Ladies and gentlemen, thank you for standing by, and welcome to the Gossamer Bio Incorporated Customer Q1 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Bryan Giraudo. Thank you. Please go ahead, sir.

Thank you, operator, and thank you all for joining us this afternoon. I am joined on today's call by Gossamer Bio's Co-Founder and Chief Executive Officer, Dr. Sheila Gujrathi. Earlier this afternoon, Gossamer Bio issued a press release announcing its financial results for the first quarter ended March 31, 2020, in addition to providing a corporate update. Please note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Gossamer management will be making forward-looking statements. Actual results may differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the statements contained in Gossamer's news releases and SEC filings, including in the Annual Report on Form 10-K and subsequent filings. This conference call also contains time-sensitive information that may be accurate for only a limited period of time. Our ability to meet our guidance, especially that related to the timely initiation and completion of clinical studies, in addition to our ability to release results from our clinical trials in a timely manner may be adversely affected by the ongoing COVID-19 pandemic. Gossamer Bio undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. Now, I'd like to turn it over to Sheila. Sheila?

Thank you, Bryan, and good day to everyone joining us on today's call. Earlier this afternoon, Gossamer Bio was pleased to announce its financial results from the first quarter 2020, in addition to several favorable updates to our pipeline of clinical product candidates. These include the completion of a pre-specified interim analysis for our LEDA Phase 2b study of GB001 in moderate-to-severe eosinophilic asthma, as well as the release of topline data from our completed Phase 1b study of GB004 in patients with active ulcerative colitis. Beyond those, we have a number of other exciting updates to cover. So, let's jump right in. We will start with GB001, our once-a-day oral DP2 antagonist, which is currently being evaluated in two ongoing studies, the Phase 2b LEDA study in eosinophilic asthma and the Phase 2 study in chronic rhinosinusitis. We announced today that we have completed a pre-specified interim analysis of the LEDA study, which was based on approximately the first two-thirds of patients who either completed or withdrew from the study. The Independent Data Monitoring Committee or IDMC, reviewed results from the interim analysis and recommended the study continue as planned to its completion. As we have previously stated, given that this is an ongoing blinded study, we are unable to characterize the data further. We expect to report our topline data when the study is complete in the second half of this year. The final decision to proceed to Phase 3 will be determined on the totality of the final data, as well as discussions with global regulatory authorities. Based on the results of the interim analysis and the IDMC recommendation, Gossamer has commenced initial Phase 3 planning and supportive activities. GB001 is also being studied in the Phase 2 TITAN study for the treatment of chronic rhinosinusitis, both…

Thank you, Sheila. We will now review the financial results for the first quarter of 2020. We ended the quarter with $346 million of cash and cash equivalents. We continue to anticipate our cash, cash equivalents and marketable securities, along with the access to our debt facility, will provide us sufficient capital resources to fund operations and capital expenditures until mid-2022. Research and development expense in the first quarter of 2020 were approximately $41.4 million as compared to R&D expenses of $25 million for the same period in 2019. This reflects -- this increase reflects a continued ramp-up of clinical expenses related to our clinical programs and increased expenses related to the development of our proprietary pre-clinical programs. In-process R&D expenses in the first quarter of 2020 were approximately $2.8 million as compared to $1 million for the same period in 2019. G&A expenses were $10.7 million in the first quarter as compared to G&A expenses of $8 million for the same period in 2019. And our net loss for the quarter was $54.1 million, equating to $0.87 per share. For the same period in 2019, we reported a net loss of $32.6 million, which equated to $0.90 a share. With that, I'll turn the call back over to Sheila to offer closing comments before we open the line for Q&A. Sheila?

Thank you, Bryan. As we close the scripted portion of this call, I would like to take a moment to personally thank those who have contributed so far to the success of Gossamer. From the patients in our clinical trials to our valued investigators advancing the field of medicine, to our investors who have bought into our shared mission and finally to our employees who are working diligently every day in the labs or virtually at home, your valiant efforts have enabled Gossamer to pursue its goal of enhancing and extending the lives of patients. Thank you all. With that, I will now turn the call over to the operator for questions. Operator?

