Kymera Therapeutics, Inc. Q4 FY2022 Earnings Call

Hello, and welcome to the Kymera Therapeutics Fourth Quarter 2022 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Bruce Jacobs. Bruce, please go ahead.

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'll open the call to your questions. Before we 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're 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 to Nello.

Thanks, Bruce, and thank you, everyone, for joining us today. I thought I would spend a few minutes this morning reflecting briefly on the importance of all the progress we've made in 2022 and what we believe it means for our ambitious objective to build a best-in-class fully integrated global medicines company. 2022 was an exceptionally important year for Kymera's evolution with healthy volunteers and patients with HS and AD, which is the first time for a degrader in immune-inflammatory indications, along with patients with lymphomas, leukemias, and solid tumors with our first three investigational drugs. We've seen across three programs strong translation of our preclinical PK/PD and safety into the clinic. This is a substantial accomplishment for a company that is pioneering a new modality. In addition, we have seen, for the first time, clinical benefits of a heterobifunctional degrader in immune-inflammatory indications and the first proof-of-concept of clinical differential of a degrader versus a small molecule inhibitor with our KT-474 Phase I data. In fact, KT-474 clinical data that we shared late last year from the patient cohort of the Phase I study of IRAK4 degrader exceeded our expectations. We were able to replicate the PK/PD profile of the healthy volunteer portion of the trial in HS and AD patients. The molecule was generally well tolerated with no serious adverse events, including a resolution of the QT effect. We demonstrated an encouraging impact on disease-relevant inflammatory biomarkers in the body and skin. We were able to produce some early but really encouraging signs of clinical activity in HS and AD patients that we think represent strong reasons to believe in the clinical potential of effectively targeting the IRAK4 pathway and our degrader molecule. Our partner, Sanofi, shares their enthusiasm and will initiate Phase II studies in 2023. Jared will share a little bit more on this call regarding the next steps for the program. But obviously, this was an important milestone for KT-474, a molecule we believe can have a unique and broad role in raising the standard of care in a wide variety of inflammatory conditions. Assuming the molecule's profile remains consistent as we test it in larger studies and additional patient populations, we believe a small molecule with the emerging efficacy and encouraging safety profile could be a best-in-class medicine across several diseases. This year, we're excited for Sanofi to initiate KT-474 studies initially in HS, followed by AD and potentially other indications. While perhaps somewhat overshadowed by the KT-474 results, we made encouraging progress in our first two clinical stage oncology programs, KT-413, the IRAKIMiD degrader, and KT-333, our STAT3 degrader. Both programs are currently in the dose escalation phases of the Phase I clinical studies. In December, we disclosed pharmacodynamic activity in both blood and tumors and knock down of their targets without any dose-limiting toxicity. Importantly, we've seen fidelity of translation of PK/PD and safety from preclinical profiles into these clinical settings, further validating our work and highlighting our ability to replicate our approach to discovering and developing high-value molecules. The promising initial data from these Phase I trials position us to share data later this year that we hope will show clinical activity, particularly when we reach the expected active dose levels in our targeted patient populations. Taken together, we believe that these results represent a validation of our R&D approach and strategy. Since we started the company over six years ago, our funding principles have remained unchanged: harnessing the transformative potential of targeted protein degradation to address areas of significant therapeutic need and improve patients' lives. With this goal in mind, we made intentional choices that we believe represent a differentiated approach to design in many key areas, including target selection strategies, disease area focus, cutting-edge platform investments, and corporate strategy. This strategy and approach, in conjunction with a clear focus on disease targets in areas of significant patient need that can't be meaningfully addressed by traditional medicines, has led us to targets in markets where protein degradation is the only or the best way to elucidate the desired biology or clinical outcome. I hope that as you reflect on the totality of the data we presented in December and our progress in building the company, you share our belief that we have validated the work and investments we've made over the past seven years, resulting in high-quality molecular design, platform capabilities, and a proven ability to translate our understanding of disease biology, PK, PD, and safety from preclinical models into patients, creating high-value programs that have the potential to become important new medicines. Before I hand the call over to Jared, I should mention that the three programs I just discussed are just the beginning for Kymera. At the end of last year, we announced that the FDA had cleared the IND for our MDM2 degrader, KT-253. MDM2 is a crucial regulator of the most common tumor suppressor p53, which remains intact in close to 50% of cancers. Jared will share more on our plans for KT-253 shortly. We also hinted at several other programs in our early stage pipeline in both oncology and immunology indications earlier in the year, further evidence of the productivity of our drug discovery engine. These advances have been fueled in part by innovative computational research tools that have enhanced our understanding of disease biology and allowed us to develop new ways to harness TPD. In addition to leadership in the discovery of heterobifunctional degraders, we are also identifying novel molecular groups that expand the therapeutic applicability of our platform, and we hope to share more on this later in the year as well. Along with our clinical and scientific progress, we work to ensure that we have the people and resources to build our company sustainably. We recently appointed Ellen Chiniara as Chief Legal Officer and Corporate Secretary, where she will serve as a key member of our leadership team. Ellen joins us from Alexion Pharmaceuticals with extensive experience overseeing legal activities at biopharmaceutical companies ranging from discovery phase through commercialization. This month, Rebecca Mosher joined us as our Senior Vice President of Translational Medicine from Mersana Therapeutics. She previously held positions of increasing responsibilities in translational medicine, translational research, and molecular pathology at Novartis, Vertex, and Millennium. We also recently appointed Juliet Williams as Kymera's new Head of Research. Juliet was previously our Head of Biology and contributed profoundly to our target selection strategy and drug discovery efforts. She has more than 20 years of drug development experience, including leadership roles at Novartis, Sanofi, Millennium, and Curis. These important roles will help Kymera navigate our next stage of development as we work to bring revolutionary degrader therapies to patients. Finally, we ended the year in a very solid financial position with approximately $560 million in cash, an expected runway into the second half of 2025, which will allow us to continue to invest in our clinical programs, discovery pipeline and platform and importantly, allow us to read out our IRAK4 Phase II proof-of-concept study and initial proof-of-concept for the three oncology clinical programs. Jared will now cover in more detail our recent progress for each of our disclosed programs before returning the call to Bruce for a financial update. I will then finish with some concluding remarks, including covering our key goals for 2023 before handing the call to the operator for a Q&A session in which Jared, Bruce, and I will be available.

