GOSS - NASDAQ

Good day, and thank you for standing by. Welcome to the Gossamer Bio Q3 Earnings Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Bryan Giraudo. Financial and Chief Operating Officer. Thank you. Please go ahead.

Thank you, operator, and thank you all for joining us this afternoon. I am joined on today's call by Gossamer Bio's Chairmen, Co-Founder, Chief Executive Officer, Faheem Hasnain; Laura Carter, Gossamer Bio's Chief Scientific Officer; and Richard Aranda, Gossamer Bio's Chief Medical Officer. Earlier this afternoon, Gossamer Bio issued a press release announcing its financial results for the third quarter ended September 30, 2021, in addition to providing a corporate update. Please note that certain information discussed on this 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 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 in the annual report on Form 10-K and subsequent filings. This conference call also contains time-sensitive information that may be accurate only for a limited period of time. Our ability to meet our guidance, especially that related to the timely initiation and completion of clinical studies. In addition to our ability to release results from our clinical trials in a timely manner, may be adversely affected by the ongoing COVID-19 pandemic. 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 the call over to Faheem. Faheem?

Thanks, Bryan, and thank you all for joining us today on Gossamer Bio's third quarter earnings and update call. At the end of today's call, we will conduct a question-and-answer session. But at first, we will discuss our inhaled kinase inhibitor for the treatment of pulmonary arterial hypertension, seralutinib. In the press release we issued earlier today, we shifted our guidance for the top line data readout for the TORREY Phase II study of seralutinib to the second half of 2022. And as I'm sure all of you are aware, the COVID-19 pandemic has created unprecedented challenges in conducting clinical trials, including a shortage of medical professionals, and we believe that these challenges given the nature of COVID were more impactful for our clinical trials in the arenas of pulmonary and critical care. We started screening patients for the TORREY study in December of 2020. Prior to the full effect of the delta variant in U.S. and Western Europe, we experienced a meaningful uptick in screening and enrollment in this spring and through the mid-summer, and we leveraged many of our learnings with COVID from our completed Phase Ib trial. At the time of our second quarter call on August 7, we were confident on meeting expected time lines, especially with the uptake in both screening and enrollment in U.S.-based sites. However, with the emergence of the delta variant, many of our investigators and nurses were called back into COVID ICU wards in mid-August and September. A further lockdowns on a national, regional and municipal level created an additional obstacle and enrollment in many locations throughout the western world essentially ground to a halt. Moreover, we also experienced competition from COVID-related trials, specifically pediatric and booster vaccine work as well as from some of the COVID antibody and therapeutic trials. I'm pleased to say, now that the delta appears to be passing, we're seeing increased engagement with sites and investigators as they've gone back to their non-COVID research and clinical programs, and we're actively working to translate that into screenings and enrollment. Remember, we first encountered COVID-based enrollment obstacles in the Phase Ib studies, while getting patients enrolled remains an issue, once on study, we have designed the study protocol with COVID in mind and we have incorporated measures to keep patients on some once they're enrolled. Despite COVID, of those patients that have already completed the 24-week TORREY Phase II, all had enrolled into the OLE. With nearly all of our 70-plus sites online and engaged, we're confident that we can continue to navigate these challenges to complete enrollment in the first half of next year and reach our top line data in the second half of 2022. Now moving on to GB004. We are extremely pleased today to announce that last month, we completed enrollment for the SHIFT-UC Phase II study in mild-to-moderate ulcerative colitis patients with active disease. We were able to enroll this group of patients despite the pandemic for a number of reasons. GB004's mechanism of action is distinct from systemic immunosuppressant. And with COVID, a real concern for investigators and patients alike, GB004 became an attractive option for those institutions focused on clinical trials in inflammatory bowel disease. We believe this also speaks well to the target positioning of GB004 in an evolving ulcerative colitis commercial landscape. Patients with severe UC are inundated with treatment options that are lacking from a safety and tolerability perspective, but mild-to-moderate UC patients who fail 5-ASA are hesitant to make the jump to biologics in immunosuppressive therapies. This dynamic is buttressed GB004 trial enrollment throughout COVID. And we believe it bodes well for the commercial potential of the molecule. Additionally, the contributions from many capable team members, including from the legacy Receptos as [indiscernible] , were instrumental in building a global clinical trial infrastructure, leveraging long-standing relationships and positioning this trial for a successful enrollment. The primary endpoint of this trial is clinical remission after 12 weeks. Once all patients complete 12 weeks and an additional month of safety monitoring, we expect to announce top line results early in the second quarter of 2022. After the 12-week primary endpoint, patients will stay on randomized therapy for an additional 24 weeks. After completion of 36 weeks of randomized therapy, we expect to announce the result of the 36-week treat-through endpoints in the fourth quarter of 2022. Following the completion of the trial, patients will be presented with the option to enroll in our open-label extension study, where we hope to generate longer-term data. Now before I ask Bryan to run through the financial results for the quarter, I wanted to remind listeners today that Gossamer recently unveiled its next clinical stage product candidate, a pair of CNS-Penetrant, BTK inhibitors known as GB5121 and GB7208. These candidates are the product of intensive behind-the-scenes internal development work. We believe that these molecules have differentiated properties, including superior brain penetration that position the candidates to treat neuro inflammatory and neurodegenerative conditions in oncology and autoimmune disease, including primary CNS lymphoma and multiple sclerosis. And we're also pleased today to announce that we have dosed our first subject with 5121 -- GB5121 in a Phase I trial in healthy volunteers this month. We expect to initiate a potentially registrational Phase Ib/II trial in the first half of next year. GB7208 is expected to enter a first-in-human clinical trial in the second half of next year. Please visit our website at gossamerbio.com to see a recent Investor Day presentation that details both of these candidates and our development plans. I'll now turn it back to Bryan.