Thank you. [Operator Instructions] Your first question comes from the line of Geoff Meacham from Bank of America. Your line is open.

Hi, guys. This is Olivia Kapra [ph] on for Geoff. Thanks so much for the questions and congrats on all the progress today. And can you give us a little more insight into what went into that interim go-no-go decision for GB001? Was there a level of clinical reduction that was met that really ultimately drove that recommendation? And when you think about success in the Phase 3, are you looking for some more thresholds versus what was met in that Phase 2 interim? Thanks so much.

Thank you, Olivia. Yes, whilst the interim, just to be clear, was pre-specified and planned as an administrative analysis and that we were basically looking at the totality of the data on the [indiscernible] primary and key secondary efficacy endpoints, safety and tolerability, it wasn't really designed to adjust anything significantly for the study. Having said that, of course, whenever you do the analysis, you do look at all the efficacy and safety and the IDMC, which is a very seasoned group of really pulmonary and respiratory experts, take a look at that data and also make a determination. So, we did take a look at the clinical outcomes that we were measuring and we are very pleased that we actually designed our Phase 2 study to really focus on those clinical outcomes that are most important and relevant for Phase 3, including exacerbation. And so that's the totality of the data set that they were able to take a look at in the first two-thirds of patients and we're again very pleased and encouraged that they recommended to continue on with the study to study completion. And so we're very much keeping that in mind about what does our Phase 3 endpoints we are going to be looking at in that Phase 3 decision? And I think this study puts us in a very good position to make that [indiscernible] decision.

Your next question comes from the line of Joseph Schwartz from SVB Leerink. Your line is open.

Great. Thanks and congrats on the great news. I was wondering if you could talk a little bit about what else you look for in the totality of the data for 001 when making your final go-no-go decision? If you can characterize what more insight you'd like to gain from the data set, that would be helpful. Thanks.

Sure. It's really around continuation of the study and the maturity -- that continued evolving maturity of the data set with the total sample size that we're looking at. Again, for the efficacy endpoints, secondary endpoints, as well as, again, the safety and tolerability aspects. So, it's really around looking at all of the data on the full 480 patients plus that we enrolled into the study, which is the full sample size. So just continuing to make sure that all of these things are reading out, so again that evolution that you get from a full data set versus an interim dataset. So, that's really what we will be continuing to look at and evaluate.

Okay, that makes sense. Thanks. And then do you foresee any challenges to completing the evaluations for the last third of the patients enrolled in LEDA, given what's going on in the world?

Yes -- actually no. We're actually -- we put in so many risk mitigation plans. As I've mentioned, we are feeling very confident that we'll have not only a high rate of completion for those remaining patients, but good quality as well in terms of the data collection and monitoring. So, we're feeling very comfortable about being able to complete the study and actually be able to really see it through completions to the final analysis.

Sounds great. I look forward to seeing the full data. Congrats.

Thanks, Joseph.

Your next question comes from the line of Eliana Merle from Cantor Fitzgerald. Your line is open.

Hey, guys. Thanks so much for taking my question and congrats on all the progress. Just in terms of the UC data, can you help us think about what the next steps would be for GB004 in terms of thinking about the potential next study? And I guess, what data you would want to see to further derisk the asset before you'd be comfortable moving forward into a Phase 3 study? And then secondly, on the UC program, I guess, just in terms of your pre-clinical modeling or perhaps maybe from the initial clinical data, what is the JAK [ph] in terms of the length of time it would take to get to sort of the peak efficacy? So basically, I mean, do you think that like as you would move from say, four weeks to eight weeks or 12 weeks in an induction study, I guess, when would you expect to get to that peak sort of level of efficacy? Thanks.

