Surrozen, Inc. Common FY 0 Earnings Call

Welcome everyone to H.C. Wainwright's Sixth Annual Ophthalmology Investor Conference. My name is Matthew Caufield. I'm a senior biotech analyst here at H.C. Wainwright. We're very grateful to be joined by Surrozen and CEO Craig Parker. Craig, thank you very much for joining us. Always great to speak about the platform together.

Thanks for the invitation. Look forward to talking with you.

Yeah, absolutely. A key component for the Wnt platform has been targeting Fzd4 or Frizzled-4 and anti-VEGF. Can you walk us through the rationale behind the Fzd4 therapeutic target for retinal diseases?

Yeah. This is a key receptor that's involved in modulating Wnt signaling. Fzd and LRP is the co-receptor. Actually, going back to the early '90s, there were some genetic studies of some pediatric diseases, retinal vascular diseases, that led to the identification of Fzd4 mutations and Fzd4 signaling as a contributor to these quite rare childhood retinal vascular diseases.

Subsequent studies and experiments showed that there were mutations in both the Fzd4 receptor, one of the ligands for the receptor, Norrin, and LRP, this co-receptor, that result in a loss of function of Wnt signaling in these kids in retinal vascular endothelial cells. That led to leaky vessels, poorly developed vessels. While these diseases don't look exactly like wet AMD or diabetic macular edema, they have some overlapping pathologies of leaky vessels and importantly, for the Wnt signaling pathway, poorly functioning blood-retinal barrier tight junction proteins.

That's what led us and others to be interested in pursuing Fzd4 mediated Wnt signaling for retinal vascular diseases was really compelling human genetics that this was a critical pathway for retinal vessel development and retinal vessel function.

No, it's very helpful. The clinical asset SZN-413 was previously licensed to Boehringer Ingelheim as a bispecific Wnt agonist antibody. From there, the separate development proceeded for preclinical candidate SZN-8141, which includes targeting Fzd4 and anti-VEGF. How do you think about the internal pipeline differentiation and positioning presently?

Yeah. You follow obviously the area closely, and you know that one of the evolving themes in the area is to pursue multifunctional antibodies or other modalities.

you're targeting multiple contributors to the pathology of the disease. We know Fzd4 mediated Wnt signaling is really important. I think the Merck molecule and data has shown that Wnt agonism alone could have VEGF-like clinical benefit. We also know there are other contributors to this disease. As I said, you follow this closely, you know that the field's now identified not just VEGF and now not just Wnt, but IL-6 and potentially other contributors to the disease. That was really the foundation of our approach, coming from a background in Wnt biology, was to see this evolving landscape of trying to target multiple contributors to the disease. Obviously, VEGF is foundational therapy, is extremely effective in improving visual acuity and reducing leakage of retinal vessels.

There are clearly other contributors, and we think the data today points to Wnt and VEGF being the most attractive targets in the area. I know we'll talk about our other molecule, SZN-8143.

There are potentially other contributors to the disease. The foundation of our approach was this idea of multiple contributors to the pathology, and in one molecule targeting multiple pathways that are contributing to the disease pathology.

Mm-hmm. That's very helpful. Kind of along those lines, the pipeline additionally includes preclinical asset SZN-8143, which targets Fzd4, anti-VEGF, and anti-IL-6, as you just mentioned. How are the tri-specific approach and the IL-6 blockade relevant for targeting inflammatory signaling and specifically any related retinal edema?

there were observations actually going back to systemic use of IL-6 in autoimmune patients who also had what's called uveitic macular edema.

the physicians treating those patients observed that their retinal phenotype was improving. I don't know if it was exactly at the same time, but there were parallel observations in patients with retinal vascular diseases looking for biomarkers of disease, where people observed that IL-6 was elevated in some diseases like UME and diabetic macular edema.

the observations sort of came together and resulted in people pursuing IL-6 inhibition initially alone for diseases like uveitic macular edema, where there is clearly an inflammatory component.

That's also now led people like us and others to take this multifunctional approach, and really try to answer the question of can we continue to improve clinical benefit for patients targeting more than just, in our case, Wnt and VEGF? We think that there's compelling data from others that IL-6 is a contributor to UME and now to DME. You probably saw this data.

