All right. Good afternoon, everyone. Welcome to this session of the Morgan Stanley Global Healthcare Conference. I'm Judah Fromer, one of the STEM biotech analysts here. Let me just get through a quick disclosure before welcoming Kymera. 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. With that, welcome Nello and Jared. We appreciate you guys being here.
Yeah, thanks for having us, Judah.
Maybe for those newer or less familiar with the story, can you spend a couple of minutes on a high-level overview of your protein degrader platform and the technology that your products have been built on?
Yeah, for the very few that are not familiar with Kymera, the story behind the company is to use targeted protein degradation to develop a whole new generation of medicine. Where is the opportunity? The opportunity is the technology allows us to go after targets that have never been drugged before or have been drugged poorly because we use a small molecule modality so we can get into the cell where 80% of targets had remain undrugged or poorly drugged. Unlike small molecule inhibitors, we don't need to have a function with this molecule. We only need to elicit a binding event. A binding event to the heterobifunctional nature allows us to present a disease-causing protein to the proteasome that is the natural cellular machinery for protein recycling. We present a disease-causing protein for degradation, and in doing so, we elicit a very strong pharmacological effect.
What we've focused on for the past nine years is to marry, as I like to say, the technology with the right problem. We focus really on undrugged targets, poorly drugged targets in pathways that have a high degree of validation, targets that have strong human genetics, and targets that lead to broad potential impact. We're talking about millions of patients instead of thousands of patients. We have started, and this technology is disease agnostic. Our initial efforts were almost evenly split between oncology and immunology. As we continue to advance our pipeline, we actually saw a unique opportunity in the overall landscape. The opportunity is to develop oral drugs with biologic-like activity. This is exceptionally unique in immunology. We have several mega-blockbuster drugs, amazing mechanisms. You can think about the TNF, the R17, the R23, the R413.
These are validated biological pathways, and in doing so, they've helped millions of patients. The challenge is there's still these drugs that have generally low penetration, and there are millions of patients that are not accessing these highly effective advanced therapies. With oral drugs that can mimic the pathway blockade of these biologics, we can change treatment landscape. We've focused our whole pipeline on pathways that, again, as I mentioned, are validated, but there are key drugs, especially transcription, key targets, especially transcription factors that have not been drugged before. STAT6, for example, is the key transcription factor for IL-4 and IL-13. Our KT-621 is the first-in-class oral STAT6 degrader for 100 million patients' potential impact or more.
IRF5 is another transcription factor in the Type 1 interferon inflammatory cytokine, IgG pathways that also has been pursued for many years, unsuccessfully so far, and we have the first-in-class oral molecule, and we have many others that we haven't disclosed. That's the high-level view: orals with biologics-like activity through protein degradation.
Okay, great. That's a great setup for the conversation. We'll spend most of our time on STAT6, as it will not be a surprise to anybody. Starting with KT-621, we have initial data here. Staying very high-level before we get into it, I guess I'll ask you a question that I would typically ask later in the conversation. Key feedback you've received from KOLs and investors following that data, kind of how did level of excitement change once people saw initial data in humans?
Yeah, I mean, I think this is one of the very rare cases that I've personally experienced where the feedback has been overwhelmingly positive. I think that we had entered the phase I healthy volunteer study with expectations of degrading the target 90%+ safely and with an impact on TH2 biomarkers. What we were able to see went above expectations. We saw not only 90%+ degradation, we saw complete degradation in blood and skin at very low doses. We saw placebo-like safety, and we saw an impact on TH2 biomarkers like TARC or EOTAXIN that was similar, if not numerically superior, to Dupilumab. It really told us that the premise for the program, the investment thesis so far continues to be confirmed and also de-risked the ongoing studies and future studies.
How would you characterize unmet need, given the existence of Dupilumab in the space? Has that framework for unmet need changed since people have seen the data?
Yeah, look, as I mentioned, if you look at the seven major markets and you look at people that are diagnosed with moderate to severe AD, Asthma, COPD, CNR, Chronic rhinitis, EoE, et cetera, there are seven or eight indications which Dupilumab has been approved in. There is slightly above 100 million patients. Dupilumab has treated about a million patients. We clearly have 90%+ of patients that do not have access to advanced systemic therapies. Why not? The main reason is that these are expensive and difficult, challenging to reimburse, inconvenient injectable biologics. There are no oral drugs in most of these diseases that are well tolerated and have the activity that these biologics have.
