Gossamer Bio, Inc. (GOSS) Q2 2026 Earnings Call Transcript

Hello, and welcome to the Gossamer Biobusiness update call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. I would now like to turn the conference over to Brian Girodo, CFO and COO. Please go ahead.

Thank you, operator, and thank you all for joining us today. Earlier today, we issued a press release announcing several important updates for Gossamer. The outcome of our pre-NDA Type B meeting with the Food and Drug Administration and receipt of the official minutes, the reacquisition of worldwide development and commercial rights to Sarah Lutonid from Chiesi, and stock overapproval of the previously announced proposals related to our convertible node exchange and reverse stock split. The press release is available on the Investors section of our website. Joining me today are Fahim Hazane, our Chairman, Co-Founder, and Chief Executive Officer, Karen Peterson, our Chief Development Officer, Bob Smith, our Commercial Officer, will also be available during the question and answer session. Before we begin, I would like to remind listeners that today's discussion includes forward-looking statements, including statements regarding our planned NDA submission, potential regulatory review and approval timing, the development and commercialization of saralutinib, the anticipated benefits of the rights to reacquisition, our capital structure, and our financial position and runway.

These statements are subject to risks and uncertainties that could cause actual results to differ materially please refer to our sec filings in today's press release for a discussion of these risks we undertake no obligation to update these forward-looking statements except as required by law with that i'll turn the call over to fahim thanks brian and good morning everyone today marks an important step forward for gossamer and for sarah lutenin we now have a clear regulatory path toward an nda submission in PAH, worldwide control of the program, and stockholder approval of the capital structure actions needed to support the company's next phase. I'll start with the transaction with Chiesi. We made the decision to reacquire Chiesi's rights and consolidate worldwide ownership of saralutnib under Gossamer. This was a deliberate decision to invest in our own program at an important moment in its development. Based on the totality of the clinical evidence, the progress we have made with FDA and our view of serolutinib's global commercial potential, we believe the right decision is to bet on ourselves. We wanted Gossamer and its shareholders to own substantially more of the program's future value. The outcome is exceptionally compelling for Gossamer. We regain worldwide development and commercial rights, secure full global strategic and operational control and retain the substantial majority of Sarah Leutnant's worldwide economics with no upfront cash payment. In fact, Chiesi will make a $5 million payment to Gossamer shortly after signing. Under the prior collaboration, Gossamer shared U.S. profits equally with Chiesi and participated outside the United States through a royalty. Under the new structure, Chiesi will remain entitled to a capped royalty on worldwide net sales and specified success-based milestone payments, giving Kiesi defined participation in the program's future success, while allowing Gossamer to retain the substantial majority of the worldwide value. Importantly, Kiesi's remaining economics are tied to the future success of Sara Lutna. The royalty is payable from commercial sales and ends once the agreed cap is reached. While the milestones are payable only upon achievement of specified success-based events. This replaces the prior perpetual sharing arrangement with defined, finite, and contingent obligations. Put simply, we're buying back substantially more of Sarah Lydnib's global upside at a point when our conviction in the program has never been stronger. We're also consolidating all decision-making within Gossamer. One team will set the worldwide strategy across regulatory, manufacturing, monitoring, pricing, market access, commercialization, and lifecycle development. This should allow us to move faster, maintain clear accountability, and respond more flexibly as we approach the planned NDA submission and consider the potential of saralutinib beyond PAH. This was a negotiated outcome that both parties determined was appropriate for their respective organizations. CAZ retains defined participation in saralutinib's success, while Gossamer has secured worldwide control and the substantial majority of the program's long-term economics. Karen will now walk through the regulatory update and what we've heard from the FDA.

