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Gossamer Bio Inc (NASDAQ:GOSS)
Q3 2019 Earnings Call
Nov 12, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Gossamer Bio Third Quarter 2019 Earnings Call. Today's call will feature updates from Gossamer Bio's management team followed by a question-and-answer session.

I will now turn the call over to Gossamer Bio's Chief Financial Officer, Bryan Giraudo. Bryan?

Bryan Giraudo -- Chief Financial Officer

Thank you, operator, and thank you all for joining us this afternoon. I'm joined on today's call by Gossamer Bio's Co-Founder and Chief Executive Officer, Dr. Sheila Gujrathi; as well as Gossamer's Chief Medical Officer, Dr. Jakob Dupont; and Gossamer's Chief Scientific Officer, Dr. Luisa Salter-Cid.

Earlier this afternoon, Gossamer Bio issued a press release announcing its financial results for the third quarter ended September 30, 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 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 in 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 call -- I'd like to turn the call over to Sheila. Sheila?

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Thank you, Bryan, and good afternoon to everyone joining us today's call. Since our initial public offering in February of this year, I emphasize that Gossamer Bio's goal is to be an industry leader in immunology, inflammation, and oncology, and to enhance and extend the lives of patients suffering from such diseases.

On today's call, I'm excited to further update you on Gossamer's continued progress toward that ambitious goal. I will walk you through the updates and milestones achieved for each of our four clinical-stage product candidates. And then, Bryan will discuss Gossamer's financial updates, following which I will provide a few closing remarks.

We will 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. Gossamer Bio continues to enroll the LEDA study for the treatment of moderate-to-severe eosinophilic asthma. LEDA is a global Phase 2b study testing GB001 over 24-week treatment period with patients remaining on background therapy.

As a reminder, the LEDA study is enrolling [Indecipherable] step four and five patient population, all of whom have an [Indecipherable] count of at least 250 cells per microliter. [Indecipherable] reduction in asthma worsening, a composite measure at 24 weeks at this primary endpoint. The study is on track to trigger an interim analysis in the first half of 2020, once approximately two-thirds of the patients have completed the trial. In the second half of 2020, we expect to read-out full top-line Phase 2b results for this 400 patient trial.

In September at the European Respiratory Society International Congress in Madrid, we presented a poster further detailing GB001's effects in relation to fractional exhaled nitric oxide or FeNO in mild-to-moderate atopic asthmatic. The day described in the poster suggest that FeNO could serve as a useful prognostic marker for treatment response to GB001, in addition to elevated eosinophils which is the marker we are currently using to enroll the LEDA study.

The high FeNO subpopulation who are patients with FeNO greater than or equal to 35 parts per billion showed FeNO reduction versus placebo of 13.4 parts per billion. The high FeNO subpopulation also showed a mean FEV1 improvement at Day 20 versus placebo of 207 milliliters. In our ongoing Phase 2 LEDA study, we continue to evaluate FeNO as a potential biomarker.

Late this past week at the American College of Allergy, Asthma and Immunology Annual Scientific Meeting in Houston, we presented two posters relate to asthma and GB001. The first contains detailed results from the previously discussed proof-of-concept Phase 2 study run by our partner Teijin Pharma, and 158 mild-to-moderate Japanese asthmatics. The study met its primary endpoint, a change in [Indecipherable] from baseline versus placebo.

Additionally, in the poster, we show that treatment with 20 milligrams, the GB001 led to a 71% reduction in the risk of asthma worsening in the overall population and an 84% reduction in the elevated eosinophil population. These data reinforce our belief that baseline blood eosinophils are a potentially useful marker for response to GB001.

As part of our ongoing commercial characterization of the asthma market, the second poster from ACAAI detail a real broad analysis of the dynamics and prescription trends for biologic usage in asthma. All three of these posters related to GB001 are available on our website at gossamerbio.com in the postures and publications section.