What I think needs to be appreciated is not only, you know, we can potentially compete with Dupixent for the existing patients, but more importantly, we can expand to the millions of patients that don't have access. The unmet need is really to allow all patients that have these diseases to have a convenient, safe, and effective oral drug. That I think will be a treatment shift. I know we're very focused in AD, but if we think about asthma, there are millions of children, young adults that are required to take treatments like inhaled steroids, et cetera, that do not address the underlying cause of inflammation and are actually being exposed to secondary effects and unwanted effects that they should not be exposed to. We feel very, very, very committed to changing how these diseases are treated, and that's the opportunity we have with the KT-621.
Okay. Maybe just one more on the health of data. I guess safety versus efficacy profile that's been demonstrated thus far, did one surprise you more than the other, or did the molecule behave kind of as designed?
I mean, I think from a safety standpoint, we were expecting to see a clean safety profile based on what we knew about preclinical models of STAT6 knockouts in mice or what we had seen in our preclinical tox where at all doses, even high doses, giving us complete degradation in higher species and rodents, we weren't seeing any toxin. I think we were expecting also, given the fact that STAT6 is so specific and selective for IL-4 and IL-13, and we have such a selective drug that we could use at low doses, that we would have a clean safety profile. I think we weren't surprised, but it was nice to see that confirmation. I think on the activity side, again, I think we knew this was a very potent degrader and that we should see very potent effects on STAT6.
I think we tend to underestimate just how potent our degraders are going to be in vivo based on our preclinical animal data. Humans always end up sort of outperforming, so to speak, non-human primates and rodents. We were very happy to see just how low we had to go in our dose to even get less than 90% degradation in blood. We were very pleased to see that the level of degradation that we saw at relatively low doses, 50- 200 mg, you know, in blood and skin, were essentially the same. We could completely degrade the target in both of those compartments.
Okay, great. Moving into the phase I-B in AD patients, you did recently announce you'll be adding a second dose. Could you walk us through study design there, the rationale behind that decision, and particularly in the context of, I believe, already having selected your phase II-B doses? What's it helping you do?
Yeah, let me just go back. I'll let Jared talk maybe more specifically about the study design and the, you know, the inclusion and exclusion criteria, et cetera, just a high level about the goal of the study and the reason for the study. Just reminding everybody, what's on the critical path for registration is to do a dose-ranging study and then a phase III registration study. Those ranging studies in our development plans are phase II-B studies. For us, initiating phase II-B studies in AD and asthma are the priority of the company. Based on the required data to be generated ahead of phase II-B study, we could, at the earliest time possible, start phase II-B studies in Q4 of this year. We had an opportunity between the healthy volunteer study and the phase II-B study to evaluate our drug in patients.
We have three goals from phase I-B study: confirming degradation in patients in blood and skin, understanding the translation from healthy volunteers to patients to then select the right doses for the phase II-B study, and then demonstrating that STAT6 degradation in patients with AD can have a pathway blockade and clinical endpoints that are comparable to upstream biologics based on the mechanism of STAT6. Obviously, the third goal is kind of independent of the doses to a large extent. What we wanted to do was really use the opportunity, given that the study was moving at a relatively rapid pace, to translate, instead of only one dose for medical volunteers to patients, but two doses so that we will see the translation more robustly across multiple doses and de-risk phase II-B dose selection.
It was an opportunity not to have questions as we're making a $100 million plus investment into these phase II-B studies. Maybe, Jared, you can speak to the study design and the other kind of more clinical goals.
Sure. I think the aim of this phase I-B study was to strictly and efficiently show initial proof of concept in AD patients. We designed the study that was going to be approximately 20 patients initially, one dose, then we added on the second dose to look at it as well. No placebo control because, again, for us, the primary objectives were being able to demonstrate, as Nello said just a moment ago, degradation in skin and blood safety, as well as impact, hopefully seeing a duplicate impact on biomarkers in blood and in skin where a placebo control really isn't necessary, while also including clinical endpoints. Even without a placebo control, it still gives us the possibility of being able to detect a clinical signal. This was a 28-day study.
28 days, if you look at the Dupilumab 16-week studies, even 28 days is sufficient to see an impact on TARC, one of the key circulating TH2 biomarkers, to see an impact on TH2 skin transcriptome, and to see an impact on key clinical endpoints like EASI and pruritus. The aim was to enroll moderate to severe AD patients, so all the usual criteria, for example, EASI of 16 or greater, vIGA of 3 or greater, et cetera It was really designed to allow us to get that population of patients and to really show the impact, again, on degradation, on biomarkers, as well as on clinical endpoints, and to look for connections between those three different buckets of activity, in addition, of course, to showing safety and, as Nello said, being able to sort of confirm our dose selection for phase II-B.
