All right, great. Good morning, everybody. Thanks for joining us. I'm Terence Flynn, Morgan Stanley's U.S. biopharma analyst. I'm very pleased to be hosting Nurix this morning. 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. Joining us from the company this morning is Arthur Sands, the company's President and CEO. Thanks so much, Arthur, for taking the time. Really appreciate it.
Thank you, Terence.
Bright and early in the middle of Times Square.
Yes, it is early.
Well, I thought, maybe to kick us off, we'd talk about the Roche collaboration now that that's closed. Congratulations there. Maybe just talk to us a little bit about the strategic rationale for partnering bexobrutideg, which is your lead pipeline asset.
Yes. So that deal we announced in June, it did just close in August. It's a landmark deal, I think, for the field of targeted protein degradation and in B-cell malignancies and autoimmune disease. Two-therapeutic area deal, that's number one. So that was one of the strategic considerations, as we were embarking on a partnership process, which was a competitive process. We wanted a partner that really could span both oncology and immunology because those are the two major areas for Nurix in terms of creating drugs and value, and Roche was really perfect for that. They have, of course, I think, the preeminent drug portfolio in B-cell malignancies, CLL, and NHL, and then also in autoimmune disease with their multiple sclerosis expertise and, of course, their Xolair franchise. So these are areas of great importance to us for bexobrutideg.
This deal really maximizes the clinical development program for bexobrutideg, and thereby maximizes the market potential of the drug. It also gives us a global footprint, of course, with Roche. So those are some of the strategic considerations. Plus, they're great people to work with and terrific scientists.
Great. Maybe talk about the milestone structure in terms of any more clarity you can provide there in terms of some of the maybe near-term milestones, and then how to think about some of those. But again, I think it's about $2.3 billion all in.
In total cash payments, most significantly, the upfront payment of $700 million, which I think signifies the level of importance of this deal, and again, the breadth of the clinical development plan. Then an additional $1.6 billion in clinical development, regulatory, and sales milestones, pretty much evenly distributed among those three categories. This is very accessible future cash, the $1.6 billion for the company. In addition, I think, and probably most importantly, long term, it is a 50/50 cost- profit share, co-development, co-commercialization in the U.S. Roche will commercialize ex-U.S., for which we receive significant milestones and royalties. So it is really, again, maximizes the global footprint, play to each other's strengths as two companies, and it is a terrific deal.
How do you think about capital deployment in terms of what that upfront can do for the rest of your portfolio now in terms of maybe additional investments or other areas that you could potentially accelerate as a result of that upfront? I am sure it gives you some more flexibility now.
Well, the main area for acceleration right away is the autoimmune opportunity for bexobrutideg, because within the deal and defined in the clinical development plan upfront is a CSU trial, so chronic spontaneous urticaria, which we are in the midst of planning with Roche and their Xolair team, which they have got such expertise in this whole allergy area. Also, MS. So right away, we get an acceleration there. Of course, the funding, we are using that for our share. Now, the cost portion is 40% Nurix, 60% Roche. So the offsets in the costs are significant. If you look at all of the cash financials of this deal, really it is essentially a self-funding deal, if you look at it that way within oncology and the current clinical development plan. Now, it can expand beyond that clinical development plan.
Both parties would need to agree to such future expansions. I think there will be expansions because bexobrutideg can go so far, very far, farther in autoimmune disease. There are so many indications. We are covering essentially the waterfront of CLL and NHL, so I think that is already fully baked.
Yeah. We will talk about NHL, CLL in a bit, but what is the timeframe for that indication expansion on the immunology side? Are we talking months, are we talking quarters?
Well, we are talking months. Our goal is to file the IND for CSU this year.
Okay.
This would put us right into a phase II trial, basically. We have already completed over 200 healthy volunteer studies with our new formulation, designed with certain different profile improvements for autoimmune disease currently. NX-5948 is all ready to go. MS would be next year.
Okay. Would MS be gated by CSU initial data, or are they separate development paths?
They're very separate development paths. There's no gating. We'll go right into the planning for that. The planning's already started. MS, big opportunity. As you know, the whole BTK hypothesis, very exciting. Recent announcements from Novartis with remibrutinib. I think the playbook for remibrutinib is quite intriguing, and appears to be very successful so far. We think degrading BTK is superior in oncology, and it'll be a superior approach in autoimmune disease.
Great. Maybe we'll just go into the lead indication CLL. So you've already enrolled the first patient in the phase III, CLL-306 trial. This is versus Lilly's Jaypirca. Maybe just walk us through the design here and how to think about your confidence in showing superiority.