Thanks, Nello. I'll provide a brief recap of where we stand with our clinical programs and what to expect in 2023. I'll begin with our IRAK4 program. As you all know, in October, we announced the completion of dosing of the patient cohort portion, Part C, of the KT-474 Phase I clinical trial, and we shared the full dataset in December. I won't go over all of the data here today. However, if you are interested, you can find the replay of our December meeting on our website. The data are also included in our updated corporate presentation. That said, I did want to share our expectations for the progress of the program in 2023. As you know, Sanofi will be taking KT-474 into Phase II. Thus, as they were closely involved in the Phase I trial that Kymera ran, we jointly discussed the plans for the Phase II program. As we shared in December, Sanofi is committed to Phase II trials in at least two initial indications, beginning with HS and followed by AD. As for timing, it is too early to guide to the expected Phase II start dates. However, at least the first Phase II is planned to start in 2023. Turning to our oncology pipeline, I want to update everyone on our disclosed programs, which include our STAT3, IRAKIMiD, and MDM2 degraders. Focusing first on our new trial activity, KT-253, our MDM2 degrader received IND clearance from the FDA in December. MDM2 is the crucial regulator of the most common tumor suppressor p53, which remains intact and close to 50% of cancers. Kymera is developing a highly potent MDM2 degrader that, unlike small molecule inhibitors, has shown preclinically 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 or wild-type p53. We plan to initiate dosing patients soon in the Phase I trial of KT-253. The Phase I study will evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and clinical activity of KT-253 in adult patients with relapsed or refractory high-grade myeloid malignancies, acute lymphocytic leukemia, lymphoma, and solid tumors. The open-label dose escalation study is intended to identify the recommended Phase II dose. It 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, while the second arm will consist of patients with high-grade myeloid malignancies and ALL. Now turning to our two ongoing oncology trials, STAT3 is a transcriptional regulator that has been linked to numerous cancers and other 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. Based on the PK/PD we have shown to date with robust target knockdown for 72 hours followed by recovery, we expect to be at efficacious doses by dose level 3 or dose level 4. This year, we expect to show clinical impact of STAT3 degradation on tumor burden in target patient populations such as peripheral T cell lymphoma, cutaneous T cell lymphoma, and LGL leukemia. 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 STAT3 dependent T cell malignancies as well as in solid tumors. Finally, our IRAKIMiD program, KT-413, is a novel heterobifunctional degrader that targets degradation of both IRAK4 and the IMiD substrates, Ikaros and Aiolos with a single small molecule. KT-413 was designed to address both the IL-1R/TLR and Type 1 interferon pathways synergistically to broaden activity against MYD88-mutant B cell malignancies. KT-413 is on a similar timeline as STAT3 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 IRAK4, Ikaros and Aiolos degradation in PBMC and tumor and no safety signals with good translation of PK/PD from preclinical models to patients. We are continuing enrollment and expect to be at efficacious doses by dose level 3 or dose level 4. As with KT-333, later this year, we expect to show clinical effect of IRAKIMiD degradation on tumor burden in MYD88-mutant patients. 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. We look forward to sharing more progress on these programs throughout the year. I will now hand the call to Bruce, who will share some brief comments on our financial results for the fourth quarter.

