Good day, and welcome to the Kymera Therapeutics First Quarter 2024 Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Justine Koenigsberg. Please go ahead.

Thank you. Good morning, and welcome to Kymera's quarterly update call. Joining me this morning are Nello Mainolfi, President and CEO; Jared Gollob, our Chief Medical Officer; and Bruce Jacobs, our Chief Financial Officer. Following our prepared remarks, we will open the call to questions. To have enough time to address everyone's questions, we ask that you please limit your questions to one and a relevant follow-up. Before we begin, I would like to remind you that today's discussion will include forward-looking statements about our future expectations, plans, and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A description of these risks can be found in our most recent 10-Q filed with the SEC. Any forward-looking statements speak only as of today's date, and we assume no obligation to update any forward-looking statements made on today's call. With that, I'll now turn the call over to Nello.

Thank you, Justine. Good morning, everybody. It's been a very productive beginning of 2024, starting in January with an extensive update at our immunology R&D Day and a subsequent financing to provide capital that we will invest in our expanding clinical development efforts and growing pipeline. The past quarter has been focused on execution on both our preclinical and clinical pipeline as well as external engagement across various business and medical conferences. Today, our plan is to share a brief update on our programs as well as timelines for news and catalysts we're expecting through the rest of this year and early 2025. As we shared earlier this year, we believe we have a significant opportunity to address and expand the existing treatment paradigms within immunology by developing compelling oral small molecule degrader medicines with biologic-like activity. Had it been the case all the way back to the timing of the company, we have taken a differentiated approach to target selection and focused on critical molecular pathways that are well validated through human genetics, clinical evidence, and/or the success of approved drugs. Many of these pathways play a key role in disease pathology mediated by Th2-driven inflammation. While injectable biologics dominate these markets often due to their strong clinical activity, they are not without limitations, which in many instances can limit penetration. As a result, we believe developing convenient oral options with biologic-like activity and a good safety profile presents an enormous opportunity to expand patient access in many of these markets that are currently dominated by injectable agents. Our IRAK4 program, which was our first program to enter clinical development, simplifies a target and a pathway that has the potential for a broad patient impact. We have talked in the past about our reasons for enthusiasm around IRAK4 as a target and our rationale for pursuing it. IRAK4 is a key node in the IL-1/TLR signaling that we believe its degradation is the only approach to fully block the pathway, creating multiple development opportunities in large unmet need indications. In the KT-474/RF4 Phase I trial, we observed deep and well-tolerated degradation, early signs of clinical efficacy, and high fidelity of translation from preclinical models to patients which provide key insights for our growing immunology pipeline and positions future programs such as our STAT6 and TYK2 programs for success. In March, we had the opportunity to showcase our proprietary immunology programs, KT-621, as a STAT6 degrader and KT-294 as a TYK2 degrader at the American Academy of Dermatology Annual Meeting. The poster presentations, which marked the first data from a STAT6 targeted agent and a TYK2 degrader to be shared at a major medical meeting, highlighted our robust preclinical packages and support the significant potential of our oral degraders in these pathways. In our KT-621 AAD poster, we've highlighted the preclinical efficacy studies comparing KT-621 to dupilumab in a preclinical atopic dermatitis model. Importantly, KT-621 showed robust activity in vivo in this model, outperforming dupilumab significantly. KT-621 degradation of STAT6 was well tolerated in multiple preclinical safety studies and doses concentration up to 40 times above the projected human efficacious concentration. If we can indeed deliver biologic-like activity, a good safety profile, and oral once-daily dosing, we believe KT-621 could change the treatment paradigm for millions of patients suffering from Th2-driven inflammation. In terms of timing, KT-621 is currently in IND-enabling studies and is on track to enter Phase I testing in the second half of 2024. It's our intent to conduct a Phase I healthy volunteer study to assess single and multiple ascending doses of KT-621 and move quickly from there. We have finalized our clinical development plan and strategy, and we look forward to sharing more details as we move closer to clinical development. Moving to TYK2, we shared a poster at AAD that demonstrated picomolar degradation potency, alone with nanomolar inhibition of IL-23, IL-12, and Type-1 interferon partners, showing KT-294's potential to recapitulate the biology of human TYK2 loss-of-function mutation. The biological differentiation of KT-294 from our steric small molecule inhibitors was demonstrated through IL-10 sparing compared to other existing treatments which is important in inflammatory bowel syndrome, as well as was shown through superior inhibition of the Type 1 interferon pathway compared to TAK-279, which is relevant for several diseases. Additionally, KT-294 demonstrated deep and sustained TYK2 knockdown in vivo with low daily oral doses. We believe that this data demonstrates a TYK2 degrader has the potential to deliver best-in-class TYK2 pathway blockade with productivity across multiple IL-12/23 and Type I interferon-mediated diseases. We intend to continue to share updates across our pipeline and medical meetings in 2024. In fact, later this month, we will present a poster highlighting KT-621 and its potential to treat TH2 allergic diseases at both the American Thoracic Society International Conference in San Diego as well as at the Digestive Disease Week in D.C. These presentations will build on what was previously shared in R&D, featuring new and exciting additional preclinical data. To sum up my introduction here, since our founding eight years ago, which we will commemorate just in a few days, we have demonstrated consistent and scalable innovation, including strong clinical to clinical translation of degradation, safety, and activity across the pipeline. We have also achieved early proof of concept in both immunology and oncology, which we believe is a significant accomplishment for the new modality. As we transition from early to mid-to-late development across our pipeline, we remain committed to building on our early success in expanding our team and capabilities to deliver on the substantial clinical and commercial opportunities that our programs offer to ultimately become a leading global commercial stage medicine company. In the meantime, we look forward to important near-term data readouts this year in oncology and multiple readouts from our immunology pipeline in 2025. I'll pause here and ask Jared to provide an update on our clinical program. Jared?

