Hi. Welcome, everybody. My name is Leiyang Wang, the health care desk-based analyst here at Barclays, and it's my pleasure to introduce Bryan Giraudo, the COO and CFO of Gossamer Therapeutics. Bryan, thank you for being here.
Leon, thank you so much for having us into all of Barclays. You've been great supporters of ours. So always a pleasure to be here. .
Great. Thank you. So why don't we just kick it off? Can you provide us the latest update with Gossamer?
Sure. Absolutely happy to. So as folks who follow Gossamer know we are San Diego-based biotech company focused on pulmonary hypertension. We are in right now a registrational Phase III study for Group 1 pulmonary arterial hypertension.
We expect to complete enrollment with that study in the second quarter of this year and have top line data in the fourth quarter of this year. At the same time, we expect to start a second Phase III registrational study in pulmonary hypertension associated with interstitial lung disease in the second half of this year. Our plan with success in Group 1 PAH would be to have an approval and a launch in 2027. And then a launch in PH-ILD in 2029. So all in on pulmonary hypertension.
Perfect. So we've been getting some questions about color on enrollment and your PAH PROSERA Phase III study. Can you tell us about how well the enrichment criteria is working?
It's a great question. Our enrichment criteria, principally using a composite tool called the REVEAL Lite risk score that was developed by Dr. Ray Benza of Mount Sinai in New York, is a way for us to ensure that we get the sicker patients, those that can really respond to an intervention at week 24. What we've said publicly, we did an analysis of the first half of the folks that were enrolled in the PROSERA Phase III study and that the enrichment strategy is working quite well.
If anything, we've said that the patients enrolled to date are sicker -- as sicker if not sicker than what our friends at Merck enrolled in the STELLAR Phase III study. That's really important Leon because as you remember, from our Phase II experience, while we were statistically significant on our primary endpoint of PVR. Those results disappointed the investment community. They had hoped that we were closer to where the Merck drug sotatercept had shown.
We had shown a 14% reduction in the primary endpoint of pulmonary vascular resistant. Merck had shown an 18% to 32% reduction to the low dose and the high dose. The principal reason why our efficacy was more muted as we were doing that study during the height of the COVID-19 pandemic, and we enrolled a less sick patient population because the number of patients that were available for clinical studies was severely constrained.
The good news is for our Phase III, there isn't a pandemic. So we're back to normalized clinical trial work in PAH and utilizing these strategies has really been enabling us to get that sick patient population.
Perfect. And obviously, you guys are very in touch with the KOL community, the clinical community more so than us. Can you tell us about what you are hearing in terms of feedback that you're getting from folks on seralutinib?
So there's kind of 2 perspectives that the KOL community has. Most of it is informed by, obviously, our Phase II example, but more importantly, the patients that from our Phase II that continued on our open-label extension study. We have patients out over 144 weeks from the Phase II study. What we've continued to say and we've shown is a deepening of efficacy. We proved that with those that have been initially randomized to seralutinib and stayed on drug through a week 72 right heart cath to check their PVR where we saw that 14% reduction at week 24 nearly double to about 27% at week 72.
That's unprecedented that we were able to have continued efficacy. That's also important because that very mild patient population that we enrolled was actually able long term to achieve the mean of what sotatercept showed in its Phase II study. So we got patients. We got a less sick patient population to the same place over time without any safety issues. I would say, for those -- that has got the KOL community, very excited about the prospect of what seralutinib can do. Importantly, their Phase III experience the narrative that we have to continue to be focused on is around safety and tolerability, especially when compared against to sotatercept or WINREVAIR. The inherent comfort that the investigative community has with the safety and tolerability of our drug and thus the need to not have some of the more intense monitoring that our friends at Merck have to do with sotatercept has been part of the reason why they've been even more comfortable on putting some of those sicker, more fragile patients into the study.
Perfect. And as part of the investor community, we love to talk about what potential scenarios there are for readout, right? And you've got a lot of things going on here. You have 6-minute walk distance, but there are other things beyond the 6-minute walk, example I can give you probably taken together a more fulsome picture of efficacy. And so with that said, right, what is a scenario where you would consider to be probably like a base case that's meaningful? Is there a blue sky or a reach case here for the PROSERA?