Also Bardina's data that's been presented on the combination of VEGF and IL-6 showing that IL-6 has an additive benefit in DME.

There's also obviously evolving data in UME. Again, we built on this foundation of what disease entities have multiple contributors, and where is there good clinical evidence that there are multiple contributors. I think UME really stands out as one where there is clear evidence that IL-6 is a contributor. I think there's now data that in DME, at least in some patients, there's an inflammatory component and antagonizing IL-6 on top of, at least no one else has done Wnt VEGF yet other than us, but on top of VEGF has an additive benefit. That was what really propelled us trying to make this quite complex, large antibody that inhibits VEGF, inhibits IL-6, and activates Wnt signaling, and preserves each of those individual elements, at least in terms of its individual potential efficacy.

Meaning we have the same VEGF inhibition as other VEGF inhibitors. We have the same IL-6 inhibition as other IL-6 inhibitors. We think we have the best-in-class Wnt activation.

Very exciting. Looking at the data side of things, at ARVO this year, the team highlighted the preclinical efficacy looking back to SZN-8141. Can you discuss the key takeaways there from the preclinical OIR and/or CNV mouse models and possible benefit from the Wnt and VEGF dual mechanism that you're seeing?

I think the short answer is there appears to be synergy combining Wnt agonism and VEGF inhibition. Maybe I'll just take a minute to describe the experiment, because I think it was a very rigorous way to explore what the individual contributors and what the combined molecule can do in these models. As you said, one of these is a DME model, oxygen-induced retinopathy. The other is a model of wet AMD, a choroidal neovascularization model. What we did is we took SZN-8141, which is Wnt activation and VEGF inhibition, and for one control molecule, we knocked out the VEGF inhibition part of it. It's still the whole SZN-8141, but doesn't inhibit VEGF. That's what we call Wnt agonist in the poster. Took SZN-8141, knocked out the Wnt part of it's still the whole SZN-8141, but in this case, it just inhibits VEGF.

We mixed those together in one mouse eye in an experiment, in another arm, we gave SZN-8141. What that showed in the OIR model, which again is a model of diabetic macular edema, it affects the retinal vessels in these animals, is if you look at the same concentration in each of those experimental cohorts, there's significantly better efficacy in the SZN-8141 than there is in Wnt alone or VEGF alone.

That's not surprising, I don't think, given that we know that these are both contributors to the phenotype. What's really exciting is that the mixture of the Wnt agonist and the VEGF antagonist is not as good as SZN-8141. There's some intrinsic benefit. It may be a proximity effect, or there may be some other biology involved that putting them together in one molecule has a synergistic effect on, in this case, reducing what's called the avascular area. The phenotype in these mice is that they get leaky vessels, and they also have areas where there are no vessels. There's a clinical correlate to this, which is called retinal non-perfusion in DME. You probably know from studying the field, this is an area of very high unmet need.

VEGF drugs, as well as they work on leakage and improving visual acuity, they don't really do anything to these areas of retinal non-perfusion, which are known to be associated with more active disease and disease progression.

That was a very unique finding, was the synergy, and we had previously shown that Wnt agonism alone can reduce these areas of non-perfusion or avascular areas. The combo does it in a really compelling and synergistic way.

Very exciting. Very helpful as well. Obviously, an important part of the Wnt pathway validation was Merck's prior acquisition of EyeBio. They have their current phase IIb/III clinical development of Restoret in DME. It's important to note Surrozen's 8141 adds the VEGF inhibition to the Fzd4 targeting. What do you believe could be the best ways to differentiate 8141 from other Wnt pathway therapies? Obviously, you mentioned the retinal non-perfusion impact.

What are the best ways that SZN-8141 could carve out its own space in Wnt?

Mm-hmm. Yeah, I think the ways to win in retinal vascular diseases, and I think this is particularly true in DME, are to at least be a better drying agent. I think there are a number of ways to measure that. As you know, in these studies and in clinical practice, optical coherence tomography is used to image the back of the retina.

