Great. Good afternoon, everyone. I'm Alex Thompson, the biotech analyst here at Stifel. Very happy to have Septerna joining us, CEO Jeff Finer and President and COO Liz Bhatt. I'll give it over to Jeff to go through a few slides for a quick overview of the company, and then we'll get into a Q&A.
Okay. Thanks, Alex. Thanks to the Stifel team for inviting us. Septerna, for those of you who don't know us, is a company focused entirely on GPCRs, or G protein-coupled receptors. We were founded about five, six years ago and developed a new way to do drug discovery for GPCRs. My presentation and our comments today will include some forward-looking statements, so please take those into considerations. Starting off with our pipeline, that platform that I mentioned at the outset has led to a very exciting pipeline. Our lead program is SEP-479. This is a PTH1R agonist for hypoparathyroidism. We have an ongoing phase I trial, I'll tell you a little bit about that more in a moment, with a data readout anticipated in Q1 of next year. Second program, which we just announced last week, a new molecule, a new development candidate called SEP-204.
This is a TSH receptor negative allosteric modulator. An allosteric modulator is something that binds outside of the binding pocket of the normal endogenous ligand. I'll go over that program a bit as well. We had some exciting preclinical data that we shared at the American Thyroid Association meeting last week, and anticipate this one to be in phase I, also in the first quarter. So those are two milestones for the first quarter. Behind that, we've got a mast cell-oriented program called MRGPRX2. We won't spend much time on that one today. And the newest entrant to our pipeline is a second PTH receptor program for osteoporosis. This is different than the lead program in that we have to have a short-acting compound to be anabolic for bone formation, whereas for SEP-479, it's a long-acting compound. Beyond that, we've got a collaboration with Novo.
We did announce in our earnings on Monday that Novo had selected the first candidate from the collaboration. I'm going to just spend a little bit of time on two programs, the hypoparathyroidism program and the Graves' disease program. So SEP-479 is going after this receptor. I'm showing you the PTH receptor in magenta. The PTH peptide is a long helical peptide in green, if you can see that. We discovered multiple ways to activate this receptor with small molecules. It has been a historically challenging small molecule target, but our platform shined here. We optimized multiple compounds, and SEP-479 is our current clinical candidate. It is, as I said, well underway in a phase I trial. It's got excellent pharmaceutical properties.
We announced a couple months back that we've got a very long half-life, a half-life of about three to four days, and we're looking forward to some data in the near future. In order to kind of frame the data expectations, I thought it would be helpful to share some monkey data. This is a healthy monkey data, monkey experiment, seven-day dosing, five-day recovery period. You can think about this analogous to a healthy volunteer phase I study. What's different about healthy volunteers, healthy monkeys versus hypoparathyroidism patients is that they have intact parathyroid glands, and the endocrine system is actually quite efficient. It allows the PTH secretion to be turned up and down very, very efficiently. Given that efficiency, when the drug is dosed, we see significant decreases in endogenous PTH secretion, down about 80% here, and then after that, we see calcium increases.
If we think about where we want to head with a drug, our drug, there are some lessons from the PTH peptides that came before us. A relevant starting dose for Yorvipath, as an example, it's the leading injectable peptide. If you look retrospectively at what that did in its phase I healthy volunteer trials, it decreased endogenous PTH about 50% and increased serum calcium about 0.5 mg/dL. We think that's a great drug, and we're holding that as our benchmark as well. We're aiming for a drug that has that. In hypoparathyroidism patients, it's a disease of dose titration, and so we want to have some headroom to go above that. So the range that we're looking at is 0.5 mg/dL to 1 mg/dL.
Yeah. But it's sort of this, you're talking about the starting doses in that 0.3 mg/dL to 0.5 mg/dL. Right? Okay.
Yeah, exactly. Yeah, 0.3 mg/dL to 0.5 mg/dL would be a good starting dose potentially, but in some patients, they'll have to dose higher. So we want to be able to go past those doses in our phase I trial. So the phase I trial is ongoing, and again, we expect a readout in Q1. Single ascending dose, multiple ascending dose. We're also doing a food effect study. We don't anticipate a food effect, but we always do them in our phase I trials. I mentioned the half-life already. Given the long half-life, we extended the duration of the multiple ascending dose trial to 14 days of dosing once a day. As I mentioned, the signals that we're looking for are in the ranges that we just discussed. So hopefully we'll have those results in Q1.