Thanks, Jared. I'll quickly cover the financials before turning the call back to Nello for concluding remarks. For the quarter, we recognized $16.1 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 $63 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 $43.1 million, of which $4.5 million represented non-cash stock-based compensation. The adjusted cash R&D spend of $38.6 million, excluding stock-based compensation, is essentially unchanged from the comparable amount in the September quarter. Our G&A spending for the quarter was $11.6 million, of which $4.4 million represented non-cash stock-based compensation. The adjusted cash G&A spend of $7.2 million, excluding stock-based compensation, reflects a 13% increase from the comparable amount in the September quarter. Finally, on cash, we exited the fourth quarter with a cash and equivalents balance of approximately $560 million. As we shared earlier in the year, we believe that our cash runway extends into the second half of 2025, a projection that now includes milestones related to the Phase II start. I'll now turn the call back to Nello.

Thanks, Bruce. With our accomplishments last year, it's clear that Kymera has made considerable progress in its evolution and begun to demonstrate the incredible potential of this modality in our company to make a meaningful difference in patients' lives. We're excited to have the opportunity this year to assess the impact that our four programs may have for patients with cancer and immunological conditions and to further demonstrate the potential advantages of our technology and platform over traditional medicines. We feel that we're just getting started and are energized by the opportunities we have in front of us. As I said earlier, 2023 will be a busy year. We have a lot that we expect to achieve, much of which was discussed earlier in the call. But just to quickly state our key 2023 goals, we will collaborate with Sanofi to initiate the first KT-474 Phase II study. We're also working to publish the results of the Phase I trial in a top-tier journal. We intend to evaluate the effects of our IRAKIMiD and STAT3 programs on tumor burden in patients in our Phase I studies. We plan to initiate the KT-253 Phase I trial in solid and hematological tumors in order to demonstrate proof of mechanism in patients. With respect to our pipeline, our objective is to deliver at least two new DCs/INDs from the preclinical pipeline and also continue the expansion of our novel molecular glue franchise. 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 your participation in our call, and I look forward to your questions. I will now hand the microphone to the operator so that we can take your questions.

Today's first question comes from Eric Joseph with JPMorgan.

I have a few questions regarding the MDM2 program. First, could you explain what proof of mechanism will look like with KT-253 later this year? Will it present similarly in liquid tumors as it does in solid tumors? Secondly, regarding the expected adverse event profile of the drug, do you foresee any differences compared to other MDM2 inhibitors, especially concerning myelosuppression and the possibility of reducing rates of Grade 3 neutropenia?