It's a simple design, head-to-head study against pirtobrutinib from Lilly. Really, what we're testing, the central hypothesis of degrading BTK or removing BTK, is it superior to inhibiting the kinase activity? We think it is. Many lines of evidence have pointed us in this direction, not the least of which is the fact that our BTK degradation mechanism can overcome all the resistance mutations that are cropping up after treatment with inhibitors. There are a number of these new mutations that have evolved with treatment with zanubrutinib or acalabrutinib. Originally with ibrutinib, the original, it was really just BTK C481S, the covalent cysteine bond, but there's more now. Pirtobrutinib does not cover those. It was designed for C481S, and it does so effectively, but now emerging are about half the mutations are different categories where we cover those. We think that's a big advantage. In addition-
Are you going to have a pre-specified criteria that you're going to have a certain percentage of patients that are going to have these mutations, or is it just an all-comer strategy?
It's all-comer second line.
Okay.
They do have to have been treated with a covalent inhibitor.
Okay.
Which will select for these, but that's just the natural process.
Right.
We're not going to select from an enrollment standpoint.
Okay.
The other major advantage we see is that we remove what's called the scaffolding function of BTK, so that's a structural signaling function for BTK. It's actually quite substantial. It's really interesting, if you really look at this mutational spectrum of these patients, about half, really about 40%, have some type of BTK mutation.
Yeah.
Driving resistance to inhibitors, but 60% are wild type. That means the wild-type BTK is not responding to an inhibitor. What's going on here? We think it's that signaling function through the scaffold-
Right.
-of the structural function of BTK can go through another kinase mechanism that's part of the physical scaffold. We remove that via degradation of the proteasome system. That's actually a very important feature that I think sometimes kind of overlooked.
Right. Okay, great. I think the co-primary endpoints, ORR and PFS.
Have you guys talked at all about what kind of effect size you'd like to see for the trial to be successful?
They're dual primary endpoints.
Yeah.
Well, of course, we've scaled the trial according to certain statistical assumptions of superiority. We've not shared what those are. But it brings us to a patient number around 600, 620-
Yeah.
-is I think the target number. But it's an event-driven trial, so there's opportunities to evaluate earlier based on events. We think the trial will enroll very rapidly. We're going against the latest agent, so it's very attractive for patients to have two really actually excellent drugs to choose from. Well, they don't choose.
Yeah.
It's randomization.
Right. So the interim is, it sounds like there's an interim based on PFS events because ORR is just ORR scan. Again, an interim would be triggered by PFS?
There's some standard ways to look with interim results. I'm not going to go into the details of it here. But it's a fairly typical trial design, like I said, very simple statistical plan, too.
If, let's say, ORR shows a benefit earlier at some landmark analysis, could you file there, or you'd need both ORR and PFS to kind of file on?
I don't want to speculate at this point.
Yeah.
As we get farther in-
Yeah.
-we'll probably provide more clarity on.
Okay.
The more interim plans.
Okay. You guys haven't guided a timing yet because it's contingent on enrollment and events.
Right. What we have announced is the first patient, so let's go from there, and then as we get more-
Okay.
-we'll give you some updates.
All right. Fair enough. You also have a single-arm CLL-201 study, so maybe, again, similar type questioning here. Just remind us design there, that patient population, and then what you've said about accelerated approval pathway.
This is a third-line- plus patient population, if you will. Largely, the kind of patients we've already treated in the phase I, frankly. There we were, fourth and fifth line.
Yeah.
Here we can take third line plus, which means they need to have seen a BTK inhibitor covalent, a BCL2 inhibitor, which is standard now, would be for second line, and then a non-covalent, so likely pirtobrutinib. In that patient population, this is about 100 patients for single- arm trial, potential accelerated approval. We have seen excellent results in those patients in the phase I portion, and we hope to replicate that in this single-arm registrational trial.
Just remind us what your ORR was in kind of a similar patient population from phase I, just as a benchmark.
Between 65% and 80%, depending on which category of patients you look at exactly. We have multiple cohorts there. Actually, some of the latest cohorts we just reported at EHA were more the early line patients. Just to tell you about that, those results, they're very exciting. They're 85% and 90% response rates, ORR, in the earlier line patients, and actually they hadn't even been treated that long. We think they have potential to move up to 95% or 100% ORR. We'll see. We're continuing to track those early-stage patients. But the later line patients were in the 70%, 65% range.
And just remind us on the durability. How much durability data do you guys have? And then again, what's the minimum amount you need for an accelerated approval from the ongoing study?
