Good afternoon, welcome once again to TD Cowen's 46th Annual Healthcare Conference. I'm Philip Nadeau, one of the biotech analysts here at Cowen, it's my pleasure to moderate a fireside chat with Surrozen. We have with us Craig Parker, the CEO, Andrew Maleki, the CFO, and Chuck Williams, COO. Guys, I'll kick it over to you to begin. Can you give a brief state of the company overview, biggest strengths, biggest challenges, what do you need to achieve to drive outperformance over the next year or two?
Brief snapshot of the company is we're combining expertise in Wnt biology, which is now a clinically validated target, with a multivalent antibody expertise and taking advantage of, I think, the building evidence that combining different pathways in retinal vascular diseases is really the future of treatment for these diseases to improve both visual outcomes and anatomic outcomes in patients. Combining very powerful biology, where we're experts, with antibody engineering expertise and combining targets in a unique way. Right now, we're the only company we know of that's combining Wnt and VEGF inhibition and IL-6 inhibition all in one molecule. I think challenges are really, you know, right now we're in just execution phase.
We've just indicated that we'll be filing an IND in 2026, we're very much in, you know, operating mode to get that, get that done. I think opportunities are in diabetic macular edema as well as in wet AMD. While the current therapies are very good, we've been able to improve visual outcomes in these patients. You know, there aren't a lot of diseases where we get to say we're doing more than just slowing progression of the disease. You know, in these diseases of anti-VEGFs, bevacizumab improve visual outcomes, but they're not completely dry in the retina. Retinal specialists will tell you that's what's long-term gonna lead to loss of vision, is this accumulation of fluid in the retina. That's where the opportunity really lies for these combined mechanisms, is to improve the anatomic outcomes.
One of the really powerful aspects of Wnt biology is, we seem to be able to stimulate normal new vessel growth, in the, in the retina, which is quite unique. Inhibiting VEGF, and agonizing the Ang-Tie pathway doesn't seem to accomplish that normalization of retinal vasculature.
Can you, for those less familiar, give a brief introduction.
Yeah.
-to SZN-8141? What's its structure? What mechanisms in particular is it combining? What's the rationale? I think you touched on this a little bit.
Yeah.
What's the rationale for doing that?
I mean, one end, it's a IgG-based molecule that's multispecific, multivalent. You have to bind 2 receptors to activate Wnt signaling. We do this in a similar but not exactly the same way as the Merck molecule, now called MK-3000, formerly Restoret. We bind a Fzd4 receptor and an LRP5 receptor. That activates Wnt signaling. This is a normal physiologic pathway in humans. There's human genetics associated with a loss of function of that pathway, where children are born with either absent vessels or leaky vessels. We know that this pathway is critical for normal vessel function. That's one end of the antibody. The other end, I'll be more specific, the C terminus of the antibody, we have a VEGF trap decoy receptor that's actually the same as EYLEA that binds VEGF.
VEGF, as you probably know, contributes to the pathology of retinal vascular diseases by stimulating aberrant new vessel growth, and these are leaky vessels. You get this hypoxia in the retina because of the VEGF production, and that end of our molecule does effectively the same thing that Eylea does, which is mops up excess VEGF.
What preclinical data have been delivered so far that show Wnt biology is important in the vasculature in the retina?
There are a couple of very well-accepted models of both diabetic macular edema and wet AMD. In both of those models, this combination approach actually shows not just additive, but synergistic benefit compared to EYLEA alone or anti-VEGF alone, or in fact, even just Wnt activation alone. What you see in these models is you get retinal damage, not unlike what we see in human diabetic macular edema, where you have leaky vessels, and you have regions where there are no vessels. The human correlate for this is called retinal non-perfusion. You'll hear retinal specialists talk about this in DME patients.
What we're able to do with this combination approach is with very low doses, both eliminate the leaky vessels or at least leakage from the existing vessels that are, that seem to be damaged and reperfuse these areas that otherwise would just look like black spots when you looked at a under the microscope at these parts of the retina.