So I'll start and then I'll let Jared comment more on the proof of mechanism. Maybe I'll take the second question first just because it actually points to the core thesis for our investment in the MDM2 program, which is creating or allowing us to create a larger therapeutic index that will allow us to finally interrogate this mechanism in the clinic fully. And as you've heard us say in the past, the rationale really based on cancer genetics, if you look at data that's been published over the years and that has fueled all the drug development programs in this pathway, we know that p53 is wild type in more than 50% of cancers in those types of cancers, both liquid and solid tumors, if you delete MDM2, if you genetically delete MDM2 with genetic tools that we have preclinically, you see a high dependency of these tumors on that pathway or in the presence or absence of MDM2. That basically genetic removal of MDM2 leads to rapid apoptotic response in those tumors that have p53 wild type. And if you look on one of those plots that have been generated, it's probably one of the most impressive sensitivity plots we've seen in cancer genetics. Now I think the field has made the assumption, and that has been true for many programs in oncology in the past 20 years since we started to understand the human genome and the relationship with the human proteome, we made the assumption that inhibiting MDM2 will lead to that kind of response. What we've learned is actually that's not true. We've learned that if you inhibit the MDM2 p53 interaction, you are able to actually stabilize p53, but not fully and mostly because the inhibition of that interaction leads to upregulation of MDM2. So as you're inhibiting the interaction, you see more MDM2 that gets produced and the small molecule has a hard time fighting that. You end up having to dose longer, which creates a very narrow window, if at all, between your antitumor effect and your impact on bone marrow-derived cells, which are one of the most sensitive cell types to MDM2 absence. What we have been able to do with degrading MDM2 is to remove the protein quickly, and we've seen the first two to four hours a rapid commitment to apoptosis. That leads cancer cells that are sensitive to this mechanism to die quickly while healthy cells, while they might have an initial impact, have time to recover between the first and the second dose. That creates, in tumors that are highly sensitive, a therapeutic index that no small molecule has seen before in our hands. So what we're talking about, and I think Jared commented on it before, and this is work we are still doing, obviously, I think it's not fair to assume that all p53 wild-type tumors will have this wider therapeutic index. I think that's scientifically not true based on our experimentation. But we have found subsets of tumor types within the p53 wild-type larger set that are highly sensitive. The ones that are highly sensitive have this increased therapeutic index. Our hypothesis going into the clinic is that we'll have a drug that is well tolerated while being effective in the patient populations that are sensitive to it. The only indications that we have shared so far where we've seen this high sensitivity are AML, including the patients that are refractory to the existing line therapies. That's an exciting area for us to explore lymphomas and some solid tumors that we will be disclosing later in the year or as we go into the expansion cohorts. So maybe I'll let Jared comment more on what the proof of mechanism is going to look like and whether I think your question was also whether it's going to be different between liquid and solid tumors.

Maybe if I can just quickly comment also on the question around myelosuppression. The fact that we have this unique mechanism of action that Nello laid out allows us to dose infrequently given the drug is an IV infusion once every three weeks. That infrequent dosing, we think, is going to give us this unique therapeutic index that will allow us to mitigate myelosuppression by allowing plenty of time for normal cells and the marrow to recover in between doses. Coming back to proof of mechanism, our aim for showing proof of mechanism, at least this year, is to focus on impacting the MDM2 p53 pathway in peripheral blood mononuclear cells, which we can do essentially in all of the patients on the study. We've done this with our prior programs, 413 and 333, looking at the impact on the targeted PBMC and tumors as well. Here, I think in the MDM2 Phase I trial, the initial focus will be PBMC, and then I think when there is tumor available for biopsy or once we're in arm B, where we're treating high-grade myeloid malignancies, including AML, we may have more opportunities to show impact on the pathway in malignant cells, including leukemia.

The next question comes from Ellie Merle with UBS.

This is Jacqueline, on the line for Ellie. So you've been mentioning your work in molecular glue. So we just have a couple of questions there. First, what's your perspective on the ability of molecular glues to be selective for a single target protein as you think about target selection? And then second, non-cereblon-based glues, is this something you think could be feasible over the next few years? Or is this more a longer-term focus for you?