You can directly observe fluid. There are multiple ways to measure that, like central subfield thickness or defining absence of macular edema based on a certain cutoff, or just looking for the complete absence of fluid. These are outcomes that are typically measured in a study, and I think being a better drying agent on those outcome measurements would be differentiating and be really clinically meaningful.

That other area that I just mentioned, though, of retinal non-perfusion, I think would be something that would really change the field because the VEGFs don't really have an effect on that. I think if you were both a better drying agent, you'd be the best biologic injectable in the market. If you also were able to achieve this reperfusion of these areas of retinal non-perfusion, that would really be transformative for the field. I think our preclinical data suggests that's possible.

Okay. These are mice, so of course, everyone always says how translatable is the model, and the answer is it's been very translatable for the approved drugs.

They've all shown an effect in these animal models. They're validated. I think well-accepted models.

Until we see that dual effect of better drawing and reperfusion, I think it's hard to say that the animal models are translatable. They point to that being the opportunity for SZN-8141.

Okay. Well, that's very helpful. When you talk about the retinal non-perfusion areas, the goal there obviously is then facilitating or laying down healthy- Correct vasculature, right?

Yes. Yeah. Again, there are some well-established methods for measuring this. As you said, they're actually just literally related to the area of non-perfusion. You can image that, measure it, just the surface area of that, and the objective would be to reduce that by- either restoring blood flow to existing vessels that don't have flow or stimulating new blood vessel growth in those areas.

In the animals, it's a little difficult to know exactly which of those you're doing. We're clearly reperfusing these areas.

Right. Very interesting. One question that comes up sometimes is obviously with Merck's registrational progress.

Do you have any considerations on the ideal mix for treatment-naive versus previously treated DME patients?

Obviously, the less treated patients are, the earlier stage of disease progression, the more they, I guess, conceptually could benefit from interventional therapy.

Do you have any sense of where they could be optimally positioned or where you yourself in later stage development would like to see that split between treatment-naive versus previously treated?

Yeah, I think it turns out that that's actually a really important, interesting but also complex question. There's a regulatory answer to that question, and then there's a sort of clinical practice and how are the drugs utilized.

The real world, yeah psychology of the provider's perspective.

Right now the only regulatory path is for treatment-naive patients.

That's why you see these phase III studies will have a preponderance, maybe not exclusively, but a preponderance, 75% of treatment-naive patients, because.

what's required for registration. It's also, I think a retinal specialist would describe it as the cleanest population to observe a treatment effect in because there aren't.

complicating factors. There isn't any issue of a prior response and what does refractory mean.

I think as of right now, in terms of registrational study, you would expect to have 75, I'm talking about DME now, 75% of patients.

Yep be treatment-naive. The others would really be to expedite enrollment and maybe make some observations about how did your drug behave in someone who had had prior EYLEA or VABYSMO, but you would have.

washout period in these studies, so it's not like it's a crossover design.

Right I think where you're going with the question is also you've, I'm sure, heard from retinal specialists that there may be a large majority of patients who, I wouldn't call them refractory, but still have fluid on the current drugs.

Some people have called them incomplete responders. Is that a viable target population for us to pursue? I think the answer is there's unmet need in that population for sure. Sorry, my lights just went off. I think one could envision a study that investigates those patients, and that could be quite important to show, for example, that if someone has incomplete resolution of fluid on EYLEA or VABYSMO and you are able to resolve fluid, switching them to SZN-8141.

could be clinically really meaningful. Again, there's no precedent for that resulting in a labeling for you in that indication. I think. Right in reader psychology, that could be quite important.

Okay. That's very helpful. Maybe taking a step back just to think about the landscape. Where do you see the greatest unmet need when we think about wet AMD, DME, UME, in the context of standard of care therapies? Is there a direction that you think the Wnt platform could be best positioned strategically among those different indications?

I think our preclinical data and the biology would suggest that those and other retinal vascular diseases.

are all really viable target populations for us. Another disease- Okay that has overlapping pathology is retinal vein occlusion.

