All right. Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Gold, one of the Biotech Analysts here, and it's my pleasure to introduce the team from Zentalis. We have Julie Eastland, CEO, to my left, and to her left is Ingmar Bruns, CMO. Just a reminder, the format is a fireside chat, so if anyone in the audience has a question, please raise your hand and we'll try to address it in our discussion. Before we get started, I just need to read a quick disclosure. 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. With that, maybe I'll just hand it over to Julie for some brief introductory remarks, and then we can hop into Q&A.
Thanks, Michael. As always, we really appreciate the invite and the time. Just to go toe-to-toe with disclosures, since that seems to be the flavor, I would hate to be remiss in reminding the audience that we will be making estimates and forward-looking statements. There are risks and uncertainties associated with those, and we encourage those listening to review our SEC filings. Now we both are squared away with our lawyers.
Did our duty here.
Yeah.
So maybe you just want to give a brief introduction to Zentalis and kind of at a high level, and then we can maybe start digging in a little bit.
Absolutely. Would love to. Zentalis is a late-stage clinical development company focused on developing azenosertib, which is a WEE1 inhibitor. It's a small molecule. Our focus is in platinum-resistant ovarian cancer for patients who express high levels of a protein called Cyclin E1. We are currently conducting the DENALI trial. Part 2 of that trial is a trial intended to be registrational for an accelerated approval pathway in the U.S. In addition to that, we are also enrolling our ASPENOVA trial, which is the companion trial, which is a randomized controlled trial which supports accelerated approval but also converts to a global full approval.
Yeah.
Very busy. We also are expanding in some earlier lines of ovarian, doing some proof of combination studies there that we're happy to talk about, and then very interested in furthering the development of azenosertib in other combinations and other tumor types, and all focused with the intent to bring the drug to as many patients as possible.
Yep. Great, and thanks for that introduction. Maybe since your initial focus is on ovarian cancer, more in the late line setting, but maybe just paint the picture for us in the ovarian cancer landscape, how it's been evolving, where the competitors are, et cetera.
Sure. It's an exciting space. It's exciting for patients, but also for drug developers, because a lot of new opportunities. I think, overall, when you think about the totality of the work that's being done, it's really around targeted therapies, and in our case, around biomarker selected patient population where there is a high unmet need. Probably higher unmet need given the Cyclin E1 patients, certainly in the PROC setting, typically don't do as well, progress faster. So no targeted therapies for these patients, Cyclin E1 patients in the platinum-resistant space. And we think there's a clear advantage for a different modality. Azenosertib is an oral. It is not a chemotherapeutic agent, which is primarily, if not all, that's available to patients. And again, it's for this important biologically different selected population.
Yeah.
A real advantage, we think, compared to maybe some other targeted agents that are coming along.
Yep. Then I guess the biomarker selected approach, maybe just talk about the unmet need, and you mentioned it's not chemo, obviously, so what are some of the advantages there?
Yeah. Ingmar, do you want to talk about the characteristics of azenosertib then, compared to chemo? I think that would be helpful.
Yeah, no, happy to, Julie. Yeah, so, compared to most of the available chemotherapies out there, it is an oral therapy, right? Some oral chemotherapies out there, but not many, right? And it is differentiated due to its five- on, two- off schedule.
Which is part of the, as we see good tolerability, and in terms of safety, it really is differentiated due to a lower rate of cytopenias, namely neutropenia, right? Other side effects include GI toxicities, but also to a lower degree. The third group of side effects is fatigue. Those overall, it is providing additional flexibility due to the oral route of administration. It is due to its schedule that has been developed across a large number of patients, actually over 1,000 now. Very well tolerated, yet efficacious. It is from primarily single agent chemotherapy, well-differentiated in terms of its toxicity profile, but also from the emerging players like ADCs or taxane regimen.
Yeah.
And maybe just from a patient journey perspective.
Yeah.
To kind of understand how patients really see a lot of chemotherapy in that early PROC setting. For Cyclin E1 patients in particular, they tend to move through therapies in a more rapid fashion. As they come into the platinum-resistant setting, their choices are chemotherapy. Obviously, they have built up cumulative toxicities around neuropathies. Women experience hair loss, a number of chemotherapy-like compounding issues. So really looking for an alternative to some of those toxicities as a break in the-.