In terms of SZN-413's, the molecule itself, how potent of a VEGF inhibitor is it? How would it compare to the VEGFs-
Yeah.
-on the market? How potent of a Wnt activator is it? How does it compare to some of the other Wnt activators in development?
On the VEGF end, what we set out to do, which we've done, is to really replicate the kinds of binding affinity and neutralization that you get with Eylea. That's, you know, Eylea HD is just a higher dose version, but the pharmaco dynamics are the same of that molecule. That end of our molecule essentially replicates the activity of Eylea, both in terms of binding affinity and neutralizing VEGF-based signaling. The Wnt end of our molecule, really the only other one to compare against right now, the only other molecule in the field is the Merck molecule. We think we're more potent than that molecule. They haven't published that preclinical data, their sequence is available, we seem to be more potent in vitro than that molecule.
You referenced in your opening remarks the IND this year for E141. What needs to be completed before that IND can be filed?
I mean, it's the very typical, last steps. You know, you have to complete GMP batch, both drug substance and drug product. You need to file stability data with that for a US IND to be able to open that. Then you need to have a draft audit to draft report from your GLP tox studies. You know, we're sort of working through those last elements.
Can you discuss the design of the first human trial, particularly what doses would?
Yeah
be employed, how many patients, what endpoints?
Yeah, I would say we don't know about the doses until we've really finalized all the toxicology studies. We are able to concentrate the drug, which is a really key aspect of being able to have an intravitreal drug, is we know we can concentrate it to a point where we can get milligrams of drug in the eye. That's potentially important. We don't know that we need doses that high, but we know we're gonna be able to go that high. You know, we haven't laid out all the specifics of the phase 1b/2a study, but we're considering what we would see, you know, for a lot of programs in diabetic macular edema and/or wet AMD.
You'd have an ascending dose portion of the study, identify a couple of the highest tolerated doses, and then expand the study, you know, into tens to twenties of patients, at maybe multiple dose levels with multiple doses, three or four doses over several months, and then continue to follow patients for several months. It'll give you an idea, you know, as it has with a lot of other these early programs about the magnitude of the visual acuity benefit, the amount of retinal drying, and then in the follow-up phase, it'll give you some insights into the durability of the effect.
Got it. Have you given any guidance as to when that data could be available?
We have not yet.
No.
We haven't yet.
You referenced the Merck program before.
Mm-hmm.
What's its status? When could we see data from that, and what would you learn from their initial data release?
Yeah. I mean they've been quite enthusiastic about ultimately the, you know, clinical and commercial potential of that program. Like we think that's encouraging for the field that they're very optimistic about that drug finding a place in treating retinal vascular diseases. What they've said is, they've have 2 phase 3 trials ongoing. They'll have top line data in September from the first of those. That's the primary endpoint in that is visual acuity at 12 months. The second study, I think March of 2027. That's right. These are exactly the same design, these studies in diabetic macular edema. What do we expect? I mean, you know, people's smaller data sets, you know, there are examples of them not being replicated in phase 3.
Right
... as in a lot of therapeutic areas, and examples of, you know, people doing as well or better in phase 3. What their phase 2 data showed, phase 1, 2 data, this is in 26 patients, so, you know, a somewhat limited sample size, but looked VEGF like, both in visual acuity gains, and in retinal drying. They're comparing, by the way, in this study, Lucentis, which is, you know, is the oldest anti-VEGF and probably less effective than Eylea or Vabysmo in drying the retina. You know, I would say I think good for us would be any evidence that Wnt on its own looks VEGF-like, even if it's numerically not quite as good. Because our thesis is combining multiple mechanisms, multiple functions in the same antibody is gonna have at least additive benefit.
That's been shown with VEGF IL-6 in combination, Ang-2, VEGF in combination. Those other mechanisms that show additive benefit on their own didn't seem to do anything. IL-6, I mean, it just got sort of buried over time, but you remember Regeneron looked at Ang-2 a long time ago and never published the data. Roche looked at IL-6 alone, never published the data, it's probably reasonable to infer that it didn't do much on its own. The combination helps. I think not saying any minimal activity with Wnt would be good, but I think some activity, some demonstrable drying, and certainly if it's VEGF-like, that would be a very compelling mechanism to combine with VEGF.