Okay, great. We've fielded the question, and I'm sure you've got it as well, kind of the idea of splitting 20 patients into two cohorts and effectively testing two doses in half the number of patients. I think the study protocol does allow you to dose more than 20 patients. How are you thinking about, you know, I guess, kind of final end within those two?
Yeah, look, I think it's important to recognize this is not a powered study for a clinical endpoint. I believe we have enough power to look at changes in biomarkers because those are really, you know, they don't carry, let's say, a placebo effect. I think it's important not to get too hung up on the number of patients per cohort, given that the questions for us are quite clear. Do we degrade the target? Does the degradation lead to biomarker changes? And do the biomarker have an initial impact on clinical endpoints? We're never going to be powered to scientifically compare to other studies. Whether you have 10 patients or 15 patients per arm, I'm not sure it's worth, you know, the effort of protracting a study instead of focusing on phase II-B.
It is true we have the protocol that allows for more than 20, and we'll probably have more than 20. I'm not sure there is a meaningful difference between 10, 12, and 15. If you look at the early Dupilumab study, if I'm not wrong, the three doses, they had eight patients per dose. They were able to show what they wanted to show, which, you know, for them was really the early translation of this new mechanism into patients. I believe we have what it takes with the existing protocol to accomplish our goal.
Okay. Maybe for both phase I-B and the phase II-B, can you give us a sense of enrollment conversations, how those go with investigators and patients, supporting the demand for an oral safe product?
Yeah. Maybe there are two aspects of the enrollment. phase I-B is a 28-day study with two required biopsies. This is, in every type of disease setting, a hard study to enroll. Patients will have limited benefit given the short duration. We have no extension of study. It's a tough value proposition for any patient. Having said that, we've had quite a bit of interest. I think there are patients out there that are still naive that are excited about, and obviously, I'm not speaking for patients, but from what we're gathering, there is interest in an oral option. I think we're aware and continue to learn, and we've said it already publicly, and it's not even based on the experience, but on recent studies in atopic dermatitis, the population is evolving.
When Dupixent was developed, if you look at mean entry EZ level, we're talking about 30, 32, 31, 29, 33. Now, if you look at the past five studies in AD, we're looking at, what, 24, 25, 26. That's only natural as there are treatment options, which there weren't back then. We always have to keep in mind that the patients are different. We have all the tools to appreciate the treatment effect of a drug, even with different populations. We just have to be really smart at data analyzing, which hopefully is the case for the whole industry, but I can't say that it will be always.
Okay. Just following up on phase II-B doses, have you started running or communicated those with phase I-B readout, and should investors be assuming that phase I-B doses are encompassed within phase II-B doses?
Let's start with when we disclose what. We haven't disclosed phase I-B doses, but we will do so when we disclose the data. We assume that we will do the same the phase II-B. we will not disclose those when we begin or run the study, but we will do so when we release the data. We don't see a reason why we should share the doses ahead of time. I don't think there is any benefit for anybody to know. We just would be disclosing a competitive piece of information for no reason. I think maybe what I can say is that the doses are within the range that has been explored in healthy volunteers.
Okay, helpful. How are you or how should we be thinking about dose effect, whether that's in the phase I-B or the phase II-B? How important is that aspect of the data generation here?
What do you mean by dose effect?
Whether we'll see more of a benefit in higher dose when we get to the phase II-B.
Got it. Yeah, the phase II-B has been designed as a dose-ranging study, and the doses that we select, we expect to see a difference between the lowest dose and the highest dose.
Okay.
I do not want to comment on the phase I-B.
Yeah, that makes sense. In terms of the sequencing of that data communication that you pointed to, you know, reporting out the phase I-B data versus starting the phase II-B.
Yeah. Great question. Reminding everybody that when we enroll the last patient on the phase I-B, that patient would be on the study for 28 days. There would be a two-week follow-up, and then there'll be a six weeks or so time needed to collect all the data. From last patient, last visit to our ability to have all the data, it's, you know, a couple of months. It is because of all of this, it is possible that we will begin phase II-B study before we disclose phase I-B data. We remain committed to do both of those things in Q4.
Okay. Have you said kind of the, you know, where and how you'll communicate the phase I-B? Would it just be?