Yeah.
PROC setting, because currently standard of care is either taxane-based or other chemotherapy-based options for patients, so not great choices.
Yeah. In the PROC selected patient population, can you give us an idea of the size of that relative to PROC?
Yeah, absolutely. We've seen in our historical studies, about 50% of our patients that we've looked at retrospectively screen for high Cyclin E1 protein. We expect about 50% of the PROC population to be available. That represents about 20,000 patients across the U.S., EU5, U.K., and Japan, so a pretty sizable market. We expect to see about 50% of that as an opportunity for the Cyclin E1 patients.
Great. We'll move more to ovarian, but just also, you'd mentioned previously other ways to move upstream, maybe combinations, maybe other indications as well. Maybe just talk about beyond PROC, what are the opportunities you're considering?
Yeah, I think we've said very clearly our strategic focus has been to utilize our capital resources to get this agent to patients with platinum-resistant ovarian cancer first. Our second dollar goes to earlier ovarian. That's currently a POC trial, proof of concept trial, in second-line maintenance. That's the combination of azenosertib plus bevacizumab. These are patients who had progressed while on a PARP inhibitor in the earlier first-line setting. They come into the second-line setting, and they get into maintenance with bevacizumab as their choice. We're adding azenosertib on that and able to really see the safety combination is the goal, as well as see some additional activity with regards to improvement in PFS. That would be kind of a proof of concept data set that would allow us to really expand into a broader first and second-line setting for the agent.
And then separately, we have some really exciting data at AACR around triple-negative breast cancer in combination with ADCs with different payloads, as well as with single-agent paclitaxel. That was, of course, in PDX models, those preclinical models. But again, really sort of proof of concept showing the benefit of azenosertib in the face of cytotoxic agents, whether that is single-agent chemotherapy or whether that is ADCs, that we would like to see to extend that to the clinic, as well as I think Ingmar Bruns can certainly talk about other tumor types that he is super excited about. But we will make some decisions about where we go next outside of ovarian shortly. We plan to, as this has always been the promise of WEE1 inhibitor, to be a single agent, but also a good combination partner with cytotoxic agents across multiple different tumor types. So PROC is the beginning.
Yeah.
Not the end of the story.
Yeah. I do not know, Ingmar, you want to talk a little bit about where you might go post ovarian, or what are some of the considerations.
Yeah.
As you think about that decision or?
Yeah, I think there's several factors that, of course, lead that decision, and one of them is, of course, biology mechanism.
Yeah.
Right. So, that's certainly present in disease with P53 loss or mutation. So, as Julie said, we've some interesting data in triple-negative breast cancer and there's certainly a P53 mutation in a large proportion of patients to be found there. But we're also excited in HPV-driven disease, to just name a few. It's all early days. We haven't really made decisions here, but that's certainly an exciting space where we think biology will lead the way and that's even indication agnostic, right? If you look at HPV-driven disease in particular. Then, of course, the other factor would be combination partners.
Extensive replication stress. So, of course, what comes to mind first, ADCs and Topo1 payloads, of course, create a great deal of replication stress here. So those are certainly interesting combination partners. Then lastly, of course, it's a little bit around the setting, right? So I think it makes sense to start where we already developed a footprint now in gynecological oncology or some adjacent indications. Also looking towards commercialization and where you build the strategic capabilities and even sales force, et cetera. But that's ranking highest is probably the biology and the mechanistic differentiation here.
Yep. Makes sense. Maybe we can shift now back to ovarian and Ingmar, you gave a little bit of a preview of the profile that we've seen so far across a number of studies. Julie, you mentioned the dosing. So maybe just talk a little bit about how you're dosing the drug now versus how you dosed it in the past and what gives you confidence there.
Yeah. As we have disclosed, we selected a dose, and we have determined previously already that the five on, two off schedule is most favorable. That's really the best combination of, by the way, not an uncommon schedule, but the best combination of really the exposure that we want and the tolerability that we also desire at the same time. I think if we look at our relative dosing intensity, we see that this is very high and over the many and long efforts to determine the right schedule and dose here, this has been well established. All of this is now in the DENALI trial, which again is a three-part seamless design, where initially was the original dose escalation, but then Part 1B was a retrospective biomarker analysis at 400 mg.