Thank you, Faheem. We will now review the financial results for the third quarter of 2021. We ended the quarter with $366 million of cash and cash equivalents. We anticipate our cash, cash equivalents and marketable securities along with our access to our debt facility, to provide us sufficient capital resources to fund operations and capital expenditures well into the second half of 2023. Research and development expenses in the third quarter of 2021 were approximately $43.2 million as compared to R&D expenses of $41.8 million in the same period in 2020. G&A expenses were $12.5 million in the third quarter as compared to G&A expenses of $11.4 million for the same period in 2020. And our net loss for the quarter was $60.2 million, equating to $0.80 per share. For the same period in 2020, we reported a net loss of $57.8 million, which also equates to $0.80 a share. With that, I'll turn the call back over to Faheem prior to Q&A.

Thanks, Bryan. I'd just like to give my thanks to the Gossamer team for their incredible passion and commitment towards making a difference for patients. And I'd like to thank all of you for joining us today. We're excited to share our progress with you. Operator, you can now open the line for questions.

[Operator Instructions]. Your first question comes from the line of Yasmeen Rahimi.

I have two questions for you. Maybe the first one is in regards to the TORREY study. I know you noted that about 100% of the patients enrolled into the open label, can you provide me with how many patients that are -- have entered open-label? And then are you planning on to turn on additional sites so that top line data is on track for second half of 2022? And then the second question is around SHIFT-UC. Have you maybe commented on sort of the statistical hierarchy in regards to the secondary end point as we think about clinical response and mucosal healing. So if you could provide some color around that it would be very helpful.

Hi, Yasmeen, this is Faheem. Thanks very much for your question. As it relates to the number of patients that are into OLE. As I'm sure you're aware, we don't comment on the specific numbers of patients enrolled or entered patients into OLE. Having said that, we're pleased with the progress that we're now starting to see an enrollment and the fact that all of the patients that have been enrolled have come into OLE is an early encouraging sign. As it relates to the UC, sorry...

The number of sites. Yes, I mean we have, as we said in our remarks, almost all of our 70 sites are up and running or on the verge of reopening due to COVID issues. Obviously, that is the variable. But we feel very good that with the sites that are online, on board that we will be able to deliver the results, the timing of we put forth, again, subject to meaningful changes in the COVID landscape.

And the UC question. I'll turn that over to Richard to give you some thoughts.

Sure. The secondary endpoints in our SHIFT-UC study involve clinical response, endoscopic improvement or healing and mucosal healing, and our study is appropriately powered to also achieve those end points.

Your next question comes from the line of Joseph Schwartz.

