Surrozen Inc Stock

Hello, everyone, and welcome to today's fireside chat with the management team of Surrozen. Would you like to briefly introduce yourselves before we get started with questions?

Sure, I'm Craig Parker. I'm the CEO at Surrozen.

And I'm Dan Chao, Vice President and Head of Clinical Development.

Great. Thank you so much for joining us here today. Maybe to kick things off, Surrozen is pioneering a new class of Wnt-based therapeutics aimed at some of the largest, most persistent unmet needs in eye disease with a lead candidate now approaching the clinic in diabetic macular edema. As you sit here today, how do you frame the opportunity in front of the company? And what are you most excited about?

Yes. So this is a really momentous year and great time for the company. We just filed an IND to start our first clinical trial with SZN-8141. The excitement about the molecule is about bringing together 2 mechanisms in 1 molecule to treat retinal vascular diseases. One is anti-VEGF. This is a well-established therapy, really has been a phenomenal, I think, breakthrough for patients with retinal vascular diseases, but it doesn't provide complete control for all patients. And so we started off as a Wnt biology company, and it turns out that Wnt has been implicated in normal function of retinal vessels. And one of our competitors has shown some clinical data validating the approach of activating the Wnt pathway for retinal vascular diseases. And so I think we're really excitingly bringing together what we think are the 2 best mechanisms for treating these diseases into 1 molecule.

Dan and our team, clinical development team, have designed a study we've called DUET, which we think has the opportunity to really reveal what could be like a best-in-category or best-in-disease, even control of fluid accumulation in these patients, potentially visual acuity, and potentially something which could really be a breakthrough of re-perfusing the retina in patients who have diabetic eye disease in particular. So really, it's a pretty unique moment for the company, and I think an exciting time for particularly the clinical development team to get this molecule into patients.

Fantastic. Your platform rests on SWAP technology, bispecific antibodies that mimic natural Wnt proteins and activate the pathway selectively in diseased tissue. For investors newer to the science, how do you explain why modulating Wnt signaling is a fundamentally different way to treat retinal disease than today's mono anti-VEGF approach?

Yes. So I'll let Dan answer that.

Yes, sure. Thanks, Craig. I think when we think of the Wnt pathway, I think, first of all, the Wnt pathway is a very ancient and conserved pathway, important in many organ systems for regulation and repair. And that is no different than in the eye, and in particular, the retinal vasculature. It's been known for a very long time that these Wnt proteins are important for both the development of the normal vasculature as well as maintenance of the blood-retina barrier. And in fact, there is actually human genetic evidence that some of the key proteins, such as the Wnt receptors Frizzled-4 and LRP5, are actually linked to human disease where there's incomplete development of the retinal vasculature.

And so this leads to a really, I think, complementary approach as we think of anti-VEGF. Now vascular endothelial growth factor is a pathologic cytokine in the context of diabetic macular edema, which causes leakage. So kind of a pro-pathogenic cytokine, whereas Wnt, we think of as more a restorative, reparative pathway, where we know that the Wnt pathway is important for upregulating tight junctions of proteins which are important for repair of the blood-retina barrier. So in fact, we think we're attacking this through very complementary mechanisms compared to anti-VEGF, where we're preventing leakage. And with Wnt, it's really more a restorative, reparative pathway. And we think that combining these 2 then leads to additive and even synergistic effects in control of these.

That's great. SZN-8141, your lead candidate, pairs Frizzled-4 agonism with VEGF antagonism for diabetic macular edema and wet AMD, is expected to begin initial clinical development in the DUET study mentioned by year-end. Can you tell us more about the rationale for this combo and how you expect it to differentiate from mono VEGF in the clinic?

Yes, absolutely. So I think part of it is highlighting some of the data that Craig had mentioned. First, I think there's strong scientific rationale for targeting the Wnt pathway as a restorative pathway. And in fact, a lot of preclinical data, including our own, shows that activating the Wnt signaling pathway can show strong efficacy in a number of preclinical retinal vascular disease models. And in particular, I think the recent Phase I/II data from first generation Wnt agonist Restoret showed very robust increases in BCVA and CST that are comparable to VEGF. And that level of efficacy has not been seen outside of any non-VEGF mechanism. And so on the surface, the idea of putting together the 2 strongest mechanisms within disease, VEGF and Wnt, could have the potential to lead to better therapies beyond the standard of care.

I think the next piece of evidence is what is the evidence that actually Wnt and VEGF are actually additive and not overlapping? And I think that comes from our preclinical data where we've shown that when we compared our molecule, the SZN-8141 dual molecule versus a molecule where we've either inactivated the Wnt part of the molecule or the VEGF part of the pathway or even a co-formulation of the 2 is that our SZN-8141 combination molecule shows superior efficacy compared to all those. So it's just not only additive efficacy, but potentially also synergistic efficacy.