Great. No, thanks for the questions. Yes, so we're, again, very pleased with our Phase 1b data in that to look at the clinical efficacy outcomes that we're seeing already in four weeks, gives us, again, that confidence to move forward into the Phase 2. So now we're going to be doing a more robust Phase 2 induction study. This is going to be a 12 weeks. And will really give us, again, additional time to be able to assess the impact on induction. The fact that we're already seeing effects on histologic remission and mucosal healing is again very encouraging for us. And typically, we do see earlier effects on histology then you could see on some of the other clinical parameters. So it fits very nicely with the mechanism of action for GB004. And again, these are very meaningful endpoints. The unmet need and you see is really around mucosal healing and improvements in histology. That's really kind of what we're trying to address with this differentiated mechanism looking at epithelial barrier, repair and healing and function. And so, again, just to have this set of data already at four weeks, where we think we're probably at a lower range of the dose exposure, we'd like to study is very encouraging. So now, we'll be going forward into that more robust Phase 2. We'll be looking at additional outcome measures such as the clinical response remission and continue to look at mucosal healing and the effect on histology. And based on that, we'll be able to make a final Phase 3 decision. But I think we're in a very good position and are going into that trial with a good degree of confidence. At around the peak time, I mean, I think that's really where we think going for 12-week induction study really gives us enough time to [indiscernible] evaluate induction effects. We're seeing good efficacy at four weeks. So, I think that will improve over time over the next eight weeks that we're giving ourselves to continue to see good effects in that induction setting. So, we feel pretty comfortable with that. That does seem to correlate, again, well with all the data we're seeing preclinically in terms of our impact on gene expression profiles, as well as what we're seeing in terms of like the mucosal lining. And so I think, if anything, I think we're giving ourselves more time to really make sure we have a good effect. So, I feel comfortable with the 12-week induction period.

Yes. And then in terms of the detail on the program, can you elaborate a little bit more on the biology and why pancreatic cancer was a focus? Is there anything particular to the target and sort of that tumor type and biology there? Thanks.

Yes. And just to be clear, so, yes, this is a really interesting mechanism that goes after more immunosuppressive mechanisms within oncology and is a great combination approach with checkpoint inhibition. So, we're really affecting the myeloid suppressor cell types such as the tumor-associated macrophages and other MDSC cells with granulocytic and monocytic, all of which really contribute to the immunosuppressive phenotype, for especially for selected tumor types where you have primary and secondary of resistance to checkpoint inhibitors. And we impact not only, the trafficking of these cells from the periphery into tumors themselves, but we also skewed polarization to a more immunostimulatory phenotype away from that immunosuppressive M2 phenotype for macrophages. So again, potentially, several mechanisms that play for this mechanism. And to that regard, we are setting a number of other tumor types outside of pancreatic cancer. So while we have gotten orphan drug designation for pancreatic cancer, we actually are setting a number of other areas such as prostate cancer, colorectal cancer, triple-negative breast cancer. Other areas where, again, we see gastric cancer, maybe low rates of checkpoint of response as well as, again, lot of mechanism of resistance, which we think are very related to the myeloid biology I had spoken to. So, we have a number of different tumors that we're studying in the Phase 1 dose escalation period through both combination cohorts, monotherapy cohorts, as well as the cohort with chemotherapy. So with that, Luisa, do you have anything else to add on the mechanism and our thoughts about tumor types?

No, I think you covered most of it, Sheila. I mean, one of the things we have seen as well is in mechanisms of secondary resistance that a lot -- not only you have the immunosuppressive effect, you also have some fibrotic effects in stromal. And we believe this mechanism could actually addressed it as well. So as Sheila mentioned, we believe in secondary resistance. There is an opportunity in quite a wide range of tumors as well and we definitely are looking for the biomarkers in this study that will help us and then really focus on the right patient for subsequent studies.

Very helpful. Thanks so much.

Your next question comes from the line of Carter Gould from Barclays. Your line is open.

Great. Good afternoon and congrats on all the progress. Thanks for taking the questions. Just a couple I guess to start with on 001 first. Can you maybe just talk now as you think about that sort of go-no-go decision in going into potentially into a Phase 3? Just kind of where you're sort of setting the internal bar from a high level in light of the obvious Novartis data late last year? And I guess to follow-up on that question as well. Maybe just kind of clarify then around when we get the topline data, it sounds like we may not get a go-no-go decision at that point. Is that kind of where the -- our expectation should be set? I guess reading the PR, it sounded like you would still kind of meet with regulators at that point. So, I'm just trying to, I guess, level set expectations there. Thank you.

