Yatin Suneja from Guggenheim. My pleasure to Craig Parker, the CEO of Surrozen here. We will be chatting for the next, let's say, 25, 30 minutes. Craig, thank you so much. We always appreciate your presence, you coming, spending time with us. Why don't you make some opening comments? There were some key updates that you provided yesterday on the earnings release. Maybe recap that. Then obviously, we have a lot to discuss between your program and some of the stuff that is happening on the competitive dynamic. Why don't you make some comments?
Yeah. It's a very exciting time for Wnt biology, exciting time for retina broadly, retinal vascular diseases broadly. The background of Surrozen is we actually started as a Wnt biology-focused company. We discovered the multifunctional antibodies that we've been pursuing.
And have looked at a number of different areas and arrived at targeting the specific receptors that we're targeting, and that the Merck molecule targets, because of some really compelling human genetics, some childhood retinal diseases that illustrate how important these targets and this pathway are in preserving normal retinal vessel function.
So, we made an antibody that we thought really accomplished a number of key objectives in treating the disease, and I think we'll talk about the Merck data, but the combination of the clinical benefit that's been shown with all the anti-VEGF molecules combined now with the clinical benefit that's been shown with targeting Wnt signaling, and we're activating Wnt signaling with that portion of the molecule, those really look like the two best mechanisms to treat retinal vascular diseases, at least diabetic macular edema.
Got it.
That's the foundation for our approach, was to take our knowledge of Wnt signaling, combine it with what's been proven to be very efficacious in these retinal vascular diseases into one molecule.
Got it. I think it'll be helpful to put in perspective on what is going on in that space. Obviously, at the AAO, Merck's BRUNELLO data got presented. There was a lot of focus going into it. What were the key learnings for you? Maybe put in perspective the efficacy and both the safety and the efficacy profile that we saw with the Merck molecule.
Yeah. This was a large phase III, nearly 1,000-patient phase III trial. Patients had diabetic macular edema. About three-quarters of them were treatment-naive diabetic macular edema patients. In the study, they got randomized to either LUCENTIS, which is one of the older-
Yeah
VEGF antibody fragments, or one of two doses of what's now called remigromig. People will also know it as MK-3000 or Restoret. This is their Frizzled 4/LRP5-targeted Wnt agonist. Really, for the first time ever with something other than a VEGF mechanism, what they showed was you can get VEGF-like efficacy, and that's measured in a couple of ways that I'll come back to.
So, VEGF-like efficacy. That really alone is quite a breakthrough for the field, that a non-VEGF mechanism could show this kind of clinical benefit. Others have been tried alone, like Ang-2 alone, IL-6 alone. None of these have shown that magnitude of benefit. On the safety side, other than something called proliferative diabetic retinopathy, where they saw higher rates, it was very safe, so no other intraocular inflammation. I think that's really important for the field.
Some other aspects of the data that I think were very important, visual acuity was correlated with drying, and that's something we did not know with Wnt signaling, whether those would be as well correlated as they are with anti-VEGF therapy. The onset of clinical benefit was very rapid. It was as rapid as VEGF. That's something else we didn't know about Wnt signaling, that it could result in very rapid retinal drying.
Yeah.
That's really encouraging for us. Then we have an anti-VEGF component to our molecule.
Yeah.
The way you treat proliferative diabetic retinopathy and vitreous hemorrhage, which is what they saw, is with anti-VEGF molecules. When we left the, literally walked out of the theater where the data was presented, we happened to talk to a couple of our clinical advisors. You can see who they are on our website. They all said, "This is the perfect landscape for you. Wnt works really well.
Yeah.
Part of your molecule is going to treat the one potential liability of the Merck molecule, which is proliferative diabetic retinopathy.
Got it. With regard to, again, going into the study, there were two focuses, right? Or the two or three things people were focused on. One was obviously on the safety side. On the PDR adverse rate, do you get a sense that that has been put to, or that is behind us now? People are not really focusing on. Is it more of a-
Yeah.
Maybe talk about that.
Sure.