We reported a 22.1 or so months of PFS, which is really quite remarkable. Again, these are patients that have failed all available, or all available therapies have failed the patient, I should say. And so that we think is, if we come anywhere in that ballpark, that's really, we think, a significant benefit for patients. Obviously, that's up to the FDA in terms of their judgment calls over what constitutes accelerated approval criteria.
Yep. Okay, great. The other one in the competitive landscape is BeOne's BGB-16673. That's another BTK degrader. Maybe just talk about high level, again, differentiation of bexobrutideg in your view. What are some of the key features here?
They've been presenting with us basically at every conference. We kind of share the podium with them every six months or so at ASH or EHA, and the efficacy data does look similar. I think between the two agents, and I think that's very encouraging. We have external validation, completely different company, different trial, coming up with the same results in very difficult-to-treat patients. I do believe our safety profile looks slightly better. That's sort of our interpretation of data so far. There aren't many patients to make that judgment on. But if you, I think, read between the lines, I do think there's a safety advantage. We have looked at and profiled both compounds cellularly and molecularly, and we do believe we have a selectivity advantage at the cellular and molecular level.
Certain targets that we see showing up on proteomics analysis with the BeOne compound, we do not hit, we do not degrade. We think we have a more selective compound.
Okay. I guess when we think about the phase I/II data we were just going through, are we going to see another update at ASH this year? Is that a fair expectation?
That would be a fair expectation. We're at ASH every year in some form or fashion.
Okay.
It depends on getting your abstracts accepted and where we will end up. But yeah, we have been giving updates. Basically, the cadence has been about every six months.
Okay. I guess the other thing is just frame for us how to think about the initial opportunity before we get to the front line, just how to think about second, third line plus in terms of numbers. I think Jaypirca so far has had a fairly good ramp, but how are you guys sizing up those later line opportunities?
Well, the later line opportunities are kind of difficult to really get accurate numbers on. But it is not a lot of patients. The real benefit will be in the second line and any front-line opportunity where you are talking about tens of thousands of patients potentially, depending on how competitive our agent will be. So the goal is second line, I think, is the focal point. But if we can start in the third and fourth line and offer benefit and get on the market, that could be an advantage.
Yeah. Okay, great. Maybe talk to us just what is the front-line strategy? I know in front line there have been a number of moving pieces. Like you said, there has been ibrutinib was the standard of care, but now there is acalabrutinib, some other drugs that are moving there. Then you also have the notion of combination therapy, fixed duration. So it seems like there is a lot of different directions that you guys could go in that front-line setting. So what is right now the current thinking in terms of how you guys with Roche would approach that?
It is an active area of discussion with Roche, what is the best strategy? It is true that fortunately, patients have a lot of options now in the front line. But they do boil down to monotherapy or some type of combination. Really, I believe the majority of patients are still in the monotherapy sort of camp and investigators. If you go to academic centers and more of the tertiary care centers, they really favor the combinations and getting a deeper response, a longer response, and even trying to find a combination that could approach a cure-like level for this chronic disease. So it is an active area of debate, and we will just have to keep you posted on that as we evolve our thinking there.
Any rough timelines? Is that months, quarters when we might get an update?
I think quarters.
Okay.
Yeah. It is important to get going.
Right.
Yeah.
Yep. Okay. All right. We'll stay tuned. The other area is just non-Hodgkin's lymphoma. Maybe just again, similar type question, what data you have there, and then how are you thinking about addressing that opportunity and other sub-pool?
Yeah. Waldenstrom's and then also MCL.
Yep.
Presented on some of our later stage patients in Waldenstrom's with, again, about an 80% + response rate as monotherapy. Those two areas are defined within the clinical development plan of the agreement to be initiated. That'll be largely a Roche-driven trial.
Okay.
Two trials, and largely combination approaches.
Okay.
We haven't specified those yet. Beyond that, we're-
Is that later lines or is that going to go frontline? Any more detail there?
The current discussion's around second line, but also frontline.
Okay.
We haven't outlined exactly the strategy there, but again, that'll be likely a combination approach.
Okay.
With regard to the other areas of NHL, that is for future exploration.
Got it. Okay. Maybe just pivoting, we talked about this a little bit at the beginning, but just immunology, neurology again, this molecule can go in a lot of different directions. So maybe just elaborate a little bit more on the multiple sclerosis piece there, biological rationale here. What gives you and Roche confidence to move into the MS?
We have demonstrated brain activity, number one. So we have demonstrated our drug crosses the blood-brain barrier. We can measure it in the CSF free drug levels, compare the plasma level to CSF, roughly 1:1, so we know we are at effective concentrations. Most importantly, we have patients with CNS disease in the oncology setting that have responded to the drug, some quite dramatically. So we have biologic proof of activity in a disease setting. In addition, we have all the animal model data for MS, where we have really very potent activity, including demonstration of degradation of BTK in the microglia of the brain. So this is as central to the whole microglial hypothesis as being the resident immune cells embedded within the neuronal structures that are responsible for the debilitating aspects of MS.