On the previous quarterly call, we announced the first patient dosed by our Phase 2 proof-of-concept study at GB001 in chronic rhinosinusitis known as the TITAN study. We plan to enroll approximately 100 patients with chronic rhinosinusitis, both with and without nasal polyps in the TITAN study, which is designed to measure the effect of GB001 on the sinonasal outcome test or SNOT-22 score, after 16 weeks of treatment in patients who are refractory to intranasal steroids. We remain on track to read our top-line data for this proof of concept Phase 2 study in the second half of 2020.

Moving on to our third plan indication for GB001 chronic spontaneous urticaria or CSU, there is evidence of the TH2 pathway and cell types such as eosinophils, basophils, and mast cells are implicated in the pathogenesis of CSU. But the underlying biology differ from eosinophilic asthma and CRS. To better understand the effect of this difference in biology, combined with our desire to ensure, we are targeting the right patient population. We have decided to initiate a smaller translational Phase 2 trial in CSU in the first half of 2020 prior to initiating a larger study.

We also continue to evaluate the potential of GB001 in other allergic and inflammatory diseases such as eosinophilic esophagitis. 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. And we look forward to reporting multiple Phase 2 top-line readouts in 2020.

We'll now move on to GB002, our inhaled PDGFR inhibitor for the treatment of pulmonary arterial hypertension, also known as PAH. GB002 has the potential to be the first drug in new therapeutic class destructive, equivalent and rare disease with high unmet need and limited classes of approved therapies. GB002 has completed Phase 1 safety study, the normal healthy volunteers with no serious adverse events observed, and has been granted orphan drug designation from the FDA and the EMA for the treatment of PAH.

We have commenced an exploratory translational Phase 1b with the goals of assessing the initial safety and tolerability profile of GB002 and PAH patients, and generate target engagement and biomarker data. While we originally expected to begin patient enrollment in the third quarter of 2019, following the receipt of long-term toxicology data, we amended the trial protocol to include a six-month open-label extension following the original two week study period.

We've been working closely with our Phase 1b study sites and investigators to identify appropriate study participants for our Phase 1b study. We expect to begin enrollment in the fourth quarter of 2019. And we expect initial readout from the Phase 1b trial in the first half of 2020.

As a reminder, this coming Sunday and Monday, at the American Heart Association Scientific Sessions in Philadelphia, we are excited to present further GB002 preclinical data and two distinct animal models of PAH. The first presentation demonstrates that inhale delivery of GB002 is efficacious and preventing PAH progression in the Rat Monocrotaline and Pneumonectomy model in PAH, and furthermore, that GB002 may be disease-modifying through its effect on lung remodeling and this related model.

The second presentation detailed results from GB002 in the Su5416 Hypoxia Rat Model PAH. In this model, two weeks of treatment with GB002 significantly reduced right ventricular systolic pressure and mean pulmonary arterial pressure. Additionally, decreased plasma level of NT-proBNP, a biomarker for heart failure was observed. We view the data presented in these presentations as very promising for the future of the GB002 program in PAH. And if you are at AHA sessions in Philadelphia, we welcome you to stop by. The abstracts or both presentations are currently on our website and both posters will become available on our website after the presentation.

Additionally, based upon conversations with the regulatory authorities and KOLs, we are in the final stages of designing our GB002 Phase 2 study. While the Phase 2 study may not support registration, we believe that the data generated from this study will be incredibly valuable for future registrational study, by assessing PBR, cardiac function measured by echo and six-minute walk test. We plan to initiate the Phase 2 study in the first half of next year.

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 [Phonetic] factor involved in the body's protective response to low oxygen levels.

We are very excited to see that in October, it was announced that HIF Biology was subject is the work underlying to 2019 Nobel Prize in Medicine and Physiology. GB004 is currently in a Phase 1b designed to demonstrate proof of mechanism in UC patients. We are enrolling patients with active mild-to-moderate UC in the four-week study which is testing one dose of GB004 versus placebo. Patients enrolling in the trial must have active UC as confirmed by [Indecipherable] assessment and evidence of colonic inflammation as confirmed by endoscopy.

