GOSS - NASDAQ

Good day, ladies and gentlemen, and welcome to the Gossamer Bio Second Quarter 2019 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I'd now like to turn the conference over to Bryan Giraudo, Chief Financial Officer. Mr. Giraudo, you may begin.

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Gossamer Bio's co-Founder and Chief Executive Officer, Dr. Sheila Gujrathi; as well as Gossamer's Chief Medical Officer, Dr. Jakob Dupont. Earlier this afternoon, Gossamer Bio issued a press release announcing its financial results for the second quarter ended June 30, 2019, and provided a corporate update. Please note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Gossamer management will be making forward-looking statements. Actual results may differ materially from those stated or implied by these forward-looking statements due to the risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the statements contained in Gossamer's news releases and SEC filings, including the annual report on Form 10-K and subsequent filings. This conference call also contains time-sensitive information that may be accurate for only a limited period of time. Gossamer Bio undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. Now I'd like to turn it over to Sheila. Sheila?

Thank you, Bryan, and good afternoon to everyone joining us on today's call. Here at Gossamer, we are focused on discovering, acquiring, developing and commercializing therapeutics in the disease areas of immunology, inflammation and oncology. Our goal is to be an industry leader in each of these therapeutic areas and to enhance and extend the lives of the patients suffering from such diseases. We are working to achieve this vision by focusing on building a diversified immunology portfolio with multiple meaningful shots on goal. To that end, over the past few months, the Gossamer team has delivered on a number of critical clinical development milestones along our journey towards benefiting patients. On today's call, I'm going to walk you through the updates and milestones achieved for 3 of our 4 clinical stage programs before handing it over to our Chief Medical Officer, Jakob Dupont, for a discussion of our newest clinical asset, GB1275. Bryan will then discuss Gossamer's financial update. Following which, I will provide a few closing remarks. Let's begin with our most advanced clinical stage product candidate, GB001, an oral DP2 antagonist, which we are developing for eosinophilic asthma and other allergic conditions, including chronic rhinosinusitis both with and without nasal polyps and chronic spontaneous urticaria. As you may recall, our Phase IIb trial in moderate to severe eosinophilic asthma, known as the LEDA study, began enrolling patients in October of 2018. LEDA is a global Phase IIb study, testing once-daily dosing regimen of GB001 over a 24-week treatment period. All patients will remain on background therapy throughout the study, and the primary endpoint is a composite measure known as asthma worsening. We are happy to reaffirm that enrollment in the study remains on track to trigger an interim analysis in the first half of 2020. After this interim analysis, we expect full top line Phase IIb results to read out in the second half of 2020. On our last call, we announced the first patient we're screening for our Phase II proof-of-concept study of GB001 in chronic rhinosinusitis, known as the TITAN study. Since that update, we have begun actively enrolling patients in TITAN, which is recruiting patients with chronic rhinosinusitis, both with and without nasal polyps. These indications have significant overlap with the asthma population and represent areas of high unmet need as there are a few effective treatment options for patients failing to respond into nasal therapy. We plan to enroll approximately 100 patients in TITAN. The study is designed to measure the effect of GB001 on the Sino-Nasal Outcome Test, or SNOT-22 score, after 16 weeks of treatment in patients who are refractory to intranasal steroids. The SNOT-22 endpoint has relevance for both parties with and without nasal polyps. We also plan on assessing polyp-specific endpoints such as a nasal polyp score in a subset of patients with polyps a key secondary endpoint. Based on current involvement trends, we are on track to read out top line data for this proof-of-concept Phase II study in the second half of 2020. In regards to chronic spontaneous urticaria, or CSU, an indication with a dearth of existing approved therapies, we remain excited about GB001's potential, and we look forward to initiating a Phase II proof-of-concept study in CSU later this year. In the nearer term, we have a poster presentation at the American Rhinologic Society annual meeting in New Orleans this December, and we have a poster discussion at the European Respiratory Society International Congress in Madrid this October. Please be on the lookout for those. To close on GB001, we are very optimistic about the significant potential that this once-daily oral DP2 antagonist holds across multiple allergic disease areas with high unmet need, and we look forward to reporting several Phase II top line readout in 2020. Now let's move on to our second clinical stage product candidate, GB002. GB002 is an inhaled PDGFR inhibitor that our team is developing for the treatment of pulmonary arterial hypertension, also known as PAH. PAH is a devastating, progressive rare disease with high unmet medical need and limited classes of approved therapies. GB002 has the potential to be the first drug in a new therapeutic class, and we believe it could provide disease-modifying effects to patients. The FDA and the EMA have granted GB002 orphan drug designation for the treatment of patients with PAH. Earlier this year, we completed our Phase I safety study of GB002 in normal healthy volunteers with no serious adverse events observed. I am pleased to report that we have activated sites for our Phase Ib trial in PAH patients and expect initial patient enrollment to occur in the third quarter of this year. This Phase b is an exploratory translational study, and our goal is to generate target engagement and biomarker data and to assess the initial safety and tolerability profile of PAH patients. We expect the readout from the Phase Ib trial in the first half of 2020. Additionally, we continue to have discussions with health authorities about our registration-directed Phase II/III trial and anticipate initiating this study by the end of this year. Moreover, we are excited about presenting more of our preclinical data on GB002 at upcoming medical conferences, including the American Heart Association 2019 Scientific Sessions in November who just notified us of the acceptance of two abstracts, 1 as an oral presentation and 1 as a poster presentation. Next, we will discuss GB004, an oral HIF-1 alpha stabilizer for the treatment of inflammatory bowel disease, including ulcerative colitis, or UC. GB004 is a gut-targeted, prolyl hydroxylase inhibitor designed to preferentially stabilize HIF-1 alpha, a transcription factor involved in the body's protective response to low oxygen levels. We believe that this preferential stabilization of HIF-1 alpha will lead to the healing of the gut lesions associated with inflammatory bowel disease and potentially other diseases of the bowel. On our last call, we announced the commencement of enrollment in our Phase Ib trial of GB004 in patients with active mild to moderate UC in which we are dosing patients for 4 weeks. The study is designed to demonstrate proof of mechanism in UC patients based on target engagement, changes in gene expression, epithelial barrier restoration and potentially UC symptom improvement. Enrollment is going very well, and we expect to report initial top line results from the Phase Ib in the first half of 2020. Now I will hand it over to Gossamer Bio's Chief Medical Officer, Dr. Jakob Dupont, who will discuss our latest entrant into the clinic and Gossamer Bio's first clinical stage oncology asset, GB1275. Jakob?