Then on the efficacy side, we do get question on some of the differences. It is about, let us say, three-letter difference.
Yeah.
How meaningful is that?
Yeah. Yeah, I mean, on the proliferative diabetic retinopathy side, I think when we talked to our clinical advisors, and our head of clinical development is a retinal specialist, I think they would all tell you that in a 12-month study of diabetic macular edema patients, you would expect to see an evolution of diabetic retinopathy, of non-proliferative converting to proliferative DR.
The question is, what rate does that occur if you don't have VEGF treatment? Merck, the presenter for Merck, highlighted a couple of other studies, a very old study that was done when you could do sham injections, and then a more recent study that used laser photocoagulation. Those rates were 11%-22%.
Yeah.
at 12 months. So their 6.1% and 6.7% was below that, and I think most retinal specialists would tell you the PDR was not the result of activating Wnt signaling, causing it. It was inadequate control of PDR.
Yeah.
Anti-VEGF happens to control this vitreous hemorrhage and PDR very well. So, I think there was a clear consensus that that rate was lack of adequate control of PDR. They have a second parallel study that's going to get reported around February.
Yeah
called BAROLO.
I would expect that we and others will be looking to see whether those rates are about the same
Yeah
or whether, for some reason, these 6% were outliers one way or the other. As of now, again, we control that with the anti-VEGF portion of our molecule, and I think it will be important to see
Yeah
what that rate is in the second study. With respect to the efficacy, you have looked at the results of these studies. Even 1,000-patient studies are highly variable. We actually had a statistician go through all the published data for aflibercept, faricimab, and LUCENTIS, and the mean varies by study, but it is generally about nine letters
Yeah
for VEGF-based molecules. The standard deviation is 7.5 letters. A two-letter difference is probably not an actual true difference in efficacy, and LUCENTIS outperformed all of the previous phase III studies that had been done with LUCENTIS. LUCENTIS, historically
Yeah
had about an 8.8 or 8.5 letter benefit, so its 10.7 or what I think it was, or 11.1 letter benefit, was larger than had been ever seen with LUCENTIS. I am not sure that those are meaningful comparisons to say that Wnt slightly underperformed because LUCENTIS, compared to historical data, outperformed.
Outperformed. Yeah. Very good point. Yeah.
The same is true actually of central subfield thickness.
CST, yeah.
which is one of these measurements of retinal drying. We had a statistician do the same exercise. If the mean across phase III studies was 150 microns, the standard deviation was 80.
Oh, wow.
The standard deviation was 50% of the treatment effect.
Of the treatment effect. Yeah.
for CST. These 20-micron differences are probably not true differences in the efficacy.
Got it. Going back on the PDR adverse rate, I think it was also comforting to see there was no dose response. I think both arms were similar.
Right. There didn't seem to be a dose response for any outcome measurement.
Yes
at least with 0.5 and 0.8 milligrams. They had previously described that in their phase I/II, they didn't see a dose response, even with a wider range of doses.
Got it. This was BRUNELLO. Now, what is your molecule? How it is differentiated? Explain to us what are these two different arms of the molecule.
Yeah. The most easily identifiable difference is they have no anti-VEGF components on their molecule.
Yeah.
The Wnt portion of the molecule, we are targeting the same receptor and co-receptor, so we're both targeting Frizzled 4 and LRP5. I won't get into sort of the inside baseball of antibody fragments and the differences between diabodies and VHH fragments, but we're both targeting the same receptor and co-receptor.
If you think about, is the pharmacology of Wnt signaling different? The answer is no. It's probably the same. The downstream effects are the same. But what we also know from our molecule is it's more potent in cell-based assays, and it's more potent in animal models of retinopathy than remigromig, at least what we've made from what's in the published patent with the sequence of remigromig. We do seem to have greater potency in cell-based assays and in animal models for the Wnt portion of the molecule.
Yeah.
Now, they did not have a dose response. Do we know that that's going to translate to efficacy benefits? No, but again, in animal models, we do see a dose response with our molecule.
We do see differences.