The primary outcome is safety and tolerability, and we plan to evaluate PK-PD, and hope to see evidence of target engagement, changes in gene expression and epithelial barrier restoration. We are also presenting information on clinical effects in the study, including Mayo Score, and after the treatment period, patients will undergo either flexible sigmoidoscopy or colonoscopy. We are pleased to say that we are on track to report initial top-line results from the Phase 1b in the first half of 2020.

Finally, we will touch on our newest clinical asset GB1275 which is an oral CD11b modulator being developed as an immuno-oncology product candidate. GB1275 is focused on addressing the immunosuppressive myeloid cell populations present within tumor tissues. These tumor types include pancreatic, colorectal prostate and other significant tumor indications. And GB1275 has received orphan drug designation from the FDA for the treatment of pancreatic cancer.

This morning we announced that we entered into a clinical trial collaboration and supply agreement with Merck, in which they have agreed to supply their anti-PD1 antibody KEYTRUDA or pembrolizumab for ongoing Phase 1/2 study of GB1275 in selected solid tumors. The study, now known as KEYNOTE-A36 is actively enrolling patients with pancreatic, gastric, colorectal esophageal and triple-negative breast cancer. The Phase 1 portion of the study consist of dose escalation of GB1275 monotherapy and after clearing several monotherapy dose levels, we will initiate dose-escalation combination with KEYTRUDA or chemotherapy. We are very excited to collaborate with Merck an established leader in cancer immunotherapy as we work to improve the lives of cancer patients.

Our team presenting the poster detailing the study design at last week Society for Immunotherapy of Cancer meeting which can now also be found in our website. We expect to disclose initial data from the study in the second half of 2020, and we will provide updates as the study progresses. Gossamer Bio retains worldwide rights of GB1275.

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

Bryan Giraudo -- Chief Financial Officer

Thank you, Sheila. We will now review the financial results for the second quarter 2019. I'm sorry, the third quarter 2019. We ended the quarter with $446 million of cash and cash equivalents. We continue to anticipate our cash and cash equivalents, plus the capital available to us under our debt facility will provide a sufficient capital resources into the fourth quarter of 2021.

Research and development expenses in the quarter were approximately $40.1 million, which reflects the continued ramp-up of expenses for GB001, GB002, GB004, and GB1275. G&A expenses were $9.8 million in the quarter with $3 million of that in total stock-based compensation. Our net loss for the quarter was $48.5 million equating to $0.80 per share.

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

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Thank you, Bryan. As we drove the call to a close, we at Gossamer Bio would like to thank all our employees, shareholders, clinical trial participants and investigators who have invested their time and resources for the betterment of patients. While we continually strive to advance our product candidates through the clinic, we know that our successes in the areas of immunology, inflammation, and oncology are not possible without your fate and commitment in our shared journey. Thank you for taking the time to join us today and thank you for your continued interest and support.

With that, I will now turn the call over to the operator to begin the question-and-answer session. Operator?

Questions and Answers:

Operator

[Operator Instructions] We have a question coming from the line of Joseph Schwartz from SVB Leerink. Your line is open.

Joseph Schwartz -- SVB Leerink -- Analyst

Great. Thanks very much. My only comment is congrats on the progress. And then for my first question, I was wondering on GB001, what is the baseline rate of asthma worsening that you expect to see in the patients you've enrolled in the LEDA study? What degree of improvement do you hope to show in this trial? And what kinds of events do you think GB001 has the best opportunity to reduce the rate of based on your understanding of the biology, as well as the endpoint?

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Great. Thank you, Joseph. So just to remind everyone, we are looking to enroll a bigger disease population in terms of disease severity. So in that respect, the patients we're going after typically will have an average of two exacerbations in the preceding year prior to the start of enrolling the study at baseline. So in terms of what we would like to see for an improvement in that area, again, we're looking at asthma worsening which is a broader composite endpoint then just the asthma exacerbation rate, and so we'll be looking at a number of events, but we are hoping to see a reduction in the range of 30% to 50% reduction.

This is similar to what we saw in the clinical [Phonetic] trials where we saw about a 50% reduction in the proportion of patients who had asthma worsening rate. So that's really what we guide patients -- what we guide really everyone to when we think about the primary endpoint for looking at the LEDA trial and looking at the primary endpoint for that study.