It looks like your expectation of being able to report top line data from TORREY in the second half of '22 is still subject to the extent of potential ongoing COVID-19 disruption. So I was wondering if you can characterize how much of a stretch the second half of '22 could be? And as part of that question, if enrollment continues at the same rate as it has been most recently, where would that put the data release within the second half of '22? And then I have a follow-up.

As it relates to 2022, I mean we're -- again we're encouraged by the rate of enrollment that we're seeing today. But Joseph, I think we absolutely have to continue to put that COVID after it's gone on the plan in that while we're seeing declining rates of delta, hopefully, we don't see the next variant or a resurgence. So again, I think it's only prudent to -- for us to continue to apply that COVID after until we can kind of get to the other side of where we're at with the pandemic.

Yes. I would just say, Joe, at the end of the day, we wouldn't put out the guidance that we didn't believe we could hit it. But as Faheem said, as we sat in the same conference from here at Gossamer, a quarter ago, we thought we were going to hit the end of the year. And we clearly did not expect the ferocity of delta and what it did to again, just the practice of medicine and pulmonary and critical care. So ultimately, we certainly have the plan, the people, the infrastructure to do that. There is a variable that's beyond our control that got us to the back end of the summer and our fingers are crossed that we won't have that happen again.

But obviously, our forecasting and projections based on where we are today, we believe that's a pretty reasonable guidance.

Okay. That's helpful. And then have you considered doing an interim analysis for the TORREY study? Or how about some protocol amendments to simplify things such as perhaps making the PVR undertaking a substudy if that's the main rate limiting factor, for example, and a 6-minute walk study could be more -- alone could be more straightforward?

Yes. This is Richard. We've designed the study. As a reminder, we've had some experience with PH patients from our Phase Ib in the setting of COVID. So we had several lessons learned from that study, and hence, we design our Phase II from the get-go, if you will, with certain provisions in mind to allow for some flexibility without compromising the integrity or quality of the study. A typical Phase II program, it's important for PVR because you want to demonstrate hemodynamic changes. And actually, the sample size requirement for a PVR endpoint is much more relaxed, if you will, than a 6-minute walk endpoint. We feel that the way the study is currently designed, we do not plan or to do an interim analysis, and that was not something that we are planning to do.

And Joe, I'd just add that, again, the components of the TORREY study were not what impeded enrollment. It was the fact that literally many of our investigators got called to work in ICU wards. All of the management team has been out visiting with our investigators. And more often than not, we hear, we have patients, we just don't have nurses. So it really has to do with just what's going on at, again, pulmonary critical care centers of excellence around the world are struggling, and we're struggling with COVID. We do think that, that is starting to lift, and we're seeing that engagement, but really not about TORREY more about just the infrastructure of treating patients on a macro basis.

Your next question comes from the line of Carter Gould.

I guess to start, it would be helpful if you could just comment even at a high level around, I guess, your satisfaction with the homogeneity, the population you enrolled in SHIFT-UC. It seems like you were clearly the beneficiary of differentiated positioning in the marketplace. And so even at a high level, any comments on that front would be would be helpful. And then just given some of the setbacks that have, I guess, at some of your oral competitors in the UC landscape, if that's, I guess, changed any of your viewpoint as you think about that moderate to severe population going forward. I recognize the early efforts around mild to moderate, but the landscape around you has sort of shifted, no pun intended.

Yes. Certainly, as it relates to the landscape of UC, you're absolutely right. There is definitely some shifting that is occurring. And while we're in a very interesting position in this mild to moderate segment and given the pace of enrollment, I think it's a reasonable view to the attractiveness of the profile of this drug. I think clearly, we would have the opportunity to be able to move not only earlier in therapy but possibly even up later in therapy and potentially if the safety continues to play out, view this as an opportunity to try to really change remission rates through combination use. I think the profile of this drug is just made more attractive, quite frankly, with the cloud that sits around now safety associated with, say, the JAK class as an example. So I think that's -- all of that speaks to a bit of a tailwind for this program.

In terms of the patient population, we designed it to target a population, mild to moderate based on Mayo Score and with an endoscopic subscore of 2. We'll have to wait till we get the top line results first half of next year to figure out the full demographic but based on what our enrollment characteristics have been, we're confident that we've targeted the right population.

Your next question comes from Olivia Brayer.

