Parabilis Medicines, Inc. (PBLS) Earnings Call Transcript

Thank you. Mathai Mammen, the CEO and Chairman of Parabilis Medicines. Thank you for joining us on day three of the Morgan Stanley Healthcare Conference. Thanks for being with us, Mathai.

Of course. I appreciate it.

So quick disclaimer, please visit morganstanley.com/research disclosures for important disclosures relating to our conference. So let's start with the Parabilis Medicines story at a high level. Maybe you can take us back to the founding of the company and the original insight behind the Helicon platform. What problem in drug discovery were you trying to solve that conventional small molecules and antibodies couldn't address?

Yeah, thanks for that question. The company was founded by a Harvard professor called Greg Verdine, who was the same professor behind Warp Drive that got folded into Revolution Medicines. That's the basis of their product now, and Warp Drive and other companies as well. The problem he had been thinking about for a long time is one of drugability, undruggability, that most proteins inside cells lack small molecule binding pockets. Pockets are required for any kind of small molecule or version of a small molecule we have today, from degraders to covalents to anything. So what to do then, because 80% or so of proteins inside cells lack these. And yet, the genetics and phenotypic screening efforts that abound in the industry now, they often point to one of those 80% as causes of various diseases. So, if that's a cause, you're kind of out of luck. So, the principle that he pushed then was, well, you know, nature enables helical peptides to sit inside membranes, and perhaps that will allow us to put a protein, effectively a peptide, into a cell and function like an antibody might that binds flat epitopes. So, the need for pockets is unnecessary, was his hypothesis. And what he did with that was evolve a peptide platform that we call now the Helicon platform that's comprised of stabilizing entities that hold this peptide as a helix, as an alpha helix. So it's constrained to be that way. And once it's constrained, you can go kind of crazy on the side chains. You can use whatever side chains you want. You don't have to stay within the 20 canonical amino acids. So we use now over 2,000 different amino acids. So it's an astronomical diversity of peptides that we can create, and what we found is that subsequent to the founding, is through creation of very large data sets how to predict compositions that both enter cells and engage proteins that are otherwise undruggable. So that's the fundamental problem that we've solved.

Your program Zolocatatide is really the first major clinical test of this platform if the drug continues to demonstrate activity across your different genetically distinct diseases. I think that's the...

It should provide great confidence that this platform is not only validated biologically, and manufacturing and all the things that need to be true to get to that point. So we feel as other elements like the other thing about those and now it's only and it's that interaction that the broad map and other ways of pointing to causality points right at that node. That node is undruggable, it lacks a pocket, it's a flat protein interacting with another flat protein. There's nothing there for a molecule to bind to. So it's been therefore very, very, very challenging. It's actually been impossible. Actually, an interesting anecdote is that both J&J and Merck, when I ran research at Merck and R&D at J&J, we tried very hard to drug that personal experience twice. On that experience, it also provides some personal motivation and satisfaction for me. That's right. Never failing, just learning.

Detail, but what gives you confidence that inhibiting the same central node can actually produce meaningful clinical benefit across diseases that are as different as desmoid tumors, FAP, ACP, et cetera?

Yes. So this is the case actually often in cancer that something goes wrong in a critical system, in this case beta-catenin. Either that protein beta-catenin itself is mutated or the protein that it is constantly, almost always bound to, APC, is mutated. A mutation in either of those two proteins results in a common common biology where lots of beta-catenin then floods the system, engages with the APC and drives the tumor program. If that happens to happen in a connective tissue that arises sarcoma and it's called a desmoid, then it's a desmoid tumor. If it happens to rise in a cell in the pituitary stalk, it's ACP. If you're born with an APC mutation like in FAP patients and you pick up a thing in your life, it results in polyps. So that's FAP. So depending on the tissue that an APC or beta-catenin mutation arises, these names, like these are different diagrams. But in my mind, they're all the same, same disease, the same exact biologic problem, and should be dealt with the same way. And that's a beta-catenin TCF4 inhibitor.

That's really great framing as we sort of get into the different indications here. And maybe let's start with desmoid tumors. You can just spend a few minutes framing the disease burden.

That much. Surgery is very difficult because they're very asymmetric and they kind of plug into different parts of the body. So it's extremely difficult to get margins. If it rises in your neck, we have a patient where it just squeezes this poor gentleman's trachea and where the physician until treated with our drug was considering intubation chronically, which is terrible. So there's a level of morbidity that's profound living with this condition. If it's in the abdomen, it's extraordinarily painful typically because it's squeezing all your organs and it can squeeze up against your heart and spleen. So all these things are happening that feel extraordinarily painful. So that is a big unmet need. We think the gamma secretase inhibitors, they've been pioneers, and they offered the first ever treatment to these patients. So we're very happy about that. That is something extremely good. But those drugs are difficult to take because of the side effect profile that only allows maybe 2,000, 3,000 of these 30,000 people to ultimately be treated. And so we think the unmet need remains very large.

