO. Jas, it is a privilege to have you here with us. I will go ahead and kick off the Q&A portion. Just for anyone in the audience, please feel free to chime in and raise your hand if you have a question. Maybe we can begin the conversation by discussing KER-012. At this point in time, what are you able to tell us regarding potential causes of the pericardial effusion AEs that have been observed in the Tropos trial in PAH patients?
Thanks for the opportunity to have this conversation. First and foremost, we shared in December and then in January that we had observed pericardial effusions with KER-012. Now, pericardial effusions are a background in PAH patients, but I do not think any of us appreciate it to the extent with which pericardial effusion is there. Literature tells you there is a background anywhere from 10% to 40%, depending upon the size of the study. It had not been previously observed with these kinds of molecules. Now, with KER-012, we observed no signals whatsoever in the tox studies where we conducted six months of tox studies at very high doses of 50, 500 milligrams per kilogram, and it was not observed there. In the healthy volunteer study, we treated up to four and a half mg per kg for three months and did not observe that.
I do believe it is only in the PAH patients that we're observing this pericardial effusion, and it is biology that is there as a background that we're augmenting. Okay? I do believe that based upon the phase one data, that it is unique to PAH patients. Beyond that, I don't know anything else. Okay, right? I'm not privy to the data from the ongoing trial that we will share in the second half of this year. As you know, okay, right, we stopped dosing in the lower dose in January. Patients have up to eight weeks to come in for the end of study visits. That's going to go into March. As a consequence, we will have data readout in the second quarter of this year.
Okay. Great. In terms of a mechanism, what do you hypothesize would be, I guess, augmenting these events with KER-012?
Yeah. First of all, I don't believe it's just KER-012. I think it's the biology of the TGF-β pathway that may be augmenting it. Because while with sotatercept, the approved drug, it was not observed in Stella, there was a single case in Pulsar. Since we announced the observation in December, there have been reports with sotatercept that are now in the FDA events reporting database. Okay? It may be biology that is being augmented through this pathway. Sotatercept is dosed at relatively low doses. 0.7 is the highest dose that's used. We're starting off with 1.5 mg per kg. It is a higher target engagement at CMAC. We may be seeing uncovering biology that is there as a part of the biology of PAH patients that's being augmented by this pathway.
I'll give you another aspect of the biology that was uncovered by sotatercept. Sotatercept has an increase in red blood cells. KER-012 was designed not to have an increase in red blood cells. That's what we've observed. Sotatercept went into numerous different indications in chronic kidney disease, in multiple myeloma, in patients with anemia from cancer therapy. Bleeding events were not observed there that were beyond, okay, what is the background? Yet in PAH patients, in the open label extension of Pulsar, telangiectasias and bleeding events were observed. In Stella, there were events of special interest that were observed. Now you're seeing more and more as the treatment is commercially available. We always wonder, what is it, right? Part of it is the biology of the pathway.
If you're inhibiting certain BMPs, you're going to cause vascular remodeling, and some of that could be aberrant remodeling. That takes time. Yet with sotatercept, you see increased bleeding risk from the first dose. That's not from remodeling. What do we know about sotatercept? It increases red blood cells. Could these bleeding events be due to an increase in red blood cells? Because there's a background or change biology of the vasculature in other tissue, other beyond just the lungs. We did a study. It's on our website. You can see it in our corporate deck, where we treated rats with erythropoietin that had established PAH. Only, okay, when you have PAH, do you see that they have bleeding events? You can see it on the whiskers, right? You can see blood on the whiskers.
You can also see that the animals have shortened survival. When you look at the animals upon necropsy, you see bleeding in the gastrointestinal tract and other tissue. It really shows you that just a little bit of increase in red blood cells that you can get with erythropoietin is sufficient to break those blood vessels. They've been weakened. With sotatercept, you're seeing two events, okay? One initially, which is the increase in red blood cells leading to bleeding events, and then the vascular remodeling. That has taken a while for us to understand. I think we will eventually understand pericardial effusion, but it requires you're not going to do that from the clinical studies. You're going to have to have preclinical models. Unfortunately, they don't exist. We're trying to establish those as we speak.
Understood. What can we expect from the top-line data readout of the Tropos trial in Q2? How will the data inform next steps for Sibo's clinical development?