Thank you, Nello. I'll round out the immunology discussion this morning with IRAK-4 and then give an update on our two clinical oncology programs. Our first-in-class oral IRAK4 degrader, KT-474 is progressing in two Phase II trials in hidradenitis suppurativa and atopic dermatitis. These trials are being conducted by Sanofi under our collaboration, and we expect to be in a position to share top-line data in the first half of 2025. Recall that Sanofi moved this program into Phase II studies based on the early clinical data we generated in atopic dermatitis patients in the Phase I trial. In that study, not only did we achieve our study objectives in terms of PK/PD and safety, but we also delivered encouraging signs of clinical activity that we will also evaluate over a longer dosing period in the Phase II trials. These randomized placebo-controlled trials represent an opportunity to demonstrate the potential for IRAK4 degradation generally and KT-474 specifically to transform the treatment of complex inflammatory diseases and to offer hidradenitis suppurativa and atopic dermatitis patients well-tolerated, effective, and convenient oral medicines. We're switching gears now to oncology. I'll start by noting that we recently presented scientific data on our oncology pipeline in both the late-breaking poster session and during the major symposium at the AACR Annual Meeting. As we shared in the past, our preclinical and early clinical findings highlighted last month at the meeting support the advantages of degraders over other existing technologies and agents and further validate our differentiated molecular design, target selection, and translational strategies to advance a new generation of medicines for patients. KT-253, our highly potent degrader of MDM2 E3 ligase that modulates the most common tumor suppressor p53 is currently in development for the treatment of liquid and solid tumors. Preliminary data from the Phase I clinical trial showed evidence of target engagement and p53 pathway activation along with initial signs of antitumor activity without dose-limiting toxicities, including typical hematological toxicity. These findings support our therapeutic hypothesis for MDM2 degraders and the potential to improve the therapeutic index compared to MDM2 small molecule inhibitors. As we finish dose escalation in the Phase I trial this year, we hope to see antitumor activity in various tumor types. Coupled with our biomarker selection strategy, we plan to assess these data collectively to inform next steps. Finally, on MDM2, we are announcing today that we've had an abstract accepted for a poster presentation at ASCO in June, where we will provide a clinical data update. Once the trial is completed, we expect to present the full data set at a medical meeting later in the year. KT-333, our highly selective degrader of STAT3, a traditionally hard-to-drug transcription factor recognized as a key component of the JAK-STAT signaling pathway, with both tumor cell intrinsic and tumor cell extrinsic effects on the tumor microenvironment is currently in development for the treatment of multiple STAT3-dependent pathologies, including hematological malignancies and solid tumors. Preliminary data from the Phase I trial demonstrated early signs of antitumor activity at doses that were generally well tolerated and associated with substantial STAT3 knockdown in blood and tumor. Our preclinical to clinical translation showed some early, but encouraging responses in both cutaneous T-cell lymphoma and Hodgkin's lymphoma. We also demonstrated stimulation of an inherent gamma response in tumor in blood, which is encouraging given the correlation between interferon gamma and how tumors respond to anti-PD-1 drugs. This escalation of the KT-333 Phase I study is ongoing, with the goal to further assess safety and antitumor activity in both liquid and solid tumors. We expect to complete the study this year and deliver additional proof of concept data to define KT-333's path to late-stage development. We are also announcing that we've had an abstract accepted for presentation at the European Hematology Association, or EHA meeting in June, where we will present a clinical update. We plan to present the full data set at a medical meeting later in the year. Now I'll hand the call over to Bruce to share the financials for the quarter. Bruce?