There are, I think, a pretty broad array of opportunities for Wnt signaling and VEGF inhibition combined. We've talked about this before. I think the biology in the retinal vessels in particular is very straightforward and quite elegant. Activating Wnt signaling up regulates tight junction proteins. These are directly reducing vessel leakage. Maybe you could argue there's a straighter line to DME for the Wnt agonism portion of the molecule. On the other hand, wet AMD is very VEGF-sensitive and VEGF-driven disease, having the combined molecule could be very important in wet AMD. I think they're all really tractable opportunities and I think we would anticipate, over time, exploring many or if not all of those.

Okay. Excellent. One other question I wanted to ask was, considering the therapeutic development in the retina, including tyrosine kinase inhibitors, bi and trispecifics, even biosimilars, for instance, how do you envision a candidate such as AT141 ideally positioned within the retina market?

Yeah. Ideally, I think you'd achieve those clinical benefits that I described. You'd be- Sure the best drying agent.

Just to give an example of what that might mean in DME. In DME, if you had 80% of patients with no macular edema, no intraretinal fluid, I think that would be a really clinically meaningful and differentiating benefit. The current agents get to about 40%-55%, 60%. If you added on top of that, this reperfusion, that would be I think, again, clinically highly differentiating. If you really wanted to say, what would it take to, aside from what those really important clinical benefits, as you know, durability is important, less frequent injections is important. If you could achieve those and have an every 6-9 month injection, that's sort of your world beater profile, I think- is to do all of those.

We're, I think, enthusiastic and optimistic about the potential for this to be a less frequent injection- than every other month maybe, or maybe it's every 3-6 months.

The animal data, ultimately the human data will really dictate how durable the treatment response is.

Sure. Understood. I know we only have a minute or so left here, but we've touched on this in the past, with AT141. As that program moves towards the clinic, what biomarkers or imaging endpoints do you think could have the most important impact, from a clinical proof concept standpoint? I just wanted to note that that IND is targeted for second half of this year, I believe.

Yes. What kind of biomarkers or what kind of initial signals do you think could be most useful for folks?

Yep. In this field, people call changes in retinal anatomy a biomarker. Sometimes people get confused because we also do measure like an aqueous humor proteins to see if there's something, for example, that if you activate Wnt signaling, is there a protein that's upregulated that would be a biomarker for Wnt signal activation?

Right. We'll look at that and take aqueous taps in the study to see if there are any soluble biomarkers of treatment response or Wnt signal activation.

On the imaging side, it's really everything that's very well-established modality like OCT for the identification. Well, first of all, something called ETDRS for the visual acuity measurement.

Right. That's a well-established and validated visual acuity method.

OCT for the fluid measurements. For this reperfusion, there are actually some other methods that are typically used, but again, VEGFs have not shown a response on those. These would be what's called OCT angiography and ultra wide- fluorescence angiography.

The sites that we and others would use would typically have all of these instruments available. I don't think there aren't any unique endpoints. There would just be a unique treatment effect if we saw it.

Right. Okay. Understood. That'll be great to see that program in the clinic.

Yep. Maybe just lastly here in our last minute, are there any aspects of the pipeline or Wnt biology overall that you believe investors are not fully appreciating in terms of the Wnt therapeutic opportunity, the unmet needs in the retina, kind of what folks may or may not be missing at this stage of development?

I think our program, the Merck program, general now rising interest and understanding of Wnt- in the retinal specialty field.

I think people have really begun to understand how this is a really critical pathway in the retina, both for development and also function. We don't have other programs that are funded that we've emphasized, but there are a lot of other targets in the eye for Wnt potentially. We've talked to you a little bit about the front of the eye. There are quite a few Wnt responsive tissues in the eye. I think- long-term vision for the company, I think if we achieve some success with AT141, that could lead us to pursue other cell types and targets in the eye.

It really turns out to be quite a good opportunity set of cells that express, not necessarily Frizzled-4, but other frizzled receptors where Wnt agonism could potentially have a therapeutic benefit.

Mm-hmm. That's very exciting. Well, with that, I'd really like to thank Surrozen and Craig obviously for joining us. A very engaging platform and approach as a novel path in the retina. Really excited to see the progress and thank you again for joining us. It's been really helpful and really great.

The opportunity. Have a good rest of the day.

I appreciate it. Thank you everyone for tuning in.