Thank you, Fahim. Following the Procera readout, the central regulatory question was whether the complete body of evidence could support an NDA filing. Based on the clinical benefit observed in Procera, the independent confirmatory evidence from Tori, and the consistency of the broader data set, we believed it could. We then took that question directly to FDA. We rapidly developed a clear submission strategy, requested a formal pre-NDA Type B meeting, and presented FDA with a proposed evidentiary framework built around Procera's one adequate and well-controlled clinical investigation, together with the confirmatory evidence from Torrey and other supportive analyses. We held that meeting in person in mid-June and have now received the FDA's official written minutes memorializing the discussion. In those minutes, FDA characterized the degree of statistical significance and the magnitude of the treatment effect observed in Procera as review issues rather than filing issues. The discussion also provided feedback on the format and the content of the plan's submission. The acceptability of the individual elements of the application, including the efficacy and safety evidence, will be determined by FDA during its review of the complete NDA. As the basis of the submission, our approach is to have Procera serve as an adequate and well-controlled Phase III study, with Tori providing independent confirmatory evidence from a separate, randomized placebo-controlled study. We believe the support of analyses provide additional evidence of the consistency, clinical relevance, and biological coherence of the overall Sara-Lutena data set. We are on track for the planned NDA submission in September 2026. To be clear, FDA has not accepted our NDA for filing or completed its substantive review of the application. The degree of statistical significance, the clinical meaningfulness of the treatment effect, and the overall risk-benefit profile will be evaluated during that review. The key outcome of the meeting is that these are review issues rather than barriers to a filing. If the NDA is accepted for filing and the review proceeds on the expected timeline, Sara Lutonib could be eligible for an FDA approval decision in the third quarter of 2027. Reaching this point reflects years of work and contributions from patients, investigators, and employees around the world. It is a very important moment for our company, and we are optimistic about the future of Sara Lutonib. With that, I'll turn the call back to Brian to discuss the capital structure update.

Thank you, Karen. At our special meeting of stockholders held on July 14, 2026, stockholders approved the proposals related to the previously completed exchange of our 5% convertible senior notes due 2027 and authorized the board to effect a reverse stock split. Through the exchange, we exchanged approximately $181.1 million of the $200 million aggregate principal amount of the 2027 notes for approximately $65.2 million of 7.5% convertible secured notes due 2030. Together with the applicable equity securities and warrants. The transaction reduced the aggregate principal amount of our debt by approximately 115.9 million. Eligible holders that tendered by the applicable early deadline also received purchase warrants. The details of the new secured convertible notes, equity consideration, and warrants are included in our prior announcements and SEC filings. Stockholder approval authorized the shares issued in the complete exchange and gives the board flexibility to affect a reverse stock split. The reverse stock split authorization is intended to support compliance with the NASDAQ's minimum bid price requirements and an improved capital structure. The timing and ratio of any reverse stocks will remain subject to final board action. These actions provide flexibility as we execute the NDA submission and prepare for the potential next days of Sara Lutonit. As of June 30, 2026, cash cash equivalents and marketable securities total approximately $57 million. With that, I'll turn the call back over to Feene for closing remarks.

Thanks, Brian. So stepping back, today's updates bring together three important pieces of the Gossamer story. First, FDA confirmed that the degree of statistical significance and the magnitude of the treatment effect observed in Procera are review issues rather than filing issues. We are therefore proceeding with our plan to submit an NDA for saralutinib in PAH in September 2026, supported by Procera, together with confirmatory evidence from Tory and other supportive analysis. Second, we have reacquired worldwide rights to saralutinib, giving Gossamer global control of the program and the substantial majority of its long-term economics. Third, our stockholders have approved the capital structure actions designed to reduce near-term debt and better position the company for the work ahead. We enter the second half of 2026 with a clear regulatory objective, worldwide rights to seralutinib, and a stronger capital structure. We are focused on executing the NDA submission and working to bring a new therapy that targets an important pathway implicated in the underlying pathology of the disease to PAH patients who need better options I want to thank our employees investigators patients and caregivers as well as our shareholders and partners for their continued support operator we're now ready to open the line for questions thank you if you have a question please press star 1 on your telephone keypad to raise your hand and join the queue if you wish to remove yourself from the queue simply press start one again.

One moment, please, for your first question. Your first question comes from a line of Yasmeen Rahimi of Piper Sandler. Your line is open.

Good morning, team. Congrats to the incredible, great news, and I know a lot of work went into it. Maybe as you're picturing through September for the filing, maybe give us a little bit color around a lot of additional analyses have been completed to be part of the filing that maybe you haven't had a chance to disclose to us yet, so how do you envision sort of the cadence of additional data to really, you know, strengthen the positioning of Sarah Luton and educating investors, you know, around the high reward and low risk profile of the drug? And then two, second question for you is do you anticipate, and I don't know if at this point an ad-com discussion came up or not, That would also be really helpful if you could shift some light. And then the third one is, do you have any financial obligations to CAESI by taking Sara Lewtna back? And thank you again for allowing me to ask these questions.

