Earnings Transcript for SRZNW - Q4 Fiscal Year 2022

Operator: Good afternoon, and welcome to the Surrozen Corporate Update Conference Call. My name is Josh, and I will be your manager for this call. I will now turn the call over to Craig Parker, CEO of Surrozen to begin the call.

Craig Parker: Thanks, Josh, and thank all of you for joining us today for this important corporate update. As Josh said, I'm Craig Parker, CEO of Surrozen. And with me today is Chuck Williams, the Chief Financial Officer at Surrozen. We'll be providing corporate and R&D pipeline updates today and will then address questions. Slide 2. I'll be making forward-looking statements. Please consult our SEC filings, in particular, our 2022 annual report on Form 10-K for a full discussion of our risk factors. Slide 3. As some of you know, Surrozen is the preeminent innovator in using the Wnt pathway, the body's own physiologic mechanism for tissue repair to selectively stimulate tissue regeneration in a broad range of diseases. We do this through our proprietary platform and technologies that combine an understanding of Wnt pathway biology in specific disease settings with advanced antibody engineering techniques and proprietary antibody technologies. Our vision is to design and develop tissue selective antibodies that have the potential to regenerate tissue in many severe diseases. It's this targeted approach to Wnt modulation and the extremely broad potential therapeutic applications that distinguish our approach and our technologies. The ultimate clinical promise of our approach is disease-modifying benefit. Wnt signaling plays an essential role in regulating many biological processes, including regenerative responses to tissue injury, and we see myriad opportunities to regenerate tissue for clinical benefit. We've invented several novel multivalent antibody-based approaches to selectively modulating Wnt signaling and have advanced to into the clinic. We believe that the Wnt pathway's broad physiologic role portends a role for Wnt therapeutics in a wide range of severe and acute diseases. Our approach overcomes a significant limitation to most regenerative medicine approaches that are limited by availability of donor tissue or long-term viability. We're currently focused on 2 key clinical areas

Charles Williams: Thanks, Craig. So as Craig outlined, we've made significant progress with our programs over the last few months. And I wanted to highlight a few, the things that we've accomplished from a corporate and capital structure perspective to establish an even stronger foundation for continued future success. So first, I wanted to highlight, we executed a partnership with Boehringer Ingelheim in the fourth quarter of 2022 to develop a Wnt agonist SZN-413 for the treatment of people with retinal diseases. We anticipate the potential to identify the lead Frizzled4 targeted Wnt agonist candidate by year-end 2023, would trigger a potential $10 million milestone payment. Secondly, we implemented a restructuring in Q1 of this year. Our efforts were focused on maximizing shareholder value by

Operator: [Operator Instructions]. Our first question comes from Dae Gon Ha with Stifel.

Dae Gon Ha: Congrats on all the progress. Good to hear things are back in motion on your side of the table. Maybe I'll just start with two before I hop back in the queue. Regarding the 043...

Craig Parker: I don't hear anything.

Dae Gon Ha: Hello. Can you guys hear me? Hello. Can you guys hear me now?

Craig Parker: Yes.

Dae Gon Ha: Congrats on all the progress. I wanted to ask two questions. One was more of a clarification for the 043 plan. Is there a change in the study plans? Because I thought the Phase I next study was in early cirrhotic patients, but now it seems like chronic liver disease. So was there a change? Or what was the, I guess, the nuance that I'm missing? And based on the liver transaminase observations, can you speak to your confidence or strategy to mitigate similar observations in more hepatically-impaired patients? And then I've got a follow-up.

Craig Parker: Thanks for the questions, Dae Gon. So yes, you observed a nuance in what we think are the patients likely to be enrolled in the study. So the general objective of the study -- well, the primary objective of the study is unchanged, which is safety. We think that -- and cirrhotic patients are chronic liver disease patients. For many etiologies like patients with hep C, for example, cirrhosis is defined by in part a FibroScan score or transient elastography score of 7.5. We're taking patients with lower FibroScan scores. So they will certainly have chronic liver disease. They will have fibrosis. But whether they have frank cirrhosis, I think we'll just have to see. So that's the nuance in the description of the target population that you picked up on is they may have FibroScan scores that are low enough that they would not be considered to be cirrhotics yet, but they would certainly have fibrosis and have hepatic impairment.