Got it. What about the VEGF portion of it? Is it Eylea, or what is it?
It is, yeah. It's actually the same decoy receptor sequences that are used in Eylea. When we designed the molecule, one of the objectives was to try to retain the same VEGF binding characteristics.
Yeah
of Eylea, which we've been able to do.
Okay. So now, you have submitted the IND, and yesterday, you actually announced that you are increasing the size of the study.
Mm-hmm. Yeah.
Can you walk us through what you are doing? What are these two studies, or the DUET study? What is the cadence of the data? What type of patient you're going to get?
Yeah. We're pursuing, as Merck did, diabetic macular edema as the initial indication. Probably not going to have time to talk about the biology of some of the other potential indications, but there is a clear biological rationale of other retinal vascular diseases like wet AMD, retinal vein occlusion
Yeah
and others. The biology in the retinal vessels is quite elegant, that Frizzled is involved in normal retinal vessel development, normal retinal vessel function
Yeah
and the barrier function of these what are called tight junctions. That's one reason for pursuing diabetic macular edema as an initial indication. It's also probably less well-served by anti-VEGF molecules, so the percent of patients, for example, who achieve complete dryness
in DME is much lower than in wet AMD. If you're thinking about where might I detect a signal of differential efficacy, DME is probably a better background to do that. This study is in DME. The initial SAD portion is in treatment-experienced DME, because with a first-in-human
Yeah
it's easier to enroll those patients, easier ethically for investigators to enroll patients, compared to treatment-naive patients who have clear treatment choices with the currently available drugs. The announcement we made was for part two of this study, that we're going to expand it from about 60 patients total to about 150 patients total. I think we're going to do what I think people have said is, I don't know if bold is the right word, but we think this can be the best drying agent, and we want to see if there are indications of that in this phase II portion of the study. So we're going up directly against VABYSMO.
Yeah.
It'll be 50 patients per cohort, two dose levels that we'll determine from the part one portion of the study. 50 patients on VABYSMO, 50 patients on each of two dose levels of SZN-8141. I mean, as with any early study, safety is the primary outcome, but we'll use the same kind of imaging techniques that are used in phase III trials to measure retinal fluid. We'll use the same techniques that are used to measure visual acuity.
So we think that we could not It's not powered to detect statistical differences, but directionally, we think we could see some improvements in drying and visual acuity versus VABYSMO. The 50 patients, there's no magic number.
Yeah.
It's not that it achieves specific statistical power at that. It's sort of more than 20 is better. We were able to raise some money, which we announced yesterday, through an ATM to be able to fund expanding the study. As I mentioned, a competitor has been able to take a data set of about that size and apparently successfully argue to FDA that they only need to do a single dose level in phase III, which really makes a phase III program a lot more streamlined.
I see. So yeah, I think that makes sense now. You have 50 patients. If you can pick a dose-
Yeah, if you can pick one dose from that
enough samples, I can just go straight to phase III.
Yeah, exactly. And that portion of the study will be three doses
Yeah
with another four months of follow-up. With all these mechanisms now, this was an important, I think, observation from the Merck study is, like VEGF, these molecules achieve close to their peak benefit at 12 weeks.
Yeah.
That is a relevant time point to look at efficacy, and both visual acuity and retinal drying.
Okay. You should be able to see, because the other thing that we do not know about your molecule or the Merck molecule is also the frequency that you can give. Merck is giving it on a monthly basis.
Yes. Yeah.
You can check off-treatment durability.
Yeah, we'll continue to observe patients for four months, and then make a commitment to a phase III design. One important aspect of a phase III design that I think Roche really showed was you want to enable use and reimbursement for many different regimens.
Yeah.
You think committing to a single regimen in phase III, even if you had a high level of confidence that you could get to, say, every four months, you might not want to do that in your phase III, because if a physician wants to use it more frequently, they may not get reimbursed.
Yeah. That is true. What is the timeline for this SAD and then a part two study? When do you expect to initiate the SAD?
At what time point you'll be able to, or after how many doses you'll be able to move to the part two of the study?