It's a great question because it lets us discuss one of our key differentiators, which has always been tackling challenging problems. As you've heard, and I'm sure your team has closely followed our previous comments on this particular issue, we've indicated that we are using molecular glues to address challenges that heterobifunctional degraders cannot solve. To provide some context, our heterobifunctional degrader is effective for undrugged or poorly drugged targets where there is potential to bind to specific disease-causing proteins. We've demonstrated success in targeting transcription factors and scaffolding proteins, among others. There are certainly many targets that heterobifunctional degraders can address effectively for clinical issues. However, there are numerous validated targets in fields like oncology, immunology, rare diseases, cardiovascular health, and CNS disorders where it is challenging to identify discrete binders for these proteins, primarily because they tend to be disordered or difficult to target proteins. You can either decide not to pursue them or develop the capabilities to do so. We opted for the more challenging path of creating technologies to target them. We take an E3 ligase agnostic approach. Yes, in response to your second question, there will be molecular glues that are not based on cereblon. In fact, there are already instances in the literature indicating those possibilities. We take a translational medicine approach, focusing on the clinical problems we aim to solve and the molecular mechanisms that will facilitate this. I must commend our team, led by Juliet and others in our platform team, for discovering new series of proteins that we can target using entirely new background motifs to engage with an E3 ligase, aided by our molecular designs. It turns out that the proteins we’ve identified—there are several—are significant undrugged and unligandable proteins, many of which are in immunology and some in oncology. It’s unlikely that we will reveal the molecular mechanism since we believe this could mark the onset of a new area for molecular glue. I would refer back to when IMiD and cereblon were first discovered and how many targets were subsequently addressed through that interaction. I suspect that what we've identified could lead to similar discoveries. We are just at the beginning and very excited. Our first program is already in lead optimization, progressing towards a development candidate. We will keep you updated as the program advances into development, although it’s probably not likely that we'll disclose the molecular mechanism or the specific E3 ligases.

The next question comes from Brad Canino with Stifel.

Two questions from me. First, I guess with the recent announcement for the departure of the Global Head of R&D at Sanofi, John Reed, and the company is searching for a new successor. I'd just like to hear your optimism that KT-474 has enough advocates or champions, so to speak, at Sanofi, so that the program will continue to be prioritized even with any future shakeup of portfolio strategies and initiatives from a new R&D head? And then for Jared, on KT-413, can you remind us the type of DLBCL patients that are being recruited in terms of likely prior therapies? Are these patients post-Polivy, CAR-T bispecifics, et cetera? And if so, what is your confidence in the ability to recapitulate the preclinical model results in such a heavily pretreated population, particularly with the MYD88 mutation?

Brad, that was a perfect question for our colleagues at Sanofi. I will try and answer it, understanding that I cannot speak for them. First, you give me the opportunity to thank John, who has been an amazing partner along the way from the beginning, which was when we started to talk about a partnership on KT-474, all the way through his last day. I will say that we've had the fortune to connect with several leaders in the company, without naming names at the executive levels, that have continued along the way to be excited, to be helpful, and to be supportive of the partnership, understanding and appreciating the value of 474. Again, speaking for Kymera, I have no doubt that the molecule is in the right hands, and there is excitement, commitment, and appreciation of what this molecule can do for millions of patients out there. I expect that there would be no change of priorities or commitments going forward. Regarding the second question, I'll leave it to Jared to answer.

Yes. Brad, on the 413 study, we are recruiting patients with B-cell malignancies, including DLBCL and including patients with MYD88 mutations. As you noted, many of the patients will have had prior therapies, and we anticipate that many of these patients will have had, especially if they had DLBCL, perhaps prior CAR-T if they were eligible, and maybe prior Polivy or bispecifics or even Tafa. What is important to note is our unique mechanism of action. The fact that with 413, we're drugging IRAK4 and we're also drugging the IRAK4 pathway with the IMiD activity. It makes this a unique mechanism of action. We don't expect there to be cross-resistance to these other therapeutics like cellular therapies or bispecifics. We are confident that, with the right patient population, especially those with the MYD88 mutation, regardless of prior therapies or how many prior therapies, we still expect the mechanism of action here to yield significant antitumor responses with 413.

The next question comes from Vikram Purohit with Morgan Stanley.

