Zentalis Pharmaceuticals Inc Aktie

Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here, and it's my pleasure to introduce the team from Zentalis. We have Julie Eastland, CEO, to my left, and to her left is Ingmar Bruns, CMO. And just a reminder, the format is a fireside talk. So if anyone in the audience has a question, please raise your hand and we'll try to address it in our discussion. But before we get started, I just need to read a quick disclosure.

For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com backslash research disclosures. If you have any questions please reach out to your Morgan Stanley sales representative. And with that, maybe I'll just hand it over to Julie for some brief introductory remarks, and then we can hop into Q&A.

Thanks, Michael. As always, we really appreciate the invite and the time. And just to go toe-to-toe for disclosures, since that seems to be the flavor, I would hate to be remiss in reminding the audience that we will be making estimates and forward-looking statements, and so there are risks and uncertainties associated with that. those and we encourage those listening to review our SEC filings. Now we both are squared away with our lawyers.

We did our duty here. Yeah. Maybe you just want to give a brief introduction to Zentalis and kind of at a high level, and then we can maybe start digging in a little bit. Absolutely.

Yes, absolutely, would love to. So Zentalis is a late-stage clinical development company focused on developing azenosertib, which is a WEE1 inhibitor, it's a small molecule. Our focus is in platinum-resistant ovarian cancer for patients who express high levels of a protein called Cyclin E1. We are currently conducting the DENALI trial. Part 2 of that trial is a trial intended to be registrational for an accelerated approval pathway in the U.S.

And in addition to that, we are also enrolling our ASPENOVA trial, which is the companion trial, which is a randomized controlled trial, which supports accelerated approval but also converts to a global full approval. So very busy. We also are expanding in some earlier lines of ovarian, doing some proof of combination studies there that we're happy to talk about. And then very interested in furthering the development of azenosertib and other combination and other tumor types, and all focused with the intent to bring the drug to as many patients as possible.

Great, and thanks for that introduction. And maybe since your initial focus is on ovarian cancer, more in the late line setting, but maybe just paint the picture for us in the ovarian cancer landscape, how it's been evolving, where the competitors are, et cetera.

Sure. It's an exciting space, exciting for patients, but also for drug developers because a lot of new opportunities. I think overall when you think about the totality of the work that's being done, it's really around targeted therapies. And in our case around biomarker-selected patient population where there is a high unmet need. Probably higher unmet need given the Cyclin E1 patients, certainly in the PSOC setting, typically don't do as well, progress faster, so no targeted therapies for these patients, Cyclin E1 patients in the platinum resistance space. We think there's a clear advantage for a different modality. Azenosertib is an oral. It is not a chemotherapeutic agent, which is primarily, if not all, that's available to patients. And again, it's for this important biologically different selected population. So a real advantage, we think, compared to maybe some other targeted agents that are coming along.

And I guess the biomarker selected approach, maybe just talk about the unmet need. And you mentioned it's not chemo, obviously, so what are some of the advantages there?

So I think, Ingmar, do you want to talk about the characteristics of the azenosertib then, compared to chemo? I think that would be helpful.

Yeah, no, happy to, Julie. Yes, so I mean, compared to most of the available chemotherapies out there, it is an oral therapy. Some oral chemotherapies out there, but not many. Right. And, you know, it is differentiated due to its five-on, two-off schedule, which is part of the, as we see, good tolerability. And in terms of safety, it really is differentiated due to a lower rate of cytopenias, namely neutropenia. Other side effects include GI toxicities, but also to a lower degree. And then the third group of side effects fatigue. For those overall, it's providing additional flexibility due to the oral route of administration. It is due to its -- schedule has been developed across a large number of patients, actually over 1,000 now, very well tolerated, yet efficacious.

And it is from primarily single-agent chemotherapy, well differentiated in terms of its toxicity profile, but also from the emerging players like ADCs or taxane regimen.

And maybe just from a patient journey perspective to understand how patients really see a lot of chemotherapy in the early PSOC settings. And for Cyclin E1 patients in particular, they tend to move through therapies in a more rapid fashion. And so as they come into the platinum resistance setting, their choices are chemotherapy. And obviously, they've built up cumulative toxicities around neuropathies. Women experience hair loss. another -- number of chemotherapy-like compounding issues. So really looking for an alternative to some of those toxicities as a break in the PROC setting because currently standard of care is either taxane-based or other chemotherapy-based options for patients. So not great choices.