I want to briefly introduce you to the second program, the TSH receptor program for Graves' disease and thyroid eye disease. This is a receptor that is behind both of these diseases. Both diseases are autoimmune conditions where the patients develop autoantibodies that bind to the TSH receptor and activate it. You can see in this diagram that I have that the receptor undergoes quite a substantial conformational change from the inactive state in blue to the active state in magenta. SEP-204 binds in the transmembrane domain of the region, a receptor in this region, and prevents the activation of the receptor even with an autoantibody bound. SEP-204 has excellent pharmaceutical properties. It is highly selective. One of the features that is important is selectivity over closely related receptors. FSH receptor and LH receptor are the two most closely related ones.
They happen to be reproductive hormone receptors, and Graves' is commonly a disease of women of childbearing ages, and we do not want to inhibit those receptors. We spent a lot of effort in dialing in a high level of selectivity for our compound for the TSH receptor over those receptors. I will share some of the animal data, mice and rat data today, but we have also got some data in dogs and monkeys as well. Compound has excellent pharmaceutical properties. We are projecting this also to be a once-daily oral pill. Just to kind of jump into one experiment here, this is a rat study, where we have got a normal rat, but we have dosed this rat with a Graves' disease patient-derived antibody, called M22, and that antibody causes an immediate increase in thyroid hormone levels.
In the plot in the upper right, you can see that after M22 is dosed, about 18 hours later, we start dosing SEP-204. But by the time we start, thyroid hormone levels have already started to go up. In the untreated population, which is represented by the black dots, thyroid hormone stays high. Two doses, 1 mg/kg and 3 mg/kg , basically take the thyroid hormone levels into a normalizing range, whereas the 10 mg/kg suppresses that. What this brings up is a very intriguing possibility that we may have dose optionality. Not only would oral be a differentiating feature for us, but dose optionality could be one as well, where we are able to potentially dose into a range of thyroid hormone normalization without the need for thyroid hormone replacement. But of course, we will have to work that out in the clinic.
Last piece of data is in the mouse. This is now a chronic study where we have dosed that same Graves' disease patient antibody over and over again for eight weeks. During the last two weeks of the study, we introduced SEP-204. You can see that these mice end up with quite a prominent Graves' phenotype. I am showing you some thyroid histology. You can see the healthy control. That is what normal looks like. The Graves' mice is the middle photo. You can see the thyroid histology is quite substantially changed. Then over just the last couple of weeks, we are starting to normalize and return the thyroid histology to normal, and the thyroid size is also returning. On the eye side, the middle photo is a good example of a mouse with thyroid eye disease.
You can see a very prominent bulging of the eye there, and we are also starting to see some reversal of that as well. Very exciting. This compound, as I mentioned, has a long half-life. We have now completed 28-day GLP tox studies in rats and dogs, and all of the effects were consistent with exaggerated on-target pharmacology, namely hypothyroidism.
Great.
With that, we can transition to discussion.
Yeah, let's do it. Maybe, obviously, let's start with PTH1R because obviously a lot of focus there for you and the company with data coming up in the first quarter. I guess maybe I want to start with, obviously, the history of this molecule and small molecules, obviously, you can run into issues, and the first gen here, SEP-786, ran into some tox in phase I. Can you walk us through kind of what happened there, when did it occur, and your confidence in sort of the safety profile of SEP-479 so far?
Yeah. SEP-786 was our first-generation molecule. It was moving quite well in a phase I clinical trial, until it wasn't. We ran into two individuals that had severe unconjugated bilirubin increases. That's not liver toxicity, but it is a very specific effect of unconjugated bilirubin. We made an immediate decision to discontinue the trial. Prior to the discontinuation, we did see on-target pharmacology. We saw endogenous PTH going down, as I suggested. We saw serum calcium levels starting to go up. We weren't quite in that zone of the starting dose that we thought we needed to be.
However, it was proof of concept that a small molecule could do what a peptide was doing. After we discontinued the trial, we decided it was really critical for us to figure out what the mechanism was. We did an investigation, and that particular compound has a very We found the smoking gun. It very specifically inhibits an enzyme called UGT1A1, which is the enzyme in the body that conjugates bilirubin. Of course, that's why we got unconjugated bilirubin increases. The second compound, SEP-479, binds to a completely different binding pocket than SEP-786. It also is a completely different and unrelated chemical series, and we have shown definitively that it does not inhibit that enzyme.
We also did even more extensive preclinical testing. We did a third preclinical species. The first compound, before it went into the clinic, had sailed right through rat and dog toxicology studies without any evidence of this. After the fact, we were able to show that the effect was seen in a monkey.
Yeah.