Yes. So great questions. And I think I'd like to remind everyone about the intention of this program, again, is to be in oral treatment for patients with moderate-to-severe asthma, where there is so much high unmet need. There is at least 50% of patients who are not controlled today with moderate-to-severe asthma that are really on high dose or medium-dose inhaled corticosteroids, plus one or even two other controller medications. And that's the population that we enrolled into our clinical trial. So, what we're really looking to see is a good impact on clinical exacerbation, which is the approvable Phase 3 endpoint. So from that regarding, we've done a lot to talk about what we think our efficacy could be for these types of oral mechanisms and what would be very acceptable to patients providers and payers. And again, that's really the range that we have been talking about. And in prior discussions, we've talked about anywhere between 20% to 30% of exacerbation reduction is something that we were looking for and targeting. As you recall, Novartis has mentioned information in that regard as well. And they did have that in the LUSTER-2 data that they reported out. So it's a very interesting evolving area and something we'll continue to monitor and measure in our clinical trials as well as, as we continue the maturation of the study. In addition to that, I think it is important that we do our homework around understanding the totality of the Novartis data when it is released. As you've probably heard at the American Thoracic Society, it's now going through a virtual meeting presentation. So, we'll see what additional data we get on the fevipiprant program either through publications or through presentation and to see how much we can learn from that program as well as, again, our own interactions with global regulatory authorities, in addition to looking at the top line and final data coming out of the LEDA trial to really make a very well-informed decision since we have more time now to really make sure that we're bedding all this information, so that we can design the most robust Phase 2 program moving forward. You can take all this information to really make sure we have a very well sought through [ph] program and plan for Phase 3 informed by health authority interactions, as well as a lot of learning, looking at this range in clinical endpoints and being able to really design our studies correctly using the correct assumptions from a statistical perspective. So, I think that there is a lot of very interesting developments that are occurring, that we can really capitalize on and make sure that we're making the best decision for the Phase 3 decision.

Great. And then maybe just one follow-up on 004, going into the dose escalation. I guess maybe based on your pre-clinical models, do you have a sense sort of on the target dose? Or maybe another way of asking that, when you think about sort of the level, which you could push the dose up to any insights from the pre-clinical models there? I'm just trying to get a sense for maybe the number of doses you might evaluate in the Phase 2 study. Thank you.

Yes. Another great question. So, I think we're in a really good position for the next study. We have a very good pre-clinical colitis model that we've done. This is really under Luisa's and her research team leadership and expertise that she is a true expert in really any animal models, especially the IBD colitis models, to sing her praises. And we've had some very good data that kind of help guide our dose escalation based on the exposure that we're achieving for efficacy in those animal models. We have a lot of information from our Phase 1 normal healthy volunteer studies with both the solution and the tablet formulation that we recently completed in normal healthy volunteers, which is not only looking at systemic concentrations or colonic concentrations and both, again, the solution and the tablet formulation studies, because we did actually sigmoidoscopies and we're able to get colonic biopsies to really measure tissue concentration there, which is very helpful to really share that we had a greater colonic concentration than the peripheral exposure that also helps guide our decisions, as well as, of course, the Phase 1b 28-day study now with not only a biomarker data, but also that clinical data that we discussed. So, we have a really nice set of data to guide what we want to do moving forward in terms of just exposure dose levels, as well as the formulation that we wanted to explore. So, we can make decisions based on the target levels and we can come back and discuss all of that at a future date after we are finished analyzing the data, but I think we're in a really good position to help us select the doses for the Phase 2.

Thank you.

Your next question comes from the line of Tyler Van Buren from Piper Sandler. Your line is open.