Yes. And just in the PROC selected patient population, can you give us an idea of the size of that, you know, relative to PROC?

Yes, absolutely. So we've seen in our historical studies about 50% of our patients that we've looked at retrospectively screened for high Cyclin E1 protein. So we expect about 50% of the PROC population to be available. That represents about 20,000 patients across the US, EU5, UK, and Japan, so a pretty sizable market. And we expect to see about 50% of that as an opportunity for the Cyclin E1 patients.

Great. And we'll move more to ovarian, but just also you mentioned previously other ways to move upstream, maybe combinations, maybe other indications as well. So maybe just talk about beyond PROC, what are the opportunities you're considering?

Yes, I think we've said very clearly our strategic focus has been to utilize our capital resources to get this agent to patients with platinum resistant ovarian cancer first. Our second dollar goes to earlier ovarian. That's currently a POC trial, proof-of-concept trial, in second line maintenance. That's the combination of azenosertib plus bevacizumab. These are patients who had progressed while on a PARP inhibitor in the earlier first line setting. They come into the second line setting and they get into maintenance with bevacizumab as their choice. We're adding azenosertib on that and able to really see the safety combination is the goal as well as see some additional activity with regards to improvement in PFS. That would be a proof-of-concept data set that would allow us to really expand into a broader first and second line setting for the agent.

And then separately, we have some really exciting data at AACR around triple negative breast cancer in combination with ADCs with different payloads, as well as with, you know, single agent taxane. And that was, of course, in PDX models as preclinical models. But again, really, sort of, proof of concept showing the benefit of azenosertib in the face of cytotoxic agents, whether that's a single-agent chemotherapy or whether that is ADCs, that we'd like to see to extend that to the clinic, as well as I think Ingmar can certainly talk about other tumor types that he's super excited about. We'll make some decisions about where we go next outside of ovarian shortly. We plan to, as this has always been the promise of a OE1 inhibitor, to be single agent, but also a good combination partner with cytotoxic agents across multiple different tumor types. So, PROC's the beginning, not the end of the story.

I don't know if, Ingmar, you want to talk a little bit about where you might go post-Ovarian. What are some of the considerations as you think about that decision?

Yes, I think there's several factors that, of course, lead that decision. And one of them is, of course, biology mechanism. So that's certainly a big part of the process present in disease with p53 loss, right, or mutation, so, as Julie, it's really -- we've some interesting data in triple-negative breast cancer. There's certainly P53 mutation in a large proportion of patients to be found there. But we're also, you know, excited in HPV-driven disease to just name a few is all early days. We haven't really made decisions here, but that's certainly an exciting space where we think biology will lead the way. And that's even indication agnostic, if you look at HPV-driven disease in particular. And then, of course, the other factor would be combination partners, so if you look at those with extreme extensive replication stress, right? So, you know, of course there's -- what comes to mind first, of course, ADCs and TOPO1 payloads, of course, create a great deal of replication stress here. So those are certainly interesting combination partners.

And then lastly, of course, it's a little bit around the setting, right, so I think it makes sense to start where we already developed a footprint now in gynecological oncology or some adjacent indications, right, also looking towards commercialization, right, where you build the, you know, strategic capabilities and even sales force, et cetera, ranking highest is probably the biology and the mechanistic differentiation here.

Yep, makes sense. Maybe we can shift now back to ovarian and Ingmar, you gave a little bit of a preview of the profile that we've seen so far across a number of studies. Julie, you mentioned the dosing, so maybe just talk a little bit about, you know, how you're dosing the drug now versus, you know, how you dosed it in the past and what gives you confidence there?

Yes. As we have disclosed, we selected a dose, right, and we have determined pre-dose-- previously already that the five-on, two-off schedule is most favorable. That's really the best combination of -- by the way, not an uncommon schedule, but the best combination of really the exposure that we want. and the tolerability that we also desire at the same time. And I think if we look at our relative dosing intensity, we see that this is very high, and over the many and long efforts to determine the right schedule and dose here, this has been well established.

