We're good to go. Great. Hello, everyone. I'm Alex Thompson, biotech analyst here at Stifel. Happy to have Dan Faga here from AnaptysBio for a fireside chat. Maybe you want to kick things off with a brief intro, and then we'll get into some Q&A rapid fire.
Hey, everyone. So we're entering a really exciting period. We reset this company two and a half years ago, focused on novel differentiated antibodies. And upcoming, we're going to have two pretty big readouts of novel mechanisms of action targeting two different co-inhibitory receptors, BTLA and PD-1. We have a phase II-B study that will readout in December for our BTLA drug, ANB032, 200 patients, moderate to severe patient population. In February, we'll readout for our PD-1 drug, a study in rheumatoid arthritis, 420 patients. And also, we have an ongoing and rolling ulcerative colitis trial for the PD-1. Stepping back from those two exciting programs, we have two other drugs, a CD122 antagonist that's in phase I, and a BDCA2 modulator that's entering phase I in Q1 of next year. We have $460 million of cash coming out of Q3, well capitalized into the end of 2026.
That supports all the trials and drugs I was just saying in terms of what's ongoing, as well as the phase III enablement for both of our lead assets.
Yep. Yeah, so let's focus on BTLA to start. And maybe a useful way to kind of frame it in the context of immune modulation in atopic dermatitis, how is BTLA agonism similar and different to the OX40 space?
Yeah. BTLA is present on activated immune cells. On target here, it would be modulating T cells, dendritic cells, and B cells. OX40 blocks the co-stimulatory receptor between dendritic cells and T cells. We have a different mechanism of action that on the T cell side of the equation, disease may have a similar directional effect in terms of the immunological outcomes. We're looking to reduce proliferation of T cells by reducing the cytokine presentation from those cells and reducing their activation status. What we're also doing with BTLA, though, is it's expressed on these conventional dendritic cells. What we've shown preclinically is that modulating the DCs directly, reducing antigen presentation, reducing co-stimulatory receptors presentation, CD40, CD80, OX40 ligand. We're seeing these reductions by over half.
What that's going to do in disease, and specifically in AD, we're seeing a tenfold increase of DCs active in lesional skin. So by modulating the DCs, you're going to see less stimulation of the T cells. So we do expect a cumulative effect of agonism of the T cells, modulation of dendritic cells that will reduce the presentation status in disease. And the third mechanism of action, again, unique to BTLA, is these DCs. We've now shown that they're inducing FOXP3 positive stable Tregs by two- to threefold. So there's a lot going on here mechanistically to drive outcomes. We're excited about what the OX40 class, and specifically Amgen's OX40 ligand, is. They showed a 40% reduction in EASI-75 by downregulating IL-13 about 60% in patients.
Talking about Amlitelimab?
Yes, the OX40, right? So this was in their phase II-B study.
Yeah.
The IL-13s, even up to the JAKs, show about an 80% reduction. So what that's showing here is in atopic dermatitis, the disease is driven more beyond Th2 and Th1/Th17/Th22. So right on point with what we're doing, there's great clinical proof of concept with a class that should have a less potent effect than what we're doing.
Yeah, and I guess to that point in atopic dermatitis, others in this space, Gilead, Lilly, chose to study other indications of BTLA agonists. What sort of was the unlock that made atopic derm make the most sense as the lead indication for you versus SLE or RA?
Yeah. Well, it's interesting. J&J is taking their PD-1 into AD, right? So there's a lot of overlap in terms of where companies have started that have clinical stage agonists right now between diseases that are defined as heterogeneous and have a systemic component. We do believe we're going to get activity with our drugs by just the interactions in the periphery, as well as what we're seeing in tissue. So there's kind of, and then the efficacy bars really are not that high in these diseases. They've been limited by treatment from single cytokine or single chemokine antagonists. So there's a big opportunity with this top-down immune cell modulatory approach with what we're doing.
Yep.
The.
Sorry, go ahead.
No, I was going to talk a little about the competition.
Yeah, I was going to say, I think that makes sense. So I wanted to kind of talk before about all sort of the data that you've generated, the kind of difference between your antibody versus the Lilly and Gilead antibodies, yeah.
