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Gossamer Bio, Inc. (NASDAQ:GOSS)
Q2 2019 Earnings Call
August 8, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen. Welcome to the Gossamer Bio second quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. If anyone should require assistance during the conference, please press * then 0 on your touch tone telephone. As a reminder, this conference is being recorded.

I would now like to turn the conference over to Bryan Giraudo, Chief Financial Officer. Mr. Giraudo, you may begin.

Bryan Giraudo -- Chief Financial Officer

Thank you, Operator. Thank you all for joining us this afternoon. With me on today's call are Gossamer's Cofounder and Chief Executive Officer, Dr. Shelia Gujrathi, as well as Gossamer's Chief Medical Officer, Dr. Jakob Dupont.

Earlier this afternoon, Gossamer Bio issued a press release announcing its financial results for the second quarter ended June 30th, 2019 and provided a corporate update. Please note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation Reform Act.

We caution listeners that during this call, Gossamer management will be making forward-looking statements. Actual results may differ materially from those stated or implied by these forward-looking statements due to the risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the statements contained in Gossamer's news releases and SEC filings, including the annual report on Form 10-K and subsequent filings.

This conference call also contains time-sensitive information that may be accurate for only a limited period of time. Gossamer Bio undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

Now, I'd like to turn it over to Shelia.

Sheila Gujrathi -- Chief Executive Officer

Thank you, Bryan and good afternoon to everyone joining us on today's call. Here at Gossamer, we are focused on discovering, acquiring, developing, and commercializing therapeutics in the disease areas of immunology, inflammation, and oncology. Our goal is to be an industry leader in each of these therapeutic areas and to enhance and extend the lives of patients suffering from such diseases. We are working to achieve this vision by focusing on building a diversified immunology portfolio with multiple meaningful shots on goal.

To that end, over the past few months, the Gossamer team has delivered on a number of critical clinical development milestones along our journey toward benefiting patients. On today's call, I'm going to walk you through the updates and milestones achieved for three of our four clinical stage programs, before handing it over to our Chief Medical Officer, Jakob Dupont, for a discussion of our newest clinical asset, GB1275. Bryan will then discuss Gossamer's financial updates following which I will provide a few closing remarks.

Let us begin with our most advanced clinical stage product candidate, GB001, an oral DP2 antagonist which we are developing for eosinophilic asthma and other allergic conditions, including chronic rhinosinusitis, both with and without nasal polyps, and chronic spontaneous urticaria.

As you may recall, our Phase 2b trial in moderate-to-severe eosinophilic asthma known as the LEDA study began enrolling patients in October of 2018. LEDA is a global Phase 2b study testing once daily dosing regimens of GB001 over a 24-week treatment period. All patients will remain on background therapy throughout the study and the primary endpoint is a composite measure known as asthma worsening. We are happy to reaffirm that enrollment in the study remains on track to trigger an interim analysis in the first half of 2020. After this interim analysis, we expect full topline Phase 2b results to read out in the second half of 2020.

On our last call, we announced the first patient was screened for our Phase 2 proof of concept study of GB001 in chronic rhinosinusitis, known as the TITAN study. Since that update, we have begun actively enrolling patients in TITAN, which is recruiting patients with chronic rhinosinusitis, both with and without nasal polyps. These indications have significant overlap with the asthma population and represent areas of high unmet need, as there are few effective treatment options for patients failing to resoond to intranasal steroids.

We plan to enroll approximately 100 patients in TITAN. The study is designed to measure the effect of GB001 on the sino-nasal outcome test or SNOT-22 score after 16 weeks of treatment in patients who are refractory in intranasal steroids. The SNOT-22 endpoint has relevance for both parties with and without nasal polyps. We also plan on assessing polyp-specific endpoints, such as the nasal polyp score in a subset of patients with polyps as a key secondary endpoint.

Based on current enrollment trends, we are on track to read out topline data for this proof of concept Phase 2 study in the second half of 2020.