And then in terms of what you've actually demonstrated to date in this program, can you review a bit of the data, specifically what you view as sort of the most important takeaways?

Yes. So we've been recruiting patients for over 2 years right now into both a Phase 1/2 study and more recently a dose optimization study as we prepare for Phase 3. We've had in the last couple months a disclosure through our S1 of 38 patients, and in those 38 patients, we've seen a response rate of 74%. As a context though, it's very important, most of those were from the dose escalation and they had a maturity about them that was pretty significant. So the median treatment time in those patients was 9 months. So about 4 scans or 4.5 scans on average that they've seen. We are about now, we just announced that at ESMO coming up, and then again at CTOS, we will be able to substantially lift up that data set. And they will offer up consistency of safety data, or you will be able to assess consistency of safety data, consistency of efficacy data, with the caveat that this is obviously a less mature dataset as we've just recently fully enrolled the study. This is the data set, very important to us though, because this is the data set we're using, the dose optimization arms, to select a dose and dose schedule for Phase 3. So we wanted to be able to communicate this to the investment community, to the medical community, to give confidence that we picked correctly the dose and schedule that we will end up using in Phase 3. And we remain on track to start that study in the first half of next year. So you should look for consistency in a time-adjusted sense.

We think about the ESMO data that's coming, what should investors be most focused on in terms of the actual endpoints and data you're going to share?

Yes. Meaning when you have 2 scans, 4 scans, 6 scans, like are the data sets consistent that we're reporting now from what we've reported in the prior time? You should be looking for safety. We've said that really the only on-target safety that we've made note of in the past is a very mild minor effect on bone. We see no changes in DEXA scan, but we have seen at high doses sometimes a stretch fracture or 2 that is dealt with by just skipping a dose and putting like a little splint on your finger or toe and then it goes away. Nothing notable, but you should be looking that there are no new safety effects. This is a new mechanism so you know we'd always worry about that until like we have way more data. So if you're looking for that, and you should be looking for consistency of efficacy, like I said. So I would just look for all those numbers. One of the not at ESMO but potentially at CTOS, will start to hopefully collect some patient-reported outcome and volumetric data. And there, it would be very exciting for you to look at the consistency or relationship between symptomatic changes, volume, and RECIST changes. I can tell you from, and we've talked about this a lot from the original data set, that symptomatic changes happen well before you see RECIST changes. And the reason for that is these are mass-based symptoms. So the mass of this desmoid tumor is pushing against something that's causing, say, pain, and as soon as you that and shrink that volume by even a small amount, like 10%, 20%, you're relieving the pressure that's causing the pain. And so you see that kick in very quickly, and then you see volumetric changes follow, then you see RECIST changes, because RECIST is just the longest axis. And you know, all leadership I think complains about RECIST, but here, with desmoid, given the asymmetric shape of these tumors, it's particularly problematic. You can have these long, skinny, like hot dog shaped tumors that just get to be thinner hot dogs, but the length is comparable. So the RECIST change is not necessarily big, but the volumetric changes are very significant and the PR changes are very significant. So we'll do our best as a company in the presentation to provide proper context, but you're asking, so I'm just saying these are things you might watch for.

Pay attention to, for sure. And then as you get through those Q4 updates, you said you're planning to engage the FDA and initiate a registration Phase 3 study in the first half of '27.

What are the major questions you still need to align with on the FDA and then what does the ideal Phase 3 design look like? We've talked to FDA already and we've aligned on the study population so it'll be a Zolocatatide versus placebo, Zolocatatide versus placebo study design. We've talked about sizing of it very similar to the other studies of around 150 patients, which, by the way, for our efficacy is massively overpowered, but we didn't want to arrive at an approval with a smaller safety database than other compounds that have been approved before us. So we're still going to size it that way. That seems fine. The main question is the dose and schedule. Hence, we did this whole optimization study, and we're taking to them at least maintenance dose and an induction dose. And for both, they should rightly ask, why is that dose not higher? Why is that dose not lower? And we should have good answers to that. So, and we feel we do. So, those are the questions we will discuss and align on. The endpoints are another topic of conversation. Technically, you don't need to align on your endpoints or statistical analysis plan at the beginning of the Phase 3, but we'd like to. And we're going to discuss whether the old PFS endpoint that they used prior is the right endpoint to use or whether a dual endpoint, meaning A or B, 1-to-1, or a dual endpoint the 1 or the either, endpoint of ORR and PFS is the more appropriate endpoint. We feel, let's say there were no approvals ever before us, there was no precedent, we would take ORR as a primary endpoint here, because tumor shrinkage is the name of the game like we just described with mass effects and all that. It's not about in in kinds of cancers, ORR is a surrogate of PFS, which is a surrogate of OS. In this case, ORR is the clinical benefit. However, since there's regulatory precedence with PFS, we think a reasonable compromise is an either-or situation. It won't make a lot of difference to us either way, but we'd slightly prefer the ORR/PFS dual as we could probably read that result out even sooner.