Dae Gon Ha: Got it. And what about the hepatically-impaired aspect? How might that be a potential complication for you guys? Or do you have strategies to mitigate that?

Craig Parker: No. We have not identified a specific mechanism where one could mitigate, for example, by co-administering something else. And so I think, as I mentioned, we've observed that damaged tissue tends to be more sensitive. And so I think this is really going to come down to the dose response in disease tissue versus healthy tissue. So not -- there's no specific mechanistic strategy at this point based on the data that we've generated. But again, it's possible that at quite low doses, there's a regenerative response that doesn't bring with it some hepatocellular injury.

Dae Gon Ha: Okay. Regarding that MABEL aspect you were talking about, so if we think about your 1326 study, how many more dose cohorts are you going to be exploring? I think I heard you say starting with 0.04 but going up to 1 milligram dose. Have you clarified how many cohorts that would be? And kind of by extension, this notion of higher-than-expected exposure in humans versus animal studies. Is that also an effect for your 043 molecule as well?

Craig Parker: Yes. We'll publish some of the pharmacokinetic data at some point for both molecules, but 043 was roughly in line with our PK projections from animals. We're -- Dae Gon, we're not going to disclose all the dosing cohorts, but it's a pretty typical dose level strategy. And we can continue to go above 1. And it's possible, for example, that we could go up to 2.5, where we've seen one of these events with a different route of administration. So one potential hypothesis, for example, is that Cmax may be a contributor. We don't have preclinical data suggesting that, but it's seen with other molecules, and we're giving the molecule IV. And we may ultimately want to test whether there's a difference at doses we've tested IV with the subcutaneous dose. So...

Operator: Our next question comes from Hannah Adeoye with JPMorgan.

Hannah Adeoye: It's Hannah on for Eric. Just a few from us. Have you commented on the half-life of 1326 before? And if so, are you able to speak to any of the expected dosing regimens or frequency for a multiple ascending dose study based on your preclinical and clinical findings thus far? I guess, generally, I'm trying to see what gives you comfort that the AEs you've observed initially...

Craig Parker: Hannah, I couldn't hear that, I don't know if others could.

Hannah Adeoye: Okay. I can repeat. I was saying, have you guys commented on the half-life of 1326? And are you able to speak to any expected dosing regimens or frequencies for a multiple ascending dose study based on your preclinical and clinical findings thus far? Just trying to see if there's any data points to give you comfort that the AEs that you've observed thus far won't be seen over longer dosing intervals? Were you able to get that?

Operator: One moment, please, the conference will begin momentarily. Go ahead, Hannah.

Hannah Adeoye: Can you guys hear me now?

Craig Parker: Yes.

Hannah Adeoye: Just was asking about the half-life of 1326 and your expected dosing regimen or frequencies for a multiple ascending dose study.

Craig Parker: The half-life is about -- for 1326, you're asking, correct?

Hannah Adeoye: Yes.

Craig Parker: The half-life is about 5 days. Keep in mind, though, that because there are a number of Wnt pathway target genes that are activated when you activate the pathway, the biological effects could be longer lasting than the -- what you might anticipate from the half-life of the antibody. And so it's not a straightforward align the PK with the frequency of dosing. So we think this could be in every other week or perhaps even less frequent dosing regimen. We have not finalized that yet for the Phase Ib portion. And obviously, we want to see all the human PK data at different dose levels. That half life, by the way, was in primates for 5 days.

Operator: [Operator Instructions]. Our next question comes from Yatin Suneja with Guggenheim.

Yatin Suneja: Can you guys hear me?

Operator: Yes, you're coming in loud and clear.

Craig Parker: I can't hear him.

Yatin Suneja: Craig, can you hear me now? Once I get signal from the company I'll ask the question.

Operator: Craig, please give us the word when you can hear us?

Craig Parker: I can hear you. I can't hear Yatin.

Yatin Suneja: Now? Hello? I think we are able to hear. I don't know because the other line is able to hear. Chuck, can you hear us?

Charles Williams: I can hear you. Craig, can you hear Yatin?

Craig Parker: No.

Charles Williams: You can hear me?

Craig Parker: Yes. Can you translate the question?

Charles Williams: Why don't we do that.