Then importantly, Part 2A, which we have press released, was the dose confirmation between 300 mg and 400 mg. So we decided to move forward with 400 mg as the five-on, two-off schedule. 2B is now the expansion. The latest addition is Cohort 2C, where we really want to account for the real-world treatment paradigm or the emerging real-world treatment paradigm. We already had patients in 2A and B, even 1B, that were also treated with taxanes or taxane regimens while in the PROC state already.
Yep. With the addition of 2C, maybe talk about impact it's had on timelines, and then also talk about how it impacts the analysis of the primary endpoint.
Yeah. I'll take the first part, and I'll have Ingmar address any impacts to the study. Importantly, this does represent patients who have an opportunity to experience the agents that are approved today. A and B, as Ingmar pointed out in the DENALI Part 2 trial, have been enrolling since 2025. Of course, those patients, our enrollment is complete in Parts A and B. So that data is maturing. Cohort 2C, which Ingmar just addressed, is currently enrolling. In order to allow that cohort to enroll to follow for the primary endpoint of overall response and to let those patients develop a little bit of the secondary endpoints around duration of response, we wanted to collectively, because all three parts will be an integrated analysis to support accelerated approval, we need to allow Part 2C to catch up on the duration.
Instead of parsing out data, we are going to shift to the first half of next year so we have a whole answer and not just part of an answer.
Yep. Makes sense.
Do you want to talk a little bit about impacts on 2C at all to the study endpoint?
Yeah. We do not expect any particular impact, because we think that the setting in 2C, patients will perform similar to what we have seen in prior studies to A and B. There is no mechanistic reason to believe that they perform differently, if at all, then might perform better. But no concerns on inferior response rates or durability here.
Yep. Can we go back to the phase II update earlier this year? You didn't give us too many specifics on the details, but you did give us a flavor of what you saw. Maybe if you can just characterize that for us.
Yeah, I think we can reiterate that just before you do, Ingmar. Just that this is a blinded trial, so unfortunately, data details aren't going to be available until we complete the study so that we don't sort of set ourselves back. With that, we can sort of reiterate the 2A sort of disclosures. There's a little bit to glean there.
Yep.
Yeah, that's obviously correct, but I think it was a decision that was based on efficacy. We said it's very clearly differentiated, and I would think about this in the magnitudes that we've observed before. We already said that it's very consistent across trials, so it's really a meaningful difference that is beyond doubt in favor of 400 mg, while the tolerability and safety has been broadly comparable. Again, this decision was based on efficacy, not on the safety or tolerability profile.
And just as a reminder, 2A was the dose comparison of 300 mg-4 00 mg, as Ingmar mentioned. We also disclosed at that time that in addition to what Ingmar said about efficacy and tolerability between the two doses, that in addition to that we had seen a discontinuation rate that was about half of what we had seen in-.
Right.
Part 1B of DENALI. We had not seen any Grade 5 treatment-related events in our data set. We wanted to provide a readout that the trial can be enrolled, that we can select a dose, and that we can keep patients on trial.
Yep. Makes sense. You also shared that update with the FDA, so maybe you can just talk about some feedback you've gotten or what you learned in that conversation.
Go ahead, Ingmar.
Yeah. So recent interaction with the FDA and just a couple of goals, and part of it was, as always, to reiterate-.
Right.
The fit of DENALI for an accelerated approval. Also confirm 2C as such, as an acceptable approach. We had also previously, via an information amendment, filed the 2A data to the FDA. So we also importantly wanted to make sure that we have discussion time with them, even though we decided to, in the sense of proceeding fast, to go ahead and not wait for a meeting to confirm that. But the conversation with the FDA there was short. In line with what I said earlier, they were 100% in agreement that this was the right choice and the only obvious choice here in terms of dosing selection for DENALI.
But again, also used that to get confirmation on the fitness of 2C and the overall 2A, B, and C data set as an integrated analysis, as Julie Eastland already mentioned, as a continued fit for accelerated approval.
Can you talk about your thinking on the bar for accelerated approval and maybe remind us what you've shown previously in some of your data and how that compares?
Yeah. So we've previously seen consistently through the earlier studies that, again, as a reminder, DENALI 1B, that was the first or the second part actually, a little bit confusing, of DENALI with 400 milligram and a retrospective biomarker analysis. An important study because that's where the Cyclin E1 biomarker was validated and qualified. So now we're prospectively validating it in Part 2 and eventually ASPENOVA. Then there was MAMMOTH.