And then, of course, we will take that data to look at the Phase 3 endpoints and we will be looking at exacerbation, which is an individual component of the five composite endpoint score that we'll be looking at, and we'll be using that as a guide our Phase 3 planning and also to guide the exacerbation rate reduction we're hoping to see in the Phase 3 trial. And of course, this is all predicated and now we are looking at the high [Indecipherable] population and that's again been consistent with what we've been saying in terms of our ideal patient population from the beginning.

Joseph Schwartz -- SVB Leerink -- Analyst

Okay, great. That's helpful. Thanks. And then on GB002, I was hoping that you can provide us some more color on your current plans for this program. I recall that the Phase 1b has two cohorts so -- and you were previously thinking that you might start a Phase 2b, 3 based on findings from the first cohort. Have you seen that data? Or is there any other rationale for what seems like a slightly different strategy now with Phase 2 to start next year?

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Yes. A great question, Joseph. So -- yes. I think we are again looking to commence enrollment of patients this quarter. We did want to amend the study to include the open-label extension, given the availability of our long-term toxicology data. And so we've done that, our investigators are very excited to start enrolling patients and actually treat them beyond the two-week treatment period. And so we will be getting data from the 1b really in the first half of next year, and we'll be able to report out on that dataset.

And that will be very much informing the Phase 2 study design as well. So we will be getting a very important safety PK information and biomarker data, and especially looking at NT-proBNP levels, which we are excited to show that data in our preclinical models. We believe that we show a nice reduction in our animal model looking at -- to -- in the preclinical model setting. So we'll be looking to see what data we can generate clinically as well.

In terms of our thinking on the Phase 2 strategy, I think we are -- we'll be looking at PVR, again cardiac function as measured by echo and proBNP levels and other volumes as well as six-minute walk test. So overall, the study design is similar to what we have been planning all along. I think we are saying now that it will likely be a Phase 2 study, so that may not be registration enabling based on a lot of conversations we've had with regulatory authority, as well as KOLs in the space, and then compared to a Phase 2b, 3 type of approach.

However, again, we do think the Phase 2 trial will really position us for success for future registrational studies. And so it's really more of its understanding on -- again through further interactions and assessing what's been going on the field for our overall strategy. But basically the study designs and our strategy from what we've been saying is still similar in terms of what we originally laid out.

Joseph Schwartz -- SVB Leerink -- Analyst

Great. That makes sense. Thanks for taking my questions.

Operator

Thank you. Our next question or comment comes from the line of Patrick Trucchio from Berenberg Capital Markets. Your line is open.

Iris Long -- Berenberg Capital Markets -- Analyst

Hi. Good afternoon. This is Iris on for Patrick. So congrats on the progress. I have a few questions, first, on GB001, just a follow-up on the LEDA program. Can you tell us what data should we expect to be released at the interim analysis? And then secondly, can you tell us what you would consider to be a good comparable benchmark in terms of a particular study for a particular biologic that we should have in mind for the LEDA trial results? And when should we-- what should we anticipate in the composite endpoint, based on the data generated to-date? Thank you.

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Great. Thanks so much. And so, at the time of the interim analysis, that's again when about two-thirds of patients had reached 24-week and with the primary endpoint, we will be looking at the primary endpoint, which is a composite, we'll be looking at the five subcomponents of the composite to ensure consistency. And we're really looking -- to be looking at the rate of worsened events. And so that's really the key endpoint that we'll be looking for at the study. We'll also look of course at lung function and we'll be looking at safety and tolerability as well.

just to be clear, we will not be releasing any of this data since this will be an ongoing study, but will be indicating whether we think the data support of moving forward into Phase 3 planning and initiation purposes, and so that's what the level of disclosure we'll be providing. But really the -- we'll be looking for is very robust data on the composite endpoint, consistency across all the subcomponents of the composite and, of course, consistent with the secondary endpoint.