So we had two, one on 474 and then one on your STAT3 program. So going back to your relationship with Sanofi, just wondering if you could provide some more color on what are some of the considerations that you're thinking through with Sanofi when you explore indications beyond HS and AD Phase II development for this molecule? And then for STAT3, I was just curious to get an update on where efforts stand with evaluating a STAT3 degrader in autoimmune and fibrotic conditions and when we could expect to hear an update on that effort?

Vikram, so the first question is what we generate. If you look historically at how we've developed the molecule and this program, there is a slide that we haven't changed in a couple of years in our deck that outlines the clinical opportunities that could be realized by targeting the IL-1/TLR pathway. We've usually shared this kind of Th1, Th17-driven diseases, like HS, like Array, like Lupus, IBD, and others. We've shown the Th2-type diseases like AD, asthma, COPD, and others. We said that with validation in some of those diseases, we represent kind of these two slightly differentiated ways of thinking about immunology. I believe both Sanofi and Kymera are looking at the opportunity in that way. Now practically, what we have prioritized, as you know, is HS and AD, and we've been fortunate, having seen validation of this mechanism in both HS and AD. We look for further validation in a placebo-controlled randomized Phase II study. We go into the study with a high degree of confidence, based on the data we've seen so far. The conversations that will continue to happen are what are the next type of indications that we will go after. What I would say is I can't speak for the collaboration in terms of a particular indication. What I would say from our perspective, and even from my perspective, is there is such a high unmet need in many of those indications where there are really no small molecules with activity and safety profiles that we can match with the IRAK4 degrader. Obviously, I'll start with AD. I don't think there is one. Going to HS. I don't think there is one. I go to IBD, which has a large unmet need; I don't believe there is a good molecule that can help patients go through a horrible experience. There are also opportunities for well-tolerated and active drugs. We have a unique opportunity here in the landscape to help millions of patients, as I said earlier. 2023 will be a busy year, and as we achieve more milestones, we will share updates on our progress.

The next question comes from Michael Schmidt with Guggenheim.

This is Paul on for Michael. We just have two on the MDM2 program. I guess, first on the dosing strategy. Is there a potential in the study to evaluate alternative dosing intervals that could potentially optimize the clinical profile of 253 between solid versus liquid tumors given possible differences in PK/PD in those settings? Are you fairly comfortable with the every three weeks dosing across all tumor types? And then secondly, obviously, you're just starting monotherapy dose escalation, but how are you currently thinking about the strategy for 253 in combination? It seems like, coming out of ASH, being at a class combination might be on the table for AML. I just want to get your thoughts there.

It's a great question. Maybe, Jared, do you want to take them?

Sure. Yes. Maybe starting with the dosing schedule. As we stated upfront, we are going in with a once every three-week IV infusion, which we think has the potential to be highly active based on our preclinical models, but also has the ability to mitigate myelosuppression. We do have flexibility based on our preclinical tox studies to dose less frequently, even every two weeks, if we thought that was necessary. Your question is an interesting one. Could we ever envision a situation where you might have one schedule for liquid tumors and one for solid tumors? That's always a possibility, and I think we do have that flexibility. Our plan though right now is our expectation is that every three-week dosing will be active in both liquid and solid tumors. We do have that flexibility to dose less frequently, if we think it's necessary from macro-dynamics standpoint and if we think that it would be tolerated from a safety standpoint. In terms of combinations, that's obviously a very good question as well. You mentioned venetoclax; we've been doing some very interesting preclinical work looking at our drug in both venetoclax-resistant and sensitive AML models. We can see activity of our MDM2-degrader as a monotherapy even in venetoclax-resistant models, which is very encouraging for the possibility of our seeing activity with our drug in AML patients who have previously received venetoclax. Many patients are getting venetoclax either in the upfront setting or in the relapsed/refractory setting. We've also seen some very encouraging data with our drug combined with venetoclax, either in venetoclax-resistant or venetoclax-sensitive AML. We're still confident that we have significant opportunities for MDM2 as a monotherapy in both liquid tumors and solid tumors. We'll also want to take advantage of these combination approaches in the future.

The next question comes from Marc Frahm with Cowen.