Great, thanks. Good afternoon. Great to see the progress. I had some on 004. I guess in the release, you mentioned multi-fold higher gut concentrations. Is it possible to quantify the difference or the increase in the gut concentration there? And then on, with respect to the clinical observations, there is clearly some activity here. But as we've looked at other effective agents, for example, [indiscernible] topical JAK, you're seeing I guess similar numbers. So is there, I guess, anything as you look at the data that stands out as kind of more clearly differentiated, maybe with respect to the histology? Or are we going to have to wait for the Phase 2, 12-week induction study? And then, just finally as we think about clinical development, it sounds like you're describing a fairly traditional Phase 2 UC study. So is it possible to differentiate the program from a clinical development standpoint moving forward just given the unique mechanism here?

Yes. No, I think we can talk about all three of those questions. And I'll actually ask Richard Aranda who's on the call with us today, who is a gastroenterologist, who has been involved with many IB development programs including ozanimod [indiscernible] receptors to talk a little bit about the exposures in the colon and versus the periphery. So he can address that. In terms of the other two, I'll take those and again, Richard can bolster that or Luisa. Yes, we are really compelled with the 1b data. And when you look at the Theravance data that they published in their Journal of Crohn's and Colitis, the JCC in the March timeframe, where they had a really nice robust publication, evaluating a lot of similar outcome that we've been evaluating and we do seem to be in line with what they've already, what they've shown in their one month, gut-targeted JAK program, which again is very exciting from our perspective. I think the one area of difference that, again, we're focused on here is because we have a differentiated mechanism looking at the epithelial barrier of repair and function, we do seem to have, again, more mucosal healing and histologic remission. That's a potential now. They did measure histology in their program. And so they do not report mucosal healing from the traditional definition that's the regulatory definition of endoscopic improvement and histologic remission or patients who've met that criteria of histologic remissions, but we don't know for certain. But that wasn't reported out in their publication. So that may be just a distinction that we have in terms of targeting JAK versus really going after this differentiated mechanism. Potentially, it could be a complementary mechanism as well. So, I think we're pretty excited not only as a monotherapy…

Sure. So, what I can add to Sheila's comments is that I just want to remind you that we obtained biopsies at eight hours after the dose. And at that time point, the systemic levels of 004 is quite low in the single-digit nanogram concentration. And I also want to remind you that in tissue biopsies of looking at drug concentrations, there is a lot of variability. Nonetheless, in that setting, we consistently see significantly a greater concentrations that are far above the single digits and from a nanogram per ml perspective that we see in the circulation. And just to add to that, the concentrations we see are also consistent to what is achieved in some of the animal models that has been conducted with our compound by our research group and those concentrations are associated with efficacy.

Great. Thanks so much. Very helpful.

[Operator Instructions] Your next question comes from the line of David Hoang from SMBC. Your line is open.

Hey, guys. Thanks for taking the questions and congrats on getting the green light to move forward with the LEDA study. I had a few questions on GB002. So, I know recently, I think earlier this year, Acceleron had some positive data with their compound, sotatercept. And I know that was a Phase 2 study where they looked at PVR in six-minute walk distance. I think they also have another study where they're looking at oxygen consumption. So peak VO2 or VO2 max. So, I guess my question is, do you think you need to look at anything else besides PVR in six-minute walk distance in terms of secondary or exploratory endpoints to help ensure a competitive profile for 002 in PAH?