Yeah, thanks, Jasmine, for your questions. I'll answer the last question first, and then Karen, I'll turn it over to you for the first two questions. And as it relates to financial obligations to Casey, fundamentally, no financial obligations to Casey other than the royalty on worldwide sales and some success milestones. But really, that's fundamentally, it becomes a fairly clean break, which, as I said in my earlier remarks, really allows Gossamer to retain a substantive portion of the sarolutinib opportunity, far greater than what was available to us when we were in the partnership.

Thank you, Fahim. So with regard to the additional analyses that we'll be conducting, there are a number of pre-specified subgroups that have probably characterized best as continued disease burden. Those analyses all very much support the efficacy of seralutinib. In addition, FRI is very supportive of the underlying, seralutinib's effect on the underlying pathology of the disease. And we have a number of different translational medicine approaches that we took during Procera, and those analyses are all ongoing. Those are all confirmatory evidence of what we've seen in both TORI and Procera. With regard to the ADCOM, this is something that we would not probably hear until the middle of the review, nothing that we discussed at the FDA meeting. Thank you so much.

Yes, your question about when that data may be available, we are expecting a robust presence at the European Respiratory Society. and for much of what Karen did as far as the supportive data for the discussion with the FDA, much of that foundation has already been disclosed publicly. It's been really, as Karen said, diving into those subgroups, and we plan to disclose those at major medical meetings as well.

Yep.

Your next question comes from the line of Joe Schwartz of Lyric Partners. Your line is open.

Great. Thank you, and congrats on the progress. It's great to see the hard work paying off. I had a few questions, namely, I was just wondering how much insight you were able to obtain into how the FDA views the appropriate p-value threshold and how sympathetic they appear to your analyses suggesting that a limited number of sites who relaxed enrollment criteria disproportionately contributed to the miss? And then, did you get the sense that the FDA is willing to look beyond the headline result and evaluate the consistency of efficacy in the appropriately enrolled population and how much they view an unmet need remaining? Thank you. Karen, do you want to jump in on that and we can add in?

Sure, I'd be happy to. There wasn't very much discussion at all around the p-value. It was really around the continued medical need and PAH, the totality of evidence that we presented to them across, you know, the entire population, and obviously looking at, you know, regional differences. There's really, there was no discussion at all on the p-value per se.

That's helpful. Go ahead, Brian.

I was going to say, Joe, I think the other piece that's helpful is three days after our meeting with the FDA, the FDA did put out guidance where, again, they were suggested that in orphan diseases, rare diseases, and things with a high medical need, an appropriate p-value is 0.05. So clearly there has been a shift when it comes to situations like ours that the FDA provided guidance on. So I do think that as opposed to them having a direct conversation with just Gossamer, they have provided the industry with a very robust update.

That makes sense. Thanks again.

Thanks, Joe.

Your next question comes from the line of Ellie Murrow of Barclays. Your line is open.

Hi, this is Jasmine on for Ellie. thank you for taking our question and congratulations on all the updates and the hard work. Just one question, what are the plans for PHILD now that you've regained the rights to saralutinib? Thank you.

Yeah, thanks for the question. Look, we actually have even greater conviction now with the data that was generated in Procera. We have greater conviction around the ILD opportunity, given the really, I think, striking results that we've seen with the connective tissue disorder subgroups in this study. That really gives us confidence and belief that this drug can have a meaningful impact for patients with PHILD. So from our view, obviously, we need to get the PAH indication approved first, which we would hope would be sometime around August 2027 would be the DUFA that we'd be looking at. Subsequent to that and that approval happening, we would be looking to initiate a PHILD study shortly thereafter. after. And it is even possible, and of course, much conversation still needs to be had with the FDA, but it is possible that as part of a confirmatory process, the FDA would look for further confirmatory data post-approval. We would see PHILD, and we've had past conversations with the FDA about PHILD as being part of that confirmatory component.

