Neumora Therapeutics, Inc. Common Stock (NASDAQ:NMRA) Q3 2024 Earnings Call Transcript

Neumora Therapeutics, Inc. Common Stock (NASDAQ:NMRA) Q3 2024 Earnings Call Transcript November 12, 2024

Operator: Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to Helen Rubinstein, Vice President of Investor Relations. Please go ahead.

Helen Rubinstein: Good morning, and thank you for joining Neumora Therapeutics Third Quarter 2024 Financial Results Conference Call. Before we begin, I encourage everyone to go to the Investors & Media section of our website at neumoratx.com, where you can find the press release related to today’s call. With me today are President and Chief Executive Officer, Henry Gosebruch; and Chief Financial Officer, Josh Pinto. Head of Research and Development, Rob Lenz will join us for the Q&A portion of the call. I’d like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. Please review the risk factors discussed in today’s press release and in our SEC filings for additional details. With that, I’ll now turn the call over to Henry.

Henry Gosebruch: Thanks, Helen. Good morning, everyone, and thank you for joining us for our first ever quarterly conference call. Brain diseases collectively represent one of the greatest medical challenges of our generation, affecting upwards of 1.5 billion people globally. They are the leading cause of disability with a significant impact on quality of life not only for patients, but for their caregivers, families, and society at large. We all know somebody affected by brain disease, and at Neumora, our goal is to bring the next generation of medicines forward to alleviate the substantial unmet need. To achieve that goal, we have developed a robust portfolio of seven clinical and preclinical programs, all targeting novel mechanisms of action in their respective indications.

Importantly, we believe that each of our programs has the potential to reshape the treatment of its target indication, making a significant difference for the patients and families we aim to serve. I’ll start with our lead program navacaprant, which we are investigating for the treatment of major depressive disorder or MDD and other neuropsychiatric conditions. MDD is a leading cause of disability worldwide affecting more than 280 million people. Yet, it has been more than 30 years since a drug with a novel mechanism of action has been approved to treat it. People living with MDD often experience inadequate treatment responses and/or significant tolerability challenges leading them to discontinued standard of care treatment. In fact, up to 85% of patients either don’t receive pharmacological treatment or don’t achieve remission with first line therapy, and approximately 70% of people with MDD experience anhedonia or the lack of ability to experience pleasure from daily activities, which is not adequately treated by existing agents.

We believe navacaprant has the potential to reshape the treatment of MDD. Navacaprant is a highly selective novel once-daily kappa opioid receptor antagonist that we are developing as a potential monotherapy treatment. The kappa opioid receptor antagonist approach has been clinically validated in three independent studies. In our Phase 2 MDD study, navacaprant demonstrated efficacy in treating depressive symptoms including anhedonia in patients with moderate to severe depression as well as a favorable safety and tolerability profile with no weight gain, sexual dysfunction or other adverse events commonly associated with standard of care. It is designed to be easy to use as an oral once-daily 80 milligram dose without hydration [ph]. Navacaprant has the potential to make a significant difference in the treatment of MDD and beyond if our development efforts are successful.

The KOASTAL program includes three replicate Phase 3 randomized placebo-controlled double blind studies KOASTAL-1, KOASTAL-2 and KOASTAL-3 designed to evaluate the efficacy and safety of navacaprant monotherapy in adult patients with moderate to severe MDD. We are also advancing an open-label extension study KOASTAL-LT designed to evaluate the long-term safety of navacaprant. To support the KOASTAL studies, we are deploying a state-of-the-art approach designed to strengthen probability of success that includes significant enhancements to both study design and operational execution relative to Phase 2, which are detailed in our corporate deck. We know that both study design and execution are crucial for successful MDD studies and we are laser focused on the KOASTAL program.

We look forward to top line data readout from KOASTAL-1 around the end of this year and to data from KOASTAL-2 and KOASTAL-3 in the first half of next year. We are also exploring the potential of navacaprant as a treatment for bipolar disorder and are pleased to be advancing a Phase 2 signal seeking study. This study is designed to inform further development of navacaprant in bipolar II depression, potentially including development in broader bipolar disorder populations as it is powered to show an effect size, albeit not power to show statistical significance. We look forward to sharing results from this study in the second half of 2025. Beyond navacaprant, we are currently evaluating NMRA-511, our vasopressin 1a receptor antagonist in a Phase 1b signal seeking study in people with Alzheimer’s disease agitation.