Originally in PARP inhibitor-refractory patients. Last but not least, the original dose escalation called ZN-c3-001 study. All of these studies showed a very consistent, pretty similar setting, but more lines of treatment on ZN-c3-001.
Yeah.
Even DENALI Part 1B, as well as MAMMOTH, but very consistent, remarkably consistent response rate and relatively consistent duration of response as well. That was above 30%, and that is where the bar for an accelerated approval remains. The duration of response is just supportive evidence, as you know, right?
Yeah.
The primary certainly is the response rate, but then you, of course, want to be better than what the duration of standard of care would be. We see that north of five months, and that is really in the territory where we have consistently shown data.
Yeah. Can you talk about other differences in DENALI versus some of the other studies? You mentioned one already. It's an earlier stage patient population, so maybe that helps improve the response, potentially. Any other differences that might drive a further improvement?
Yeah. In terms of lines of treatment, and Julie can certainly chime in, but one to three for DENALI Part 2, and one to four in case of patients with folate receptor alpha high and mirvetuximab was available and reimbursed in the respective geography. That's for 2A, 2B. It's also the case for ASPENOVA. There's one slight difference, and that's cohort 2C, which generally allows one to four lines irrespective of folate receptor alpha status or prior mirve. That's just what we did because it's close enough. But of course, we wanted to make sure that slightly more narrow population of the taxane regimens has a good chance of being enrolled at the time that we intend. Because after all, the taxane regimens are great options, of course, for patients and with a demonstrated risk benefit.
There is, of course, limit in that sense, restricted eligibility, right, due to prior taxane use, paclitaxel/ TAXOL really in the front line and the second line. Lots of neuropathies along the way, right? We do think that's unfortunately only an option for a limited patient population, and therefore we made that design choice.
Yeah.
I think just in addition-.
Yeah.
The ZN-c3-001 study, the dose escalation had quite a lot higher lines of therapy, one to 13, and MAMMOTH was one to nine. The differences between the early trials, DENALI Part 1B was one to five prior lines. Part 2 and ASPENOVA have certainly tightened up the number of lines of therapy. Still seeing across those other three trials the above 30% response rates and over five months for duration. The lines of therapy matter.
Yeah.
But at the end of the day, the bar is being met.
Yep. Good.
I mentioned it briefly already, right? The trials MAMMOTH, ZN-c3-001 as well as DENALI 1B had retrospective biomarker assessment. That's, again, how the threshold was determined, and Part 2 is prospective use of biomarkers. That's really the gold standard of selection biomarker development here, the additional differences between the-.
Yep. When you have the data first half of next year and next steps would be potentially filing and getting on the market. Maybe talk a little bit about pre-commercial activities, what you're doing, what you can do until you get data, and then once you get data, what are the remaining steps there?
Yeah. We're very excited to start that process. We've brought talent on board. We're being very careful in how we allocate capital. We do have a head of our commercial activities, Sarah Kelly, who joined us a few months ago, and she's already hit the ground running. Today we are focused on market research, we're focused on market development for both pathologists as well as for physicians because we'll have the companion diagnostic along with the therapy that we are seeking to get approval together. So market development, pricing, payer, all of these research components can start now, and some of the heavier lift in the investment can then be staged post data.
Yep. Makes sense. You mentioned the phase III sort of confirmatory study, ASPENOVA. Maybe just talk a little bit about the design of that study, where you are in enrollment, maybe how that's tracking versus your expectations.
Sure.
Yeah, 420 patients, PROC, similar eligibility as with DENALI Part 2, one to three prior lines, and then again, fourth line if folate receptor alpha high and we're to some of this available in that respective geography or country. Control arm, investigator's choice, still standard single agent chemotherapy with paclitaxel, PLD, gemcitabine, and topotecan, which remains the global standard for a trial with such a footprint. Because any of the newer entrants are just not available outside of the U.S. mostly, or in case of the avelumab combination. One-to one randomization, 420 patients.
Yep. All good. Maybe one last question then we will go into survey questions, but maybe talk about current cash position and what runway does that give you, and what does it cover?