Yeah, so Lilly discontinued their BTLA over a year ago. They were assessing an SLE, and that is a challenging disease, but that's not the reason they discontinued the drug. We've been saying, we've been talking about the points of differentiation for quite some time, but more interestingly, four or five weeks ago, they did have a presentation at a biologic conference where they acknowledged, again, we've been talking about this, that their BTLA targeting drug was a partial antagonist. What that means is they were blocking the natural ligand HVEM, which is going to have counter effects. It's explicitly what you don't want to do. They also acknowledged in that same presentation that Anaptys has a pure agonist. What's driving that differentiation is they did two things in their antibody. They mutated out the ability to engage on the Fc receptors, so by design.
And the second is where they bound on the epitope of BTLA, which was distal from the immune cell. Those two things combined, and most importantly, the lack of Fc engagement, we found directly correlate to lack of protein agonism activity.
So then you've alluded to some of your preclinical data around cell populations, but can you talk a little bit more about some of the T cell disease models otherwise that you've generated to date to give you confidence in activity here?
So if you have activated T cells in disease, you're going to see an expression of things like PD-1 and BTLA. BTLA is upregulated in AD. In patients who have received Dupi, it remains upregulated unless you were in response. If you've hit an EASI-90 response rate on Dupi, you see BTLA lowered, which makes sense. The inflammation's in control. So we know there's target there to engage with if you're inflamed. If you knock out BTLA in mouse models, we've seen an increase of dermatitis, which they then be treated with BTLA to reduce that. So we know there's correlation of BTLA as a regulator in this disease pathway. We've shown countless in vitro assays of cytokines that we're looking to reduce across the board. And like we already talked about, the OX40 is a really good proof of concept.
Okay, so then heading into the phase II-B, you talked about your design.
Yeah, so it's a 200-patient trial, three active arms versus placebo. We're looking at every other week and monthly dosing. A component of this trial, we did allow Dupixent experienced patients into the trial, about 15% or eight or nine patients per arm. And we did stratify by that population. So we will be able to break out these populations that have some balance in terms of the dose. On the naive population, over 160 patients were powered for that. We will read out the naives. It'll be a good comparison cross study to other patients, to other trials. And the Dupixent experience, we're looking for a signal, maybe some responses. We're also looking for a change in the EASI score, which is a secondary endpoint. As a reminder, the OX40 ligand class, they showed 40% EASI-75 at three months. They also continue to get better through month six.
We're not going to have data past week 14, so we're on drug for 12 weeks. We're looking at a primary endpoint of week 14, and then we have a six-month off-drug durability timeframe. The off-drug will come at a later readout, but we do anticipate seeing a durable outcome, so responders stay in response. And potentially, we'll see trends of increased benefit, particularly in the more immediate weeks after week 14, which would be consistent with what we've seen with other immune cell modulators.
So then talking about dose, you haven't disclosed the doses, but can you speak a little bit to your confidence in dose selection here, just given the complexity of the target and sort of the downstream effects, and then expectations around potential dose response or not?
So we have three doses. There's a wide range between the three. And like I already mentioned, we're looking at different administration and time points. We did standard PK/PD modeling off of our phase I results. We're confident that we're above the EC90 on all doses for at least some period of time. We do trough in the lower dose less than that. We do think there'll be some modest dose response, minimally, with the low dose relative to the mid and high, but that's why we're running the experiment to understand that better. What part of the thesis here is we never hit a dose-limiting toxicity in the phase I, and we pushed the dose as far as we thought could make sense while remaining commercially viable.
Yep, and it's a subcutaneous injection for those doses.
Correct. Yep.
Single dose?
For all doses, subcutaneous.
So then getting to bar for success, you've talked about 40% absolute. What is that kind of equating to, and why are you thinking about an absolute bar versus a delta?
Yeah. Let's start with Dupi, right, because it's the benchmark. Across their two phase III trials, their EASI-75 was an average of 48%. We know that patients can do better than that if you have steroids stacked on top. What we've routinely seen now over multiple years in our primary and secondary research is that if patients aren't satisfactory on that drug, which is more than half, they're not response, but the real number is more two-thirds to three-quarters of patients, and that's because they flare. So there's a lot of patients here who are not satisfactorily treated. What we saw with Sanofi's OX40 ligand, that 40% EASI-75, and again, it got better over time, better than Dupi's outcomes. They were into the mid-50s% at month six. What doctors want if you're not satisfied on a Th2 path drug is another option that treats the disease differently.
Something broader makes a lot of sense here. We're routinely hearing that, and as Sanofi's out there pushing their profile, that's starting to resonate more. They're doing the hard work out of the gate to reconfirm what we've now heard for multiple years. That is the benchmark, is that 40%. Now, when you historically look at placebo, 15%-20% on the EASI-75 is about the range. We should be in that range. There's a couple of correlative factors. One is the baseline EASI score. To get into our trial, you have to be at least 16. That's a moderate patient on the EASI score. 21 is severe. Our average patient is in the mid to high 20s. We have a severe population in this trial. Second is how you handle rescue therapy. Long story short, we're on the conservative side of that.