In a different preclinical model, in a wet AMD model, we've also shown that SZN-8141 was superior to aflibercept or EYLEA in reducing leakage, again showing the additive benefit of these 2 pathways. And so then we've now designed the DUET trial to test and confirm whether these preclinical results translate into humans.

And it's probably worth mentioning, the outcome measurements in these studies will allow us to detect whether we have significant clinical benefit, not statistically significant, it's not powered for that, but whether there's meaningful clinical benefit on the kinds of endpoints that you would be looking at in a Phase III trial. So these are visual acuity. These are fluid accumulation measured through something called OCT imaging. And we can even measure through some other types of imaging modalities whether we have this effect of re-perfusing these areas of non-perfusion in the retina. And of course, safety is a critical endpoint in any early clinical trial. So the study has been designed to really try to capture these elements that could be differentiating for the molecule.

Rather than combining 2 individual mono therapeutics, you've decided to combine your 2 targets into 1. Can you tell us a little bit more about the approach for using a bispecific rather than 2 different molecules and the advantages you think that could convey for Surrozen?

Yes. So maybe I'll let Dan expand a little bit on those comments about what we've seen preclinically. There is synergy in combining them into 1 molecule. And so I think there's a scientific rationale for doing that and a really compelling one. There's also just the -- I think, some patient convenience issues associated with trying to do separate injections as well as reimbursement issues. So for example, if one were to show that a Wnt agonist alone was very effective and safe, why wouldn't you combine that with an existing anti-VEGF therapy? And I think -- and Dan is a retinal specialist. I think a retinal specialist would tell you their patients would not like to get 2 injections. There are some volume limitations around getting 2 injections at the same time. And I think it would be very challenging to get reimbursed for using 2 therapies that would probably be roughly equally priced at the same time. So I think there are other reasons, but there are also really compelling scientific reasons that Dan can expand on a little bit.

Yes. I mean, I think just to add on, again, I think what we noticed is that in the preclinical models, it's not just additive effects, but there are synergistic effects, suggesting that, I think, bringing these 2 mechanisms in close proximity could show stronger effects than again the co-formulation.

Great. I know you touched on this a little bit before earlier, but it'd be great to hear more about the DUET study design. It looks like you're taking SZN-8141 head-to-head against VABYSMO in roughly 60 treatment-naive patients. Can you tell us a little bit more about how you designed this trial and what you're hoping to see out of it?

Yes, absolutely. So our DUET study is divided into 2 parts. The first part is a first-in-human dose ascending phase. And so participants will receive a single injection, and then they'll be observed for 3 months in ascending dose. We'd obviously start with both lower doses and if safety permits, we would then escalate to the top dose. This would be open label. And our study is being performed in both parts in DME. And in this first part, the majority of these patients will likely have had previous VEGF or other treatments for DME.

I think the main purposes of these 2 parts is to determine initial safety as well as the 2 doses that we'd like to take into the part 2. We'd obviously get some initial efficacy data after single injection as well. And then that would transition into the part 2 portion, which is our dose expansion -- randomized dose expansion with comparator. And so we would have 3 arms in this study: 2 dosing levels of SZN-8141 randomized 1-to-1 compared to VABYSMO at the label dose. All 3 of these groups would be given 3 monthly injections of the drug and then observed for 4 months. And that dosing regimen is typical of a common clinical dosing regimen that one would see in clinical practice. The main endpoint for all of these again is safety and tolerability.

And the second part, again, as was mentioned, is about 60 patients total. So about 20 patients per arm. And so from an efficacy standpoint, it is not statistically powered to show statistical differences. However, we are -- do think we can get meaningful robust directional data on a number of endpoints such as best corrected visual acuity, fluid and OCT metrics as also other measures related to retinal non-perfusion.

And I think, in particular, what we've designed this study is hopefully to show in the second part is, again, how does SZN-8141 compare to a contemporary standard of care. And we think there are, I think, 3 ways of differentiation that we would like to see for the molecule. One, I think, is related to anatomic control or drying. And we think that this is a reasonable number of patients to see directionally to compare VABYSMO compared to SZN-8141. The second is also an early look at the durability of the effect. As I mentioned, we will be observing these patients 4 months without treatment after the 3 monthly doses. And the third part is also related to this idea of retinal non-perfusion is whether SZN-8141 could help to reverse retinal non-perfusion, looking at some of these exploratory endpoints.

I think for people who don't follow retinal vascular diseases and clinical development there, it's important to highlight that the drugs that have been developed for retinal vascular diseases have a very rapid effect. And so I think one can get a pretty good idea about clinical benefit, like probably literally within days, but certainly within weeks, and at 12 weeks, I think you'll have a pretty good indicator about what the ultimate efficacy of the drug can be in a relatively small study. And so for those of us in the industry and for investors, I think it's a really attractive therapeutic area because the opportunity to see clinical benefit really early and in a relatively small sample size have a pretty good idea about ultimately what the efficacy is going to look like.