We look forward to reporting data from that study in the second half of 2025. Additionally, we are continuing to progress our M4 franchise with an IND for a second M4 positive allosteric modulator or PAM expected in the first half of 2025. We believe that with our franchise of several M4 PAMs in development, we are well positioned to become a leader in muscarinics, and important new class of medicine. Finally, we are advancing a deep pipeline of additional novel clinical and preclinical opportunities addressing such conditions as Alzheimer’s agitation, schizophrenia, Parkinson’s and ALS. With these programs, I believe we are well on our way to achieve our mission of redefining the development of novel medicines for brain diseases. With that overview, I’ll turn the call over to Josh to review our financials.

Josh?

Josh Pinto: Thanks, Henry, and good morning, everyone. Our financial results for the third quarter of 2024 are detailed in the press release that we issued this morning, which I encourage you to read. I’ll take a moment to provide some context and highlight a few key points. As we advance our industry leading CNS pipeline, we are focused on disciplined capital allocation that we believe will enable us to leverage our strong balance sheet to realize multiple catalysts across our programs. Total operating expenses for the third quarter were $76.6 million compared to $56.9 million for the same period in 2023. The increase was driven primarily by activities related to the Phase 3 program for navacaprant, ongoing studies across the rest of our portfolio and investments to support the growth of our business.

We ended the third quarter with $341.3 million in cash, cash equivalents and marketable securities, which we expect to support operations into mid-2026. We believe this runway places us in a very strong financial position to execute on our goals. In fact, over the next 18 months, we have five clinical catalysts on the horizon, including three Phase 3 readouts for navacaprant in MDD, data for navacaprant in bipolar depression and data with NMRA-511 in Alzheimer’s disease agitation. Additionally, our preclinical portfolio comprises programs targeting novel mechanisms of action that are supported by promising early evidence. I believe that this represents an industry leading neuroscience pipeline and sets us up well to achieve long-term growth.

With that, I’ll now hand the call over to Helen to manage Q&A with the operator. Helen?

Helen Rubinstein: Thanks, Josh. Before I turn it over to the operator, I’ll ask that you limit yourself to one question. If you have an additional question, please feel free to return to the queue. Now, I’ll turn it over to the operator to handle Q&A. Operator?

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from Paul Matteis with Stifel. You may proceed.

Julian Pino: Hi there. This is Julian on for Paul. Thanks so much for taking our question this morning. We’re just wondering, is there a final sample size that you guys have for KOASTAL-1 that you’d be able to share? And we’re curious if there’s any upside to original powering assumptions there. Thank you.

Rob Lenz: Hi, this is Rob. I can take that question. So we have three replicate Phase 3 studies ongoing, all of which were powered or are powered at approximately 90%. They are targeting approximately 332 patients in each. When we did design the KOASTAL studies, we actually did build in the ability to increase the enrollment by up to 25% in a seamless way, meaning without requiring us to conduct the protocol amendment. So look forward to sharing the details on the enrolled population, including the final sample size at the top line results.

Operator: Thank you. Our next question comes from Brian Abrahams with RBC Capital Markets. You may proceed.

Brian Abrahams: Hey, good morning. Thanks for taking my question and congrats on all the progress. Recent studies have shown that placebo rates can sometimes be pretty tough to keep down in neuropsych studies. So I was wondering if you could talk a little bit about your confidence in the conduct of the KOASTAL studies. And maybe some of the QC measures that you’re employing, how you believe they’re working in terms of how you’re balancing patients across the sites and diverting towards the most reliable validated centers. Thanks.

Rob Lenz: Hi, this is Rob, again. I can take that question. So we’ve implemented a number of measures in the KOASTAL program at a program level, as well as at a study level to really focus on increasing the overall probability of success. So at the program level, as mentioned, we’re conducting three trials with the expectation that we would need two of those to be positive. And then at the study level, there’s a number of things that we implemented from both a design perspective, as well as an execution and oversight perspective that we think increases that overall probability of success. I’ll just mention a few. So from a design perspective, we did move from the HAMD-17 to the MADRS as the primary outcome measure. This is really driven by the fact that the MADRS better captures the clinical concepts of anhedonia, which is something that we should benefit with navacaprant in our Phase 2 study.