So we'd be very, very happy with with that outcome great thank you your next question comes from line of patrick truchio of hc rain right your line is open good morning this is louise in for patrick thank you for taking our questions uh going back to the kiazi reacquisition of worldwide um rights from them um did their view change did the kiazi's view change on ph ph probability the commercial opportunity and development risk and how does your current financial position support a commercialization and launch assuming

approval and then I have a follow-up great Brian do you want to you want to jump in now I'll add where necessary yes so so the the practical reality is our friends at Chiesi are going through a bit of a reorganization of their own business and are really, with the recent acquisition, pivoting their business really towards the very rare ultra-orphan disease marketplace. And ultimately, I think you can see some recent announcements, which includes some significant management changes on their end. And so that combined with With the effort that would be needed to commercialize Sarah Luton globally, it just felt like the right time for us to part ways. But Fahim, any other thoughts?

Yeah. I mean, look, I don't really think that their perspective on the opportunity changed as much as what really appears to be changing, and I really can't speak for Casey. But certainly from our perspective, as Brian said, their focus has shifted in the context of how they think about the U.S. opportunities, given what was in their pipeline and given some of the challenges that they've had in the context of their pipeline. So from Chiesi's perspective, I think it's more about their focus and their shift towards the ultra-rare orphan disease. And, of course, they are needing to juggle many more priorities than our singular priority here at Gossamer. And in the context of their strategic decision-making, they made the decision that they wanted to reprioritize towards some of their other assets in their pipeline. Look, from our perspective, and it's really, we can only speak from confidence about how we view things, we are tremendously excited about regaining the economic profile that we've got around saralutinib. Obviously, we've got conviction around the potential for approvability here, this drug. We have conviction around the meaningfulness of this drug. And with that conviction, being able to get back worldwide rights gives us substantially greater upside. And so we're absolutely thrilled with the outcome here.

Yeah. And, Louis, this is Bob Smith. I think you put also a question on the commercialization and launch readiness. Obviously, we had slowed many of those activities once we got the top-line data while we're kind of sorting through what all of that looked like in order to preserve our capital as much as possible. We fully expect to resume the launch readiness on the back half of this year, which will give us, you know, a solid year to prepare the organization for a successful launch and call it, you know, August or September of 2027.

Great. Thanks. That's really helpful. And for your NDA strategy, what are you going for in the label? Are you going for the broad PAH population, an intermediate, high-risk, maybe CTD-focused? Or, yeah, how should we think about it, given the subgroups and pre-specified sensitivity analysis?

Yeah, I'll ask Karen to jump in. But obviously, many of those questions are very much linked to future conversations of the FDA as we negotiate the label. But, Karen, do you want to comment?

Yeah, thank you, Fahim. Obviously, you know, labeled negotiations towards the end of the review will dictate what that indication statement is. But we do believe the data supports a broad indication. And, you know, obviously, this is what we are planning to, you know, have in the NDA is a broader indication, but that is up for negotiation with the agency.

Did the agency raise any safety issues on the data available? Any boxed warning expected?

That is not something that they discuss at a pre-NDA meeting. that will be discussions that will be had throughout the review of the NDA. Okay.

Great. Thank you so much. Just to add on to that, I know Karen mentioned the broad label, and that's what our anticipation is. But even if you look at the numbers from Procera and the intermediate to high-risk group represented over 80% of the population in Procera, we know that that patient population did extraordinarily well. And as it relates to the connective tissue disease population that Brian had mentioned earlier, really the results there are unprecedented in PAH with a walk of, I think, up to 37 meters. So the totality of the patient population that benefited from seralutinib will be a very, very high percentage of the overall market potential.

Thank you.

Your next question. Again, if you would like to ask a question, please press star and the number one on your telephone keypad. Your next question comes from the line of Paul Choi of Goldman Sachs. Your line is open.

Hi, good morning and thank you for taking the question. I was just wondering, in your meeting with the agency, did they perhaps any offer direction or guidance on filing for a specific subpopulation? Just if you could provide some clarity there, if they were, you know, more favorably inclined for one subgroup versus the entire ITT population. And then second, just with regard to the global opportunity, can you provide your latest thoughts on potentially filing in Europe and any other major geographies? Yeah, I'll take the last part of that question first, and then, Karen, you can handle the first part. As it relates to filing in other locations, yeah, that's very much in our sites. Obviously, the discussions, the ensuing discussions of the FDA are first and foremost the highest priority for us. But shortly thereafter, we would be setting our sites to EMEA and other appropriate locations. So that's very much part of our plan as we go forward.