Thanks, Jared. I'll briefly go over our financial highlights for the first quarter of 2024, and you can also refer to the tables included in today's press release. In the first quarter, revenue reached $10.3 million, entirely from our collaboration with Sanofi. As a reminder, we have received a total of $55 million in milestones due to the initiation of two Phase II studies in the last quarter of the previous year. Regarding operating expenses, our R&D costs for the quarter were $48.8 million, with about $6.1 million being noncash stock-based compensation. This results in an adjusted cash R&D expenditure of $42.7 million, reflecting a 10% decrease compared to the same period in the fourth quarter of 2023. On the G&A front, our spending was $14.4 million, including $5.9 million for stock-based compensation. The adjusted cash G&A expenses, which exclude stock-based compensation, were $8.5 million, marking a 1% decrease from the prior sequential quarter. At the close of the first quarter, our cash balance stood at $745 million in January. As noted, we raised roughly $300 million in net proceeds from our equity offering. Our cash reserves are anticipated to support operations into the first half of 2027, allowing us to advance various initiatives, including oncology proof-of-concept results in 2024, Phase II data for KT-474 expected in the first half of 2025, and key clinical milestones for our STAT6 and TYK2 programs also in 2025. This wraps up our prepared remarks, and we're now ready to take your questions. Operator, please open the line for inquiries. Thank you.

The first question is from Brad Canino from Stifel.

It looks like we're going to get two bites out of the apple for MDM2 this year. And generally, I would assume that the completed Phase I trial and the biomarker data later this year would be most material. So just to not overlook what's coming at ASCO, can I have you talk about the decision to present here? What should be the focus? And how should investors view it within the broader trial and strategy for the asset?

So thanks, Brad. Taking a step back, this is a program that we started clinical development in the second half, roughly the middle of last year. Our first update was in November, if you recall, and we presented limited data. Since then, we have recruited many more patients in the solid tumor lymphoma arm as well as opened the AML arm. We thought it was important to connect with the medical community and the investor community to give an update on the progress we've made in both arms of the trial. That, I believe, will shine more light on the potential of MDM2 across the subset of patients and also create more enthusiasm as we can to continue to recruit the right types of patients for study. So obviously, when we share data, there are multiple audiences, and the investor community is one of them. The goal is to complete this Phase I dose escalation study by the end of the year and then provide a full update as planned for further development later in the year. Given the substantial number of patients recruited between November and now, we thought this would be a good update to showcase the progress of the program.

Okay. And then Nello, I know you took part in a targeted protein degradation symposium at AACR. I'd just love to hear what your general insights were and thoughts were exiting that about the evolution of this therapeutic area?