Yes, I'll start that and I will also ask Richard to provide some comments. So, I think, clearly, this is also another area of very high unmet need. We're going after patients who are having significant disease, the functional class 2, 3 and 4 that -- so they are very significantly disease severity and symptomatology. Despite being on two or three classes of vasodilator therapies, so really all the available therapies that are available to them today. So for the ARADPD [ph] class and the process second class, particularly and we have data, obviously, with imatinib here in that same group of patients. 50% of the IMPRES trial patients were on process cycles and IV [ph], process cycles of the time, where we saw that's really improved clinical benefit looking at PVR reduction in six-minute walk distance. So any of the stuff, you look at those clinical functional outcomes of an improvement in six-minute walk distance, as well as the effective endpoint of PVR reduction, these are really critical endpoints in the setting of PAH. And these are also, obviously, the six-minute walk distance is the approvable endpoint or one of the approvable endpoints for PAH. So, those are really the ones that we're very focused on, as we stated for our Phase 3 design and we have the hope and the thinking that this could be a disease modifying therapy. We have a lot of great pre-clinical data that really supports that. And we have a lot of crosstalk with actually this sotatercept mechanism that Richard and Luisa could speak to, which really gets to, again, the underlying biology improvement that we're seeing, preclinically, definitively within our animal model. And what we think we could show clinically and including, we've seen increase in BMPR2 signaling in our pre-clinical models as well. So, I think those are what's critical. In addition, we have a number of other biomarkers that we're looking at. And we're going to be looking at echocardiography imaging and looking at right ventricular function and looking at proBNP levels ourselves as a measure of right heart stream to kind of get at really how we're affecting right ventricular function. And then we have some exploratory measures that we'll be looking at that really could get at potential for disease remodeling. So with that, maybe I'll ask Richard to say a few words and maybe Luisa comment on some of the biology that we're so excited about with our mechanism.

Sure. I'll say a few words just to add to Sheila's comments. So, as you may know, CPETs or cardiopulmonary exercise testing is not yet validated as an endpoint for PAH. As Sheila mentioned, the key sort of endpoints required for approval still remain a six-minute walk, as well as evidence of a reduction in pulmonary vascular resistance. CPET is being used in exploratory to see if there could be other non-invasive methodologies to determine. First of all, a diagnosis of pulmonary arterial hypertension, but also could it be used as a measure to determine a therapeutic benefit. So, I still think it's a little bit too early to say that CPET can be used in the absence of the other endpoints. However, it can be considered as sort of supplemental if some of the data that's coming out and its used and some other programs seem to be suggestive that it can add some additional information.

Got it, thanks. That was really helpful. And I think I just have one follow-up. In terms of the Phase 1b data, when we [indiscernible] that. I know that it's a -- I think it's a two-week study you have there and you do have some exploratory endpoints. So, maybe just to help kind of set expectations in terms of BNP and ejection fraction over a two-week period, should we kind of expect to really see much there or I guess how much efficacy do you think you can obtain on those measures with just two weeks of treatment?

Yes. The two weeks is definitely a short-duration period. So we basically -- this is a study that's designed to look at safety, tolerability, target engagement, some biomarker and pharmacodynamic work, as well as start to look at some of these exploratory outcome measures. So, I think we're very keen on understanding some of the target engagement and biomarker were coming out of that study. And, of course, looking at the safety PK to kind of continue to help us guide our dose selection for Phase 2, which is really critical in understanding safety and tolerability in PAH patients in addition to normal healthy volunteers where the drug was very well tolerated. And we saw good PK consistent with our limited systemic exposure of profile, which is really what we're trying to go after with this local lung delivery. So, we want to temper expectations on what we could be seeing from a clinical activity perspective. In this case, we are hoping to have some patients roll into an open-label extension, where maybe you get to file them for a longer period of time. So that's an area -- a way where we could get some more clinical data, looking at some of the echocardiograph measures as well as some of these other biomarkers, especially NT-proBNP. So more to come. This is really, again, dependent on how the COVID situation continues to evolve and we're able to really get patients into the clinics safely. I mean, our primary responsibility is to make sure that these PAH patients who are quite sick are really -- their safety is really paramount in terms of making sure you don't increase their risk to the COVID infection. So that's really what we're focused on.

Okay, great. Thanks for taking the questions.

There are no further questions at this time. I'll turn the call back to the presenters for closing comments.

Well, thank you again so much for joining us on our call today. I'm so pleased with the tremendous progress Gossamer is making on a number of our clinical programs, really all four of our clinical programs to-date as well as the whole research portfolio therapeutic, where we're looking forward to be able to speak to you about shortly, which is a very exciting pipeline of candidates and areas we know very well. I want to thank the Gossamer employee base for their continued hard tireless efforts in these challenging times and really continuing to advance all of our programs in such a high quality manner. I look forward to continue the dialogue with investors and shareholders and continue to help support meeting the unmet need for patients and their families. Thank you so much.

That concludes today's conference call. You may now disconnect.