Kymera Therapeutics, Inc. (NASDAQ:KYMR) Q1 2023 Earnings Call Transcript

Kymera Therapeutics, Inc. (NASDAQ:KYMR) Q1 2023 Earnings Call Transcript May 6, 2023

Operator: Good morning, and welcome to the Kymera Therapeutics First Quarter 2023 Earnings Conference Call [Operator Instructions]. Please note that this event is being recorded today. I would now like to turn the conference over to the Chief Financial Officer, Bruce Jacobs. Please go ahead, sir.

Bruce Jacobs: Good morning, everyone, and welcome to the Kymera Therapeutics quarterly conference call. I’m Bruce Jacobs, Chief Financial Officer at Kymera, and I’ll be joined today by Nello Mainolfi, Founder President and CEO; and Jared Gollob, our Chief Medical Officer. After our prepared remarks, we will open the call to your questions [Operator Instructions]. Before I get started, I’d like to remind everyone that some of the comments that management may make on this call include forward-looking statements, as outlined in the press release. Actual events and results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in Kymera’s most recent filings with the SEC and any other future filings that the company may make with the SEC.

You are cautioned not to place any undue reliance on those forward-looking statements and Kymera disclaims any obligation to update such statements, except as required by law. With that said, I’ll now hand the call over to Nello.

Nello Mainolfi: Thanks, Bruce, and thank you, everybody, for joining us today. This month marks the seven year anniversary of our founding. And as Kymera reached this milestone, I thought I would spend a few minutes reflecting on the progress we’ve made on our ambitious plans to build the best-in-class fully integrated global medicines company. Since our funding, we have focused on a target selection strategy that would allow us to use this novel drug modality in target areas that would uniquely benefit from it and on evolving the platform to reach novel therapeutic hypotheses. Over that time, we’ve continued to enhance our platform capabilities and advance programs in areas of significant patient needs that cannot be meaningfully addressed by conventional medicines building a high-value pipeline and demonstrating our ability to design molecules that have the potential to transform disease treatment.

Our first-in-class IRAK4 degrader program, KT-474, is a molecule we discovered and developed through Phase I and is planned to start Phase II trials conducted by our partner, Sanofi. In December of last year, we shared positive early data in both hydrotenatic separativa in atopic dermatitis patients that demonstrated strong translation of our preclinical PK/PD and safety models into the clinic. With this program, we have seen, for the first time, clinical benefits of hydro bifunctional degrader in inflammation and immunology indications for the first proof-of-concept of clinical differentiation of a degrader compared to a small molecule inhibitor. This is a substantial accomplishment for a company that is pioneering a new modality. Sanofi expects to initiate the first Phase II study of KT-474/nHS this year, followed by a study in AD.

Our three oncology programs continue to make progress. Of note, we have initiated the Phase I clinical trial of our MDM2 degrader, KT-253. The clinical effect of stabilizing P53 and P53 wild-type tumor is a concept that has been pursued extensively in the biopharma industry. There are a handful of MDM2 small molecule inhibitors in the clinic with some activity in a variety of tumor types. Unfortunately, the activity has been limited given the inhibition of MDM2 leads to a transcriptional feedback loop, which creates more protein that makes it harder for occupancy-driven small molecule inhibitors to block leading to reduced therapeutic indices. We believe KT-253, on the other hand, has the potential to overcome that feedback loop because it removes the protein and does so in a catalytic manner.

This makes KT-253 a highly potent candidates that may be able to induce an irreversible acute apoptotic response with brief exposure while aligning time for the recovery of any normal sales, which may be affected, creating an improved therapeutic index. With KT-253, we believe we have a degrader that can remove MDM2 stabilize P53 and overcome the feedback loop generated by MDM2 reduction, giving us the opportunity to explore the clinical potential of such a powerful mechanism fully. We look forward to sharing more updates as the trial advances, including safety and proof of mechanism data later in the year. Near term, we plan to present additional preclinical data on KT-253’s pharmacological profile at the European Hematology Association Congress next month.

