Good afternoon, everyone, and thank you for joining us today. My name is Steve Trecartin, and I'm an associate with JP Morgan's Healthcare Investment Banking team. Before we start, as you probably know by now, we'll have a Q&A session at the end. Feel free to raise your hand if you have any question once the presentation is over. Today, I'm pleased to introduce John Fowler, Co-founder and CEO of Kezar Life Sciences. I'm sure he's excited to tell you more about the company and the work his passionate team has been doing to deliver unique treatments that can better the lives of patients fighting difficult to treat chronic diseases. With that, I'll pass it over to John to share the story. Thank you.
Thanks very much. It's really good to be here. Thanks, everybody, for taking the time at the near the end of a long day and a long week to learn a little bit about Kezar Life Sciences. I've got a slide deck that will take about 20-25 minutes to get through. Definitely happy to take questions. I'm joined by my chief scientific and chief medical officers here as well. If you need to really dig deep, I may even embarrass them and ask them to come up at the end. Before getting into it, here are disclaimers as per usual. What we'll be talking about today is what I like to think of as the potential for real paradigm shifts in both autoimmunity and oncology. We have two distinct yet complementary programs.
Our lead program targeting a really important piece of biology called the immunoproteasome. We have a drug called zetomipsemib, or I'll refer to it for the rest of the presentation as Zeto, that's been in patients for several years now, treating patients with pretty refractory lupus and lupus nephritis, and we think it has potential in really a wide range of other diseases as well. A lot of the time we'll spend today will be reviewing the data from our recently completed MISSION study in patients with active lupus nephritis, but it also gives us a lot of insights into how Zeto might treat patients with hard to treat lupus or SLE. Our other program has been a part of Kezar from the very beginning. It's our protein secretion platform.
My third Co-Founder, Jack Taunton, who kept his faculty position at UCSF, is really the world's leading biologist and chemical biologist in this unique piece of biology that has never been drugged before. We're the first company to bring a small molecule into the clinic targeting the translocon. KZR-261 has really exciting potential. It kind of resembles a combination therapy in a single small molecule drug, which is a bold claim. I think when I share you a little more data, you'll understand what I'm talking about. Finally, we're lucky to be in a strong financial position. At the end of December, we had approximately $277 million in the balance sheet, giving us a three-year cash runway. Let's get into our drugs. Let's get into our targets first.
The lead program, again, as I mentioned, targets the immunoproteasome. That's a seven-syllable word. I know most people don't know what that is, but I think most people in the room probably know what proteasomes are. It's really, really important, very highly conserved of our biology. All of us are approximately 1% proteasome, but Mother Nature did a cool thing eons ago and evolved a unique form of proteasome for our immune cells. The immunoproteasome, very creatively named. It's only a tiny fraction of the overall proteasome in our body, but it is distinct, and it's distinctly evolved to handle the unique workloads of the cells in our immune system, for everything from antigen presentation on down the line.
What our incredible team of chemists were able to do is engineer a small molecule that selectively targeted the active site subunits in the core particle of the immunoproteasome, thereby avoiding dual proteasome toxicities, targeting toxicities that you might see with Velcade or Kyprolis or other drugs used in the myeloma space. We're able to still blanket the entire immune system because all immune cells, whether in the adaptive or the innate immune system, express immunoproteasomes. We think that we are seeing and will continue to see kind of pleiotropic immunomodulatory effects with our drug with a very excellent safety profile that I'll explain a little bit later. This other attractive multicolored illustration is a picture of the Sec61 translocon, heretofore not targeted drug target that we've really taken the lead on.
Our molecule KZR-261 is blocking approximately 10%, 9%-10% of the proteins that utilize this channel to move off of the ribosome mRNA kind of birthplace of a new polypeptide and into the ER-Golgi apparatus and out of the cell. It's such an important piece of biology 'cause every single target of a biologic drug, with one exception, relies on the Sec61 translocon. Among many things that we think this has potential for, it really has potential to complement or replace biologics with small molecule drugs. I'll explain more of that later. Right now, because we had to pick where to go first, we're going after solid tumors because the unique inhibition profile of 261 targets so many of the proteins that tumors rely on to evade immune response or proliferate.