We think we're going to have a well-controlled trial that would be in the range of what you normally see. If you go talk to a dermatologist, they think of absolute terms, and the reason they think that way is because in the real world, you're stacking steroid on top, and they're really looking for an overall outcome. It's not the same as we're accustomed to in placebo adjusted.
I guess in the context of that and expectations around placebo, if you are in the lower end of that delta in the 20% range, say, are you powered to sort of see that delta?
Yeah, so.
In the conference, that you can see that signal?
There's a 200-patient, so yes, there's a 200-patient trial. We were originally powered for 160 patients. So in the naive population only, which I said earlier, we have north of 160 patients, we're powered to see that a result there on EASI-75 relative to the average placebo.
Okay. So then safety, I think one of the questions into this is just what's the impact of a broader immune blockade or immune modulation in the OX40 class, particularly impact on B cells? How has your confidence on safety, how have the DSMB interactions been?
Yeah. So mechanistically on target here, we're agonizing T cells, DCs, and B cells. We're not depleting all your B cells. So by design, we do not want to be BTLA depleter. We shouldn't see AEs that associate with that. We're looking to not have infections. And a good comp here is Abatacept in RA or other diseases. That's a T cell modulator. We've seen BTLA data. We heard from Lilly. They saw nothing. Our preclinical data, our phase I data was in 100 patients. They've had benign profiles. We're not bringing you down to an immunosuppressive state. We're modulating you back to homeostasis. Healthy control, you're about 15% of your T cells are activated in the periphery at any given time. Based on what we saw in the phase I in terms of the PD, we don't expect you to be lower than that level.
So if anything, we believe that this treatment on target is bringing you back to a healthier state. We don't anticipate significant AEs. I've said this publicly. I mean, all patients are off drug at this point on a blinded basis in totality. We haven't seen any AEs of concern. In diseases like AD, that's what you need to have. Amgen's OX40 depleter is afucosylated. That afucosylation is driving the flu-like symptoms. Sanofi's OX40 ligand is not. It's a non-depleting antibody. They don't have that AE profile. And that AE profile was pretty benign as well, blocking all the T cell stimulation. So there's a lot out there. We don't expect to see anything on a blinded basis or not.
Yep. So then, timing, you said December. Do you plan to announce a quiet period? What have you said about timing in December?
We've announced publicly. We'll be at a conference or two at the very beginning of December is the plan. We're not going to publicly announce a quiet period, but we have a couple of weeks spread in there in December where our data will be read out. We anticipate a press release, and assuming the data is positive, we'll likely do a call.
Okay. Maybe shifting gears to PD-1, I guess probably your favorite question. What happened in your view to peresolimab?
We are really excited that Eli Lilly was out there ahead of us on two drugs. They brought excitement to these classes. I don't know if we would have run an RA trial if they didn't show proof of concept in phase IIA. We're really excited about the ulcerative colitis readout if you go back two years, given all the literature and correlations to what we're doing. We have a more potent drug than Eli Lilly. We're a depleter of PD-1 high T cells and an agonist, and we will agonize the remaining PD-1 expressing T cells. Eli Lilly's drug is a moderate depleter and an exceptionally weak agonist. Our data suggests that. Their own patents suggest that. So the fact that they show proof of concept in the phase IIA with moderate depletion should make everybody in this room feel really good.
We can at least do that, and we do believe we're going to see a much more significant outcome than them. What we think happened is they hit the primary endpoint in their phase II-B. It was a 500-patient trial crossed over at week 12, and then they went out to week 60. You're not going to treat patients for 60 weeks. We didn't see a right signal at week 12. Unfortunately, in this market for them, this is a mature marketplace. You need to be better than every other biologic to have a TBB that makes any sense. We've consistently been talking about you need to approach what JAKs look like with the biologics, with a new biologic to have meaningful second line or third line share to make an investment thesis in phase III make any sense. I've been saying this for a long time.