So in that regard for benchmarking purposes, we feel very comfortable looking at the data from the TITAN [Phonetic] study. Again this will be in a different population, but if we're seeing again that improvement with 30% to 50% type of improvement in the reduction in worsening events, we'll feel really comfortable that we're in that ballpark. And we will have the benefit, of course, seeing the Novartis, a totality of their Phase 3 program, the LUSTER-1 and LUSTER-2 data which will help aid in our Phase 3 planning, including statistical planning further the trials.

And again I'll just guide individuals to look at the biologic studies in their Phase 2 trials. Again these are looking at different endpoints and with the [Indecipherable] exacerbations in Phase 2 as well. And of course, that's one component of our overall composite. But again we'll be looking at consistency across all these events. We can't really look at exacerbation solely in Phase 2 as a primary endpoint just because of the event rates and that we won't have the number of events we need in the shorter term duration study and the smaller sample size. So that -- again these are all very correlated in terms of the worsening subcomponent, so there'll be -- it will give us a very good indication of how we think we will fair in Phase 3 looking at a primary exacerbation endpoint.

Iris Long -- Berenberg Capital Markets -- Analyst

Okay. A follow-up question on Novartis, that's the Phase 3 program. So based on your discussions with the FDA and the zero trial failure, do you think that the FDA will require you to run a similar Phase 3 trial in a moderate asthma patient population with the lung function endpoint? Or is it possible that study could be avoided in your pivotal program?

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Yes. A great question. We have had conversations with the FDA, where they were very interested in characterizing the efficacy in a broader population beyond moderate-to-severe eosinophilic asthma patients. We definitely wanted to have that as our patient population for the Phase 2b LEDA study because we think that's where the highest and best a scientific rationale lies in terms of the underlying biology for those patients and the potential therapeutic effect for DP2 antagonism as well as any TH2 related mechanism. But we do know that they are interested in that characterization.

And Novartis has done quite a bit now to generate data and the moderate asthmatic in the mild-to-moderate setting as well as looking at the all comers in the LUSTER trial. So our plan is to continue to have regulatory dialogs. And to talk about that plan, we are ready to see the data from again our own LEDA study, placebo, look at the LUSTER-1 and LUSTER-2, a dataset I think, become available. And take all of that back to the regulatory authorities to discuss and finalize our Phase 3 plan.

I will say that if we are seeing a clear benefit in the moderate to severe eosinophilic [Indecipherable] really not a lot of benefit in those other patient populations. We will try to streamline our Phase 3 program. We think that's the right thing to do for patients. And we also think that's the best use of the Gossamer resources as well. So those will be some of our intentions.

Iris Long -- Berenberg Capital Markets -- Analyst

Okay. Another question on GB002. So how should we think about the top-line data in the Phase 1b study, from both the safety and the de-risking perspective, particularly at safety and PAH study is something really difficult to assess?

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Yes. So think primarily, this is the safety and tolerability trial, and then experience in PAH patients, and so that is the primary outcome measures for this study. We will be looking at these biomarkers that we think can be very helpful in understanding clinical activity around the mechanism and that includes again imaging parameters and looking at right heart function, as well as these proBNP levels, which is a measure of right heart strain, and gene expression signatures which would really be more direct evidence of us on target engagement in our ability to mutualize the mechanism.

So those all be very encouraging. A lot of that will be reading into our exposure-response modeling to finalize a dose selection for Phase 1. But we don't want to guide that we think proof-of-concept in thise Phase 1b trial. Really, that it will be very helpful information for us to do a nice Phase 2 study.

Iris Long -- Berenberg Capital Markets -- Analyst

Thanks for taking all the questions.

Operator

Thank you again. [Operator Instructions] I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to management for any closing remarks.

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Thank you very much. Thank you, everyone, for dialing the call and for your questions. And we'll look forward to more dialog over the next few weeks and quarters. Thank you again.

Operator

[Operator Closing Remarks]

Duration: 28 minutes

Call participants:

Bryan Giraudo -- Chief Financial Officer

Sheila Gujrathi -- Co-Founder, Chief Executive Officer

Joseph Schwartz -- SVB Leerink -- Analyst

Iris Long -- Berenberg Capital Markets -- Analyst

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