And maybe one thing just to fall back on, and again, for those that are not familiar, is like, what are really the key unmet needs in DME? And I think we've tried to address that, actually, with our 3 points of differentiation. I think number one is better anatomic control. With our current standard of care, not all patients respond. In fact, there are numbers from studies quote that 50% to 60% -- about 40% are suboptimal responders to our current therapy based on anatomical measures. And so agents which can improve drying is certainly a big unmet need. The second is durability and reducing treatment burden. I think current patients need to receive these injections as frequently as monthly, and so I think that's kind of a very clear value proposition. And then the third part is then, again, addressing this retinal non-perfusion, which is known as a clear driver of diabetic retinopathy. And we know our current treatments, our current anti-VEGFs, do not reverse this non-perfusion. So the potential to be able to revascularize or perhaps disease modifying effect is also something of high interest in the field.

Great. The next area I'd like to talk about is your second candidate, SZN-8143, which layers in IL-6 antagonism on top of the 2 targets from 8141 to reach uveitic macular edema alongside DME and wet AMD. How does a triple mechanism broaden the franchise? And how do you differentiate the 2 programs?

Do you want to start on that one?

Sure. I think one thing is, I think, in the field of retinal vascular disease, I think IL-6 has also been established as a key mediator of disease, and now there are a number of programs looking both at kind of IL-6 inhibition as a monotherapy or in combination and have shown some interesting results. And so I think the strategy there is that IL-6, again, is more on an inflammatory axis. And again, that could cover another, I think, circle of the Venn diagram of retinal vascular diseases that may or may not be addressed by the other 2. And so I think very excited about our -- the molecule that we've created and its potential in retinal vascular diseases.

I mean, a foundation of our approach broadly, and it's very much true for 8143 and 8141 is these are diseases that we know have multiple contributors to the pathology of disease. And so while anti-VEGF therapy is very effective, I think the biology and biomarker studies, and then studies with some of these other monotherapy agents, have shown that there are these multiple contributors to the disease pathology. And so I think, you'll hear at retinal conferences more and more people talk about multifunctional antibodies because of this growing evidence that there are these multiple contributors to the disease. So we think it just makes sense for these disease entities with multiple contributors to try to go after multiple pathways within one molecule.

And as Dan said, now there's growing evidence that IL-6 is an important contributor to certain patients with macular edema. There's a related inflammatory driven disease called uveitic macular edema, where IL-6 has been shown clearly to be a contributor to that. So that's sort of a natural fit for 8143. And then how they fit together with each other. I think, as you know, 8141 is ahead of 8143. I think we don't have to make decisions early. We have the opportunity to look at evolving data from others to see what the clinical data with 8141 looks like and to really not have to decide on the relative positioning until we have a lot more information. But ultimately, it could be that going after all 3 of those pathways is the best for every retinal vascular disease. And if that's the way the landscape and our own data evolves, I think that's great for us.

Great. The markets you're targeting are all large and continue to grow. Like you said, anti-VEGF still leave considerable unmet needs for these populations. How do you think about the areas where your therapeutics could be most helpful in the current therapeutic landscape?

Yes. So as you said, these are highly prevalent diseases if you include wet AMD and diabetic macular edema and some of these other related diseases like uveitic macular edema. The current market for these -- for the anti-VEGF agents today is about $15 billion globally. I don't have to tell anyone who's a health care investor that the population is aging and for the most part, these are age-related diseases. So that's currently going to be a growing market. So our opportunity is really large.

Dan's alluded to differentiation. The most recently launched drug, and now also I think it's market leader for, I don't know if it's true for both wet AMD and DME, but certainly for one of those is VABYSMO. And that product, I think, showed you how differentiation can translate to very rapid adoption by retinal specialists. So they showed somewhat better drying on a secondary endpoint in Phase III trials. And that led to very rapid adoption because I think retinal specialists are like, they're treating to fluid. They can visualize it very clearly with this OCT imaging. It's all part of normal clinical practice. And I think there are certainly opportunities to be the best agent for drying for some of these areas like retinal non-perfusion for durability. It could be that you hit all of those with this molecule with 8141. So again, really large growing markets with very clear evidence that retinal specialists are very quick to adopt products that have some differentiation.

That makes sense. On the IP front, we recently saw some news that the Patent Trial and Appeal Board recently declined to institute Merck's post-grant review of one of your core patents. Can you tell us a little bit more about the IP situation there and how it relates to your own product portfolio?