When you contemplate your own data, what would be the bar to moving forward? Do you need to see something better than VEGF? Is VEGF like good enough for a combination molecule? How would you frame your own data? What is a minimum product profile for you to invest in a future study?
I think the product profile target may be, you know, different than, you know, what would merit a further investment. At the end of the day, these are small studies, and people are now going directly to large phase 3 trials. It might be that you don't capture all the true benefits of the drug in your phase 1, 2 data set. Our vision for the molecule is to be the best drying agent. It's not a, you know, same as, it's not a little bit better than strategy. It's a combine. Again, the Merck data will, hopefully support this. Combine the two most potent mechanisms that have been identified in retinal vascular diseases and have that translate to true anatomic outcome benefit. That would be better drying.
There are a lot of ways to measure that are common both in clinical practice and in clinical trials. OCT imaging, for example.
What about dosing interval? What have you suggested would be a possible or likely dosing interval?
Yeah. I mean, you know, one can calculate from the mice minimally effective concentrations, and that will get you to, with our molecule, we think every couple of month dosing. Ultimately, I think you really have to be informed by the durability in humans to assess that. I think it's very unlikely to need to be dosed monthly as Merck is doing with their molecule. The actual interval, I think we don't really. It's hard to extrapolate. The animal models are not informative about true biologic durability. You can calculate PK and how long you might have drug on board, but we have an agonist, which is very different than an antagonist, right? You don't need to necessarily have coverage of the target-
All the time.
All the time. If we actually get this revascularization effect, and you actually have a normal vessel that's grown there, it could be that that resists the underlying disease process for quite some time, and again, the animals are just not informative about that potential.
That's interesting.
Yeah.
What, so after the first in-human study, will you have sufficient data to know the dosing interval? Would you have to do a phase 2 to nail that down?
Yeah.
Kinda what would be the development progression after you do the first?
I think it would be, I mean, you know, we'll need to see what the durability looks like in this multiple-month follow-up. I think a potential and maybe even likely phase three design would be to do something like what Roche did with Vabysmo, which is to allow what, you know, some people called a personalized treatment interval for a portion of the study. You give a couple of loading doses, and then because this OCT imaging is such a standard part of practice, and in all these clinical sites, you can have a protocol and rescue definitions that allow you to increase the interval on a patient-by-patient basis.
What Vabysmo found is they had a large majority of patients get to every 12 to 16 weeks, employing that kind of personalized treatment interval driven by the OCT imaging.
Got it.
That also has the benefit of allowing you to be reimbursed in any setting, versus just picking a fixed dosing regimen.
Got it. Okay. In terms of safety, are there any risks to combining VEGF and Wnt? Is there anything theoretical that could come out of that combination?
Not theoretical. I mean, you know, the, with intraocular injections, you know, I think, unfortunately, we can do all the kinds of immunogenicity risk assessments and mitigations, and ultimately until you're in humans, it's difficult to assess whether the molecule itself, and we do have quite a large molecule, presents some unique risks. There are no theoretical risks associated with the targets, and we've done everything you can do to mitigate the immunogenicity risks in terms of the sequence and...
Can you discuss the manufacturing? What's the status of SZN-413's manufacturing now? Are you manufacturing at clinical scale?
Mm-hmm.
In what formulation are you gonna move into the clinic?
Lonza is manufacturing the molecule for us. We haven't disclosed a lot of details, but I can say we've, you know, we've been through what would be considered probably even commercial scale. You know, you're using very small quantities of these proteins. This is not like, you know, a systemic disease where we give milligrams, you know, or even grams per week. You can manufacture it like a 1,000 liter scale or roughly that scale. We're, you know, we're in that kind of scale up. The molecule expresses extremely well, probably even monoclonal antibody-like, and it's purified with typical monoclonal antibody methods, and our overall yields have been very high.