They clearly didn't hit that bar in the phase II-B in a robust way. Their phase IIA was small. It looked like their two doses there were overlapping, and the error bars were wide. But they had patients on drug for 60 weeks. We're not concerned that they saw AEs that were outside of a range that you would expect. These are not AD patients. So as a reminder, if you have arthritis, you have an exceptional amount of comorbidities. You have two to three-fold likelihood of higher MACE, two to three-fold higher likelihood of malignancies, lung cancer, leukemia. There's a lot of AEs that are driven just by having the disease itself. A drug like rituximab, which is salvage therapy, still does $2 billion a year of revenue in the U.S. in RA alone.
That exacerbates almost twofold what you would normally see as the comorbidity profile of an RA patient. Then as another reminder, the JAKs, which are the efficacy benchmark, have a black box. This is a disease population.
From RA patients.
From RA patients. That's the dose you need to see efficacy. There's a lot of room here to operate in terms of just the drugs driving a higher profile. And so what we've been saying since August, this is not new commentary from AEs. It's the same exact thing as for BTLA. I know we have an active drug based on a blind review of the data, and we're not seeing an aggregate AE profile that wouldn't be consistent with what you'd expect on placebo.
Yep. Yep. So you talked about differentiation from peresolimab. J&J and Gilead both have PD-1s that are in the clinic too. How are you differentiated from those assets?
Right. So there's a thesis out there, and it continues with Gilead's, do you want depletion or not? Gilead's PD-1 is a non-depleting antibody. We are a depleter of PD-1 high T cells, and we agonize the remaining. I said that. Lilly was kind of on that side. They just didn't have agonistic activity. They were a moderate depleter. Our view is that just like with BTLA, you have these T cells driving disease. You want to tamp down the proliferation and reduce the cytokine activity. 80% of the T cells in a synovium of an RA patient are activated and driving disease, and that's correlated through the progression of disease, and that's similar post-treatment with TNF, post-treatment with multiple classes of biologics, so there's a lot to engage with. You want to tamp that down. The PD-1 high T cells in the synovium are half of that population.
Again, if you're healthy, 3% of your T cells are PD-1 high. You don't want them there. They're driving a lot of the cytokine activity. Depletion cleanly eliminates those, and you want to agonize the rest. What Gilead has done is, again, they've introduced mutations to target only the R2B receptor, and they're not an IgG1 backbone. So we'll see what ends up happening by just having an agonistic profile. Again, Lilly got there. First read on their translational data, they depleted 60% of the PD-1 high T cells, and that was driving the efficacy profile, only doing that, and we should be doing better.
Yep. So any sense of when we might see data from J&J or Gilead at this point?
They haven't guided us.
Who knows?
They haven't guided us.
Okay.
I think you'll see our data first is going to be my guess at this point.
We'll see. And then maybe Lilly will present data next year.
It's not. I mean, look, everyone's going to have to react to us. We've been ahead in the market. We've changed the language that even Lilly's used. If you go back two to three years ago, they didn't acknowledge they had any depletion. At some point, they ultimately did. I think it's great to be the leader of the field. People can then look at our data and then react. I think we'll see. There's folks behind us that are super depleters. They're afucosylated. There's folks who don't deplete. They can battle out which arm is better. We do both. That's going to be the right answer.
So then talking about your phase II-B study, can you talk about the design key considerations relative to contemporary studies?
Yeah. So it's a robust study. It's three active arms versus placebo. 425 patients was the target. We are assessing patients out to week 12 as the primary endpoint. At week 14, if you were in response to find a CDAI less than equal to 10, which is low disease activity, you're able to stay on drug through six months. So it's a six-month treatment. What we'll be reporting in February is that week 12 primary endpoint data.
But you would theoretically know how many patients have gone to that post-treatment period?
Theoretically.
Theoretically. You won't be able to say, at the top line, we'll be able to comment at all on that population?
I think we have to get there, and we'll figure out where we're at. I mean, but there will still be patients on drug. We'll report this top line out. So we still have a controlled study that we don't want to impact in a negative way by talking about an ongoing trial in the public domain. We will still be blinded to how those patients, which arms the patients are on specifically in that longer-term period. About 40% of the population of the study is TNF experienced or has experience of biologics, so a robust look at both frontline and biologic experienced patients, which would be two or three classes of drugs.
So you alluded to the efficacy bar there being JAK-like or close to JAK-like. So what does that look like in the context of ACR50, 70?
Yeah. So, in a biologics experience class, and just for clarity, the commercial market for us is second- and third-line. That's what we're targeting. So biologics there do plus or minus 20% on the ACR50 scale. So in that range, JAKs are in the low 30s. So about 50% improvement, still a relatively low bar in the context of this disease. In ACR70, these other biologic classes are in single digits. The JAKs are around 15% ACR70. So we're looking to hit those types of thresholds on the efficacy side. The placebos are low, particularly on something like ACR70. It's low single digits.