I wanted to ask on your latest expectations for efficacy measures in the TORREY study. I know you've talked about wanting to see similar PVR reduction of sotatercept, and I think that was 18% to 32% range. And then also on 6-minute walk in that 20 to 30-meter improvement, at least directionally. So is that still the bar you're looking to hit? Or are there any updates to how you're thinking about that readout? And then I've got a follow-up on UC.

We still believe that those are the right guidepost for what we want to see, and hence, there's been no changes in our thought process.

Okay. Got it. And then on 004, I know you guys talked a little bit about the landscape earlier, but there are still a number of orals in development, and there could be more than one oral modality on the market. by the time your asset moves through development. So I guess the question is, how do you think about the possible treatment hierarchy for those different oral agents? And where do you think 004 could be most differentiated there?

So as we know, unfortunately, none of these treatments are going be as viewed as cures. And like many other autoimmune indications, patients often cycle through treatment. So the availability of a number of treatment choices that have kind of a patient-friendly attribute of being an oral -- daily oral, I think is incredibly attractive. The market is pretty large. So I think that's kind of the first to mention is that a number of orals on the market are, I think, is great for patients, but also there's plenty of room in that context. I think the second dimension here is the positioning that at least the first level of positioning in that kind of mild to moderate segment that post 5-ASA failure pre-immunosuppressing prebiologic that's a very unique positioning that doesn't have the same kind of oral competition, so to speak. In other words, ozanimod, which is a drug we know well, really doesn't play in that space, of course, nor does the JAK. So I think there's a very unique element of profile for this drug that I think bodes well for the future, assuming that the data plays out.

Your next question comes from Patrick Trucchio.

This is Jason speaking for Patrick. And so I guess I just have a 2-part question about the GB BTK inhibitors. And so the first question is, what is your expected pace of enrollment for your GB5121? And possibly, if you can give us some insight on your future study for GB7208. And the second question is, what is your primary endpoint for your first in-human study for your GB5121.

Yes. So -- As mentioned, we're currently conducting a normal healthy volunteer study. Our primary point is typically for normal healthy volunteers' safety, tolerability. We'll obviously look at pharmacokinetics. And the nice thing about BTK inhibitors, there's a lot of science behind target engagement biomarkers so and receptor occupancy. So we'll will also assess those. Your question furthermore was around [indiscernible] Yes. It's a normal healthy volunteer. So typically, they're done in Phase 1 units where patients are identified, and screened and put in queue. So we anticipate that it would go relatively quickly. And then I think you had a question -- I think you had a question about 7208. It's -- we anticipate also doing a first-in-human normal healthy volunteer given that it's a BTK, we'll likely have a similar trial design as our current normal healthy volunteer 5121.

Your next question comes from Brian Chang.

Maybe first one on GB5121. I'm just curious if you have any early thoughts on the inclusion or exclusion criteria for PCNSL, using learnings from other BTK inhibitors for this indication. And are you going to be including -- are you planning to include patients with intraocular or CSF involvement? And then I have one quick follow-up.

Yes, we are going to include patients with intraocular and CSF involvement. Obviously, we're going to enroll patients that have refractory or recurrent primary and secondary CNS lymphoma as our initial patient population in our dose escalation once we define a -- recommend a Phase II dose, we will then focus on our PCNS patient population as part of our Phase II study and then as part of a dose expansion component.

Okay. And maybe back on seralutinib. I'm just wondering if we would be getting additional OLE updates for the compound from the Phase Ib study near term, given that we saw the 2-patient update last quarter. And I'm just -- and also I'm curious if you have any -- if you started looking into any signs of vascular remodeling or hemodynamics in those 2 patients.

Yes. So as you recall, we had two patients complete the open-label extension of the Phase Ib. One of those patients still continues in an open-label experience as we have another protocol that this patient rolled over in. They continue to do well. The other patient decided to go on to another trial and therefore, did not go forward in the open-label extension of seralutinib. In terms of vascular remodeling, we did not specifically have any assessments of that. It's difficult. So the only thing we do have is, for example, indirect measures, such as NT-proBNP and obviously, 6-minute walk that we're continuing to follow.

I am showing no further questions at this time. Please continue.

All right. If there's no further questions, we thank everybody for spending time with us today. And again, my thanks to the team, and thanks to all the patients that have enrolled in the trials. We look forward to the next quarter being able to continue to give you updates on progress. Thanks, everybody.