I think if anything, that's been an upside surprise about how well-behaved the molecule is from a manufacturability perspective, a formulatability perspective. We're using a very typical, you know, kind of buffer formulation. This will be delivered not initially as a prefilled syringe, initially as a vial, a liquid vial.
Got it. Other, retinal disease programs have run into trouble early in their clinical development 'cause the formulations weren't optimized-
Mm-hmm.
You saw a lot of inflammation.
Mm-hmm.
How comfortable are you that your formulation's sufficiently optimized?
Yeah.
It'll be well-tolerated?
There's a lot of data available on the currently marketed antibodies and what formulations they use. You know, it's relatively straightforward. As long as your molecule's amenable to those buffers and other excipients, it's pretty straightforward for Lonza, who does try a bunch of different formulations as part of the development process, to include commonly used formulations for intravitreal delivery. That's what we've done, and I can tell you, we have, you know, we do have a commonly used formulation. Our molecule did not require anything unique.
Nothing different.
Like very low pH where you might think there might be some stinging or something like that.
Got it. Maybe turning to SZN-413, could you give us a brief introduction to that molecule? What's its mechanism?
That's effectively a direct competitor to the Merck molecule. It's the Wnt end of our molecule. It binds Fzd4, LRP5, activates Wnt signaling, as I mentioned earlier, with SZN-8141 and it's true of SZN-413. We think it's a more potent Wnt activator than Restoret. That's from an in vitro assay perspective. And it's also has very desirable pharmaceutical properties like formulatability and manufacturability, and that's in the hands of Boehringer Ingelheim now. And we're don't have a lot of visibility on their timing.
Can you remind us of the terms of that agreement with Boehringer Ingelheim, both the financial terms.
Yeah.
I guess you just answered this, but who controls development?
Yeah. They control development. Maybe Chuck negotiated that deal. Maybe I'll let him just-
Yeah. It's $12 and a half million upfront. It's about $590 million in typical commercial, regulatory, and clinical development milestones and single, mid-single digit to low double-digit royalties on sales.
What does the agreement say about developing a competitive molecule? Are there any constraints on your ability to compete with SZN-413?
No. We don't have any constraints.
What does Boehringer Ingelheim disclose about the timing of development, data disclosures, kind of any guidance on the milestones for the program?
You know, they haven't said anything publicly. You may know that, I mean, they're a private German company. They don't typically disclose and provide guidance on preclinical assets. As Craig alluded to, given it's now a straight-out license, they control everything. We don't have a whole lot of visibility.
Yeah
... in the timing of when they'd start a clinical trial.
I mean, it is visible. Like, if you go to American Academy of Ophthalmology or ARVO where they have a booth, you know, we're on their partner section of the booth. It's not invisible, but there's no guidance about timing or positioning or...
Yeah, we know they're committed to moving it forward.
Yeah. Yeah. Great. Maybe going back to your wholly-owned assets, SZN-8143, can you give us a brief introduction to that molecule?
Yeah. Yeah. It's the same underlying thesis of multiple pathways potentially contributing to better clinical outcomes. That molecule is very similar to SZN-8141 with an IL-6 antagonist added in. We haven't disclosed exactly the format of that molecule, but there are only a couple of places where you can add an IL-6 inhibitor. Otherwise, the sequences in the molecule are the same as SZN-8141. We're obviously trying to reduce any liabilities associated with it, whether it's immunogenicity or manufacturability or concentrate ability or anything like that. I think it's possible that IL-6, even if you have other multiple pathways like Wnt and VEGF contributing to better anatomic outcomes, that inflammation is still contributing to those diseases. Ultimately, it's possible that it's just the best drug for all retinal vascular diseases.
It's a bit behind SZN-8141. I think our initial strategy is to really try to have those complement each other, where SZN-8143 would initially be targeted to more inflammatory driven diseases like uveitic macular edema. Yeah, I think we'll just have to also test it in DME and wet AMD patients. Again, if IL-6 is really continuing to drive those diseases, it could just be the best drug.