If you can shut that down, which the CD20 antibodies do not really do-
Yeah.
Then you could block this debilitating progression. That is central to the hypothesis, and we have demonstrated that in animal models. I think that this is a very exciting new dimension to explore. Degraders have a unique, I think, advantage here because the drug levels required are low to achieve basically complete removal of BTK, and I think that gives us a safety advantage. The other advantage is taking out that scaffolding function, because that is every bit as important in autoimmune disease as it is in cancer.
Okay.
The inhibitors do not do that. I think they are leaving some efficacy on the table, and I think it will be very interesting to explore this.
What are you predicting from a dose level versus CLL, for example? You mentioned the potency in CNS, but again, are you going to need potentially a lower dose, or are you going to need to push the dose because of the blood-brain barrier? How do you think about dose selection relative to CLL?
That is an excellent question. The devil is in the details with dosing and determining what levels are required for that particular pathology. The current thinking is it will either be a similar dose to the oncology setting or it will be less.
Okay.
It won't be more.
Okay.
We don't think, basically.
You don't need to do any more additional animal talks to explore higher dose. You have all that stuff covered, so it's just a matter of tweaking it.
Yeah. No, in terms of we won't go up. Yeah, we've covered in terms of dose levels. It could be as low as one-third or one-fourth the amount, but we'll model the best we can, probably test two doses.
Okay.
Really, you just have to go with the empirical study in a phase II.
Right. You said that's next year?
We hope to initiate it next year, yeah.
Okay. Got it. Just remind me, because again, I haven't looked at these MS studies in a while. That's just usually like an MRI imaging type phase II study?
That's the typical approach.
Like lesion, something like that?
Yeah, lesion measurement, 12-week, 13-week. That's what's been done.
Right.
That'll definitely be part of the picture. We may do more, but that'll be determined when we get to the IND level.
Okay. Great. You mentioned CSU. Roche has a lot of experience here with Xolair. There have been some other targets that have been successful now. Just remind us the paradigm in CSU and then where you think bexobrutideg would slot into that current paradigm.
Antihistamines, and a lot of patients, most will progress with serious CSU, which is triggered by this mast cell degranulation. So significant allergic response, and quite debilitating. BTK is a driver in mast cells. It is clearly a driver in the allergic response in multiple cell types, which we hit, including basophils, and we can measure in healthy volunteers. I think mechanistically, we are spot on. Of course, remibrutinib has demonstrated it clinically, is launching quite well in this area. We anticipate similar rapid onset of therapeutic activity, which will be an advantage. Xolair is a slower onset, although they do get a very deep response. It is the leading drug, I think, in the area, so I think it would be an important addition to that franchise for Roche, and it would be, of course, a new expansion for us.
It is clearly a great place to start. It is a rapid initial proof of concept trial, so that is attractive. MS is longer. Again, remibrutinib and Novartis have charted a very nice, successful course.
Where is remibrutinib used mainly? Is this post-Xolair, or is it used pre-Xolair?
I don't know.
Okay.
How it's actively being prescribed, but they were post-histamine.
Yeah.
I am not sure about the post Xolair or not.
Okay, got it. All right. Well, maybe just in the last few minutes here, because again, you might be able to answer some of these, you might not, because they are partner programs. Sanofi, you guys received a $10 million milestone payment for STAT6 moving into phase I. Maybe just anything more you can say on that and how, I guess big picture, what a lot of investors are looking to is this upcoming Kymera data as well as like a kind of lateral. First, just talk about this phase I trial and then maybe your profile and differentiation versus the Kymera approach.
Yeah. First off, STAT6 is a terrific target for type 2 inflammation broadly. Transcription factor, largely undruggable to date. We started the program in 2019 with Sanofi. It was one of our original drug discovery programs under that alliance. We've been working side by side with them for quite some time. Quarterly joint research committee meetings, really a highly evolved program that has yielded a terrific molecule. Our number was NX-3911. It has started phase I. In terms of its profile, it's exquisitely selective for STAT6, and we've shown that with global proteomics. Highly active in animal models of atopic dermatitis, as well as asthma. There's multiple more animal models that we haven't shown. It really fits the bill. I think that Kymera is leading the way and has done a great job.