We did an extra monkey study just to validate that we did not only have that, but did not have any other surprises.
Are you past the point in the phase I where you saw this issue with SEP-786?
Yeah. We cannot give-
Sure
an update on status, but we can say that this trial has run longer than that one did.
Yeah.
There is a little bit of a difference between this trial and that one, which is here we're dosing for 14 days. For SEP-786, it was only a five-day dosing regimen.
Okay. You talked a little about the ongoing phase I and how to put the data into context. I wonder if we could expand a little bit more on what we should expect to see with the phase I update as it relates to sort of these PD effects, the sort of distinction between the starting dose, we're looking at reductions in PTH and increases in calcium, and sort of what range you want to get into to de-risk actual pharmacology in patients.
Yeah. A starting dose, so just to remind everybody, this is a condition where every patient needs to be titrated to their own specific dose levels. Now, for the injectable peptides, that sort of dynamic range of dosing is not that larger range. We hope to be in a starting dose that kind of mimics the effect of the peptide starting dose.
Yep.
That's where the kind of 0.5-ish range, plus or minus.
Yep
Is about the right place for a starting dose. We would like to be able to ideally see that we have got some headroom above that.
Yeah
To move calcium probably at least up to about one mg/dL. There are limitations in a healthy volunteer as to how high you can go without causing hypercalcemia.
On the PTH reduction side, are you going to see a similar effect as the peptide, just given this is a little bit of a different mechanism?
I would guess we should. In all of our animal studies, the effect of this compound was indistinguishable from peptides in cell-based assays, gene expression profiles, every animal study. I would expect, if human biology is consistent, we should see a very consistent and equivalent range of PTH reduction across. This should be the same as a PTH peptide in theory.
Yep. Okay. Then we have 1Q data. What are the next steps here from a development perspective? How quickly can you move into patients? Is YORVIPATH development, is that the analog, or is there something that you can do to move a little bit more quickly potentially?
Yeah, we're trying to figure out how to move more quickly. The good news about our half-life of being 3-4 days is that with YORVIPATH's functional half-life being about two and a half days, we think we can kind of lean on some of their learnings in terms of titrating patients up on the drug and down on their calcium and vitamin D supplements. Our goal is to get into patients as quickly as we can after that phase I study. If we wrap up this study in the first quarter, we are planning to do a global phase II study.
Not a large study, but probably a few dozen patients, with the goals of trying to figure out what that starting dose is for patients. My guess is we'll do 2-3 starting doses. We'll make a decision after we've got the full phase I data set. We need to figure out the starting dose. We need to figure out the titration protocol.
Yep.
The other thing we are planning to do before starting the phase II study is to complete our chronic toxicology studies.
Yep.
We would like to do an open-label extension so that every patient that is on this drug, that is benefiting from this drug-
Yeah
in our phase II study can continue on the drug.
Like with YORVIPATH phase II, basically.
Yeah, exactly.
Okay. I guess the other thing to talk about here is you're not the only small molecule considering PTH, right? You have the molecule from BridgeBio as a different mechanism of action. How do you see your PTH1R agonism comparing to CaSR?
Yeah. Maybe Liz will take this one.
Yeah. You're absolutely right. Encaleret is another product focusing on post-surgical hypoparathyroidism as well. Originally, it was developed for a different condition, ADH1 deficiency. Data that's generated there actually had very good improvements in terms of urinary calcium. Little unclear how it's going to work exactly in post-surgical hypoparathyroidism because it is a different mechanism.
You actually need PTH tissue there to actually use that mechanism appropriately. At the end of the day, PTH replacement is really the more natural way in terms of these patients. That is what they are missing as it relates to the surgery. Just again, a reminder, hypoparathyroidism is basically removal of the parathyroid glands, and that is really kind of critical as it relates to obviously producing PTH. I think the data in the phase III study is going to be really important for us. A small phase II showed us a little bit of data, but it is a little unclear whether it is going to exactly replicate what PTH replacement-
Yep.
is going to be able to do.
As you think about later stage development too, obviously open-label extension is important, but how are you thinking about, obviously with the Yorvipath launch going quite well, thinking about patients that have been on an injectable peptide already and might want to try an oral?
Yep. Great question. We think there's a significant opportunity as it relates to an oral small molecule within this space. A couple things to remember. These patients are early on usually in their diagnosis. They're going to be on therapy for decades. Patients right now who are even on some of the injectable peptides want to say, "How do I switch?"