I think most likely, given the nature of the study and our desire to release the data quickly after we've collected the data, the availability of conferences, et cetera, it will be a company-sponsored event, very much alike the healthy volunteer data.
Okay, helpful. Maybe just backing up, sort of high-level question on this space. I guess, you know, how would you characterize Big Pharma's current interest in STAT6 degradation? You know, how do you think about potentially partnering opportunities if there's a right time for that, or are you committed to doing this on your own?
I think STAT6 is, there is, in my mind, three targets in the biopharma industry today that have the potential of a mega-blockbuster drug. STAT6 is one of those three. I won't comment about the other two. It is not surprising, given that there are a lot of smart people everywhere in big and large companies, that from what we understand, STAT6 is one of the hottest targets in the industry now where you either are trying to develop your own asset or you're trying to partner with the existing companies. Actually, this is one of the very few targets that, as far as I'm aware, at least most assets out there have been partnered already in preclinical stage. If we were a different company, our assets would have been partnered already. There would be no biotech with a STAT6 asset given, again, the potential impact of this drug.
Going back to the second part of your question, we've made it very clear to our colleagues in other companies that we have no intention of partnering this program for the foreseeable future, for sure, through phase II-B data. I think at that time, once I think phase II-B, we'll have a very clear understanding about the efficacy of this drug, where it stands in the, where it will stand in the treatment paradigm. At that time, depending on our cost of capital, we will make those determinations of going all in alone or partnering some aspect of this program. If you ask me, I would prefer no partnership ever. We'll do what's right for the value creation of the company.
Okay. Maybe another way to ask the competition question, is there a competing asset you see out there that makes you nervous, or is the competition more in-house with your next-gen asset?
Yeah, yeah. I was going to reply to that, but you stole my joke. I think we have a second-generation asset that we've decided to, for now, let's call it PARC in I&D ready. I think this speaks first and foremost to the level of investment we've made into the STAT6 franchise, the opportunity of the franchise, the gap that we have with our, you know, with our, I don't know that competitors is the right way to say it, maybe with the Silvers. We have it because we continue to do chemistry. I'll just put it out there so that we don't get trapped in another roundabout conversation on this next-generation molecule. We believe in three things. Until you have a drug approved, you continue to invest. Companies like Alnylam, Vertex have shown you how much value you can create by continuing to work on the existing program.
Until we know what the payer landscape looks like, we want to have the option to use different molecules for either different indications, different severity of diseases. To be honest, we want to have an insurance policy at any given time. It's extremely difficult, even for us that are the best at STAT6, not only the first, to find something better than KT-621. To be honest, the next molecule is not better. We will continue to invest to make sure we'll remain first and best.
Okay, great. I did promise we'd touch the other programs. Maybe if we just touch on IRF5, could you help us with an update on that program, kind of key elements of the therapeutic potential for that program and any development timelines you'd highlight?
Sure. Yeah, I mean, IRF5, in terms of starting off in terms of where we are with the program, we're in the midst of IND-enabling studies. The plan is for that program to enter phase I in healthy volunteers in the early part of next year with data readout next year as well. You know, the value proposition for that program, IRF5, is a target that's been very attractive to big pharma and biotech because of where it sits at the cross-section of multiple different toll-like receptor pathways leading to control of Type 1 interferon response, control of autoantibody production by B cells and B cell activation, and the production of multiple different pro-inflammatory cytokines. A lot of intense interest in IRF5. The problem has been trying to drug it because there are many different IRFs within that family and many different isoforms even of IRF5.
I think the other compelling aspect about IRF5 is the strong genetic association with a variety of different diseases, including lupus, rheumatoid arthritis, IBD, and other interferonopathy. I think all of that makes it very attractive. Our data, with our very potent, very selective IRF5 degrader, we had shown in our preclinical models of lupus very strong activity looking better than most of the other approved or active drugs in the space. We have ongoing studies in rheumatoid arthritis as well as in IBD. We see this as potentially first-in-class, best-in-class for IRF5 and a drug that can really change the treatment landscape for diseases like lupus, rheumatoid arthritis, and other interferonopathies.
Okay, great. Just touching on IRF4, there was an update there with your partner moving to a new molecule, KT-485. Do you see any implications for the overall probability of success or timelines for that program and that mechanism?