We announced yesterday that we dosed the first patient.
Okay
in the SAD portion. We have only disclosed that we will have data from that portion of the study in 2027. We have not given guidance on exactly when
the full part two data would be available.
That first portion is a single dose with 12 weeks of observation after that. You might think, "Well, are you really going to get insights into the clinical benefit and the durability?" If you look at other data sets, the answer really is yes. at four weeks, you see a pretty dramatic improvement. In fact, almost half of the ultimate peak improvement
Yeah
You can see by four weeks. We know from PK modeling that the drug is still around long after even a month.
Yeah.
A 12-week durability assessment might be meaningful as well. That would be the data set that we would have in 2027. We haven't disclosed exactly the absolute starting dose.
Yeah
It'll be a couple of cohorts likely, with, again, one dose, 12 weeks of follow-up. The design is at least three patients per cohort.
Yeah, all experienced patients.
All experienced patients.
Okay. You will decide the two doses, right, based on that data?
Yeah, we would take the two highest tolerated. This has become a pretty common design element in these phase I/II trials, is take the two highest doses into this expansion phase, which we are calling the part two of the study.
Yeah. You mentioned about the choice of Vabysmo. Yes, I think it is a bold choice. Why? There must be something underlying. You must have a thesis for you to feel confident that, "Hey, look, we are going to go after the agent that dries the best.
Yeah. Yeah, I mean, the foundation and vision, it's hard not to make puns in this disease area, is for this to be the best drying agent. VABYSMO was able to show that
Yeah
versus VEGF alone. That was with a backbone of one component that had shown really minimal, if any, differences as a monotherapy. Ang-2 as a monotherapy, there's never been a robust data set published. Doesn't seem to add much as a monotherapy, and yet there's additive benefit.
Yeah.
We know from a data set with combining IL-6 inhibition with VEGF inhibition, even though IL-6 alone is probably half the benefit of Wnt alone,
Yeah
there's incremental benefit, there's additive benefit on top of VEGF. That was really the foundation of this approach, was take the two best mechanisms and combine them. Our preclinical data actually supports a synergistic effect, not just an additive effect, but we would hope in humans to at least have some additive benefit from those two. If we do, we should see at least numerical indications of that against VABYSMO.
That has become the standard of care. A lot of people have asked us, "Why don't you go up against EYLEA? It will be easier to beat. You want to make sure you have a positive study." The intent with this molecule is to really be a better agent, not just be another agent.
Helpful. What about AMD, or wet AMD? What is the path there? Obviously, Merck is going in AMD as well. Just curious, how strong is the biology there? I mean, at least with VEGF on board, you-
Yeah
should not have the risk in that indication.
Yeah.
How do you think?
Yeah. I mean, as I mentioned about why do DME first.
Yeah
If you just look at the published data and what's even in the label for Vabysmo, for example, a very high proportion of wet AMD patients get what's referred to as completely dry.
Yeah.
So, no evidence of macular edema. It just is numerically a more challenging indication to try to show some differentiation. That doesn't mean you won't get used there if you have a molecule that's better in DME and roughly comparable in wet AMD, and that's actually the profile of Vabysmo. I think if you asked a retinal specialist, "Why do you choose Vabysmo for wet AMD?" They'll say, "Well, it's a better drying agent.
Drying agent.
Where is it a better drying agent? They will say, "Well, in DME." "So why are you using it in wet AMD?" "Well, it is my drug to use in retinal vascular diseases." Success in DME, I think Vabysmo is a clear case study that translates to uptake in wet AMD. Should it be at least as good in wet AMD? You already alluded to there is VEGF on board, but there actually is interesting biology in these vessels at the back of the eye that are what are implicated in wet AMD.
These are called the choroidal vessels or the choriocapillaris. There is a Howard Hughes investigator at Hopkins who has published probably the most in this field, that if you knock out Wnt in these vessels, that you do get more leakage, and if you upregulate Wnt in these vessels, that you can reduce that leakage.