All of this is now in the DENALI trial, which again is a three-part seamless design where, you know, initially was the original, the dose escalation, but then Part 1b was a retrospective biomarker analysis at 400 milligrams, and then importantly, Part 2a, which we have, uh, press released, was the dose confirmation between 300 and 400 milligrams. So we decided to move forward with 400 milligrams of the five-on, two-off schedule, and 2b is now the expansion, and the latest addition is Cohort 2c, where we really want to account for the real-world treatment paradigm or the emerging real-world treatment paradigm. We already had patients in 2a and b, even 1b, that were also treated with taxane regimens while in the PROC stage already.

And with the addition of 2c, maybe talk about impact it's had on timelines, and then also talk about how it impacts the analysis of the primary endpoint.

Yes, I'll take the first part, and I'll have Ingmar address any impacts to the study. But importantly, this does represent patients who have an opportunity to experience the agents that are approved today. And a and b, as Ingmar pointed out in the DENALI Part 2 trial, have been enrolling since 2025. And so, of course, those patients are enrollment is complete in parts a and b. And so that data is maturing. Cohort 2c, which Ingmar just addressed, is currently enrolling, and so in order to allow that cohort to enroll, to follow for the primary endpoint of overall response, and to let those patients develop a little bit of the secondary endpoints around duration of response, collectively, because all three parts will be an integrated analysis to support accelerated approval, to allow Part 2c to, kind of, catch up on the duration. So instead of parsing out data, we're going to shift to the first half of next year so we have a whole answer and not just part of an answer. Do you want to talk a little bit about impacts on 2c at all to the study endpoint?

Yes, so we don't expect any particular impact, right, because we think that, the setting in 2c, patients will perform similar to what we've seen in prior studies, 2a and b. There's no mechanistic reason to believe that they perform differently, if at all, they might perform better.. But no concerns on inferior response rate or durability here.

Can we go back from the Phase II update earlier this year, and you didn't give us too many specifics on the details, but you did give us a flavor of what you saw. So maybe if you can just characterize that for us.

Okay. I think we can reiterate that just before you do, Ingmar, that this is a blinded trial. So unfortunately, data details aren't going to be available until we complete the study so that we don't off set ourselves back. So with that, we can reiterate the IIa disclosures there's a little bit to glean there.

Yes, that's obviously correct. But I think it was a decision that was based on efficacy, right? Where we said it's very clearly differentiated. And I would think about this in the magnitude that we've observed before. We already said that very consistent across trials. So it's really a meaningful difference that is beyond doubt in favor of 400 milligrams, while the tolerability and safety has been broadly comparable. So again, this decision was based on efficacy, not on the safety or tolerability profile.

And just as a reminder, IIa was the dose comparison of 300 to 400, as Ingmar mentioned. We also disclosed at that time that in addition to what Ingmar said about efficacy and tolerability between the 2 doses that in addition to that, we had seen a discontinuation rate that was about half of what we had seen in Part 1b of DENALI. We had not seen any Grade 5 treatment-related events in our data set. And so we wanted to provide a readout that the trial can be enrolled, that we can select the dose and that we can keep patients on trial.

Makes sense. And you also shared that update with the FDA. So maybe you can just talk about some feedback you've gotten or what you learned in that conversation.

Go ahead, Ingmar.

Yes. So recent interaction with the FDA and just a couple of goals. And part of it was, as always, to reiterate the fit of DENALI for an accelerated approval and then, of course, also confirm 2C as such as an acceptable approach. We had also previously via an information amendment filed the IIa data to the FDA.

So we also, importantly, wanted to make sure that we have a discussion time with them, even though we decided to in the sense of proceeding fast to go ahead and not wait for a meeting to confirm that. But the conversation with the FDA, there was short. In line with what I said earlier, they were 100% in agreement that this was the right choice and the only obvious choice here in terms of dosing selection for DENALI. But again, also use that to get confirmation on the fitness of IIC and the overall IIA, B and C data set as an integrated analysis as Julie already mentioned as a continued fit for accelerated approval.

Can you talk about your thinking on the bar for accelerated approval? And maybe remind us what you've shown previously in some of your data and kind of how that compares?