Araracumid program, KT-413 targets IRAK-4 and the image substrates, [Indiscernible] with a single small molecule and has the potential to be the first precision medicine to treat a genetically defined subset of tumors. KTE-413 has been designed to target MYD88-mutant lymphoma, and we’re currently in dose escalation of the Phase I trial in B-cell lymphomas, including DLBCL. We shared some initial data from the trial in December, showing that we engage the target without any dose-limiting toxicities. Our third oncology program, KT 333 targets STAT3, which has been linked to numerous cancers and inflammatory and autoimmune diseases and is the first degrader against an on-track transcription factors to enter the clinic. We’re currently in dose escalation of the Phase I trial in the broad subset of liquid and solid tumor patients, where we’ve also shown early proof of mechanism.

Our focus in 2023 for both KT-413 and KT-333 will be the degradation profile and evaluating their biological and clinical impact in the appropriate target patient populations. As disclosed today, we plan to provide a clinical update focused on degradation and safety for KT-413 and KT-333 at the International Conference on Malignant Lymphoma, or ICML, in June. We intend to present data evaluating antitumor activity in the target patient populations for both programs later in the year. In addition, we continue to push the signs of TPD forward and identify best and first-in-class opportunities to transform the treatment of disease. We have several exciting programs in our preclinical pipeline that are designed to address well-validated immunology and oncology pathways in areas of significant patient need and commercial opportunity.

These include developing tissue-selective restricted E3 ligase treatment programs as well as a new generation of molecular glues, exploiting newly identified agrees to expand the reach to high-value on-drug and nonregundable targets. We hope to be able to share more on these efforts later this year or early next. Jared will now cover in more detail our recent progress for each of our disclosed program before turning the call over to Bruce for a financial update. I will then finish with some concluding remarks before handing the call to the operator for a Q&A session in which Jared, Bruce and I will be available. Jared?

Photo by National Cancer Institute on Unsplash

Jared Gollob: Thanks, Nello. I’ll provide a brief recap of where we stand with our clinical programs and what we expect in the coming months. Turning to our oncology pipeline. I want to update everyone on our disclosed programs, which include our Stat3, Aracamid and MDM2 degraders. As Nello mentioned, KT-2503, our MDM2 degrader, received IND clearance from the FDA at the end of last year. We initiated the Phase I trial in March and expect to dose our first patient shortly. MDM2 is the crucial regulator of the most common tumor suppressor p53, which remains intact and close to 50% of cancers. We believe KT-253 has the potential to be a highly potent degrader that unlike small molecule inhibitors has been shown preclinically to have the ability to overcome the MDM2 feedback loop and rapidly induce apoptosis, even with brief exposures.

KT-253 has the potential to be effective in a wide range of hematological malignancies and solid tumors with functioning p53. We’ve shown preclinically that KT-253 has superior activity compared to MDM2 small molecule inhibitors and demonstrated greater than 200-fold improvements in both in vitro cell growth inhibition and apoptosis. Additionally, we presented data at the ASH Annual Meeting last year, supporting an intermittent dosing schedule of KT-253 in acute myeloid leukemia, AML, which has the potential for improved efficacy and safety using a degrader approach. The Phase I trial is evaluating the safety, tolerability, pharmacokinetics, pharmacodynamics and clinical activity of KT-253 in patients with relapsed or refractory high-grade myeloid malignancies, acute lymphocytic leukemia, or ALL, lymphomas and solid tumors.

Patients in the KT-253 Phase Ia dose escalation study will receive IV doses of KT-253 administered once every three weeks. The open label study is intended to identify the recommended Phase II dose for KT-253 and will be comprised of two arms with ascending doses of KT-253 in each arm. The first arm will consist of patients with lymphomas and advanced solid tumors and the second arm will consist of patients with high-grade myeloid malignancies in ALL. We plan to share initial safety and proof of mechanism data from the Phase I clinical trial later this year. Now turning to our other two oncology trials that are ongoing. STAT3 is a transcriptional regulator that has been linked to numerous cancers as well as to inflammatory and autoimmune diseases.