First, let's talk about zetomipsemib. I love that word, but even though I love it, I still refer to it as Zeto, and you all may as well. The key here that I'll keep hammering on is that we're working through immunomodulation versus immunosuppression. This puts the drug in pretty stark contrast to most other drugs in the autoimmune treatment landscape. This is a slide that we've used for many years, and we've slightly rehabbed it and bringing it out again because I think it shows just what the secret sauce of Zeto is. It's its mechanism of action. It's the broad expression profile of the immunoproteasome across the entire adaptive and innate immune system. You can see here on the top macrophages as a proxy for the innate immune system.
We've been able to measure with our drug that we'd reduce inflammatory cytokine levels like TNF-α, IL-6, IL-23, Interferon alpha, all classically validated targets of sometimes blockbuster drugs you see there listed in that column. Also T cells and B cells, the more kind of sophisticated adaptive part of our immune system are dramatically changed when they see immunoproteasome inhibition. Particularly T cells in the TH1 and TH17 inflammatory phenotypes get rewired to look like Treg cells, which is phenomenal. We see dramatic reductions in autoantibody levels. In particular, many of the diseases we're going after are defined as autoantibody-driven diseases. Most rheumatologists, nephrologists, and beyond who treat disease recognize that it's often more than just autoantibodies driving disease. That's why we believe Zeto is already working and will continue to work in places where other competitors are seeing marginal results.
There's a lot of drug development going on in autoimmunity. Steroids have been around forever. There's biologics and B-cell targeting agents that are in mid-stage and late-stage development. Why do we need additional entrants? Well, for starters, the side effect profile of many of the drugs currently in the armamentarium or in the pipeline have significant side effects, starting with the drug that's given out like Halloween candy, corticosteroids. People forget that patients hate being on steroids for the long run, even at low doses of 5, 10 milligrams a day. It drives all these things you see here, bone density loss, weight gain, issues of immunosuppression, along with other drugs like MMF, which is a backbone of LN therapy, which drives even deeper immunosuppression.
Inevitably, in many, if not most patients, you wind up on a doublet or triplet combination of immunosuppression, which is just not well tolerated in the long run by patients. They're looking for other options that reduce the overall immunosuppressive burden and reduce the really scary risk you see at the bottom there of malignancies or heart failure, things that do show up as warnings on many of the very successful biologic drugs. What we've seen to date with Zeto is a starkly different profile, right? We came into this proposition thinking we would just kick butt on efficacy, which I'll show you some efficacy data, which I feel supports that rather crudely framed claim.
It's the safety I think will be well the secret, the long-term true advantage that will get prescribing doctors extremely comfortable with giving this as a chronic therapy. We're not seeing opportunistic infections or increased infection rates, which is obviously the hallmark of immunosuppression. We're not seeing lymphodepletion, the immune cell depletion, which leads to that immunosuppression. We're not seeing drug-drug interaction risk. This drug is extrahepatically cleared. It will play very well with other drugs, which is nice. It's exquisitely targeted only on the key subunits of the immunoproteasome. It's not hitting other targets. It's most cleanly and well-behaved and well-designed small molecule that my co-founder, Chris, has ever worked with, and he's not usually that that braggadocious.
Critically for the, for the patients who actually suffer from lupus nephritis, who are often young women of childbearing age, having no teratogenicity risk is a huge advantage and stands in stark contrast. Finally, the ability to avoid serum monitoring, you're not gonna come in for blood tests, is another tremendous advantage. There's the laundry list of safety advantages, and let's talk about next steps and also about some data. Very simply put, we finished our MISSION study in patients with lupus nephritis.
We reported data at the top line in middle of last year and then the full data set, which I'd encourage if you haven't looked already at our posters, they're on our website, that we presented at ASN just in the last couple of months with a lot more detail than I'll obviously have time to go into here today. Next steps include initiation of our registrational program, which we anticipate will be kicking off in the first half of this year. Onto the data. As you can imagine, I've spent hundreds of hours with my management team speaking with many, many of you and many other investors about what to expect from the Mission data set.