So we feel that the MADRS better captures the holistic benefit that we would expect to see than the HAMD-17 does. We did implement equal allocation in Phase 3 between those patients coming into active and those going to placebo. We know historically that reduces expectation bias, which in turn reduces placebo rates in trials. And then on the execution side, we really implemented what we feel is sort of state of the art. I’ll mention just a few. One is we’re utilizing central raters for the administration of our primary outcome measure to help ensure that patients coming into the trial have the appropriate degree of depressive symptoms as assessed by the MADRS. We are also having every patient conduct video apps to confirm compliance with study drug administration and drive compliance in the study.

And then in terms specifically of placebo, we spend a fair amount of time training the sites, but also implementing a placebo script. And this is something that the sites administer to the patients on each administration of the MADRS. And the literature again supports that that’s a technique that can help mitigate placebo responses. So in aggregate, we really feel we’ve been laser focused on doing those things to increase the overall probability of success of the program in each study.

Brian Abrahams: Thanks so much.

Operator: Thank you. Our next question comes from Yatin Suneja with Guggenheim. You may proceed.

Unidentified Analyst: Good morning. This is Iris on for Yatin. Congratulations on your first quarterly conference call. So you previously guided for discontinuation rates lower than in Phase 2. Now that we’re getting close to the readout, is it fair to assume discontinuation rates in the 5% to 10% range Thank you.

Rob Lenz: Yes, this is Rob. I won’t comment specifically on the details, the discontinuation rate. I’ll say that we, overall, were encouraged by the discontinuation rates that we’re seeing in the study and look forward to sharing the details on the baseline characteristics when we show the top line results.

Unidentified Analyst: Thank you.

Operator: Thank you. Our next question comes from Myles Minter with William Blair. You may proceed.

Myles Minter: Hey, thanks for taking the question. [Indiscernible] just on the pretty benign safety profile here for navacaprant and whether that’s inherent to the drug itself or whether that might be a sign of maybe patients being underexposed for a CNS drug. I think specifically for this mechanism, people are pointing to the lack of it seeing at the 80 mg dose somnolence levels that might be lower than we expect for a CNS drug. So can you kind of just level set for us where the dose selection for the 80 mg came from, how you’re ensuring correct exposures in your ongoing KOASTAL program And I guess, are you achieving that target receptor occupancy at kappa. Thanks very much.

Rob Lenz: Hi, this is Rob. Yes, I can take that. So overall, we’ve been quite encouraged by the safety profile. And that’s based on the totality of data from both the Phase 1 and the Phase 2 studies to date. Importantly, we haven’t seen some of the troublesome side effects that are seen with existing therapies like weight gain or sexual dysfunction. In terms of specifically around our confidence in the dose selection, that’s really predicated on a couple observations. One is, we conducted a human PET receptor occupancy study would be intent to assess which doses and exposures are resulting in significant receptor occupancy through the entire dosing period. And what we found is that the 80 milligram dose achieves exposures in the brain that resulted in approximately 90% receptor occupancy throughout the dosing period.

So we looked across G protein-coupled receptor pharmacology, the objective is to get north or above 75% to 80%. We certainly have achieved that with a high degree of confidence with navacaprant. And then in terms of specifics around pruritus, I’d say pruritus is certainly a complex biology. There’s a number of receptor systems that have been implicated in pruritus histamine, the mu opioid receptor, as well as the kappa opioid receptor. There are central mechanisms as well as peripheral mechanisms. And so I’d say it’s premature to sort of extrapolate any observations of pruritus. We did not see pruritus in the Phase 2, but we did see pruritus in the Phase 1 study at a low level. So we’ve conducted – we’ve designed navacaprant specifically to be a highly selective molecule.

We’ve got about 300 fold selectivity of kappa overview. That was the objective of the program and we’ve achieved that. And so we think that in part could be driving the favorable tolerability profile that we’ve seen to date.

Myles Minter: Thanks.

Operator: Thank you. Our next question comes from Graig Suvannavejh with Mizuho. You may proceed.

Charles Wang: Good morning, everyone. This is Charles on for Graig. Congrats to the team for continued progress. So assuming two positive KOASTAL studies, can you share your initial thoughts regarding navacaprant potential commercial strategy and labeling strategy. Thanks.