So 6-minute walk distance is our primary end point. Again, having lived our Phase II reality, we are always compared to sotatercept. For a reference point, sotatercept increased 6-minute walk in their Phase III by about 40 meters. Now we've talked about in the past, Leon, that the recent failure of the kairos therapy in the TROPOS study. And as you know, the kairos molecule and the Merck molecule, sotatercept, were very close cousins, same mechanism of action, same target. The kairos therapy was specifically designed to not increase hemoglobin, okay? .
Now we're very interested to see what that efficacy data showed. As you know, they had significant cases of pericardial fusion, which is never a good thing. But the debate right now in the clinical community is of those 40 meters that sotatercept was able to achieve, how much of that was driven by what the drug was doing as an active and ligand trap. How much of in fact was that we know that sotatercept increases hemoglobin.
Look at the tour of France. We all know you increase hemoglobin, you increase exercise capacity. In this Phase III study for Merck, they increased hemoglobin by 1.3 grams per deciliter. The literature in a variety of respiratory diseases, specifically in COPD would suggest that a 1 gram per deciliter increase in hemoglobin yields about 25 meters of increase in walk distance.
So what the KOLs are trying to debate right now is how much of that 40 meters again was driven by that increase in hemoglobin. Some of the KOLs, as I said, it could be anywhere from half to almost 2/3. Why is that important? Because elevated hemoglobin long term is not good for anybody, but it's especially not good for PAH patients, increasing hemoglobin as you know, increases the viscosity of your blood, which makes your right heart work harder.
These patients die from right heart failure. I give that background because that's an important context for the investment community to understand what our results would be. I think if we have a 25- to 30-meter increase in 6-minute walk, that in the clinical community eyes is an absolute home run. That's our base case because that's how we power the study to be able to do that.
But importantly, the reason why that's a home run is that we're doing that without having any increase in hemoglobin. We are not putting our thumb on the scale for exercised capacity increase. And so I think ultimately, if we are in that 25 to 30-meter range and the hemoglobin adjust the sotatercept data, the drug may have increased 6-minute walk on its own for about 15 to 20 meters. Again, a 25- to 30-meter outcome for us, I think, would put us in best-in-class efficacy. We already know we have best-in-class safety. I think it's a great setup for seralutinib to be the market leader in pulmonary to hypertension.
And thanks for that background on sotatercept because I think there's really interplay between what you guys have as well as sotatercept. When you're thinking about when you just laid out the sotatercept dynamic, right? Your study, patients can be on sotatercept as background, right?
Correct.
So as said, like is this kind of a confounding factor that you have to consider of patients beyond sotatercept? And more so, like how many patients do you expect to be on sotatercept?
So very few patients to be on background sotatercept. Part of that is the fact that we have invested heavily in our study outside of the United States. We knew that a sotatercept launch would have some disruptions to normal clinical trial enrollment, if you will. So we expect our study to be somewhere around 30% enrolled from patients from the United States.
We're very deliberate on that today. Sotatercept is only commercially available in the United States and in Germany. So we are in 29 other countries other than those 2 for the study. I want to say sotatercept is a very good drug. It's the first new pathway for this patient population in 19 years. Sotatercept does have a very significant liability package around bleeding around telangiectasia, around the long-term increase in hemoglobin, which is not good for these patients.
To answer your question very specifically, in our protocol, we are allowing patients that are on background sotatercept to enter the study. There are 2 important caveats to come into the study, they must meet our entry criteria. So if you're meeting our entry criteria, by definition, sotatercept isn't really working for you. But secondarily, what we have to ensure is that patients are on a stable dose of sotatercept for at least 6 months.
And I would tell you, our experience to date from all of the inquiries we've had from investigators to have their patients brought in the study. I think only 1 patient that we've had amongst the dozens that have been brought to us is on a stable background dose of sotatercept. Part of that is the early launch nature where physicians are getting used to how you dose sotatercept, but it also is the fact that we've seen from those patient inquiries that we've gotten for the PROSERA study. There's just a lot of volatility in dosing, a lot of down dosing to manage side effects, a lot of drug holidays to manage side effects.