We spent a lot of time comparing other lupus nephritis trials that had used induction therapy and achieved somewhere between a rock-solid 50% rates of overall renal response on induction therapy, and then a modest increase of 15%-20% when you add the study drug on top. We designed the MISSION study to not use in classical induction therapy, so we predicted the overall response rates would be rather low. For those of you who aren't lupus nephritis experts, the primary endpoint here was renal response defined as ORR, overall response rate, or CRR, complete response rates. These rates dramatically exceeded our hopes and expectations. They exceed what we've seen in other trials that had the benefit, the rising tide of induction therapy.
As you can see here by a couple weeks, four weeks after the end of treatment, as predicted by our mechanism of action with continued kidney healing, a stunning north of 90% of patients seeing clinically meaningful 50%-plus improvements in their UPCR. It wasn't just. Here's another visualization of how the UPCR really improved across our patient population in the MISSION study. It's just wonderful to see this 0.7 sort of EULAR-mandated guideline for where you wanna hope to get a recalcitrant LN patient to that we're getting way well below that on a median basis across our MISSION patient population. To summarize, it's not just UPCR. That would be a huge win in that by itself, and no question just that data in distilled form would justify running in a, you know, full speed into a registrational program.
It was much more. One of the most exciting things for us was that, without any mandated steroid taper, we saw dramatic voluntary steroid reductions across the patient population. 53% mean reductions, and then over 80% getting underneath or at equal to that 10 mg almost like homeopathic range dose, which is considered by most of the community. In our future study, we certainly will have mandated steroid tapers, and we believe that this is one of the things that's getting the most excitement out of the KOL community, is the opportunity for Zeto to replace steroids or be the equivalent of a fast-acting, broad-acting steroid without the steroid side effects. As I noted earlier, the safety and tolerability profile also followed suit. We weren't seeing anything out of the ordinary.
The typical injection site reactions that you get with a once a week subq injectable drug were present, but self-limiting and not an issue or deterrent to being on long-term therapy. Critically, of course, no opportunistic infections or sense of immunosuppression. In a smaller and particularly open label trial, you're looking for all the quantum of evidence you can get to build your conviction level. What we saw here, by design, was a lot of other evidence that gives us confidence, particularly these very well-known biomarkers of double-stranded DNA antibodies, which is a classic hallmark of active lupus. We saw improvements in 10 out of all the 12 patients who had elevated levels, including those patients, four in one case were C4 or five with C3 with abnormal complement levels, also improvements in their complement levels.
Finally, a kind of emerging biomarker of high interest for the LN community is urinary CD163. Once again, our patients had an almost parallel track of reduction in UCD163 that tracked uPCR, thereby further showing that we're really reducing inflammation in a major way in the kidney. Finally, as we think about the future and think about the big picture and blockbuster potential of Zeto development long term, you can't not think about lupus. As most of you may know, lupus nephritis patients are also lupus patients, and many, if not most of them, are evidencing active lupus symptomology. Same case here. You can see that for the patients with lupus symptomology, they had a pretty high SLEDAI score coming in.
SLEDAI scores for the one really well-known approved drug in lupus, Benlysta takes two years to start driving those numbers away from the placebo rates. In six months, we achieved a massive reduction. PHGA, Physician Global Assessment, in a tough to measure and quantify disease, often like lupus, the physician's sense of how well the patient's actually doing is very powerful part of assessing improvement. Physicians are declaring their patients are getting dramatically better and quickly. Finally, the CLASI, a measure of skin rash and skin manifestations of lupus also is improving. Cross-organ system effects being seen by this pleiotropic drug. Not just a kidney drug. This is a new way to treat inflammation. Where do you go when you have a new way to treat inflammation? You think about other indications.