Okay, I'm just going to ask 1 more question on desmoid before we move on to the rest of the pipeline. But from a commercial perspective, desmoid tumors have been a relatively small market historically. So do you think a better tolerated, a more effective treatment could expand the actual addressable population here?

We do. We think that's the real opportunity. We think that this happens in history, you'll be aware of many situations where a first product was able to carve out a very small amount of the total addressable population because of some liabilities or inadequate efficacy of that product. But then another product comes along and it's a much bigger deal. Like, Bosentan and PAH versus the new endothelial receptor antagonists and other treatments is like an order of magnitude difference. You know, Tasigna is obviously a lot bigger than compounds that came before it. So we feel similarly about this. There are lots of patients, like I tell you, an anecdote that we sometimes I sometimes tell investors there was a woman that came to visit our company that was intolerant of gamma secretase inhibitor. She would never take that. The woman, especially, and the majority of desmoid patients are women, the ovarian toxicity is very problematic. And there's only partial reversibility of that ovarian toxicity even after drug discontinuation. So this is an issue, plus the slow response and the needing to be patient with significant rash and diarrhea for a long time waiting for your tumor to get a little smaller, those are barriers. I still go back to what I said. It's hard to be a pioneer. And so I always take my hat off to any pioneering medicine. So wonderful. But we think that that leaves so much unmet need on the table. So there's a woman that came into our company with a desmoid tumor that wrapped around her jejunum that couldn't take a gamma secretase inhibitor. So the need wasn't so acute that she needed to suffer through all these different liabilities, like I said. But every few months, she would have these horrible pains because her jejunum would get squeezed off by the desmoid tumor. She'd have a small bowel obstruction, go into the hospital, get worked up, and all of this was a horrible chronic condition that she can look forward to for 40 more years. So it's like a terrible situation, and she's unmedicated for many such patients.

Okay, all right, let's transition to FAP.

The sort of second area that you're exploring your program in, can you frame what you view as sort of the unmet need? And what would a meaningfully medical therapy need to accomplish to really change the treatment paradigm in that disease today? So FAP, and by the way, I'm glad you're calling it FAP because I'm getting accustomed to that versus FAP. FAP. Yes. And the KOLs all refer to it as FAP.

Okay, good. So thank you for that.

So Familial Adenomatous Polyposis is a condition that you're born with. It's a germline mutation in APC. That's 1 of the 2 mutations we treat with a beta-catenin and TCF4 inhibitor. So fundamentally, we get at the root cause of whatever issues come up with such patients, including all the polyposis and from cancer. What happens typically in a patient, maybe I can describe 1 of the patients we've already treated, so she would be typical. She was a young woman that was 15 years old when her polyp burden in her colons and GI tract became so bad, like they were so numerous, that the gastroenterologist could no longer feel confident that he or she could snip out enough polyps to have control. And because in these patients, typically, it goes from dozens to hundreds to thousands of polyps. So you can no longer feel confident that you've taken out potentially cancerous polyps. At 15 years old, she lost her colon, so surgically removed. Colostomy bag, pretty bad, like in, she enters high school. And then she lives in fear after that, that even after her colectomy, the polyps start to fill up her duodenum. So duodenum in other places, but the duodenum seems to be the place where most are focused on because that's where the cancer comes from. So that has a scale associated with it, a risk scale called the Spiegelman staging. 1 to 4, and when we saw her, she was at Stage 4. So if you look at her duodenum, it's just a carpet of polyps. It's just, you can't see any normal tissue there. And so she lives with this mental anguish that she's going to get cancer at any time. Once she reached Spiegelman Stage 4, which when we saw her, is to further remove, she's already lost rectum, further remove duodenum, maybe part of her stomach. And so she loses a huge part of her GI tract, and at that point life becomes very tough because your nutrition is compromised, you may need parenteral nutrition, and you live a very different life than probably most of you in this room. And so that's the unmet need. If you talk to a surgeon right now, the risk is they may say, we've got this. We can just keep removing GI tissue. But clearly from a patient perspective, that's not so good. So our ideal medicine would prevent all of that. Our ideal medicine is a way to so radically change the polyp burden that it's either gone or you can just excise the 2 or 3 polyps, or you can easily control it through endoscopies. So that's our that's our treatment objective is complete control of the disease so that mentally you don't have to worry about getting cancer and you don't have to worry about having part of your GI tract. There were a couple of patients, a couple of patients, and she was 1 of them. She went from an 11-week Spiegelman Stage 4 to 0, to normal tissue. Other patients we treated went from Spiegelman Stage 2 to 1. So in both cases, I would call that a dramatic change.