Yes. So we've previously seen consistently through the earlier studies that, again, as a reminder, DENALI 1B, that was the first -- the second part actually, a little bit confusing of DENALI with the 400 milligram in a retrospective biomarker analysis is an important study because that's where the Cyclin E1 biomarker was validated and qualified. So now we're prospectively validating it in Part 2 and eventually ASPENOVA. And then there was MAMMOTH originally in PARP inhibitor refractory patients. And of course, last but not least, the original dose escalation called 001 study.

And all of these studies showed a very consistent, pretty similar setting, but more lines of treatment on 001 and even DENALI Part 1b as well as MAMMOTH, but very consistent, remarkably consistent response rate and relatively consistent duration of response as well. And so that was above 30%, and that's where the bar for an accelerated approval remains. And the duration of response is just supportive evidence, as you know, right? So the primary certainly is the response rate. But then you, of course, want to be better than what the duration of standard of care would be. So we see that north of 5 months and that's really in the territory where we have consistently shown data.

Can you talk about other differences in DENALI versus some of the other studies? You mentioned one already. It's an earlier-stage patient population. So maybe that helps improve the response potentially. Any other differences that might drive a further improvement?

Yes. In terms of lines of treatment, and Julie can certainly chime in, but 1 to 3 for DENALI 1, DENALI Part 2 and 1 to 4 in case of patients with folate receptor alpha high and mirvetuximab was available and reimbursed in the respective geography. That's for IIa/IIb. It's also the case for ASPENOVA. There's one slight difference, and that's cohort 2C, which generally allows 1 to 4 lines irrespective of folate receptor alpha status or prior mirv. And that's just what we did because it's close enough.

But of course, we wanted to make sure that slightly more narrow population of the taxane regimens has a good chance of being enrolled at the time that we intend because after all, the taxane regimens are great options, of course, for patients and with a demonstrated benefit. But also, there is, of course, limited in that sense, restricted eligibility, right, due to prior taxane use paclitaxel really in the front line and the second line, lots of neuropathies along the way, right? And so we do think that, that's unfortunately, only an option for a limited patient population and therefore, we made that design choice.

I think just in addition, the 001 study, the dose escalation had quite a lot higher lines of therapy, 1 to 13 and MAMMOTH was 1 to 9. So the difference is between -- you've got the early trials, DENALI Part 1b was 1 to 5 prior lines. So Part 2 and ASPENOVA have certainly tightened up the number of lines of therapy, still seeing across those other 3 trials, the above 30% response rates and over 5 months for duration. So the lines of therapy matter, but at the end of the day, the bar is being met.

Yes.

And I mentioned it briefly already, right? The trials MAMMOTH-01 as well as DENALI 1b had retrospective biomarker assessment, right? And that's, again, how the threshold was determined. And Part 2 is prospective use of biomarkers. That's really, as you know, the gold standard of selection biomarker development and the additional differences between them.

Yes. When you have the data first half of next year and next steps would be potentially filing and getting on the market. So maybe talk a little bit about pre-commercial activities, what you're doing, what you can do until you get data? And then once you get data, kind of what are the remaining steps there?

Yes. We're very excited to start that process. We've brought talent on board. We're being very careful in how we allocate capital. But we do have a head of our commercial activities, Sarah Kelly, who joined us a few months ago, and she's already hit the ground running.

And today, we are focused on market research. We're focused on market development for both pathologists as well as for physicians because we'll have the companion diagnostic along with the therapy that we are seeking to get approval together. So market development, pricing, payer, all of these research components could start now. And some of the heavier lift in the investments can then be staged post data.

Makes sense. And you've mentioned the Phase III sort of confirmatory study, ASPENOVA. Maybe just talk a little bit about the design of that study, where you are in enrollment, maybe how that's tracking versus your expectations?

Yes, 420 patients, PROC similar eligibility as with DENALI Part 2, 1 to 3 prior lines and then again, a fourth line if folate receptor alpha high and mirvetuximab is available in that respective geography or country. And control arm investigator's choice, still standard single-agent chemotherapy with paclitaxel, PLD, gemcitabine and topotecan, which remains the global standard for trial with such a footprint, right, because any of the newer entrants are just not available outside of U.S. mostly or in case of the relacorilant combination. And yes, 1:1 randomization, 420 patients.

Sounds good. Maybe one last question, then we'll go into survey questions, but maybe talk about current cash position and kind of what runway does that give you? And what does it cover?