Maybe just following up on MDM2, some of the dosing questions. What is the target degradation profile you're aiming for in terms of percentage reduction, but given all you're saying about the therapeutic window, at least as important is the duration of that degradation?

Yes, Marc. What we've seen preclinically is that the degradation above 80% to 90% for a short period of time, even two to four hours, is enough to lead to this profound apoptotic response. That's why we designed this type of drug with this dosing paradigm, where we dose it IV, enabling us to reach this high quick IV marks initially, leading to quick down-regulation and then clearance of the drug relatively quickly to capture maximum antitumor effect and take time for healthy cells to recover before we dose again. Monitoring the MDM2 degradation and pathway engagement is a large piece of the work that our team has done, given the complexity of the pathway. We're also exploring innovative ways to measure MDM2 levels, which are initially already relatively low. Monitoring how target engagement relates to safety is critical, as seeing the right biomarkers that either increase or decrease downstream drives the antitumor effect. The proof-of-mechanism data is something we aim to share this year.

The next question is from Mike Kratky with SVB Securities.

For KT-413, can you talk a little bit about the potential next steps from a clinical development standpoint and how you could aim to pursue a potential accelerated regulatory path forward here? How should investors think about the potential sequencing of indications you're going to be pursuing?

Jared, do you want to take that one?

Yes, sure. With 413, the MYD88 mutated B-cell malignancies are front and center in terms of development. There, I think we see three potential opportunities: DLBCL, of course, where the mutation is seen in about 25% to 30% of patients, which represents a substantial opportunity. We're talking about prevalence numbers that are in the thousands. Waldenstrom's macroglobulinemia is another very interesting opportunity since about 90% to 95% of those patients have this mutation. Those patients have a high unmet need, both in the relapsed/refractory settings after BTK inhibitors, and even in the upfront setting, to find novel therapies that can achieve complete responses rather than just partial responses. Finally, primary CNS lymphoma, where this mutation is seen in about 80% of patients, also has a very high unmet need for that population, albeit a smaller population than DLBCL. When we think about this drug, we have to think about the unique positioning here, especially within DLBCL. In DLBCL, there really is no therapeutic that is aimed at a genetically defined subset of DLBCL. The trend is more definitively based on genetics, so finding new drugs that can target those different genetic abnormalities is key. We believe we have an opportunity for accelerated approval for MYD88 mutated lymphoma given its poor prognosis. A rapid development path can follow Phase Ib, which could consist of an open-label Phase II study leading to accelerated approval.

The next question comes from Derek Archila with Wells Fargo.

This is Sarah, on for Derek. Two quick ones from us. First, on the STAT3 program. What kind of data update can we expect this year? And the second question, from a TPV perspective, given you are developing glues for heterobifunctional degraders and tissue-specific ligases, is there any plan to look at extracellular protein?

Great question. Maybe I'll start with the second one. We always look at what is the unmet need and the problem that we're trying to solve. I personally feel that 80% of the proteome is roughly intracellular. We have great tools today to drug extracellular proteins. The real opportunity for extracellular proteins is if you're able to compete with biologics by developing molecules that you can possess infrequent dosing as antibodies do or more if you have an oral degrader or an extracellular protein. We see opportunities there but at this stage of the company; I don't think it's the highest opportunity and risk-reward scenario at this stage. As we grow, there may be opportunities to go into that space. We looked at that a couple of years ago and decided not to go into that space. Regarding your first question on STAT3, as we noted previously, our goal this year is to dose patients at exposures and degradation profiles that we expect to be therapeutically relevant. We hope to drive recruitment at doses where we expect to see clinical activity, meaning these are tumor types we saw preclinically to be sensitive to STAT3 degradation. We expect to share results on initial proof of concept in STAT3 degradation relative to the antitumor response.

The next question comes from Kalpit Patel with B. Riley.