I would say that the team at Kymera did an amazing job with the learnings of the platform over the years to deliver a superior molecule. I would say the probability of success is increased by having a molecule that is void of any potential subclinical finding that we saw in phase I in terms of QT, that is more potent and better distributed. Obviously, in timeline, there will be an impact, but we've learned a lot from KT-474 and all the learnings will be applied to the development, hopefully by Sanofi. Obviously, with us, definitely will be applied. We hope Sanofi will do the same to the development of KT-485 and both the patient and how, which type of patients and type of trials that we will advance. I hope that overall also the timelines of these assets' development will be faster than what it was for KT-474.
Okay, that makes sense. Maybe you could just help us with cash runway and which activities are contemplated within that runway though.
Yeah, so we have, as of July, just about $1 billion of cash. This will allow us to get into the second half of 2028 and really task everything that you see in our pipeline, both phase II-B studies, all the work that we're doing on IRF5, including a proof of concept study in patients for IRF5, other work on other programs that we haven't unveiled yet, and importantly, will help us set up and initiate phase III studies with KT-621. Obviously, we thank all the investors that have contributed over the years and also recently to allow us to set the company up for maximal optionality going forward.
Okay, that's great. Before I move into kind of our mini survey questions, if there are any questions in the room, feel free to raise your hand. We do have the mics that are available to folks. Before I get into the mini survey, is there anything within the story that we didn't highlight that you'd want to point out to folks that maybe people are missing?
No, I think we've covered everything. Maybe the only one asset we haven't touched on is our CDK2 collaboration with Gilead. It's for us as an immunology-focused company, not on strategy to advance on our own, but it's a beautiful asset, a beautiful molecule, if I can say so, that is moving into, hopefully, soon enough into Gilead's pipeline. It's a testament to also our molecular goal efforts that we haven't discussed at length.
Okay, great. The next little portion here is, like I said, a survey we're asking all of our biotech teams to try to get a sense of some thematic issues across the space. Biotech seems to be more exposed to external and macro factors of late. We're asking, like I said, all management teams these three questions. The first topic is China and the rise in biotech innovation there. How are you thinking about your competitive position here? Will the rise in China biotech influence R&D or business development strategy in any way?
I could go on for hours on this one because I'm actually quite passionate about this particular topic. Not to go all the way back, you know, when I moved to the U.S. 21 years ago, the simple reason was this is the country where meritocracy, hard work allows you to do incredible things. I think the moment in which we stop focusing on hard work, innovation, and we rely on others to do that for us, we're giving up a huge competitive advantage. I know we talk a lot about the importance of the impact on national security. This is a national security issue. If we lose the position we have in innovation in any field, including and foremost in healthcare, this is a big problem we have.
We should just go back to investing into basic science and making the concept of working really hard to be successful a sexy thing again.
Great.
With regards, sorry, I know you have more. Told you I can go on for hours. With regards to competitive, with regards to Kymera, we do really, really forefront biology and chemistry. There will be programs where there is more competition, but I don't believe it's going to be something we have to deal with closely, at least in the foreseeable future.
Okay. Next topic is AI. How are you at Kymera leveraging AI or thinking about AI's future disruption potential, both on the positive and negative side of what's going on in the company?
Yeah, I mean, we use all aspects of how machines can help us be more efficient. What we don't do is talk a lot about the cool things that AI can do without data, right? I think it is a train that we cannot afford not to jump on, but we need to be practical and solution-oriented. I know some companies use tools, they call themselves AI-powered companies. We are an AI-powered company as well, but we use it in a practical, solution-oriented manner.
Makes sense. Last one is a little bit broader, but you know, from the regulatory side of things, some of the topics that have been listed that are impacting businesses in the space, changes at FDA, pricing debates, tariff, I think for you guys, the toll penalty has come up as an area of focus. Anything on the regulatory side you'd highlight that is?
All of the above. First, every time there is change, we need clarity. I think we, as humans, can adapt to almost everything. Think about the COVID days, what we adapted to. We can adapt to almost anything. We just need clarity. More importantly, we need a level playing field. I think right now, that's where we're lacking. We're lacking a level playing field between small molecules and biologics. It's completely unfair, and it's probably one of the most uninspired policies that I've ever seen. Another piece is leveling the playing field in the reimbursement space. I think we need to support innovation, and we need to allow biotech companies to compete with large companies that use tools to avoid competition.
I think those are the two most important things, and they are critical for the innovation that biotech companies can bring to the table, and more importantly, to the success of these companies and to the ability of small companies to grow into established companies.
Great. There are no questions in the room. I think we'll stop it there. Thank you for the thoughtful answers and for being here.
Thank you.
Thank you.