I've talked to some of you in this room even this week about where else are you going? When are you gonna announce other indications? It's tough because we have the blessing and the curse of a relative set of riches to choose from. There are many options of where to go. SLE, I've already let that cat out of the bag. We'd love to go there. It's not cheap to do a registrational path in SLE. It is cheap to do a path in AIH. We're not doing it because it's cheap. We're doing it as a function of the excellent mechanistic fit here, and this is a fancy picture that you can look at later. The takeaway is this is not just an autoantibody-driven disease.
Because of that's why the handful of B cell-focused therapies that have been tested in AIH have failed. It's, macrophages are implicated, T cells and B cells. The perfect fit for a mechanism of action like Zeto's to have a great effect. There's a huge unmet need, utter reliance on corticosteroids, and in the last several years, a highly motivated patient advocacy community and younger KOLs who are motivated to put it mildly, to work with Kezar, with Zeto and on the PORTOLA space. We're really excited and are kicking this off as we speak. It's up on ClinicalTrials.gov.
I may have kind of skipped ahead and talked a lot about these check boxes here, but because this is an orphan disease, it is something we can pursue without breaking the bank and can pursue in parallel to our big global LN study. We love the fact that measuring these liver enzymes represents an yet another very quantitative endpoint and a way to get a clear answer on the activity of the drug. And we're up and running. And we look forward to announcing our first patients enrolled in the first quarter of this year. Stay tuned. Before I transition into talking about protein secretion and the Sec61 translocon, I just talk a little bit about how AIH and LN and maybe SLE kind of fit into this vision.
That alone absolutely is a blockbuster drug commercial story by itself from a, from a revenue perspective. There's a lot more. These 5 circles down here are absolutely not meant to represent the totality of evidence that we have both pre-clinically and clinically to support Zeto being tested in other indications. When you think about the long run, we have patent life and extensions well into 2039 and beyond. There's a lot of opportunity to dream big and consider where we might be able to go ourselves and eventually in partnership to treat both large indications as well as the more kind of modest size indications we're going after today. KZR-261, a first-in-class, first-of-its-kind protein secretion inhibitor.
Rather than go straight into talking about KZR-261, I'm gonna talk a little bit about the translocon because it is such a fascinating piece of highly conserved biology. You can see it. You saw an image of it earlier. Now you're seeing it resident on the ER. It's really that first place that a newly created polypeptide visits as it comes off the ribosome and mRNA. About 6,500 secreted and transmembrane proteins rely on this highly conserved gate, as it were. And you can see on the right side here a very, very partial list of extremely validated targets that are membrane proteins in the overall oncology space generally, and then also secreted proteins that obviously can drive inflammation and other things. All these are fair game for our small molecule drug targeting system.
You can just see from the, from the vision here how a secreted protein leaves the cell or is presented on the cell surface. They all start there at the translocon. Now, we've gone through a lot of molecules. We are blessed to have incredibly talented medicinal chemists at Kezar in South San Francisco. We have a full lab in our office, and they have been able to iterate on our own wholly owned chemical material, and they've wound up bringing to the clinic first a drug that does the following. This is a very compelling heat map to me in the range of both immune checkpoints as well as oncogenic growth factors that we're knocking down with KZR-261. That's why I used the provocative phrase earlier of combination therapy and a single small molecule drug.
It doesn't take a wild imagination to think about if this is a well-tolerated drug, which our preclinical data tells us we could have a therapeutic index of approximately four-fold, which would be wonderful, it gives us an opportunity to kill cancer cells in an entirely new way and in a multi-pronged way. The simplest way to summarize it does it by direct effects on tumor cells by hitting some of those immune checkpoints, also by hitting VEGF EGFR, for example, you dramatically modulate the tumor microenvironment. This is very compelling, and it doesn't mean you're gonna kill every single type of tumor cell, but we actually ran a pretty detailed bioinformatics process in-house to predict for which tumors would be most sensitive to protein secretion inhibition with KZR-261. We came up with the following.