This is Andy, on for Kalpit. Some from us on KT-413. First, I understand that you're looking for meaningful clinical activity in dose levels 3 and 4. But have you observed any evidence of antitumor activity so far, even if it's just stable disease? And then second, you noted needing to maintain target knockdown for 72 hours, and we're seeing robust target knockdown in plasma of the target proteins, Ikaros and Aiolos, but they're rebounding to or above the baseline levels near the end of the dosing interval. Do you anticipate tweaking the dosing frequency perhaps from every three weeks to every two weeks to ensure adequate depletion of target proteins at all times? And is sustained depletion actually needed based on your preclinical models for meaningful antitumor activity?

Great questions. The first one was about tumor activity thus far. Yes, we expect to share data at a scientific meeting or event in which we decided to share data. The second and third questions are good ones. Just as a reminder, the degradation profile that we've seen preclinically is one where we believe we need to degrade these proteins for about 72 hours and then see a full rebound of those proteins before we dose again. The fact that by week three we see full recovery of these proteins is good and necessary based on preclinical data to avoid seeing neutropenia and other safety events. We do have flexibility to change those paradigms if we need to. However, we are asking the biological question of whether the degradation profile we've seen preclinically is enough in MYD88-mutant tumors to translate into strong antitumor activity in the clinic. Only after we address this can we consider tweaking the dosing frequency.

The next question comes from Zhi Shu with Berenberg.

I have a quick one. On your updated corporate deck, you disclosed some of the discovery programs will be around the IL-4 IL-13 pathway. I thought that's interesting. Can you talk about the sort of the potential advantage for using a protein degradation approach versus a biologic approach, and also talk about the unmet medical need associated with those diseases?

Yes, Zhi, that's a great question. We only have a couple of minutes, but I could spend a couple of hours on this. We've always built a company working in pathways that have high validation where we believe protein degradation can lock biology in a better way. An antibody for that pathway will see its largest drug in the market soon and has been approved in AD for other indications. We believe there is an opportunity to develop an oral drug in that pathway and actually develop a better drug in that pathway, meaning a drug with a better efficacy profile. The math on this is clear, especially if you look at the picks in AD and how these drugs penetrate. An oral small molecule that can serve that patient population in a better way has significant opportunities. We're trying to solve for helping patients treated with a better drug, which we believe is what we're working on.

The next question comes from Timur Ivannikov with Raymond James.

Just for KT-474, tracking your strategy for the studies a little better. I think the HS study is starting first. Do you think there will be an overlap in time between those two studies? I want to make sure there are no gatekeeping factors in HS studies like safety or efficacy data that Sanofi may want to see before starting the AD study.

That's a great question. I mean I'll answer short because we're out of time. From our understanding, there will be a high likelihood of overlap between the studies. I don't believe there are data expectations to inform necessarily when and how the second study will start. However, we will talk more about the specifics as the studies initiate. Those are questions that Sanofi will have better answers for.

The last question today comes from Kelly Shi with Jefferies.

This is Shawn Tan on for Kelly. I have a question on KT-474. Can you provide more color on how you will work with Sanofi going forward? Do you anticipate continuing to engage with them over the course of Phase II initiation and maybe expanding the collaboration to other of your immunology programs that's coming up?

We've had the fortune to have a really good partner at Sanofi along the way, so I will continue to say that because it's true. We've worked very closely with them when we were running our program, and we already are working very closely as they are operationally and financially responsible for the program. I remind everybody that we have an active mechanism before Phase III. We're fully vested in the success of the programs and have committees in place to follow progress. We have almost weekly or biweekly interactions with them to ensure we both give our best for the success of this drug. I have no doubt that will continue to be the case. I think there was a second question about other collaborations. I can't comment on that. The rest of our pipeline that we've talked about is our own, and that's what we're doing, continuing to generate value. We are well-financed to advance these programs and create value, and that's our goal at this point. First, I would like to thank everybody for listening to our call and for the engaging Q&A. You all had great questions. Hopefully, we did our best to answer them in the most comprehensive way possible. We're excited about what we've done, but we've always aspired to do better year by year. We hope and expect that 2023 would be even more exciting than 2022. We welcome everybody who follows us and reaches out to us with further questions, and we always wait for amazing data to speak for us. We're excited to see how all these programs unfold and impact patients in a wide variety of indications. Thanks again for your time. Apologies for being a bit late, and have a good rest of the day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.