Crinetics Pharmaceuticals, Inc. Q2 FY2025 earnings call

Scott Struthers - CEO

• Paltusotine NDA review for acromegaly remains on track with an anticipated September approval, and the regulatory team is confident. An outstanding launch team has been assembled. Engaged with over 40 acromegaly patients, and pipeline programs like paltusotine for carcinoid syndrome and atumelnant for CAH are ramping up. Active at endocrinology conferences with multiple presentations.

Isabel Kalofonos - Chief Commercial Officer

• Excited about the launch of PALSONIFY (brand name for paltusotine). Made progress in interactions with HCPs, patients, and payers. Built a commercial team with ~30 sales reps onboarding. Market research shows unmet need in acromegaly treatment, with many patients dissatisfied with current options. Disease state education campaign and patient support hub launched.

Dana Pizzuti - Chief Medical and Development Officer

• Regulatory progress on paltusotine for acromegaly is on track with FDA review milestones. Progress on paltusotine in carcinoid syndrome Phase III program, with sites up and running. Atumelnant in CAH has achieved milestones, with revisions to timelines for ACTH dependent Cushing's syndrome. TSH candidate data presented at ENDO shows potential for once-daily oral therapy for Graves' disease.

Toby Schilke - Chief Financial Officer

• Second quarter financial results: $1M revenue from licensing, R&D $80.3M, SG&A $49.8M. Lowered high end of net cash used in operations guidance for 2025 to $340M-$370M, with cash runway to fund operations into 2029.

In the second quarter of 2025, Crinetics recognized $1 million in revenue from licensing and supply agreements with its Japanese partner SKK. Research and development expenses were $80.3 million, and selling, general, and administrative expenses were $49.8 million. There are no distinct product segments with specific revenue contribution percentages detailed as the focus is on pipeline development.

- Lowered the high end of net cash used in operations guidance for 2025 to $340 million to $370 million, reflecting greater precision on clinical timeline estimates and prudent overhead measures.

- Maintains guidance that existing cash and investments will be sufficient to fund operations into 2029, providing runway for PALSONIFY launch and pipeline advancement.

- Uncertainties associated with forward-looking statements due to risks in business operations, market projections, and regulatory approvals.

- Regulatory risks related to the approval process of NDA and other pipeline programs.

- Clinical trial risks, including potential issues with safety profiles like liver toxicity observed with atumelnant.

- Payer and market access risks, including uncertainties in formulary placement and pricing negotiations.

Q: Congrats on all the progress. Neurocrine seems to be doing quite well with the CRENESSITY launch. I was just wondering how does that figure into your thinking about the pace of enrollment for your Phase III CAH studies now, if at all? And are there any particular kinds of patients who are more likely to go on to CRENESSITY commercial versus enroll in a clinical study for atumelnant? Does that sound like for any kinds of patients in your view?

A: Joe, thanks for the question. I think that the launch from CRENESSITY is a great thing for patients with CAH and the momentum of that launch shows some of the unmet need that's out there. And in terms of impact on our enrollment in our Phase III, either adult or pediatrics, actually I think it's a positive. In general it's raising awareness on multiple fronts of the disease. And maybe just ask Dana if she wants to comment or Alan on kind of the patient population that we're treating.

Q: This is Frances on for Tyler. So just curious if you could elaborate on the timelines for the IND submissions of the TSH and SST3 agonist. Are you still targeting 2025?

A: Maybe, Steve, you want to give some color on that. Stephen F. Betz Yes. Thanks for the question. Those IND-enabling work is all still in progress. We are targeting the end of the year. I don't have particular granularity past that, but that's certainly what we're aiming for for both molecules.

Q: Can you speak to your comfort level with current consensus numbers for the paltusotine launch?

A: It's not typical for companies at this stage or prudent to comment on consensus. We haven't given guidance. So that's where we are right now. We feel comfortable though on the launch preparation and the progress we're making with the FDA.

Q: For the global CAH Phase III study, what are your expectations around placebo response and any potential impacts from different geographies?

A: Yes, sure. I think that we have a pretty ambitious endpoint as we've talked about for the adult trial and we are not really expecting a very high placebo response rate at all. So again, we're setting it up so that you have to sort of address both the A4s and have a reduction in GCs to physiologic levels. So in our mind regardless of which part of the spectrum of CAH you're in, it will be very difficult for a placebo patient to meaningfully change where they are.

Q: Just in regard to PALSONIFY, we were wondering if you plan to provide color on pricing at the time of approval? And then also with like your current payer work, how much do you understand about the level of flexibility you might have to price when compared to like current SSR injectables?