One of the things that we are thinking about is, how do we design a switch study to carefully teach physicians how do you appropriately dial off one to be able to have a patient be able to move on to the oral therapy? Beyond just the patients that are on Yorvipath right now, there's a whole swath of patients who are really not interested in going on injectables yet. That's another opportunity for oral therapy. Right now, they're taking oral calcium and vitamin D. The opportunity to move on to an oral PTH option instead is obviously a huge way for us to be able to expand the treatable patient population as well.
How are you thinking about, obviously with the orals, we have daily injectable and then between MBX and Ascendis as well, talking about weekly injectables. How does that sort of stack up with a daily oral?
Yeah, I mean, the weekly injectable is going to be obviously amenable for a patient whose interest is still in injections.
Yeah.
I think we'll have to see what the phase III data looks like there to see how it kind of-
Yeah
stands up relative to what the class is going to require as well. It will be another convenience option, but again, given what these patients are going to have to managing for the rest of their lives, orals continues to be a really attractive option for most patients as well.
Still a long way to go to grow this market, I guess.
Yeah. Just to add to that point, really every hypoparathyroidism patient should be on some form of PTH replacement.
Yeah.
Even if they are sort of biochemically controlled in terms of their calcium levels.
Yeah
Being on calcium and vitamin D supplements leads to really significant problems with calcium increases in the urine and-
Yep.
renal calcifications and other things like that.
Maybe let's pivot again to talking about TSHR, and maybe, I think the thing that you alluded to in your preclinical data that I think was most interesting is this idea that titration is possible, right? This question of, with a TSHR antagonist, can you actually get to a normal signaling pathway versus doing block and replace? How are you thinking about testing that maybe in phase I or moving into Graves' patients initially?
Yeah, good question. Phase I, our plans are to start in healthy volunteers. We want to really fully understand the pharmacology here, so we will I think the major readout from that phase I study will be increases in TSH. We hope to explore a wide enough range where we are starting to see some thyroid hormone decreases as well. As part of that study, once we're in a reasonable range, we'd like to probably get to Graves' patients as fast as we can-
Yep
to try to get a feel for just this question, is it possible, and what can we learn about that relevant dose range in Graves' patients?
Why start in healthy volunteers? I think there's been a mixture of other TSH-targeted approaches, mostly the antibodies at this point, that have moved right into Graves'. Some that also have started in healthy volunteers. Why healthies?
Yeah. Some of the agents, including the ones that are trying to degrade antibodies, obviously-
Sure
have to be in a patient that has those antibodies. We think it makes the most sense to start in healthy volunteers because we've got a readout, and at least for the dose escalation phase, at least to get into the right range.
Yeah.
Because we want every Graves' patient that goes onto our drug to be in a relevant range that could help them.
Yep. Is this something you could have data for next year as well, or is this not until 2028?
No, we think this, at least the healthy volunteer study, should, if we do start in phase I, it should be something towards the latter part of the year.
Yep. Then I guess maybe at a higher level, how are you thinking about the competitive landscape in Graves' now across the TSH receptor space, degraders, FcRns, et cetera?
Yeah, it certainly has gotten more busy over the last few years with these different innovations. They are all taking slightly different approaches relative to it. At the end of the day, our program is the only oral agent out there. All of the other ones are injectables. All the other ones are generally potentially going to be a little bit more longer acting as well, which could pose a little bit of problems once you have the drug on board if there is an issue in terms of being able to recover from that. So at the end of the day, an oral option certainly is something for patients. The one really important thing as it relates to this mechanism is something Jeff said earlier is, this is really the core relative to both Graves' disease-
Yeah.
as well as thyroid eye disease. So we really have the opportunity to also really think about the patients who have not just Graves' disease, but are comorbid TED as well.
Yeah.
That really address both indications at the same time. At the end of the day, really an ideal scenario is actually being able to slow or stop the progression of TED in some of those patients too.
Yeah.
So we're going to have to see where the data takes us.
Do you envision starting in Graves' and then working into sort of Graves' patients with proptosis, or having a dual track with TED and Graves', or how is that shaking out?
We're looking at all those different options.
Okay.
Also obviously keeping an eye in terms of the other data sets that are coming forward too.
Okay. Maybe moving down here to X2 with SEP-631, obviously a handful of negative readouts in the X2 space this year with CSU, AD, et cetera, and you've kind of moved away from going to a CSU phase II-B study. Where is your thinking at now about where X2 could be most likely to work, and how are you thinking about that?