Josh Pinto: This is Josh here. As we believe that we need two of the three studies in the KOASTAL program to be successful to file the IND and at this point believe that we are well set up both with our balance sheet as well as our team to look to commercialize the program on our own within the U.S.

Operator: Thank you. Our next question comes from Douglas Tsao with H.C. Wainwright. You may proceed.

Douglas Tsao: Hi, good morning. Thanks for taking the questions. Just one, I think you mentioned the opportunity for resizing the KOASTAL programs without taking an interim look. I’m just curious what would potentially be the catalyst for that. And then just a second question if I may, we obviously got a negative readout from a competitor with their M4 program. So just curious if you have any thoughts on how that might influence your own M4 program. Thank you.

Rob Lenz: Yes, I can – this is Rob. I can start with the first question. So I’d say we look forward to sharing the details of the design characteristics when we have the top line results. I’ll just reiterate that this is not atypical way to implement increases in sample size from an ongoing study without having to conduct a formal protocol amendment. And this was part of the design that was submitted up through the FDA. In terms of the M4 program, it’s our policy to not comment on other companies’ data. What I will say is, we do remain confident in our M4 franchise. Just by way of reminder, we do have multiple programs, each of which has unique chemistry and unique attributes in pharmacology. Just by way of recall, these programs were licensed from Vanderbilt and that’s a group there that has tremendous expertise in medicinal chemistry and really industry or sort of academic leading experience in the muscarinic space.

So we’re very much looking forward to bringing our next M4 PAMs and into the clinic in the first half of next year.

Douglas Tsao: Okay. Great. Thank you so much.

Operator: Thank you. Our next question comes from Charlie Yang with Bank of America. You may proceed.

Charlie Yang: Hi, thanks for taking my questions. Can you just confirm whether the last patient was enrolled for the KOASTAL-1? And if so, how – when – what was it – when was it enrolled? Thank you.

Rob Lenz: Hi, this is Rob again. I can address that. So we won’t comment specifically on details of enrollment. I will just reiterate our confidence in delivering the top line results around the end of the year and the things that we put in place and the resources to help ensure that that happens. And we can share – we’ll look forward to sharing those details as we share the top line results.

Operator: Thank you. Our next question comes from Myles Minter with William Blair. You may proceed.

Myles Minter: Hey, thanks for taking the follow-up. Just on the IP with Vanderbilt and your muscarinic franchise, do you have any IP around M4 agonists or other cholinergic drugs that are maybe changed in selectivity for M1, M4, it just sounds like you’ve got to focus on the PAMs, which is understandable, but wondering whether you have flexibility to pivot outside of that selectivity. Thanks.

Josh Pinto: This is Josh here. Myles, in terms of the franchise that we’ve been able to pull together with our partners at Vanderbilt, it has been focused on M4 PAMs up to this point. We believe that, that pharmacology has potential and we feel, as Rob has mentioned, very good about moving our programs into the clinic in the first half of next year. And so I am not going to be able to comment any further just around the specific IP with the franchise that we have, but feel good about what we have built and put together with Vanderbilt.

Myles Minter: Cool. Thanks.

Operator: Thank you everyone. That will conclude the Q&A portion of today’s call. With that, I’ll turn it back to Mr. Gosebruch for closing remarks.

Henry Gosebruch: Thanks, Josh. And thanks again to everyone for joining us this morning. As you heard, it’s an exciting time to be at Neumora. And as we move forward, our goal remains steadfast to redefine neuroscience drug development by bringing forward the next generation of novel therapies that offer improved treatment outcomes in quality of life for people suffering from brain diseases. We’re looking forward to the first of our three Phase 3 data readouts for navacaprant around the end of this year, with two more Phase 3 studies reading out in the first half of next year. As discussed, beyond navacaprant, we are also advancing a deep pipeline of additional novel, clinical and preclinical opportunities to address such conditions as Alzheimer’s agitation, schizophrenia, Parkinson’s and ALS, creating a catalyst rich upcoming year for Neumora.

I’d like to take this opportunity to thank our talented and dedicated Neumora team. All of the progress we’ve made to-date is the culmination of their hard work and their commitment to the patients we serve. Thanks again everyone and have a wonderful day.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.