A: Yes. So obviously we'll be discussing price at the right time after what we hope will be an approval soon. But Isabel, maybe you want to talk a little bit about the payer side of things. Isabel Kalofonos: Yes. Thank you very much for the questions. So we have continued to make progress in our discussions with payers and the value proposition continues to resonate and is very positive the feedback that we are getting from them. They understand that current treatments, particularly SRLs had a high burden of treatment and there is significant waste with many of the patients, 1/3 of the patients exactly taking more than 13 injections a year. So we continue to partner with them. We continue to reinforce the clinical value of the treatment. And at this time, we are not commenting further on price.

Q: Given how much scrutiny there was on the cases of LFT elevation that we're seeing with atumelnant, can you provide an update on the ongoing experience and whether that's been seen subsequently? And how do you plan on kind of maintaining updates going forward on that liver tox profile and whether it is turning into a meaningful signal or the opposite?

A: I think we've said before, we're kind of surprised at the scrutiny on that 1 patient we saw earlier and we're very comfortable with the emerging and growing experience that we're gaining with it. And in terms of updates on it, I think it warrants updates as the data matures and we have something meaningful to share. We should remind everybody that this is part of a much larger program. We're enrolling patients into the open-label extension from the Phase IIs. We're starting to activate sites and we'll be enrolling patients in the adult study and then the pediatric study. And so I think that kind of emerging experience will give people more and more comfort. And if there's a big problem, obviously we'd have to let people know. So I think no news is good news on that front.

Q: When we look to some of the competitive readouts in CAH, the criteria for GC dose reductions were a reflection of maintaining A4 levels within that 120% of baseline values. However, that was based on the pre-GC dose A4 levels. And when we look to the A4 component and the primary endpoint that you're using for [indiscernible] in BALANCE studies, that's based off of post GC dose A4. Obviously A4 is expected to be lower after a patient takes their morning GC dose. But can you just provide a bit of context as to why specifically you selected post-GC A4 as part of the primary endpoint and how should we be thinking about the clinical relevance of assessing efficacy pre-GC versus post-GC on androstenedione?

A: Yes. I think that's a good question, Cory. Just a reminder that I don't think that keeping A4 levels at 120% of what might be a very high baseline is all that great of a treatment goal for the person dealing with their CAH and we believe they should be getting down to normal or very close to it. But Alan, maybe you want to talk about some of those nuances in post and pre-GC dosing. And I'll remind you, Cory, that between the primary and the secondary endpoints, we're looking at both. And just as I always encourage everybody, it's the overall profile of the drug that's really important in addition to the primary endpoint. Alan S. Krasner: Yes. So it is true that when you administer glucocorticoid, you would expect in this patient population for the A4 level to go down and that is kind of what the regulatory precedent that was set in the CRENESSITY trials established. That is the optimal time to measure A4 with respect to looking at the trough level of androgen exposure with the treatment regimen to include the drug plus the glucocorticoid. We use that partly because it's a precedent, but also because it helps to facilitate variability assumptions for sample size calculations. With those assumptions, we know we have a very well-powered trial here in Phase III.

Q: This is Catherine on for John. I have a quick question about Cushing's disease. And just if you could provide a little bit more color on kind of discussions on what potential endpoints you're looking at and kind of how the endpoint would differ for your mechanism versus kind of some of the other drugs that have been approved in the indication?

A: Alan, do you want to take that? Alan S. Krasner: Yes. So the primary endpoint for Cushing's disease trials generally is normalization of 24-hour urine-free cortisol excretion. This is a measure of integrated cortisol exposure over a 24-hour period of time and approvals are usually based on the proportion of patients who achieve normal urine free cortisol. I mean I think atumelnant is uniquely situated here in several ways. One is in our trials to date, again we're running a single center trial at the NIH and we will be starting larger trials soon. But what we're seeing so far is a very rapid normalization of urine-free cortisol in pretty much all of the patients tested so far. The rapidity I think is unprecedented and the treatment duration at the NIH is 10 days and within less than 10 days, we are seeing normalization of urine free. So I'm very excited to expand these trials to increase the duration of treatment and to enroll more patients to hopefully see this as a consistent finding. And if so, I think we have kind of a real new level of treatment for Cushing's disease here.

Q: You stated earlier that acromegaly patients see endos 2 to 4 times a year, which could lead to a slower start to the launch. But should this approval draw patients to see their docs regardless of their cadence throughout the year? And further, when do you expect patients to start flowing in?