Thank you, Sheila, and good afternoon, everyone. Today, I'm delighted to discuss with you our most recent product candidate to advance into the clinic, namely GB1275 for the treatment of cancer. GB1275 is an oral CD11b modulator being developed as an immuno-oncology product candidate focused on addressing the immunosuppressive myeloid cell populations present within tumor tissues. CD11b, which is the target of GB1275, is broadly expressed on most suppressive myeloid cells, including macrophages, monocytes, neutrophils and some dendritic cell subsets. This myeloid suppressive biology is particularly pervasive in tumor types that are refractory and resistant to checkpoint inhibitor therapy, such as anti-PD-1 antibodies. These tumor types include pancreatic, colorectal, prostate and other significant cancer indications. In preclinical studies, modulation of CD11b reduces trafficking of these suppressive immune cells into tumors, and importantly, also converted or repolarized those in the tumor micro environment from a suppressive state to a pro-inflammatory anti-cancer state. With GB1275, we seek to address the unmet medical need of these cancers that are generally not responsive or minimally responsive to current checkpoint inhibitor immunotherapy. Before we discuss our Phase I/II clinical trial of GB1275, I'd like to call your attention to a publication that we posted on our corporate website on July 3, the paper entitled Agonism of CD11b reprograms innate immunity to sensitize pancreatic cancer to immunotherapies. And this was authored by David DeNardo's lab at Washington University in St. Louis and Vineet Gupta's lab in Rush University and was published as a feature cover article of the July 3 edition of Science Translational Medicine. The publication, which outlines some of the key data that made us excited about the potential of GB1275 in difficult-to-treat cancer types, has driven significant interest from KOLs and top-tier clinical institutions that would like to be involved in our clinical studies. With that, I'm pleased to inform you that we are actively screening patients in our Phase I/II study of GB1275 in selected solid tumors, and we expect to begin dosing patients in the third quarter of this year. The selected tumor types include pancreatic, gastric, colorectal, esophageal and triple-negative breast cancers. As mentioned, these are all tumor types were immunosuppressive biology and CD11b expression in cells is prevalent. The Phase I portion of the study consists of dose escalation of GB1275 monotherapy. And after clearing several monotherapy dose levels, we will initiate dose escalation combination of GB1275 with anti-PD-1 therapy or with chemotherapy. When we reach a recommended Phase II dose, we plan to open in the same protocol 3 Phase II efficacy proof-of-concept expansion cohorts. Two of the expansion cohorts will test GB1275 in combination with anti-PD-1 therapy in second-line or greater microsatellite stable colorectal cancer and second line or greater PDL-1 positive gastric or gastroesophageal cancer. The third expansion cohort will test GB1275 in combination with standard of care, gemcitabine and Abraxane chemotherapy, in first-line metastatic pancreatic cancer. We expect to disclose initial data from the Phase I/II study in the second half of 2020, and we will provide updates as the study progresses. With that, I will hand it over to Gossamer Bio's Chief Financial Officer, Bryan Giraudo, for financial updates.