Yes, that's a great question, Brad. It was a great meeting, and I believe I saw you there. It was well attended, with many companies presenting. I hadn't been in such a focused symposium in probably too long, and it was great to see a huge amount of interest from many stakeholders in the space. I saw many physicians and representatives from small and large companies. So I think the level of interest is increasing, especially with the data various companies are sharing. I came home with the great feeling that companies like Kymera are really leading the field here in terms of capabilities, target selection, and sophistication of approach. There's still a lot of work to do for the field, but I'm glad that we and others are leading in hoping to provide a good example for others to follow.

The next question is from the line of Ellie Merle from UBS.

It's Sam on for Ellie. I guess just in line with the previous question, from the MDM2 update at ASCO, can you provide any color on the extent of data that we could be expecting from the study? And what kind of efficacy measures should we anticipate?

Great. Thanks for the question. This presentation is really geared to be a clinical update for the Phase Ia dose escalation, so really to show the progress that we've made since last November. The goal here is to share additional information on the types of patients we've enrolled, both solid tumor patients as well as patients with hematologic malignancies, to share the safety that we've been seeing as we've been dose escalating and to share more data on the pharmacodynamic effect of the drug. Recall that back in November, we showed an impact on one of the key biomarkers downstream of MDM2. Our aim is to show more data that provides that sort of information on pharmacologic engagement and, of course, to provide whatever clinical response data we have for patients with solid tumors and those with hematologic malignancies.

Okay. Great. And I guess just a quick follow-up. Any color on the updates for the biomarker patient selection strategy you guys are pursuing? And how is the progress kind of going there?

Yes. That's an important question. I think Nello mentioned that earlier, which has been an important part of the program for MDM2. In addition to being able to demonstrate that the therapeutic index with our degrader is superior to what we see with MDM2 inhibitors, we aim to evolve a patient selection strategy, focusing on those patients we think will be most sensitive to this treatment. We don't plan on providing that particular update at ASCO, but our anticipation is that later in the year, probably at a medical meeting, we will provide more data showing our progress preclinically and some of our clinical data that have been informing our ability to develop this patient selection biomarker strategy.

The next question is from the line of Michael Schmidt from Guggenheim Securities.

This is Yige on for Michael. We wanted to get your thoughts on recent data that showed superiority over DUPIXENT as you think about the opportunity for your IRAK-4 and STAT6 degraders. Do the level of results shift the bar for an oral agent in AD and potential other indications? What's your strategy on future head-to-head studies against biologics for your overall pipeline?

Yes. It's a great question. We're not learning today that inhibiting JAK kinase is an extremely powerful anti-inflammatory mechanism. In fact, if you look across several indications, you see JAK inhibitors being effective. So I don't believe we're learning anything new. We at Kymera propose to use protein degradation to target those that provide the best efficacy to safety profile. The opportunity is to have an oral drug that is well tolerated, which does not require blood monitoring, or monitoring for severe cardiovascular events. So I don't think the bar has moved. The field is still looking for oral agents that are active and have a well-tolerated profile. That's what we're trying to do for both IRAK4 and STAT6.

The next question is from the line of Eric Joseph from JPMorgan.

I wanted to get a better sense of what your internal bar is for moving KT-253 into late-stage development. Will opportunities in hematological malignancies be strategically attractive enough, or do you want to think broader to encompass solid tumors as well? Additionally, is the focus more on moving forward with a monotherapy strategy, or would you be amenable to combination approaches?

Yes, thanks, Eric. The reason why we got involved with MDM2, which has been pursued by the industry for the past 15 years, is to unlock a broad variety of tumor types that are sensitive to the removal of MDM2. Looking at what Jared has said, we have developed sensitivity across various tumor sizes, pointing to a subset of tumors we've shown to be extremely sensitive to these mechanisms. This includes both hematological malignancies and solid tumors. We've demonstrated significant activity, particularly in AML both as a single agent and in combination strategies. We would pursue AML independently of solid tumors given the high unmet need, which is also relevant for first-line and refractory AML. The impetus for MDM2 is to go beyond hematological oncology, and we have exciting plans we can share with you based on the biomarker strategy indicating expansion in solid tumors as well.