Yes. So we have what we think is a broad issued patent for these SWAP-like molecules that are Frizzled binders and LRP5 or 6 binders. Merck filed an opposition to that, called a post-grant review. People can find those documents online at the USPTO website. Ultimately, what's called the Patent Trial and Appeal Board chose not to institute that. When they make that decision, it's based on the low likelihood that they would win that opposition. So right now, there is -- one has to institute this PGR, or at least file for it within 9 months of the patent issuing. That's long past now. So there isn't an opportunity for anyone else to challenge that patent through a post-grant review process. So we feel like we are discoverers of this technology. The company was started around this technology and Wnt agonism, and we have a broad -- we think broad issued patent for this general approach and formats of antibodies or antibody-like molecules that bind Frizzled and LRP molecules.

Great. And then beyond just the retinal vascular programs, I understand you also have earlier research in corneal endothelial disease, in the RPE and photoreceptor protection, where you pointed to Wnt's relevance, including conditions like Fuchs endothelial corneal dystrophy. How should investors think about the potential opportunity in some of these other disease spaces?

Yes. So Dan can elaborate on, I think, this disease called Fuchs endothelial dystrophy and some of the other opportunities. The biology behind this is related to the Wnt pathway again. So we know that the Wnt pathway is involved in preservation of some of these cell types, in some cases differentiation of some of these cell types. Actually, Wnt has been implicated or demonstrated in other actually lower species to be involved in differentiation of different cell types into photoreceptors. So that's a potential relevance for disease like geographic atrophy.

So fundamentally, the Wnt pathway is important in many of the cell types in the eye. So there is a pretty rich opportunity set just in ophthalmology for pursuing molecules that can modulate the Wnt pathway. Some of those cell types include cells in the cornea. So I'll let Dan describe that and what the disease is and what the opportunity is there.

Yes. We think this is a particularly interesting one. It's a disease called Fuchs corneal endothelial dystrophy. And what it is, the cornea, again, is the front of the eye, the clear part of the eye. You can think of it as a window. And at the back end of that is a monolayer of cells called endothelial cells, which are there essentially to dehydrate and pump out materials to keep that clear. So in the absence or dysfunction of these corneal endothelial cells, essentially the cornea gets steamy and you can't see. Just imagine you're in the shower, and imagine that's every day of your life. And one of the diseases is the Fuchs corneal endothelial dystrophy, which is kind of a native disease, an age-related corneal endothelial degeneration.

Now there are other ways to have corneal endothelial dysfunction, like for instance, after surgery, you also lose these endothelial cells. And currently, the treatment for corneal edema is surgery to essentially transplant and replace those endothelial cells. That is quite effective, but you can imagine that's limited both by donor tissue as well as then risk benefits of going into surgery. And I think what we've shown is some really interesting science showing the Wnt pathway being important for proliferation of these corneal endothelial cells. So you can imagine, say, what if you had a drug that you could inject in the front or in the back of the eye that could endogenously regenerate these endothelial cells and clear the cornea? And I think we have some interesting preclinical data to suggest that that's possible through manipulation of the Wnt pathway, and I think represents a very interesting opportunity that we're looking into.

So we have a candidate-ready molecule actually right now. We don't have -- we're very well financed to run clinical trials for 8141 and 8143, but not as much for SZN-113 as the designation for this molecule for Fuchs dystrophy. So that's really just limited by capital at this point. But I think really compelling animal models of corneal injury combined with all of the kinds of biophysical characterizations that you do for the molecule itself to prepare it for further development. And it's sort of to go right now.

All right. Great. Looking forward to seeing more of that in the future. Speaking of the future, finally, for investors just getting to know the story, what does Surrozen's success look like over the next 12 to 18 months? And what are the key milestones you think people should be paying attention to?

Yes. So I'll talk a little bit about some of the development milestones and financial milestones. We filed our IND, I think, 8 or 9 days ago. We did a PIPE financing in March 2025. The second tranche of $95 million of that is due when our IND is open. So we would hope for that to happen quite soon. That's what would adequately finance us through clinical trials for the first 2 molecules.

Dan mentioned Restoret, which is a Merck molecule. It's not being called Restoret anymore. MK-3000 or remigromig, I think, is the molecule name. There's Phase III data for that forthcoming. It's actually scheduled to be presented at the American Academy of Ophthalmology on October 10. There may be a press release before that. That's a Wnt-only molecule. Remember, our molecule, 8141, is Wnt agonism combined with VEGF antagonism. But that could be really important validation that the Wnt pathway alone has benefit that could be VEGF-like. Again, that would be really supportive of our thesis of combining these 2 best pathways. So that's relatively near-term.

And then what we've said is we'll be treating patients by the end of this year and have data -- our own data in the second half of 2027. So obviously, that's critical milestone for the company is to generate our own safety and potentially efficacy data in 2027, nominate 8143 and get that moving into the clinic as well. So those are some of the critical near-term milestones.

Fantastic. A lot to look forward to. Well, great. Thank you so much for joining us here today.

Thanks for having us.

Thank you.