A: Yes. I think this is almost something we can answer for ourselves just based on personal experience in most health care systems how long it takes to get to see a specialist, which is unfortunate but true. But Isabel, maybe you want to comment more specifically on the question. Isabel Kalofonos: Yes. Most patients are visiting their doctor every 6 months or once a year. Of course we are working actively in our engagement with advocacy and our activities in patient activation, as I mentioned it before, to get patients to proactively search for those appointments and move them. But we know that that will take time and that's why we are cautious that at the beginning it will take some regular rhythm of patients going to the providers and our goal is to accelerate it, but we recognize that that will be one of the barriers early on.

Q: It seems like a TSH agonist or antagonist is an obvious disease modifying mechanism yet other people are pursuing other targets. I guess why do you think there hasn't been a TSH antagonist successfully developed? And what do you guys think you're doing differently now with that in mind?

A: Well, this is Scott. I think that this is right in our sweet spot and you could ask that same question about almost any of our programs. So these are very difficult targets to address. We've built a capability for this over now 17 years at Crinetics. But Steve, maybe you want to comment a little bit on what it's taken us to manage to crack this one as well as some of the other programs. Stephen F. Betz Yes. Thanks for the question. I do think this is -- if you look at TSH antagonism for the treatment of Graves and the treatment of thyroid eye disease and you know that from a mechanistic standpoint, blocking the action of the receptor is the right thing to do if you can make the right molecules. But I think as Scott said, this is what we do for CAH and for Cushing's, the right thing to do is block the action of the ACTH receptor. So the right thing for hyperparathyroidism is to block the PTH receptor. And so rather than find kind of an end around to try and get an effect, we work to find the right molecules at the right receptors that will produce the right pharmacology that these patients need. And we have everything from the medicinal chemistry skills and the drug development skills and the understanding of biology and receptor pharmacology to kind of put all those pieces together to find the right molecules.

Q: Congrats on the progress. I'm just curious in terms of the BALANCE CAH study, in terms of Part B for the GC tapering, I'm just curious will that replicate what we see or the same protocol that will be used in [ COM CH ] because I believe there's sort of glucocorticoids reduction periods followed by sort of GC stable periods and I think it takes place over 2 sort of periods. Is that what you're going to be doing in the BALANCE CAH study as well?

A: Yes. Dana or Alan, do you want to take that on study design? Alan S. Krasner: Yes. So I think what you were asking, Douglas, about the pediatric Phase III part, right? And what we're trying to do, it's not exactly the same, but we're trying to demonstrate both efficacy at reduction in A4 and getting GCs tapered, right? But I think in the pediatric space, you're always a little bit more cautious with the kids. And so we have a little bit more flexibility in terms of how the GC reductions take place. And I think that that is kind of going to be a little bit reflected in the mechanisms of how the investigators carefully titrate them down. But what we're looking for is to get patients to normal A4 and then keep trying to titrate them down. Douglas Dylan Tsao: And is it set in the protocol for investigators to titrate down or is that investigator discretion? Alan S. Krasner: Well, that is the objective of the protocol is to get them to reduce the GCs as much as they can. Douglas Dylan Tsao: But there's no time when they have to achieve it or by 25 weeks or something of that order? Alan S. Krasner: Yes, there is an endpoint to the trial. And so they're expected to be on stable GCs for a 4-week period before the end of the trial. 28 weeks. So from 24 to 28 weeks, it's stable.

Q: At the moment, just given the timelines for the adult and pediatric trials, how does Crinetics plan to manage the progression towards NDA submission and labeling discussions while incorporating the data from both of those studies down the line?

A: Yes. Dana, do you want to take that one? Dana Pizzuti: Well, yes, thanks for the question. And the way that we look at it is we're looking at each one of those as a distinct submission and so I don't think that we'll necessarily hold one until the other one gets done. So whatever gets done first, which the Phase III for the adults is definitely almost begun in Phase III. So that should be done before the pediatric one. And so the way that we look at it is we will submit that. Hopefully, it will be successful and then we'll do an amendment or a supplement to add the pediatrics.

Q: I'm just curious on your thoughts on paltusotine in surgically naive patients based on the AAC presentation. Is there a market here? Is there a significant number of patients who do forego surgical resection?

A: Let me let Isabel answer that one. Isabel Kalofonos: Well, as you know, we have a label that based on PATHFNDR-1 and PATHFNDR-2 pending the FDA review look at naive and also switching patients. When it comes to presurgical patients, we are very excited about the data that we were able to present at ENDO and we also believe that there is an unmet need. But at this time, we are actively considering that segment. We believe that if physicians see that there is an opportunity and pending our label, that might be an opportunity in the future.