So I would expect by the time we end enrollment here in the second quarter, I'd be shocked if we had more than a handful of patients on background to sotatercept. That is not what our expectation was, quite frankly, our expectation was that we probably have about 10% or roughly 35 patients on background sotatercept. But clearly, how physicians are having to manage patients on sotatercept is a heck of a lot harder than I think our base case assumptions were.
That's very interesting because once you guys actually become commercial and go to market, it's going to be a very different market from today with sotatercept being on the market. Do you think that -- or how do you see kind of seralutinib positioning itself within that treatment paradigm? And also, do you think that the -- is the sotatercept profile still from your feedback with KOLs, right? Is it still -- people are still working through understanding it is basically inserting it into the treatment paradigm right now? Do you expect that to change going forward in household?
Yes. Well, I think when we look at the launch dynamics for sotatercept and we are fortunate customer that our Chief Commercial Officer. Bob Smith had worked at Merck and prepping for the launch. So we do have some insight into what they thought the patient dynamics would be.
And a year ago, I sat here and I think on the day that we presented, they were delayed in the European Union because of some concerns around safety. But we knew at that time, that patients were being warehoused in the United States for the launch of sotatercept again because it was the first new mechanism in 19 years. But when you look at their clinical data, and again, very good clinical data, but the longevity of a patient on sotatercept from their own studies is somewhere around 10 to 13 months.
We know from their data that sotatercept works well in about 1/3 of patients. It works really well and 1/3 of that third, so roughly about 15%. We think that when the time for sotatercept or rather for seralutinib to launch, there will be a deep reservoir of sotatercept refractory patients, patients that couldn't tolerate the side effects or patients that sotatercept never worked for. So I do think that in 2027, we will have a very, very favorable market dynamic for seralutinib.
Let's answer the second part of your question, what does reality look like in 2030 when both therapies have been on the market? I do believe that the profile we have for seralutinib, which is 1 where we have best-in-class safety and tolerability, our #1 AE in the Phase II at week 24 was mild cough, at week 72 was mild headache, is really, really important for this fragile patient population. Safety and tolerability is critical.
So we will come to the table with the best-in-class profile. And I also believe the fact that we have the ability to keep patients on drug much longer than what sotatercept is going to be able to do will position seralutinib as really the third line therapy. If you think about the treatment paradigm in PAH, you start with an ERA or a PD5. Those are all generics today, you will step through that to then the next therapy, we believe, will be seralutinib we think we will cover the sicker half of functional Class II patients and most functional Class III patients.
We believe we'll be able to hold those patients on seralutinib for multiple years, our longest patient from our Phase Ibs out over 5 years. And then as patients either become refractory to seralutinib, which happens in a chronic disease or patients will be given maybe lower dose sotatercept to try to even further optimize their outcome. We see sotatercept as the fourth line therapy and really disrupting where the prostacyclins are today.
Perfect. And I think that's a great foray into when you're thinking about where -- in the scenario where you're thinking about where you could be in the treatment paradigm in the future, how is that factoring in? Or how are you thinking about pricing for seralutinib?
Well, if you look at where I think the sweet spot of the market will be for sotatercept, right, they have a dose-based pricing at the highest dose. I think therapy is roughly about $450,000. At the lower dose, it's roughly about $325,000 in the United States, is where plus/minus inhaled Tyvaso is today. I see us certainly in that ZIP code of where inhaled Tyvaso is in low-dose sotatercept. .
I think what's really important also and the reason why we don't need to necessarily stretch for price is that I would expect a patient to be on seralutinib much longer than the other therapy. So the revenue per patient for seralutinib patient is going to be, I think, a multiple of what they can be for a sotatercept patient, so as a result, we're going to be smart about pricing because we do think that we will continue to capture the majority of the wallet in PAH.
And have you given any guidance on potential peak sales at this point?
We haven't given guidance on peak sales partially because we want to see how seralutinib performs in our next Phase III study, which is pulmonary hypertension associated with interstitial lung disease or PH-ILD. That market is about 3x the size of the PAH market.