In regard to chronic spontaneous urticaria or CSU, an indication with endurance of existing approved therapies, we remain excited about GB001's potential and we look forward to initiating a Phase 2 proof of concept study in CSU later this year.

In the nearer term, we have a poster presentation at the American Myologic Society annual meeting in New Orleans this September. We have a poster discussion at the European Respiratory Society International Congress in Madrid this October. Please be on the lookout for those.

To close on GB001, we are very optimistic about the significant potential that this once-daily oral DP2 antagonist holds across multiple allergic disease areas with high unmet need. We look forward to reporting several Phase 2 topline readouts in 2020.

Now, let's move on to our second clinical stage product candidate, GB002. GB002 is an inhaled PDGFR inhibitor that our team is developing for the treatment in pulmonary arterial hypertension, also known as PAH. PAH is a devastating progressive rare disease with high unmet medical need and limited classes of approved therapies. GB002 has the potential to be the first drug in a new therapeutic class and we believe it can provide disease modifying effects to patients. The FDA and the EMA have granted GB002 orphan drug designation for the treatment of patients with PAH.

Earlier this year, we completed our Phase 1 safety studies of GB002 in normal healthy volunteers with no serious adverse events observed. I am pleased to report that we have activated sites for our Phase 1b in PAH patients and expect initial patient enrollment to occur in the third quarter of this year.

This Phase b is an exploratory translational study and our goal is to generate target engagement and biomarker data and to assess the initial safety and tolerability profile in PAH patients. We expect a readout from the Phase 1b trial in the first half of 2020. Additionally, we continue to have discussions with health authorities about our registration directed Phase 2/3 trial and anticipate initiating this study by the end of this year.

Moreover, we are excited about presenting more of our pre-clinical data on GB002 at upcoming medical conferences, including the American Heart Association 2019 Scientific Sessions in November, which just notified us of acceptance of two abstracts, one as an oral presentation and one as a poster presentation.

Next, we will discuss GB004, an oral HIF-1 alpha stabilizer for the treatment of inflammatory bowel disease, including ulcerative colitis or UC. GB004 is a gut-targeted total hydroxylase inhibitor designed to preferentially stabilize HIF-1 alpha, a transcription factor involved in the body's protective response to low oxygen levels. We believe that this preferential stabilization of HIF-1 alpha will lead to the healing of the gut lesions associated with inflammatory bowel disease and potentially other diseases of the bowel.

On our last call, we announced the commencement of enrollment in our Phase 1b trail of GB004 in patients with active mild to moderate UC, in which we are dosing patients for four weeks. The study is designed to demonstrate proof of mechanism in UC patients, based on targeted engagement, changes in gene expression, epithelial barrier restoration, and potentially UC symptom improvement. Enrollment is going very well and we expect to report initial topline results from the Phase 1b in the first half of 2020.

Now, I will hand it over to Gossamer Bio's Chief Medical Officer Dr. Jakob Dupont, who will discuss our latest entrant into the clinic and Gossamer Bio's first clinical stage oncology asset, GB1275.

Jakob Dupont -- Chief Medical Officer

Thank you, Shelia and good afternoon, everyone. Today, I'm delighted to discuss with you our most recent product candidate to advance into the clinic namely GB1275 for the treatment of cancer. GB1275 is an oral CD11b modulator being developed as an immuno-oncology product candidate focused on addressing the immunosuppressive myeloid cell populations present within tumor tissues.

CD11b, which is the target of GB1275, is broadly expressed on most suppressive myeloid cells, including macrophages, monocytes, neutrophils, and some dendritic cell subsets. This myeloid suppressive biology is particularly pervasive in tumor types that are refractory and resistant to checkpoint inhibitor therapies such as anti-PD1 antibodies. These tumor types include pancreatic, colorectal, prostate, and other significant cancer indications.