Our Phase I clinical trial is evaluating KT-333’s potential in hematological malignancies and solid tumors. Specifically, the trial is evaluating the safety, tolerability, PK/PD and clinical activity of KT-333 in adult patients with relapsed and/or refractory lymphomas in solid tumors. We reported on the first dose level in December, showing initial proof of mechanism for STAT3 degradation in PBMC and no dose-limiting toxicities with good translation of PK/PD from preclinical models to patients. The trial is continuing to enroll, and based on the PK/PD we showed in December, with robust target knockdown for 72 hours followed by recovery, we expect to be at pharmacologically active doses by DL3 or DL4, as previously announced. The trial’s second stage will consist of Phase Ib expansion cohorts to further characterize the safety, tolerability, PK/PD and antitumor activity of KT-333 in relapsed and/or refractory stat-redependent T-cell malignancies as well as in solid tumors.

Our IRAKIMiD program, K2-413, is a novel heterobifunctional degrader that targets degradation of both IRAK4 and the image substrates, Ikaros and Ailos. KT-413 was designed to address both the IL-1R TLR and the type 1 interferon pathway synergistically to broaden activity against MYD88 mutant B-cell malignancies. KT-413 is on a similar timeline as KT-333 and is currently in the dose escalation stage of the Phase I trial, evaluating the safety, tolerability, PK/PD and clinical activity of KT-413 in patients with relapsed and/or refractory B-cell non-Hodgkin’s lymphomas. We reported in December that the first two dose levels have been completed showing initial proof of mechanism with IRAK-4, Ikaros and Ailos degradation in PBMC and tumor and no safety signals with good translation of PK/PD for preclinical models to patients.

We are continuing enrollment and similar to KT-333, we expect to be a pharmacologically active doses by DL3 or DL4 as previously announced. The trial’s second stage will consist of Phase Ib expansion cohorts in DLBCL to further characterize the safety, tolerability, PK/PD and antitumor activity of KT-413 in relapsed/refractory MYD88 mutant and MYD88 wild-type DLBCL. As Nello mentioned, we look forward to sharing updated degradation and safety data on these two programs at ICML in June. We’ll present a poster on KT-333 at the conference and an update on KT-413 will appear in the ICML abstract book. As we’ve said previously, we expect to assess the clinical impact of degradation in the respective target patient populations for both KT-333 and KT-413 and to share that data at a medical meeting later this year.

I’ll end with our IRAK4 program, KT-474. As Nello mentioned, Sanofi will be taking KT-474 into Phase II and initiating trials in HS and AD, the first of which in HS is planned to start this year. There is limited additional information I can share with you at this time other than to say the plans in place for starting Phase II are tracking with Sanofi’s and our expectations. Finally, with respect to KT-474, we look forward to presenting the clinical data from the Phase I program at the EADV symposium in Sevilla later this month, which will mark our first time sharing these exciting data at a major scientific meeting. I will now hand the call to Bruce, who will share some brief comments on our financial results for the first quarter.

Bruce Jacobs: Thanks, Jared. I’ll quickly cover the financials before turning the call back to Nello for some concluding remarks. Before getting into the specific financial results for the quarter, I wanted to briefly address the events surrounding Silicon Valley Bank as it relates to Kymera. At the time of the receivership of STB, we had very limited exposure to the bank. And in response to the events in March, we removed all of our excess operating cash that was held there and moved the outstanding letter of credit that was also there that is held to support our new lease. At this time, we have modest cash at STB to support our current operating needs. And as a brief reminder, Kymera’s investment policy prioritizes protection of principal and our liquidity needs above all and limits our investments to government securities and highly rated corporate bonds.

This policy guides our investment approach, and it’s been coupled with the recent expansion of our banking and asset management relationships to further diversify our financial risk. That said, back to the financials for the quarter, we recognized $9.5 million of revenue. This total reflects revenue recognized pursuant to our Sanofi and Vertex collaboration. At the end of the quarter, our deferred revenue total on the balance sheet was approximately $57 million. That reflects partnership revenue we expect to recognize over the next several years, excluding the receipt of any potential future milestones. With respect to operating expenses, R&D for the quarter was $42.2 million, of which $4.7 million represented noncash stock-based compensation.