Yatin Suneja: Let me ask the question, Chuck, do your best in translating. So with regard to 043, I think you mentioned that you have confirmed target engagement. Can you characterize that for us? Was there a dose response? And how do you feel about 0.5 dose? Is that sufficient to elect either a clinical or a biological activity? That's one. And maybe a similar question for the other one because I don't think you said for 1326, anything on the target engagement.

Charles Williams: Yes. So Craig, can you hear me?

Craig Parker: Yes.

Charles Williams: Question is we mentioned that we've confirmed target engagement and there was a dose response. So I think for -- Yatin is asking actually for both programs, for 043 specifically, how do we feel about 0.5 and the biological activity that we might see? And a similar question as it relates to 1326?

Craig Parker: And Yatin, I can't hear you, so make sure you let Chuck or others know that you can hear me. So as you noted -- you can hear me, okay. As you've noted, we've confirmed target engagement with 043, at least targeting ASGR1 receptor through ALP elevation. So these are not adversities. These are ALP elevation that results from blocking ASGR1, which is a scavenger receptor in the liver that takes ALP out of the circulation. I think your question is really about what kind of doses have we seen activity in animal models? And are we in the range with 0.5? And while we've typically employed higher doses in animal models, we think we're in a range that could be a therapeutically active dose, and then I'll just also make the observation that obviously, given that we had not seen any of these adversities in other species, other species may not be that translatable for predicting a dose response. So we're in the range, and I wouldn't be overly concerned or focused on the exact dose in the mouse translating to humans since the translatability for tox has not been there. For 1326, we do not have a target engagement assay, so we'll take getting into UC patients and biopsying the tissue to identify whether we've activated Wnt signaling. So in that situation, in that setting, we have an assay for a Wnt target gene called Axin2 which we'll look for to confirm that we've activated the pathway.

Yatin Suneja: Got it. Maybe one more question, Chuck, if you can translate. This is -- so I think it seems like at this point, we cannot rule out whether this is the phenomenon that you're seeing at least on the liver-related AEs, is it target-specific? We cannot rule that out. However, you are saying that these damaged tissues might be more sensitive. So can you help us understand is there any threshold effect at certain doses you might not see. I'm just curious like what gives you confidence...

Craig Parker: Chuck, I can't hear anyone still.

Yatin Suneja: Yes, these damaged tissues are more sensitive.

Charles Williams: Craig, can you hear me?

Craig Parker: Yes.

Charles Williams: Okay. So he -- Yatin's question has to do with -- we can't -- at this point, you can't really rule out the liver issues are target-specific, and seeing that the damage might be more sensitive, is there any threshold effect at certain doses that we've seen or might see based on the data we've collected?

Craig Parker: So to answer the first part of your question, Yatin, this does seem to be a liver-specific effect while our SZN-1326 is targeting Frizzled5, which is enriched in the intestinal epithelium in ulcerative colitis patients. It is expressed on hepatocytes. So that would be consistent with an effect that's similar to 043, meaning they're both hitting liver to some extent. And I think, as to your -- the second question, I think, is what -- how do we find the therapeutic index? Is there -- what's the likelihood of finding a therapeutic index. And again, I think we have to be cautious about extrapolating too much from the animal models. As I've emphasized, I think the robust nature of the response in multiple different animal models for both molecules, the consistency of that response across experiments and across different types of injury, I think is very compelling evidence of the pharmacology and the biological rationale, but I wouldn't get too focused on the exact doses that we tested in animals. And I think if this is a Wnt-related effect related to regeneration, in the healthy liver, it may be, and I don't -- we don't have data to support this hypothesis right now, but it may be that the damaged liver, because there is some active regeneration ongoing will really just display the benefits of regeneration and not these bumps in transaminase, but we'll just have to see what the data says in humans. I don't think we have any preclinical data to exactly answer that question.

Operator: Thank you. And this concludes the Q&A session. I'd now like to turn the call back over to Craig Parker for any closing remarks.

Craig Parker: All right. Well, thanks, Josh, and thanks, Surrozen team for joining me, and thank you all for joining the call and for your interest. I apologize that we had a little bit of a phone game for me to be able to hear questions. But thank you again for your participation and look forward to hearing from you in the future.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.