In pre-clinical studies, modulation of CD11b reduced this trafficking of these suppressive immune cells into tumors and importantly also converted or repolarized those in the tumor microenvironment from a suppressive state to a pro-inflammatory anti-cancer state. With GB1275, we seek to addressing the unmet medical need of these cancers that are generally not response or minimally responsive to current checkpoint immunotherapy.

Before we discuss our Phase 1/2 clinical trial of GB1275, I'd like to call your attention to a publication that we posted on our corporate website on July 3rd. The paper, entitled Agonism of CD11b Reprograms Innate Immunity to sensitize pancreatic cancer to immunotherapies. This was authored by David DeNardo's lab at Washington University in St. Louis and Vineet Gupta's lab at Rush University and it was published as a featured cover article of the July 3rd edition of Science Translational Medicine.

The publication, which outlines some of the key data that made us excited about the potential of GB1275 in difficult to treat cancer types has driven significant interest from KLLs in top-tier clinical institutions that would like to be involved in our clinical studies.

With that, I'm pleased to inform you that we are actively screening patients in our Phase 1/2 on GB1275 in selected solid tumors and we expect to begin dosing patients in the third quarter of this year.

The selected tumor types include pancreatic, gastric, colorectal, esophageal, and triple negative breast cancers. As mentioned, these are all tumor types where immunosuppressive biology and CD11b expression in cells is prevalent. The Phase 1 portion of the study consists of dose escalation of GB1275 monotherapy and after clearing several monotherapy dose levels, we will initiate dose escalation combination of GB1275 with anti-PD1 therapy or with chemotherapy.

When we reach a recommended Phase 2 dose, we plan to open in the same protocol, three Phase 2 efficacy proof of concept expansion cohorts. Two of the expansion cohorts will test GB1275 in combination with anti-PD1 therapy in second line or greater microsatellite stable colorectal cancer and second line or greater PD-L1 positive gastric or gastroesophageal cancer.

The third expansion cohort will test GB1275 in combination with standard of care gemcitabine and abraxane chemotherapy in first line metastatic pancreatic cancer. We expect to disclose initial data from the Phase 1/2 study in the second half of 2020 and we will provide updates as the study progresses.

With that, I will hand it over to Gossamer Bio's Chief Financial Officer, Bryan Giraudo for financial updates.

Bryan Giraudo -- Chief Financial Officer

Thank you, Jakob. We'll now review the financial results for the second quarter of 2019. We ended the quarter with $464 million of cash and cash equivalents. As a reminder, we announced $150 million debt facility led by midcap financial this past May. $30 million of that facility was taken down at the closing of the agreement and $120 million will become available to Gossamer subject to the achievement of certain clinical development milestones and customary conditions.

We continue to anticipate our cash and cash equivalents plus the capital available to us and the debt facility will provide us sufficient resources into the second half of 2021. Research and development expenses in the quarter were approximately $35.7 million, which reflects a ramp of expenses for GB001, GB002, GB004, and GB1275.

In process R&D expenses, which consists of costs related to the acquisition and licensing of our product candidates, were approximately $1 million for the quarter. G&A expenses were $9.7 million in the quarter with nearly $2.7 million of that total being in stock-based compensation. Our net loss for the quarter was $44.5 million, equating to $0.74 per share.

With that, I'll turn the call back over to Shelia to offer some closing comments before we open the line up for Q&A. Shelia?

Sheila Gujrathi -- Chief Executive Officer

Thank you, Bryan. We take enormous pride in the progress we've made toward building a diverse portfolio of assets, targeting indications with high unmet need. We are equally thrilled with the advancement of those product candidates within their respective clinical development programs. Our Gossamer team has taken our vision and purpose to heart, positioning our company to continually drive our expertise in immunology, inflammation, and oncology for the benefit of patients, caregivers, physicians, shareholders, and employees alike.

Thank you for taking the time to join us today and for your continued interest and support of Gossamer Bio. With that, I will now turn the call over to the Operator to begin the question and answer session. Operator?

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time, if you have a question, please press the * then the number 1 key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the# key.