Thank you, Jakob. We'll now review the financial results for the second quarter of 2019. We ended the quarter with $464 million of cash and cash equivalents. And as a reminder, we announced $150 million debt facility led by MidCap Financial this past May. $30 million of that facility was taken down at the closing of the agreement and $120 million will become available to Gossamer, subject to the achievement of certain clinical miles -- clinical development milestones and customary conditions. We continue to anticipate our cash and cash equivalents, plus the capital available to us in the debt facility will provide us sufficient resources into the second half of 2021. Research and development expenses in the quarter were approximately $35.7 million, which reflects a ramp-up expenses for GB001, GB002, GB004 and GB1275. In-process R&D expenses, which consist of costs related to the acquisition and licensing of our product candidates, were approximately $1 million for the quarter. G&A expenses were $9.7 million in the quarter with nearly $2.7 million of that total being in stock-based compensation. Our net loss for the quarter was $44.5 million, equating to $0.74 per share. With that, I'll turn the call back over to Sheila to offer some closing comments before we open the line up for Q&A. Sheila?

Thank you, Bryan. We take enormous pride in the progress we've made towards building a diverse portfolio of assets, targeting indications with high unmet needs. And we are equally thrilled with the advancement of those product candidates within their respective clinical development program. Our Gossamer team has taken our vision and purpose to heart, positioning our company to continually drive our expertise in immunology, inflammation and oncology for the benefit of patients, caregivers, physicians, shareholders and employees alike. Thank you for taking the time to join us today and for your continued interest and support of Gossamer Bio. With that, I will now turn the call over to the operator to begin the question-and-answer session. Operator?

[Operator Instructions]. Our first question comes from Joseph Schwartz with SVB Leerink.

Congrats on all the progress. I was wondering if I could get your thoughts on how you interpret Novartis' delay of their Phase III data for fevipiprant and how, if at all, it will impact your strategy.

Thank you, Joseph. Yes. So earlier this year, Novartis did announce a delay in terms of -- originally they had outlined they will be reading out top line data from 4 of their clinical Phase III trials that they are conducting with currently, the fevipiprant by the end of this year. They revised that guidance to state that 2 of their Phase III trials would be reading out by the end of this year and 2 would be reading out in the first quarter of 2020, namely there are 2 trials that are really characterizing lung function and a more moderate asthma population,

That's very helpful. And then on GB002, I was wondering if you could talk a little bit about the efficacy biomarkers you'll be collecting and what you hope to see there and how you plan to go about determining the optimal dose level and schedule in Phase Ib.

Sure. Yes. Very -- again, very exciting Phase Ib trial we're running with GB002. It's primarily a trial that will be, of course, looking at safety, tolerability and pharmacology. GB002 is in PAH patients, which is something we very much want to do before initiating our Phase II/III registration-directed trial. But we have growth in a lot of different elements to get at that translational aspects of the trial. And so some of the exciting measures that we've discussed before with you, Joseph, as well as with many of those on the phone are really looking at very exciting biomarkers, NT-proBnP levels are something that we have already seen changes on in the preclinical setting and disease animal models that really characterize and closely mimic human PAH biology. We've also seen evidence of impact of those biomarkers with imatinib in their Phase III trials that were very successful in PAH patients. So we are very excited to be able to characterize NT-proBnP levels. In addition, we're looking at other target engagement assays that would get at our understanding of the PD effects of GB002, including gene expression signatures and other assays that we've outlined, some that affects actually even other markers of disease. And lastly, we'll be looking at cardiac imaging. So echocardiogram, cardiac MRI and scans that will be really assessing left ventricular ejection fraction and other cardiac hemodynamic parameters from the study. So it should be a really rich study with a lot of biomarker as well as imaging. And of course, we will be looking at [indiscernible] difference. But given the short duration of the trial, we're not really anticipating any significant clinical effects at this time.