Yeah. So at Q2, we reported just under $175 million, but in August, we added another $93-ish million, $92.6 million to that. That was really the goal there was to enable to come into the data really at strength. That gives us a runway into the first half of 2028. That is about a year beyond the expected data readout for DENALI. In addition to that, it brought a nice set of investors to the table with nice support and well-known names. Ultimately the focus here was to ensure that capital was available for our pre-commercial activities, for ASPENOVA enrollment, and importantly for just runway extension.
Yep. Okay, great. Maybe now we can go into, we have three survey questions. They are on themes across biotech, and we are asking all the biotech companies. I will start with the first one here. It is just how has the rise of China origin innovation changed your competitive positioning and your R&D versus BD playbook?
Yeah, and I think, from an opinion perspective, you get what you pay for. So here is free thought process. I think we are always for new innovation. It creates opportunities. I think China is a very exciting place and has been a very exciting place for a long time. We see, if nothing else there from a BD perspective, we cannot afford to do right now.
Yep.
But certainly a place to go that is broader than just the U.S.A. or European markets to look for new opportunities. And then of course, that could create really interesting partnering opportunities or future play for assets in China. So we think the innovation is great. And I think anything that brings innovation to patients is great.
Yep.
So go China.
Yep. Makes sense. And second question here is a hot topic since this weekend, is just are you implementing AI adoption, and if so, where has it changed a decision, a timeline, a cost, or a probability of success? And I guess what evidence should we expect over the next two years?
Yeah, I think AI is super exciting, and Ingmar Bruns, you could chime in on the research side of it. And with everything, we want to take a measured approach. We want to utilize tools that can really enhance our business, not for the sake of just implementing a tool. And so I think while we are bringing AI in, we are bringing it in in a very focused way, which can enhance our business systems or enable us to be more efficient or faster in certain processes. But we are very careful about how we are doing that. And important, if nothing else, of course, is the sacredcy of our data and the confidentiality, of course, of that data. AI we will use where appropriate in the right type of closed system. Ingmar, I do not know if you want to add.
Yeah, not much to add, right? I think it is very comprehensive. I do think we are using it really for including in clinical development and medical writing, et cetera, for routine tasks, right? I think it is really that you leverage it to accelerate things, right? And reduce the actual workload where we can. It is probably not different from most other companies or settings here.
That is really where we focused on less so on what we really think is the intellectual core of our operation and activities here.
It is an enhancement, not a replacement. It is a great way to leverage a resource. At the end of the day, you are still responsible for the content, you still need to review, you still need to make sure the data going in is the right data. It's not free in terms of workload, nor should it be.
Yeah.
We think it's helpful.
Yeah.
Makes sense. The third theme here is which policy variables, whether it's FDA, Medicare negotiations, MFN tariffs, or global pricing. I know some of those don't apply. Just what matters most for you and what have you changed, if anything, because of it?
Probably not a surprise that the FDA-.
Right.
Is the near term.
Key.
Key, but following very quickly on the heels of that are things like Medicare.
Yeah.
Medicare reimbursement, MFN eventually. I mean, ASPENOVA's a global trial with full approval. Pricing on a global basis will be something in the future. You are right, it is not a tomorrow. The accelerated approval is a U.S. launch. ASPENOVA is global full approval, so all those things have to be thought about. What is actionable for us primarily is, of course, the regulators in terms of the FDA. Then second to that is going to be thinking about azenosertib pricing and reimbursement in the U.S. market.
Yeah.
Tariffs, not so much.
Yeah.
Knock on wood. But we keep a watchful eye on that.
Yeah.
But not as impactful.
Maybe just in terms of your FDA interactions over this process, I know you've had a few over time. Is it the same group of people at the FDA?
Yeah.
Is there turnover? How has that impacted things?
Go ahead, Ingmar.
Yeah. No, it's been our experience really is a positive one. They have been a very consistent and reliable partner and same group, same people involved over multiple interactions now. We don't certainly see a change to the negative. Remained a really trustworthy partner and a strong, even in a collaborative spirit.
Yeah. Okay, great. Looks like we're out of time, so why don't we wrap it up there? Thanks, Julie. Thanks, Ingmar. Really appreciate your time today.
Thank you, Mike.
Thanks for having us.
Good to see you.
Good to see you.
Thanks everybody for coming.