We've launched our Phase 1 study. This launched just over a year ago. It's been able to enjoy its sort of quiet status as all focus in 2022 was on Zeto and LN data. And it's afforded us the great luxury of not having to trickle out data. We're gonna have data on this program in the second half of this year, and it'll be a very robust and full data set of PK, PD, safety, and any efficacy data available through the dose escalation portion of this study. When I talked about using bioinformatics to pick tumor types that we predict will be sensitive, those are the ones there. You can see everything from prostate to colorectal, melanoma, mesothelioma, and all comers basket. Right now, obviously, we're an all comers to speed as quickly through dose escalation as possible.
We're very happy with what we're seeing. Now that we are in our fifth cohort, that's been publicly announced previously, we are in the range of minimally efficacious doses from our animal models. We're excited to share that data, and we're excited to get to a recommended Phase 2 dose. We're excited to establish unequivocal single agent activity, we hope, 'cause that will put us in a wonderful place of optionality and flexibility moving forward. Again, 2023 is a catalyst-rich year for this program. Stay tuned, and we're excited for this to no longer be the free call option of Kezar that it always has been in past years. A little bit more on the platform. I know everyone says they've got a drug platform. This really does have platform potential.
It's not just the 261 story. 261 obviously exists. It's been in the clinic, but we were had a pretty a-amazing reception at SITC just a couple of months ago talking about our poster detailing the activity of KZR-540. On the right side of this screen, you can see that we've come up with a oral PD-1 inhibitor that works by interacting with the translocon. Fundamentally different mechanistic approach to the Keytruda , Opdivo biologic approaches of other competitors, and without question a compelling independent development opportunity and potential partnership opportunity as we get more and more oncology-focused global pharmas to focus on this very unique target biology. There's a big middle ground here.
Think of it like a rheostat where we can turn a dial, go for a more prolific inhibitor like KZR-261 or a more targeted one like KZR-540, and we're working on that in the middle as well. Next steps. You've all seen many pipeline slides today, I'm sure. This is not news. We're in lupus nephritis, autoimmune hepatitis, and what we don't talk about that much is our ongoing dosing of patients with active dermatomyositis and polymyositis. Unfortunately, last year, we reported a result at our phase 2 that didn't separate from placebo, but virtually all the patients in that trial opted to do an open label extension, and many of whom have stayed on this for over a year, in one case, over two years.
There's something going on here for these patients, and at the very least, we'll be able to report by the end of this year on what kind of safety profile you see with chronic administration of Zeto over a truly long period of time of weekly dosing. That's going to be of high interest, obviously, to agency, regulatory agencies and doctors everywhere. Finally, down below, protein secretion's got a lot of meat on the bone, starting with KZR-261. We really think about again, single target oncology like KZR-540 but also the opportunity to continue to hit multi targets in a very considered and planned way. In 2023, what are we looking forward to? We're looking forward to enrolling our first patients in PORTOLA. We're looking forward to enrolling our first patients in our big LN study.
We're looking forward to an R&D day this quarter. Later in the first quarter this year, we will reveal all the details of our LN study, in terms of size, inclusion, exclusion criteria, and I know that's of high interest to most of the investment community. We will be detailing a lot about the indication of AIH, and more, possibly even, have KOL participation from an AIH KOL, and then dig a little bit more into what to expect from the protein secretion program in 261 this year. To summarize, and I think this will leave us, you know, 10 or 12 minutes so, or so for questions.
We really feel, thanks to the true innovation and novel targets that we're pursuing, that we have the opportunity to represent actual paradigm shifts in treatment for both autoimmune diseases and for cancers. The immunoproteasome and the translocon are truly master regulators of cellular function. Both in the early days were derided by academics and drug hunters as undruggable targets. We proved them wrong. Now because of that audacity, as it were, we have a huge head start advantage. That's a true competitive advantage and an IP position behind it that lets us really reap the benefits. Look forward to hearing your questions, and thank you again so much for your time. All right.
If anyone asks a really hard question, I'm gonna have to have Luther, my anger translator, come up. He's also known as Chris Kirk. You, you don't wanna get him angry.
Don't be shy. Just raise your hand.
Happy to give you the gift of time too. It's a precious commodity on a day like today.
Can you maybe just on the translocon, I guess?
Yeah.