Okay. At this point, your plan is to advance both, 814-
Plan is to advance both with SZN-8143, just timing-wise behind SZN-8141.
In terms of the IL-6 mechanism.
Mm-hmm
... what is the evidence that that is beneficial in the treatment of retinal diseases?
Yeah. People embarked on studying IL-6 inhibition from a couple of observations. One was people with systemic inflammatory diseases who also have a macular edema. There are some autoimmune diseases like psoriatic arthritis and lupus, where patients develop uveitic macular edema. In some of those patients treated with IL-6 inhibitors, physicians observed that there was improvement in their retinal symptoms. At the same time, there were observations that IL-6 was elevated in the posterior and anterior chamber in the eyes of these patients as well. Not just those patients, but DME and wet AMD patients. It was a combination of a biomarker being observed that was correlated with disease activity and treatment with a systemic IL-6 seeming to improve the retinal symptoms of those diseases.
That was what kind of laid the foundation for companies embarking on studying IL-6. What we now know from some recent data from Roche is if you add IL-6 inhibitions, they have a monoclonal antibody called faricimab. If you add that to Lucentis, you get better visual acuity and drying outcomes.
Relative to VEGF alone.
Yeah, relative to VEGF alone. Thank you. It does provide an additive benefit even though, you know, as I mentioned earlier, it didn't seem like IL-6 did anything given intravitreally on its own, even though these observations were made from systemic administration in some of these patients. There's clear additive benefit on top of VEGF when you add IL-6. That's as separate injections. You're probably aware of the Kodiak Sciences data, which is a bispecific that combines IL-6 and VEGF in the same molecule. I think very compelling clinical benefit, anatomic benefit in what they're calling MESI, but it stands for macular edema secondary to inflammation. It's many of these same patients with underlying autoimmune disease who develop a macular edema. Clearly more inflammatory driven retinal vascular disease.
In addition to Roche and Kodiak Sciences, anyone else advancing IL-6 in retinal disease?
I've seen a presentation from a company called Ocular Therapeutix that has a VEGF IL-6 Ang2 combination, triple combination.
Other than that, it's.
Yeah, other than that.
That's who's moving.
Yeah. Roche has multiple molecules. They're gonna put one apparently in their little port system, which has to be surgically implanted in the eye.
Got it. What work needs to be completed before an IND can be filed?
For eight one four three?
For eight one four three.
Yeah. That's why we haven't given exact guidance. You know, that's months behind SZN-8141. You know, we've still got to go through tox manufacturing.
Okay. Months, but not years.
Correct.
Oh, that's great. The candidate that you have is the lead candidate. It's just tox and all the other steps.
I mean, there is some tweaking, that, probably, you know, we think merits spending some time on. I mean, if... We don't have direct competitor. You know, I don't know that two or three months is kind of make or break...
Right
... timing, and there are gonna be lots of learnings from the Merck data. This year, Merck actually also has a wet AMD trial combining the Eylea with, MK-3000 with Restoret.
Okay.
I think there are lots of learnings for us to take advantage of during this year.
Are there any theoretical safety risks with IL-6 in the retina or anything seen in the prior trials that we should be aware of?
Not that we've seen with any of the other agents that have, you know, with direct intravitreal injection of an anti-IL-6 antibody. There's no theoretical risk of inhibiting IL-6 in the eye if it's elevated.
Maybe to finish up with some... Oh, Philip, go ahead. I think was there not some, recent retinal vascular occlusion?
There were a couple of cases, you know, that's a vision-threatening complication. Our Head of Clinical, who's a retinal specialist, you know, that's clearly a serious adverse event. I think his reaction to it was we're not sure that that's truly, given this relatively small size of the study, not sure that that's truly above what might be a low background rate. There's no mechanistic explanation for it. I think it's, again, it's clearly serious.
It wasn't observed in the phase 3.
Yeah
... as they ran for faricimab alone.
Yeah
... the IL-6.
Not working?