Yeah. When we announced in December that we had stopped dosing at the higher doses, by that point, given just the timing of events where everybody that was enrolled into the study by the end of September, by beginning of December, they would have got at least three doses, right? Everybody in the study has received three doses or more. Now, okay, right, we have to look at how many completed their study and got their vascular resistance measured, how many, okay, right, got what dose, and so on, okay, right? All of that analysis will be in the second quarter. Now, vascular resistance required right heart catheterization. It's a surgical procedure.
Not everybody that stopped dosing early on before the end of the study would have necessarily have a PVR measurement, but six-minute walk test, functional class, all of these and biomarkers are all going to be there. We're going to do that analysis. We're going to present as comprehensive a data set as we can, given, okay, the study was terminated early. What would be the path forward? If we can figure out from that data that there is a certain group of patients based upon their baseline characteristics or the treatments that are at higher risk for pericardial effusion, then that becomes an inclusion/exclusion criteria, which then allows us to think about another phase two study. Of course, the regulators will have an opinion. Once we see the data, we can determine whether we want to go forward in PAH and then engage with the regulator.
Now, should there not be a path for KER-012 in PAH, there are numerous other indications where KER-012 could go. We demonstrated in the healthy volunteer study lack of AEs, but also improvements in bone mineral density. There are other indications, whether they're bone indications or indications of other diseases like idiopathic pulmonary fibrosis, where we could take it. We are going to have to engage with the regulators before we do that.
Yeah, absolutely. For the next part of the conversation, we can transition to talking about KER-065. This is one of the newer assets from the pipeline. Maybe to kick off this part of the conversation, you could give us a little bit of an overview of this ligand trap and its biology and its discovery.
Yeah. I think when you go back over the last two and a half decades, it's been well established that deletion of a ligand in this pathway, GDF8, results in increase in skeletal muscle. Therefore, it was called myostatin by Siting Li. Now, numerous studies have been conducted with myostatin, but what was observed even preclinically that then translated to clinical setting is that in postnatal inhibition of myostatin, results in small increases in skeletal muscle, but not very large as was observed with the deletion embryonically, where you get two to three times the skeletal muscle. That's because postnatal it is not just myostatin, but other ligands in this pathway that are the negative regulators of skeletal muscle. Myostatin is one, activin A is another.
As you age and your skeletal muscle gets infiltrated with fatty tissue, fatty tissue makes activin B, which also signals through the same receptors. Therefore, inhibition of multiple ligands that are negative regulators of muscle is important. 065 inhibits myostatin, but it also inhibits activin A and activin B. Therefore, it is a potent inhibitor of the negative regulators of skeletal muscle. As such, in preclinical studies, it shows increases in skeletal muscle, decreases in fat, and improvements in bone mineral density. That is exactly what is going on in neuromuscular indication. Regardless of where a mutation in the structural genes occurred, the pathophysiology that follows is the same, which is that that muscle is weaker. It is subject to breakage upon use. That leads to inflammation. The inflammation in turn reduces regeneration, and that muscle eventually then wastes away. 065 increases that regeneration.
065 has anti-inflammatory properties on its own. 065 improves bone mineral density in preclinical studies. In preclinical studies, we see expression of the homologue of dystrophin and utrophin upregulated. In combination with exon-skipping drugs, you see increased expression beyond what the exon-skipper does on its own with 065. All patients that have Duchenne muscular dystrophy could benefit from 065. That would be the starting point. All indications where there is muscle weakness as a result of structural genes are also opportunities for 065.
Absolutely. There will be a data readout from the phase one healthy volunteer study in Q1. What can we expect to learn from this readout?
Yeah. Primarily a safety study. Like all safety studies that we conduct, we always throw in lots of biomarkers for proof of biology. I think based upon all of the things that I've been involved with in my career, I think we can demonstrate an increase in lean mass in a healthy volunteer study. We can demonstrate reductions in fat mass. This study is being conducted in males, 18 to 55. A population that is really studied for bone indications. In fact, I don't know of any literature report of that. Therefore, I don't know whether we're going to be able to demonstrate increases in bone mineral density. If this was a postmenopausal women population, I would be telling you we're going to see increases in bone mineral density. We're doing the experiment for the first time.
Changes in lean mass, increase in lean mass, decreases in fat mass trend-wise is what I expect from this study.
Great. Pending successful readout of this trial, how soon could we expect KER-065 to launch into a phase two trial? What would that trial look like? We know it would prioritize DMD, but can you give us a little more color on what we might expect?