The next question is from the line of Kalpit Patel from B. Riley.

This is Jay for Kalpit. Just one on the STAT6 program. Can you discuss the divestment of your STAT6 degrader with Sanofi? Could you provide insight into why perhaps Sanofi opted to collaborate with another STAT6 degrader company instead?

As we have said repeatedly in the past, we have built conviction around our ability to use oral degraders in immunology, starting from early days in IRAK4. We realized that we have no interest in partnering our immunology pipeline in the foreseeable future to fulfill our vision of building a global integrated company. I'm not going to share discussions we had with Sanofi, but our position has been clear that we want to develop this program independently as a standalone company for the foreseeable future. We are the first company to take a STAT6 degrader into the clinic, and we have demonstrated preclinical activity that others in this space are years behind.

The next question is from the line of Andy Chen from Wolfe Research.

Two related questions on STAT6. Can you talk about tissue distribution? I see deep degradation in the skin in nonhuman primates. How well does this tissue distribution translate to humans? Also, in the first half of '25, will we gain any insight on this exact topic? What metrics will we have when determining whether STAT6 is acting on the skin in humans?

Yes. It's a great question. For confidentiality, we don’t usually discuss preclinical data of PK and distribution besides what we showed in our presentations, which are highly confidential. That said, we believe KT-621 degrades STAT6 effectively in various tissues, including skin, lung, blood, and spleen. Our expectation is to see similar responses in the clinic. We have seen good translation of preclinical data to clinical results across different species. Our goal for the first half of '25 is to share Phase I data that will involve both blood and skin biomarkers.

The next question is from the line of Derek Archila from Wells Fargo.

This is Eva on for Derek. A quick one following up on the last question. For the STAT6 Phase I study, will you include a cohort of patients to achieve proof of concept, like you did with 474? Or will this only include healthy volunteers?

At this point, we only said that the initial evaluation will be with healthy volunteers; we'll share more at a later date.

The next question is from the line of Divya Rao with TD Cowen and Company.

This is Divya, on for Marc. More to the earlier question, what is the scope of the disclosure we should get from KT-333 at EHA? What do you need to see in this Phase I trial to continue development in both liquid and solid tumors?

I'll take the second part, and I’ll let Jared answer the first. What we need to see revolves around having meaningful opportunities with a clear path to a sizable patient population, and significant clinical and commercial impact. More obvious answers are that solid tumor opportunities make a much easier case for further investment. We don't expect to see single-agent activity in solid tumor, as we haven't seen it preclinically. However, we are evaluating the tumor biomarker effect that we’ve demonstrated for the potential solid tumor combo opportunities.

Sure. Recall that at ASH last December, we presented data on 29 patients we had enrolled so far. We showed very encouraging safety data, allowing our dose escalation to continue. We presented strong pharmacodynamic data, including strong STAT3 knockdown in blood and tumor along with strong immunomodulatory effects, and promising clinical responses in CTCL and Hodgkin's lymphoma. The aim for the EHA presentation is to build on that while we continue to dose escalate and provide further data on safety as we've been dose escalating, additional pharmacologic data on target knockdown in blood, and whatever we have in tumor response data. As mentioned, this is intended to be a clinical update, and once we complete dosage escalation later this year, we'll provide a final data set at a medical meeting later in 2024.

The next question is from the line of Thomas Smith from Leerink Partners.

This is Nathanael on for Tom Smith. Two questions in immunology. What's the gating factor to initiate the Phase I trial for KT-621, and what data can we expect from the readout in the first half of '25?

We're in IND-enabling studies, and we're going to leave it at that. We don’t usually provide a specific update on where exactly we are in the process. Completing that phase, filing IND, and initiating Phase I is what's between us and that. For STAT6 indication prioritization, we focus on getting this drug to as many patients as possible, starting with larger indications where we've seen injectables can have low penetration for many reasons. We are prioritizing larger indications, but that doesn't mean we will not pursue others; we may do so in different phases and manners.

For the program with data expected in the first half, what is the decision-making process moving forward? Additionally, how are you handling the opt-in decision?