Yes. So at Q2, we reported just under $175 million. But in August, we added another 93-ish, $92.6 million to that. That was really the goal there was to enable to come into the data really at strength, and that gives us a runway into the first half of '28. That's about a year beyond the expected data readout for DENALI. And so in addition to that, it brought a nice set of investors to the table with nice support and sort of well-known name. So ultimately, the focus here was to ensure that capital was available for our pre-commercial activities for ASPENOVA enrollment and importantly, for just runway extension.

Okay. Great. Maybe now we can go to -- we've got 3 survey questions. They're kind of on themes across biotech, and we're sort of asking all the biotech companies. So I'll start with the first one here. It's just how has the rise of China origin innovation sort of changed your competitive positioning and your R&D versus BD playbook?

Yes. And I think from an opinion perspective, you get what you pay for. So here's -- but I think we are always for new innovation. It creates opportunities. We think China is a very exciting place and has been a very exciting place for a long time. And we see if nothing else there from a BD perspective, we can't afford to do right now, but certainly a place to go that's broader than just the U.S. or European markets to look for new opportunities. And then, of course, that could create really interesting partnering opportunities or future play for assets in China. So we think the innovation is great. And I think anything that brings innovation to patients is great. So go China.

Yes. Makes sense. And second question here is kind of a hot topic since this weekend is just are you implementing AI adoption? And if so, where has it changed a decision, a time line, a cost or a probability of success? And I guess, what evidence should we expect over the next 2 years?

Yes. I mean I think AI is super exciting. And Ingmar, you could chime in on the sort of the research side of it. And with everything, we want to take a measured approach. We want to utilize tools that can really enhance our business, not for the sake of just implementing a tool. And so I think while we're bringing AI in, we're bringing it in, in a very focused way, which can enhance our business system or enable us to be more efficient or faster in certain processes.

So we're very careful about how we're doing that. And important, if nothing else, of course, is the sacred of our data and the confidentiality, of course, of that data. And so AI, we will use where appropriate in the right type of closed systems. And maybe, Ingmar, I don't know if you want to add.

Yes, not much to add, right? I think it's very comprehensive. But I do think we are using it really for including in clinical development and medical writing, et cetera, for routine tasks, right, where I think is that you leverage it to accelerate things, right, and reduce the actual workload where we can. It's probably not different from most other companies or settings here, but that's really where we focus on less so on the -- what we really think is the intellectual core of our operation and activities here.

And it's an enhancement, not a replacement. And it's a great way to leverage a resource. At the end of the day, you're still responsible for the content, you still need to review, you still need to make sure the data going in is the right data. So it's not free in terms of workload and nor should it be, but we think it's helpful.

Makes sense. And then the third theme here is which policy variables, whether it's FDA, Medicare negotiations, MFN, tariffs sort of global pricing. I know some of those don't apply. But just what matters most for you? And what have you changed, if anything, because of it?

Probably not a surprise, but the FDA is the near-term sort of key, but following very quickly on the heels of that are things like Medicare, Medicare reimbursement, MFN eventually, I mean, ASPENOVA is a global trial for full approval. And so pricing on a global basis will be something in the future. And you're right, it's not a tomorrow. The accelerated approval is a U.S. launch. ASPENOVA global full approval. So all those things have to be thought about. But what's actionable for us primarily is, of course, the regulators in terms of the FDA. And then second to that is going to be thinking about azenos pricing and reimbursement in the U.S. market. And tariffs, not so much, knock on wood, but we keep a watchful eye on that, but not as impactful.

Maybe just in terms of your FDA interactions over this process. I know you've had a few over time. Is it the same group of people at the FDA? Is there turnover? Like how has that impacted things?

Go ahead, Ingmar.

Yes. No, it's been -- our experience really is a positive one. So they have been a very consistent and reliable partner and same group, same people involved over multiple interactions now. And we don't certainly see a change to the negative, remained a really trustworthy partner and a strong collaborative there is.

Okay. Great. Looks like we're out of time. So why don't we wrap it up there. Thanks, Julie. Thanks, Ingmar. Really appreciate your time today.

Thank you, Mike. Good to see you.

Good to see you.

Thanks, everybody, for coming.