Yeah. I think we will engage with the regulators in the second half of the year on the design of that study. I just told you that in preclinical studies, the molecule shows anti-inflammatory activity, increased regeneration, increased expression of utrophin and dystrophin. It is really an all-comer study. I do not think we will get many gene therapy patients, okay, because there just are not many that have already been treated. Boys on glucocorticoid that are not eligible for exon-skippers and all, okay, that are eligible for exon-skippers can be part of the study. I think given where we are as a company, it is important for us to generate data very, very quickly. That can be done in an open label study. We can do that study where we can look for biomarkers.
If we can conduct muscle biopsies, we can look for eutrophin and dystrophin expression. There are serum biomarkers we can also look at. There are functional measures that can be looked at in a four-step climb, a 10-meter walk-run test. Those are normal along with the N-STAR, okay, right, muscle function scoring, okay, right? We will be looking at those as well.
Great. Is there any possibility that obesity will also be included as a future indication of investigation?
Here comes the challenge. While you could do that, obesity is not an indication that we can commercialize. Phase two data can be generated, but then after that, we would partner. Should a partner come along and want that asset, and we have conducted a study in neuromuscular indication, I think it would be hard for us to partner that and not continue with the neuromuscular indications. It will be a public relations nightmare to have had boys in DMD on treatment and then say, you know, thanks very much. We're not continuing with it. It will be a public relations nightmare. I think it's unethical. We have made the decision, and this was post-the Takeda deal where our most advanced asset was partnered, that we needed another asset that we can carry all the way through to registration. And 065 in neuromuscular indications is that.
We will not conduct a trial in obesity. That does not mean that we do not have other assets that we could take forward into obesity, but they may be in partnership.
Understood. For the next and final part of our discussion, I would like to turn over to discussing elritercept. You mentioned the partnership with Takeda. Could you actually walk us through what that partnership entails?
Yeah. We demonstrated in MDS and myelofibrosis benefit with this drug. I think we were looking for a partner that would have a shared vision with us in terms of the indications and would also have the deep pockets to make the investments necessary to fully optimize the treatment. We had initiated a phase three second line in MDS. We would have waited until we got registration to start frontline because it's a bigger study. It's many years. The capital requirements for that are intensive. I think what Takeda brings to the table is a shared vision for the drug, not just in second line MDS, front line MDS, in MF, but potentially exploring beyond that should there be opportunities. I think that kind of capital is not something that we could bring to the table for this program.
Okay, right, I think it is the right partnership.
Out of curiosity, how competitive was that bidding process?
We had multiple players at the table. I think for me, it always comes down to do you have a shared vision for the opportunity? I think Takeda had very much a 100% aligned vision for the drug. After that, it comes down to economics. There were others, okay, with similar economics, but there was not alignment on the vision. Therefore, Takeda was the right partner.
Great. What sorts of milestones can investors look for in the next year with elritercept, both in low-risk MDS and also in the myelofibrosis studies?
Yeah. We have not disclosed exactly what those milestones are, but as studies are initiated, there are development milestones through to registration. There are commercialization milestones. Those have not been shared. I can't really go into specifics.
In terms of data readouts, anything that investors should be looking for in the next 12 months?
We're transitioning the program over to Takeda. I think while there will be presentations mid-year, hopefully, that are still between the two parties, after that, it's going to be really up to Takeda as to what they present. I think the partnership as it is, has a transition period after, and during that transition period, Takeda is carrying all the costs. After that, you know, they control that asset.
Got it. Following the upfront milestone payments, what does runway look like for Keros at this point in time?
We have said we have runway into 2029.
Great. What sorts of major programs do you expect that that will support between now and 2029?
Yeah. We believe that the path forward for KER-012 will be determined. If it is in PAH, we can support that. If it is in other indications, we can support that. In the case of KER-065, we can support DMD plus additional indications and then bring forward additional assets. That does not rule out the possibility of external innovation where something that is synergistic with what we are doing could also be part of our strategy.
Absolutely. Maybe to close out, what do you believe is the most underappreciated aspect of the Keros story by investors?
The entire thing. I think, you know, we're trading below cash, right? We said we had $530 million or $560 million at the end of the year, $200 million upfront. We're trading around $420 million, okay, right? We're underappreciated in terms of cash. There's no value being given to the Takeda deal, okay? At this point in time, no value at all being given to sotatercept or KER-065. I think it's a story where everything is underappreciated.
Yeah. Yeah. Great. With that, I will thank Jasbir for joining us today. Thank you all for attending the 45th Annual Healthcare Conference. Everyone have a wonderful rest of the day.
Thank you.
Thank you.