I think their characterization of Dupixent in a pill is really the goal. I do believe that as they described, it could open up the market quite substantially. There probably will be significant read-through, I think, from looking at their data. Their phase I data looks so good already, and their initial patient data. We look forward to their data too, and I anticipate it'll be very positive for the STAT6 field. I think it's important. It's a huge market. It's not a zero-sum game. There's room for many drugs here. Likely they'll have different profiles. There are inhibitors being pursued. Ventyx and Pfizer, they'll probably have different profiles as well with different MOA. But we do prefer the degrader mechanism. We think that's going to be a leading mechanism based on the genetics of the removal of STAT6. It gives you a great phenotype.
Yeah.
We're going to reproduce that.
Great. What should we watch just in terms of STAT6 pathway? What should be top of mind in terms of the safety side for this pathway, if anything?
Well, for safety, we look at the genetics, and if you look at the mouse knockout of STAT6, they really don't have any phenotype other than blockade of IL-4, IL-13. It's incredibly clean. It's actually cleaner than BTK genetic phenotype. From a mechanism on- target standpoint, it should be quite safe. Then if you look at human genetics too, there's allelic variation. Patients with some allelic variation in STAT6 have decreased autoimmune symptomology. Really, it should be good. The issue then is off target, and so that's a molecule- by- molecule analysis. If you clear all the IND, enabling the GLP tox studies, which we have, Sanofi has run by the way. They've been in charge of those, and now they're in charge of the phase I. Our option comes in after that.
Yeah.
If you run all those, it looks quite safe in animal models. Then really it's the patients.
Right.
Yeah.
This is first, I'm assuming SAD. This is SAD phase I.
What's that?
Single- ascending- dose, this phase I.
Yeah. It is standard SAD/ MAD-
Okay.
-type approach is our understanding. We really haven't disclosed-
Okay.
-the design of that yet, nor has Sanofi, but that would be a standard approach.
Okay. Then, again, typical industry timelines there, I'm assuming this would wrap up sometime next year, so then the next step would be like a phase II?
Yeah, we would anticipate direct to phase II-
Yeah.
-dose selection d ose.
Okay. Then you guys would get a milestone payment, then just remind us what the size of that would be then what economics you'd get downstream if this were approved.
Well, there are milestones along the way. We haven't disclosed the size of those, but I think the important thing is the option exercise, which would be we will get a report, a clinical report, data report on the phase I, which will also include some patient data.
Okay.
We'll be able to look at an initial cohort of patients as well as the healthy volunteers, and that would trigger our option period. Then we'd make a judgment based on the data whether or not to opt into that 50/50 in the U.S. And then there are milestones along the way, like I said, but the really important value creation will be the option.
The phase I will include some atopic derm patients ultimately, like when you refer to patients that you'll get to review?
Well, under the agreement, our option is triggered by that.
Okay.
We must see patient data. We anticipate that that would represent a smaller cohort, not a full phase II.
Okay.
Sanofi has not disclosed the design of the study yet.
In other words, it's more than healthy volunteer data.
It will be more than healthy volunteer data.
Okay. Got it. Okay. I guess the last one I had is just the IRAK4 degrader. Gilead, I think, has talked a little bit about this. Not too much, but again, maybe just what can you say about the profile there? Kind of similar type question. Remind us of your economics.
Well, it's a similar structure-
Yeah.
-from a deal structure standpoint. IRAK4, they should be finishing phase I this year, so we anticipate a phase II transition there. So we've got our phase I with STAT6, our hopefully phase II transition with IRAK4, and of course, our own phase III program.
Yep.
Our pipeline is kind of well-timed out for, I think, value creation at many levels. The profile, it's a great molecule, again, developed side by side with Gilead. They had an IRAK4 inhibitor team-
Right.
-which worked on the degrader with us since 2019 also.
Yeah.
Very clean, high activity in the skin, very safe profile. We are in the lead now. There were two other degrader programs that have fallen away, one from Kymera, one from BeOne. We will be the leading degrader there. Scaffolding function is very important for IRAK4. That is why the inhibitors have not, I think, been as exciting, and some people have gotten a little disappointed with the target, but that is not true. It is really how you hit the target, and you have to have the right molecule. The biology is fantastic. Again, the genetics is fantastic.
Yep. And I guess we will see data from Gilead's inhibitor phase II, I think, later this year maybe, right?
I would certainly hope so. They have been very diligent about appropriate publication and timing-
Right.
-in international congresses. We've worked with them on certain posters, preclinical.
Okay.
Hopefully, there'll be future disclosures here.
Okay. All right, Arthur. Well, that was great. Thank you so much for the time this morning. Appreciate it.
Terence, thank you very much.
Thank you.
Great.