Yeah, thank you, Pahee. We did discuss with the agency all of the various subgroups that Bob just spoke about. But the basis of the NDA is the intent to treat population with Procera, and all of the pre-specified subgroups are supporting. So, you know, until we get, again, to label negotiations, it is not clear whether or not that, you know, the label will be specific to a subpopulation or to the intent to treat population, which is the totality of the evidence in Procera. Okay.

Thank you.

Yeah, in Europe, we're already reengaging the team over there and the assets that we have over there, just because based on, if you look at the regional differences, we know that particularly Western Europe did extraordinarily well. So we feel confident that there's going to be a sizable market, particularly with some of the pricing we're seeing over there with these newer clinical pathways such as citatercepts. So I think that makes it a very viable and robust market that we can walk into in Europe.

Paul, and again, I think you should take comfort in the fact that when you look at the combination of the two subgroups that really matter, which is North America and Western Europe, we had a six-minute walk distance north of 25 meters at a p-value of 0.02. Those are the geographies that the FDA has acknowledged that the practice of medicine and PAH have been consistent for the past 35 years. So the geographical differences that you recall we saw in Procera specifically, some of the activities we saw in Latin America have been acknowledged as well by the FDA. So, again, what's really important here is that, as Karen said, the totality of the evidence, they have gone soup to nuts, if you will, on everything that we have submitted with them. We believe that that is, again, the foundation for not only the basis for approval, but we think a very, very robust opportunity for Sarah Lutner.

Your next question comes from William DeVon of Guggenheim Securities. Your line is open.

Great. Thanks for taking my questions. Two follow-ups, if I could. So, one, the comments on the PHLD side, I was just trying to understand that a little better. It sounds like you're saying that may be used in some ways to help confirm the PH approval or support it in some ways. So, can you just clarify, I assume this would be on the PH side of full approval, not some sort of accelerator or contingent approval, or is it in some way tied to the PHILD data, you know, later on. And then second, just back to the ex-US opportunity, I'm curious how you're thinking about just the commercial side of it. I think you gave some updates on the regulatory progress now, but is this something you'd look to or continue to do on your own, or would you look to bring in another partner to help with that effort? Thanks.

Yeah, so as it relates to PHILD, just to be clear, the question that was asked is, are we still interested in PHILD? And as I mentioned, we have even greater conviction. So think about, as it relates to PHILD, there's two scenarios. One is we get the approval on PAH, and with no further confirmatory evidence needed, we would proceed with initiating a PHILD study in that context. In the context where the FDA makes a decision that they need further confirmatory evidence, so a post-approval study, We'd be very happy with that outcome as well because we would initiate a PHILD study in that scenario likely. Obviously, it's linked to discussions and confirmation with the FDA, but we'd be happy to do a post-confirmatory study and use PHILD patients in that process. So I hope that answers that question. At this point in time, it's not linked, but those are our possibilities. The other part of your question was related to would we establish partnerships? Our intention is to proceed as an independent company. We've got the capabilities, and certainly we believe given the U.S. opportunity is substantial, but also quite manageable in the context of our commercial effort. So at this point in time, we don't have in our sights the need to be able to establish another partnership.

Yeah, I was just going to give timing on the regulatory.

Vama, the EMA process is about a year behind where we are with the FDA. So we have time to get things very right outside the United States for commercialization. But go ahead, Bob.

Yeah, and just to add on, and we, you know, despite Kiesi's position on previously taking the lead in Europe, we had done ourselves a lot of market assessment. We did a lot of work on pricing strategy. There's a number of resources and assets and people over there who have just a ton of experience in PAH, most notably a lot of the people that were at Actilion and then J&J over there. So we have a lot of expertise that we're able to leverage as we move forward and think about particularly Europe and then other regions such as Japan.

Okay, thank you.

Thanks, Juan. There are no further questions at this time.

I will now turn the call back over to CEO Fahim Hasnain for closing remarks.

Okay, thank you, and thanks for all of your questions. We greatly appreciate you participating with us on this call today. I'll just close it by reiterating our conviction and enthusiasm for this path forward. Obviously, much conversation to be had in the context of approval and discussions with the FDA around label, but nonetheless, we've gone through some really important milestones here through our first conversation with the FDA, and we remain incredibly encouraged and excited about the opportunity going forward. So thank you all, and thanks for spending time with us today. Take care.

This concludes today's conference call. You may now disconnect.