There is clearly Wnt biology going on in this network of vessels, which is quite different than the retinal vessels that are involved in DME. It is just not quite as elegant biology, I would say, as is the case in retinal vessels.
Yeah.
But there is definitely a biological rationale. We have data in models of wet AMD to show that it does confer benefits over VEGF alone.
Got it. Where are you on the tox work? Because I think after the phase II, as you go into phase III, the tox work needs to be done. That is one.
Yeah.
You mentioned about the additive effect. What is the end goal? What is the regulatory path? It is most likely going to be a non-inferiority study.
Yes. Yes, we have not disclosed the details of the tox, but yes, you are quite right. To do a phase III, you need to do a six-month, what would be considered a chronic tox study.
Chronic tox.
To start our current SAD, you would only need a one-month study.
We want to get started as quickly as possible. We're not going to go into the details of all the tox studies that we've completed or planned, but yes, you'd need a six-month study completed and reports to start your phase III.
What is the regulatory path?
Yeah.
Do you need to show additive effect when you are going for non-inferiority?
Yeah. Again, sort of falling back on the Vabysmo as a case study. They showed non-inferiority on visual acuity and then some drying benefits.
Yeah.
In particular, percentage of patients with no intraretinal fluid is quite prominent in their promotional material, and I think what contributes to it being perceived as the best drying agent. No one's done this successfully, but there is guidance on superiority in these phase III trials, which is proportion of patients with a 15-letter gain.
Gain.
If you have a statistically higher proportion of patients or a lower proportion of patients with a 15-letter loss.
Loss.
I think people just haven't seen enough additive benefit earlier, in a phase II trial to want to go after that. Non-inferiority, it turns out, allows you to do a smaller study. Even if you had an incremental visual acuity benefit, you'd have to do a very large study
To-
to power it to show superiority.
Got it.
It doesn't mean that can't be a secondary endpoint.
Sure. I mean, you can assess that.
Yeah.
Okay. Any update on the second molecule that you have, and also the Boehringer Ingelheim molecule?
Yeah. So no update on the BI molecule. Once we reached a point after, I think, a very fruitful research collaboration, it is in their hands now, and they are not required to give us prospective reports on what they are doing or when it is going to happen. So, last time we reported any progress was when they started phase I and they owed us a milestone, so that was material for us, so we disclosed it. But they are a private company. There is not much public disclosure, nor to us, about what they are doing.
Yeah.
So we just know it is in the clinic now. Sorry.
SZN-8143.
Yeah, SZN-8143. So this is a combination really of SZN-8141 plus IL-6 inhibition. We want to be thoughtful about having, I think, a capital-efficient and complementary strategy with those two molecules. So, if we were a very big company that had all the time in the world and a lot of money, we might think about just going head-to-head with those and picking the best. I think we already have enough data now from a Kodiak study that says that IL-6 does not likely add anything in wet AMD.
So I think that maybe you sort of take that off the table based on that data that IL-6 does not seem to provide any additive benefit. The most natural positioning for something that has an anti-inflammatory effect is in something called uveitic macular edema or non-infectious uveitis. And most retinal specialists would tell you a portion of their DME patients have a more inflammatory-driven disease.
Now, identifying those with a baseline characteristic becomes a little more challenging for a clinical trial. But that is how we would think about SZN-8143, is complementing SZN-8141, assuming SZN-8141 continues to advance, and targeting it towards naturally diseases that are retinal vascular diseases, that includes retinal vein occlusion potentially, that are more driven by inflammation.
Got it. Very good. Helpful. Final question, what is the financial position, cash, burn rate?
We just disclosed, when we announced the first patient dose, that we had received the second tranche of a PIPE deal that we had done in 2025. Until we had the IND open, I think it wasn't certain that we would receive all that money, so that was important to get the full $95 million from that. We also announced that we had about $29 million in proceeds from an ATM purchases last quarter. That gives us about $220 million, which will take us into 2029.
Oh, very good. Well, very good. Craig, that's all I have for you.
Thanks for asking me.
Appreciate it.
Yeah.
Thank you.
Always good to see you.
Yeah, likewise.