The adjusted cash R&D spend of $37.5 million, including stock-based comp, reflects about a 3% decrease from the comparable amount in the fourth quarter of ’22. Our SG&A spending for the quarter was $12.6 million, of which $4.7 million was noncash stock-based compensation, the adjusted cash G&A spend of $7.9 million, also excluding stock-based comp, reflects a 10% increase from the comparable amount in the fourth quarter of 2022. And finally, we exited the first quarter with cash and equivalents balance of approximately $516 million. As we shared earlier in the year, we believe our cash runway extends into the second half of 2025 projection, which includes milestones only related to the start of the first 2 Phase II trials for KT-474. I will now turn the call back to Nello.

Nello Mainolfi: Thanks, Bruce. I’d like to conclude by reminding everybody that Kymera was funded to harness novel therapeutic approaches to revolutionize the way we treat diseases. Over our seven year history, we built best-in-class discovery engine capable of identifying new drug candidates at accelerated pace and delivering at least 1 IND every year. We now have a pipeline of 4 clinical stage assets across different disease areas, and we continue to invest in the future and evolve our disease-agnostic discovery platform so that we can expand the possibilities of what we can do to improve patients’ lives. Propelling a rigorous scientific approach is a relentless desire to do what hasn’t been done before to push the boundaries of our signs, expand our capabilities to support a rapidly maturing company and build a culture that enables us to achieve what may have seen impossible.

We look forward to sharing exciting updates on our clinical programs, platform and company in the coming months. At this point, I’d like to thank the Kymera team as well as our partners and the patients participating in our clinical trials for sharing this journey with us. Finally, thank you all for participating in our call, and I look forward to your questions. I will now hand the microphone back to the operator so that we can take your questions.

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Q&A Session

Operator: We will now begin the question-and-answer session [Operator Instructions]. Our first question here will come from Vikram Purohit with Morgan Stanley.

Operator: Our next question will come from Michael Schmidt with Guggenheim.

Operator: Our next question will come from Brad Canino with Stifel.

Operator: And our next question will come from Chris Shibutani with Goldman Sachs.

Operator: Our next question will come from Marc Frahm with TD Cowen.

Operator: And our next question will come from Mike Kratky with SVB.

Operator: And our next question will come from Eric Joseph from JPMorgan.

Operator: And our next question will come from Zhiqiang Shu with Berenberg.

Operator: And our next question will come from Ellie Merle with UBS.

Operator: And our next question will come from Timur Ivannikov with Raymond James.

Operator: And our next question will come from Kelly Shi with Jefferies.

Operator: And we have time for one more question, which will come from Rich Law with Credit Suisse.

Operator: Our next question here will come from Geoffrey Meacham with Bank of America.

Operator: And our last question here will come from Kalpit Patel with B. Riley.

Operator: And this concludes our question-and-answer session. I’d like to turn the conference back over to Nello Mainolfi for any closing remarks.

Nello Mainolfi: Well, thanks. I want to thank everybody for joining our call today. It’s been an exciting first quarter for 2023, starting from early in the year when we announced some of strategic choices that we’ve made in terms of where we’re taking our discovery engine and platform with some fees on the new programs. Also, we’ve been talking about where and when we would be disclosing our oncology data across our pipeline, both preclinical and clinical, we’ll have in the next seven weeks, actually presentation across the whole clinical pipeline, 474 at the ATB, then we’ll have MDM2 preclinical in this case, EHA. And then we have both KT-413 and 333 at ICML. And then we have more data in the second half of the year. And this is really what this company will continue to be producing clinical data in first-in-class mechanisms with broad clinical potential and expect that in the next two, three years, we’ll have a large pipeline with continued cadence of clinical readouts.

So it’s an exciting time. The first seven years of Kymera has been a fun ride, but the more exciting will be the next seven. So thank you very much for being on the call and looking forward to more interactions in the next few weeks.

Operator: The conference has now concluded. Thank you very much for attending today’s presentation. You may now disconnect your lines.