Yes. We will have the opportunity to decide to opt-in before plan for Phase III. The decision will be based on many reasons, including the excitement we have around the opportunity with the drug, and our cash needs across our pipeline investments. The base case is if the drug is active as we expect, it will be value accretive for us to obtain, so it would likely be an easier decision. But it's challenging to make decisions in a vacuum, so we'll evaluate everything when we get there.

The next question is from the line of Vikram Purohit from Morgan Stanley.

I have a couple of questions on KT-474. Apologies if you mentioned this in your prior Q&A, but can you provide clarity on how you and Sanofi are currently thinking about indication expansion beyond HS and AD?

Thanks, Vikram. We've got three questions, well done. On the last question, it's hard for us to know both the timing and where, as the program timelines have been presented on clinicaltrial.gov disclosures. Both studies should read out in the first half of '25, but we are too early to know whether they will be disclosed together or separately. Sanofi is diligently evaluating many other opportunities that this biology validates, but there is sensitivity about disclosing what they are while they focus on executing these studies. Sanofi may be the one to disclose other indications first, and we will provide more details later.

The next question is from the line of Geoff Meacham from Bank of America.

Given capital constraints, do you think there's a scenario where you guys might partner out some of your oncology assets? What factors would you take into consideration when evaluating the potential for a partnership?

Thanks for the question. We believe partnering is an option to grow the company, and it needs to serve the purpose. Financial needs rarely drive partnerships, but more importantly, they have to be a win-win opportunity for both parties. The conversation around potential partnerships in oncology is ongoing, but specifics are hard to share as we continue to generate important data. Ultimately, that will define our commitment to how we want to invest in these programs. We want to focus on long-term value creation rather than reinventing the wheel for every single program.

What are your business development priorities for this year?

I think I've answered that question already.

The next question is from the line of Kelly Shi from Jefferies.

I have a question on the clinical development expanding in this space. How should IRAK4 degrader compare to other oral agents like JAK and BTK inhibitors? What would be the differentiated clinical features to be anticipated based on targeted strategy and the mechanism of action for the degrader design?

Your sound was not great, but if I understood correctly, you were asking how IRAK4 ranks compared to other small molecules. Jared, do you want to take some of that?

I think the differentiation is there for IRAK4, both for efficacy and safety. Our IRAK4 degrader, KT-474, is unique because it impacts multiple pro-inflammatory cytokines due to its engagement with IL-1 receptor and TLR pathways. Many targeted agents are generally more restricted in effect. Therefore, having a drug targeting multiple pathways can broaden development opportunities across autoimmune and inflammatory diseases. Safety cannot be overlooked. Several adult human IRAK-4 genetic knockouts live without any susceptibility to infections. This means we can maximize chronic knockdown without compromising safety, potentially allowing this drug to be developed across many indications, including milder patients. This puts IRAK4 ahead of other modalities.

The next question is from the line of Jeff Jones from Oppenheimer.

There's some evidence of improved efficacy in targeting IL-17A and IL-17F versus just IL-17A, Bimekizumab versus secukinumab. Could you comment on whether targeting IRAK4 would be expected to impact the pathway for both forms?

The question about efficacy concerning IL-17 AF versus A shows the advantage of broader anti-inflammatory effects versus a more restricted approach. While IRAK4 doesn’t specifically target the IL-17 pathway, it impacts IL-17 production through IL-1 family and TLR pathways. We could assume a broad impact across IL-17 isoforms.

Just to answer your question on revenues, while we don’t guide to collaboration revenues, the deferred revenue number you see on our balance sheet is just over $46 million. That's the amount of revenue we expect to recognize over the near-term as we fulfill our performance obligations. Additional milestones are not included in that number, so any milestones achieved will be recognized at that point.

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Justine Koenigsberg for closing remarks.

Thank you. We'd like to thank everyone for joining us this morning and look forward to keeping you updated on our progress. Later this month, we'll be participating at the BofA conference and hope to see many of you there. In the meantime, please don't hesitate to reach out if there are additional questions following today's call. Thank you. This concludes today's call.

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