Maybe elaborate on the most current thinking of how selective it can be in terms of maybe avoiding knocking down other secreted proteins that you don't wanna knock down.
Yeah.
There's a ton of them. How exquisite. How does it get so exquisite?
Yes. That's a great question. The short answer is 540 is exquisitely selective. From our best assessments, I'm looking at Chris here in case he has new data that I haven't been informed of in the last couple weeks. It's only knocking down PD-1. The way you're able to achieve that kind of selectivity is the unique biology of a newly created polypeptide. As it comes off the ribosome as a dangling thread of amino acids in a specific order. It's sort of like the fingerprint of identifying what is this new protein. That signal sequence is touched by a signal recognition particle, which is the first part of the Sec61 complex, and gives it the answer to open or shut.
It also gives, we believe, the opportunity for our small molecules to interact in different ways with those peptides. There's not all of these peptides look all 6,500 look the same as they come off and are. Otherwise, you just block them all, and you'd have the most toxic drug in the world. We can actually be selective thanks to that signal sequence heterogeneous nature. Anything to add to that, Luther? I mean, Chris.
No, that's exactly right. The compound Five Forty was designed to selectively target PD-1, and we've now starting to learn the chemical rules of engagement with individual signal peptides, which, as John mentioned, every single secreted and transmembrane protein has a unique amino acid sequence that we're able to discriminate with our compounds.
The quick follow-up on that, just as I'm picturing it like it's blocking it from being secreted. What happens then? This protein doesn't leave the cell. But it's been built by the ribosome and sitting there. How does it sort of stay closed? When does it reopen?
Fantastic. What happens is we stall the translation of PD-1, when you stall the translation, that partially made polypeptide is ubiquitinated and then degraded by the proteasome. For a molecule like KZR-261, which blocks about 9% of all secreted and transmembrane proteins, you've got a high level of protein degradation that is occurring as a result of blockade of Sec61, that's one of the mechanisms of antitumor activity and tumor cell death. In the case of KZR-540, it's just preventing PD-1 from ever getting to the surface of the T cell, therefore it can't work as a brake on the immune system.
Okay. The PD-1 stop... That cell though, stops...
Stops making PD-1. Yeah.
Even at the transcriptional level, it goes back and somehow stops making PD-1.
It will continue to make PD-1, the blockade of it from ever getting out in the presence of five forty keeps PD-1 from getting to the surface. If you look on the T cell, it has no PD-1 on its cell surface.
It probably never even looks like what PD-1 probably looks like. It never enters the ER for glycosylation and folding.
Yeah.
like a stillborn proto PD-1.
Okay, cool. Thank you so much.
Yeah. Well, great.
Yeah. You,
Sorry.
presented-
Okay.
Zeto can, sort of, steroids. You're re-reducing steroids.
That's right.
...when you're using Zeto on the patient. You show that you lower 5%. Can the patient continue to lower their steroids so that you can completely replace it?
Our hope is absolutely yes. The limited data we have so far in patients who've gone for a long time shows continued steroid tapering. We actually had one patient from the phase 1B portion of our MISSION trial.
Mm-hmm
...who was a very sick lupus nephritis patient, young woman in Ohio, was only able to receive Zeto for 13 weeks. Actually saw dramatic drops in her protein. Had to come off the drug. Then she got worse over the following nine months. Her doctor, one of our investigators, actually applied for a compassionate use IND, single-use IND for this patient because she was not tolerating steroids or other immunosuppressants well. We got her back on Zeto. She went from a very high UPCR level all the way down to complete renal response and tapered off all of her steroids. Went to zero dose. N of one, you know, this is just an anecdote.
Mm-hmm
...it was a very heartwarming story of almost a full restoration to health for this very sick young woman. Again, like I noted in our next trial, we'll have very, clearly defined, mandated steroid tapers that we hope will allow us to really prove that point and also get to even lower and faster steroid tapers than our competition.
Thank you.
You're welcome. Of course, this steroid reduction is a part of the endpoint measurement for our PORTOLA study in AIH as well, because all those patients are utterly dependent upon corticosteroids to treat their autoimmune hepatitis.