Our first question comes from Joseph Schwartz with SVB Leerink. Please proceed.

Joseph Schwartz -- SVB Leerkink-- Analyst

Thank you very much and congrats on all the progress. I was wondering if I can get your thoughts on how you interpret Novartis' delay of their Phase 3 data for fevipiprant and how, if at all, it will impact your strategy.

Sheila Gujrathi -- Chief Executive Officer

Thank you, Joseph. Earlier this year, Novartis did announce a delay in terms of originally, they had outlined they would be reading out topline data from four of their clinical Phase 3 trials they are conducting with fevipiprant by the end of this year.

They revised that guidance to say that two of their Phase 3 trials will be reading out by the end of this year and two will be reading out in the first quarter of 2020, namely their two trials that are really characterizing lung function in a more moderate asthma population, ZEAL 1 and 2 will be reading out at the end of the year and LUSTER 1 and 2, which are really their exacerbation trials, will be reading out in the first quarter 2020.

So, we don't really view this as a significant impact for our program in that it's very much in a similar timeframe. I think they just wanted to get all their data together and be able to report out simultaneously, from what we understand from the earnings call.

What's most critical to relay to our investors is really the differences in the trials in that ZEAL 1 and 2 are lung function trials going into a less severe patient population. We're very focused on the readout for LUSTER 1 and 2, since those are a very similar trial population as what we're enrolling in LEDA.

So, just to remind everyone, LUSTER 1 and 2 are enrolling moderate-to-severe eosinophilic asthma patients as well as non-eosinophilic asthma patients, but the treatment severity of 4 and 5, which is the population that we're enrolling into the severity in LEDA. I think we're really focused on the outcomes of LUSTER 1 and 2, which we hope we'll have in the beginning of next year. Really, all eyes are looking forward. We're really focused on the execution of the LEDA trial and excited about the promise of the program.

Joseph Schwartz -- SVB Leerkink-- Analyst

That's very helpful. Thanks. Then on GB002, I was wondering if you could talk about the efficacy biomarkers you'll be collecting and what you hope to see there and how you plan to go about determining the optimal dose level and schedule in Phase 1b.

Sheila Gujrathi -- Chief Executive Officer

Sure. Again, very exciting Phase 1b trial we're running with GB002. It's primarily a trial that will be, of course, looking at safety, tolerability, and pharmacology of GB002 in the PAH patients, which is something we very much wanted to do before initiating our Phase 2/3 registration directive trial. We have broken a lot of different elements to get at that translational aspect of the trial.

Some of the exciting measures we've discussed before with many of those on the phone are really looking at the very exciting biomarkers, NT-proBNP levels are something that we have already seen changes on in a pre-clinical setting and diseased animal models that really characterize and closely mimic human PAH biology.

We've also seen evidence of impact of those biomarkers with imiatinib in their Phase 3 trial, that was very successful in PAH patients. We are very excited to be able to characterize NT-proBNP levels. Additionally, we're looking at other target engagement assays that will get out our understanding of the PD effects of GB002, including gene expression signatures and other assays that we've outlined, some that affect even other markers of the disease.

Lastly, we'll be looking at cardiac imaging, echocardiograms, cardiac MRI, and MUGA scans that will be assessing left ventricular injection fraction and other cardiac hemodynamic parameters from the study. It should be a really rich study. We have a lot of biomarkers as well as imaging. We will be looking at six-minute walk distance, but given the short duration of the trial, we're not really anticipating any significant clinical effects at this time.

Joseph Schwartz -- SVB Leerkink-- Analyst

Thanks very much.

Operator

Thank you. One moment please... Okay. And this ends our question and answer session for today. On behalf of Gossamer Bio management, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.

Duration: 22 minutes

Call participants:

Bryan Giraudo -- Chief Financial Officer

Sheila Gujrathi -- Chief Executive Officer

Jakob Dupont -- Chief Medical Officer

Joseph Schwartz -- SVB Leerkink-- Analyst

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