No. Just could you repeat the question for the people-
Okay. Sorry. The question was, Roche had seen some retinal vascular occlusion in the combination with IL-6.
Great. Maybe to finish with some corporate questions. First, business development strategy. You've obviously already partnered, one molecule with Boehringer Ingelheim.
Right.
What's your strategy for the other two? How far will you take them yourself? What interest do you have in partnering them?
Right now we are gonna take both of them ourselves. You know, we think we have the capital to do that right now. Andrew can address that in a second. You know, I think as you know, covering this area, you know, this is what we used to think of in the old days as like the classic biotech market, right? There are less than 2,000 retinal specialists in the U.S. They're all extremely aware of what's in development and what the differentiation is, and so it's a very tractable market for a small company, certainly from a commercialization perspective, 'cause the number of specialists. Even though these studies can be relatively large, these are not 10,000 patient studies. These are about, you know, 800, 900 patient phase 3 studies.
You know, these are not, you know, 250 sites globally. You know, these are probably more like 80 or 90 sites globally. I think we can, with some positive phase 1, 2 data, build, it's not a lot more, some more capabilities on the clinical development operations side to be able to conduct the studies, then I think it's very tractable in terms of commercializing yourself.
Regeneron certainly demonstrated the leverage in the model 10 years ago when it launched. In terms of strategic interest in the space, we have seen a couple takeouts.
Yeah.
How would you characterize it?
I mean, I think it's not dissimilar to what we perceive in terms of investor interest in ophthalmology, that, you know, it's gone from one of the reasons we out-licensed to Boehringer Ingelheim was, you know, we were contemplating that in about 2020, there was no strategic interest in ophthalmology in 2020, and I think and not a lot of investor interest in ophthalmology, in ophthalmology dedicated companies in 2020. I think that's really been, you know, I think there's a, I don't know about dramatic, but transformed interest on both sides where there's a lot of interest from strategics, ones even who aren't in ophthalmology yet. I mean, look at Merck. You know, they now have multiple molecules. I'll just repeat what they said on their earnings call.
They think their two molecules that are in the clinic now can contribute $5 billion in revenue. These are large markets, and I think there's growing interest and, like, really tangible strategic interest in ophthalmology now.
Can you remind us of your cash balance and cash burn guidance?
Sure, yeah. Just for some background, we did our PIPE financing in March of last year. That was $175 million tranched, $75 million up front, another about $100 million due upon IND clearance, which we're anticipating this year. We had approximately $80 million of cash at the end of Q3 last year. If you take that plus the $100 million from the second tranche, that would enable us to run our initial clinical POC studies for SZN-8141 and SZN-8143.
Perfect. Those are all my questions. Anything I should have asked you that you think it's important for investors to know?
Yeah. Maybe just to, you know, describe what anatomic benefit means, because I think it's really important to see what the opportunity is for differentiation, and then when, you know, we have data and others have data, to really be able to identify what that means and why that's important to retinal specialists. Just take Vabysmo as a good example of this. You know, they didn't show really any differences in visual acuity and very mild differences, minor differences, and only at certain time points in something called central subfield thickness, which is sort of like it's a OCT-based measurement, but it's sort of a. I think it's 99 sampling points or something throughout the macula.
You can also just see whether there's fluid anywhere, and that's also clear on the OCT, and that can be measured, and quantitated as the % of patients who have no intraretinal fluid. That means truly a dry macula, no edema at all. In the phase 3 trials, Vabysmo showed, call it, 20-ish percentage point increases in the % of patients with no fluid. They're still only up in the 40s and 50s of % of patients who are gonna call, use the phrase retinal specialists use, completely dry.
I think there's this compelling evidence that a second mechanism as really meaningful drying, but there's not they're not in the 80% or 90% yet, which is really where we'd like to get with these patients, is that almost all of them are completely dry, and that's what we would hope to sort of fill that gap in a higher proportion of patients who are able to achieve a dry retina.
Perfect. With that, we're out of time. Thanks so much for coming to the conference.
Thank you.
Thank you.