Yeah, so that's a great question. X2 is a We still believe at the end of the day, SEP-631 is the best X2 out there. I think the data set that we've shown so far from our phase I study is very compelling. A little bit disappointed on the CSU study, but it was the right decision to not run a big-
Yeah
phase II study around until we can really identify an indication where we can see a strong signal. So the strategy we're taking right now is to go forward with much smaller, what we call signal finding studies. Studies that are a little bit more cost-effective
Yeah.
just to get that signal and then go into a phase II study. Some of the ones that we've highlighted that we're thinking about, one of them, for example, is migraine. There's new evidence that X2 may play a role in migraine. A smaller study that you potentially could do in migraine is more of a challenge study. Those are studies that have been typically done within this space. The biology as it relates to X2 in terms of migraine, PACAP, which is a neuropeptide as well as substance P, both actually induce migraines. Those are actually both actually agonists of the X2 receptor.
There's good biological evidence that may work, and this is where a migraine challenge study might be a good way to actually see whether that biology is connected and give us a really good idea for a go/no-go. If it looks great, we can go into the big phase II. If not, potentially consider other indications. Things like asthma, things like interstitial cystitis, we're really trying to define what are those small studies that aren't going to cost a lot of money but are going to give us strong signals.
Is this a What is your timing like for moving into some of these small studies?
Yeah, it's probably sometime next year.
Okay. Yeah, maybe it would be interesting to talk about osteoporosis as a market and how you see the evolution of that market and why PTH1R makes sense there too.
Yeah, so osteoporosis is actually, there's a significant amount of unmet need there.
Yeah.
This is a market, actually, there hasn't been a whole lot of development over the last-
Yeah.
several years. There has been change in terms of the regulatory endpoints recently, such that now bone mineral density is going to be acceptable primary endpoint for the pivotal studies versus fracture reduction. That is actually a significant change from a development perspective, that smaller studies could be run, ones over a much shorter period of time. That is kind of, I think, re-energizing a little bit of the development in this area. PTH is actually already approved-
Yeah.
for osteoporosis, which is one of the things exciting for us. Teriparatide, which is FORTEO, has been approved in this space for a long time. It is a once-daily injection.
Yeah.
Really what the market needs, and other evidence has shown, that an oral anabolic agent is really going to be an attractive opportunity for patients here. We have the antiresorptive therapies, we have the injectable anabolics, but really an oral anabolic would be very helpful, and that is really what the PTH mechanism is.
Yeah.
Jeff can talk a little bit about the differences between what molecules need to look like for hypoparathyroidism and osteoporosis.
Yeah, that was my next question. You alluded to sort of this half-life difference. Can you explain exactly what you are talking about there?
Yeah, absolutely. So the two molecules, the one for hypoparathyroidism and osteoporosis, need to be completely different molecules. We cannot use one for the other indication. For osteoporosis, and the biology is not totally well understood, but it has been demonstrated multiple times that you need a basically a pulsatile activation of the receptor. So we are talking about a half-life on the scale of probably single-digit hours, as opposed to single-digit days-
Yep.
between the two.
Okay. Is there anything, as we look towards the phase I data for SEP-479, does the success there at all de-risk success in osteoporosis, or at least your understanding of the biology right now?
Yeah, I think they are completely different.
Okay.
We are going to have completely different molecules. At that, with a half-life in the SEP-479 study, we should not see bone anabolic effects.
Yeah.
What we hope to have been in the position for, I hope we are sitting here next year talking about this program-
Yeah.
as becoming a more substantial program in our pipeline. It is still discovery stage. We do not have a candidate yet. We hope to be able to share some hopefully exciting preclinical data sometime next year.
Okay. Any, you obviously mentioned Novo picked a lead. What is the milestone status there? What are the next steps around the Novo collaboration?
Yeah, the Novo collaboration, just to kind of recap it, includes five targets, four concurrent programs at any point in time. We take the compounds up to the development candidate stage. They are responsible from then on. We have collected about $13 million in research milestones across the collaboration so far. As that program graduated to a development candidate stage, we started another program. We have, again, always four concurrent programs, and the milestones will obviously come along the way.
Yep. Where are you now with cash runway, and what is embedded in those assumptions?
Yeah, cash runway currently as of the end of Q3 was $565 million. That gives us runway into at least mid-2029. The spending assumptions there include moving forward everything that you see here on this chart. SEP-479 through phase II could probably get us partially into phase III, continuing to push SEP-204 full speed, as well as the other programs. What it does not include is it does not, to be conservative, it does not include any Novo milestones. Everything, all Novo milestones on top of that would add to the runway.
Okay, great. Well, Jeff, Liz, thank you so much.
Yeah, thanks again for inviting us.