If we look at our friends at United Therapeutics with what they are doing in that indication with inhaled Tyvaso, they're on roughly $2 billion to $2.5 billion run rate. They are the only approved therapy for PH-ILD and only approved in the United States. So the possibilities for where seralutinib could be, if you take what we believe will be best-in-class efficacy, best-in-class safety in PAH and possibly replicating that best-in-class in PH-ILD.
You're talking about that total addressable market of anywhere between $10 billion to $15 billion where we think we could have a majority of those revenues.
And remind me, you guys are opting to start the Phase III and PH-ILD, as the registrational immediately or without going through all the proof of concept, that kind of stuff. How confident are you in pursuing this path? And can you walk us through kind of how you were thinking about it?
Sure. So we consider our TORREY Phase II study, the proof-of-concept for PH-ILD as well because we showed that in a statistically significant way, we can improve someone who has pulmonary hypertension, where we think that there could be even more upside from a clinical perspective is remember, we target 3 main kinases, PDGFR, which affects proliferation, CSF1R and C-KIT which affect inflammation and fibrosis. Inflammation and fibrosis are 2 hallmarks of someone who has interstitial lung disease. So if we can take care of the pulmonary hypertension side of things and maybe have an improvement on the underlying interstitial lung disease, we think that this could be a very significant therapy. The reason, again, why we're jumping straight to Phase III in conjunction with our partner, KNC Pharmaceuticals from the European Union is that, again, we've shown we can reduce pulmonary hypertension. .
And with that, there's been a recent failure of, I think, one of, I would say, competitor Aerovate. How are you thinking about read-through if there are any read-through. And have there been questions about how does that affect PROSERA and really seralutinib?
Well, there really isn't much of a read through. I don't think either the clinical community or the investment community has suggested there is one. Aerovate was taking imatinib or Gleevec and simply turning it into an inhaled therapy. Gleevec was studied about 15 years ago for the treatment of pulmonary arterial hypertension. They had a very, very good results.
They had a safety profile that made it unacceptable to take the drug going forward. When we looked at what Aerovate was doing, it was apparent to people a heck of a lot smarter than me that they didn't have enough drug on board, not enough dose to be able to have an effect. They were studying if memory shares me correct 15, 30 and 75 milligrams BID. We know from modeling that -- it also studied in the Phase Ia 90 milligrams, but that's where they start to see some of the side effects that orelabrutinib, 90 milligrams equates to roughly -- inhaled equates roughly to 200 milligrams oral.
We know 200 milligrams is the minimum dose where you start to see efficacy. So they just simply had enough drug to be able to have a clinical effect. Now seralutinib is a totally novel -- NCE novel therapy designed for inhalation that is multiple times more potent and selective on the important kinases that affect pulmonary particular hypertension. We spent millions of dollars and years doing preclinical work doing Phase Ia work in healthy volunteers and importantly, Phase Ib. Aerovate was utilizing the 505(b)(2) pathway because imatinib had already been approved in a variety of oncology settings.
I'd say this, Leon, drug development is not for the faint of heart. There's a reason why you spend a lot of money doing preclinical work and doing important Phase Ia and Phase Ib patients to make sure that you have the right dose, you have the right safety and you have the right really approach to treat patients. We spent the time doing it, Aerovate didn't. We're sitting here today on the verge, I think, of a Phase III success.
It's great to hear. Great to hear. We look forward to the data. And we wrap up. Anything that else that you'd like to share or you think investors may not be as dialed into the Gossamer story?
We sit here today with a very, very robust balance sheet funding until midyear 2027. And we have a partner that the investment community doesn't really know Chiesi Pharmaceutical , an 85-year-old Italian-based pharmaceutical company that is the market leader in respiratory therapies in Europe that are very, very excited to be commercializing seralutinib.
We get a mid- to high teens royalty. When you have the market leader in the oldest company in respiratory medicine in Europe, driving sales. That royalty is pretty darn valuable as well. .
Perfect. All right, Bryan. Well, thank you for your time, and I hope you enjoy the rest of the conference.
Thank you very much.