So you're looking for JAK-like, not somewhere in between biologic and JAK-like?
Yeah, approaching high 20s into the 30s.
Is RINVOQ really the benchmark, you would say?
If we have RINVOQ like efficacy, a safety profile that's as good as a JAK, that's a grand slam scenario. That's not just the home run.
That's not something out of the question in your view?
We invested in this knowing that we needed to be approaching that bar. Yes.
Okay. So there's RA. You're also running a trial in ulcerative colitis. Can you talk about your confidence in that indication as the next one? And I guess why has no one else gone there yet?
I said earlier, if Lilly never had data at ACR in 2022, we were running a colitis trial. The way the alpha-4 beta-7s work, just for some context, they block the efflux of T cells that are activated into the lamina propria of the colon. That's the entire way they work. All those T cells, they're TPH cells. They're all PD-1 high. We're going to deplete them. There's a correlative outcome of reduction of these TPH, PD-1 high cells to clinical remission. We should minimally work by just working in the periphery there, as good as standard of care today. And we will have the benefit of also treating the site of inflammation. There's still a significant upregulation. Over 40% of the T cells in the LP, the lamina propria, are PD-1 expressing.
So there's a lot of ways that I think we're going to get the outcomes here that we're excited about. We've done some animal model work in mice that show a significant impact in terms of lack of reduction of weight loss. So we have preclinical data. We're showing cytokine reductions that you would need to see in UC. So we're really excited about this. It's a 130-patient trial, and our guidance is to read out in Q1 of 2026. Why aren't other people there? Like I said, I think folks started. Lilly started in RA. Looking behind us, you have Gilead really doing a control. They have an RA trial for phase 1-B with their PD-1, as well as their BTLA.
But even Eli Lilly, if you talk to them in EULAR and their medical booth or their public commentary from their IR groups, they were talking about colitis as being the other indication they're interested in. They have animal model work in their IP. So I think the field's going to move in this direction. It's a rational place for us to be focused here.
Yep. Yep. I guess maybe you want to talk a little bit about the pipeline. Look, I know you've gotten more excited about this as it's moved towards the clinic. So maybe can we talk a little bit about CD122 and BDCA2 and timing of the clinic and why you're excited about those programs in 2025?
Yeah. We have so much going on in the company that I understand it's easy to overlook two earlier stage programs right now. But our CD122 antagonist, CD122 is found on cytotoxic CD8 cells as well as NK cells, including resident memory T cells in terms of the CD8s. What it does is it binds to and blocks engagement of IL-15 and IL-2 onto those cells. So it's very complementary to what we're doing with the agonists. What's in the clinical landscape right now is you have the IL-15s. You have Teva, Amgen, Novartis, who just acquired Calypso. They're looking at EOE and celiac disease. There's another CD122 that was acquired a year and a half ago by Incyte. They're testing theirs in phase IB, and they've guided a 2025 data in vitiligo. So it's an exciting target that's emerging.
CD122, we think has advantages of blocking that than just hitting the IL-15 cytokine. We will do a teach-in on this mechanism of action and where we are going to take the drug in phase I/B and what disease next year after we get through these upcoming milestones with the agonists. We're really excited about it. We know we have, again, here a best-in-class, more potent version of the other couple of CD122s that exist. We're excited to get it out and then tell a story. But for right now, we're in the phase I treating the healthy volunteers.
Any meaningful PD data coming out of phase I we should think about?
We've shown animal model data here in IL-15 induced mouse that we're excited about on a comparative basis. But we will do the teach-in next year because it'll all be directed towards the disease of interest, which we're being a little bit guarded on right now given the competitive landscape.
So BDCA2, the second one?
Yeah. So we in-licensed this drug and further optimized it internally. BDCA2 is found on plasmacytoid dendritic cells. There is one other clinical comparison right now. It's at Biogen. It's in phase III for SLE, two trials that'll read out in 2025. There's a phase III trial in CLE, the cutaneous skin manifestation of lupus that'll read out in 2026. We have a more potent drug than what Biogen has. And so we'll put more data out there. But the IND was just recently filed. We should start the phase I in Q1. So like I said earlier, our cash guidance takes us to one phase I-B data on both of those drugs in addition to the three phase II trials with the agonist that we've talked through already with the $450 million of cash.
We are investing in both of our agonists right now in terms of the clinical supply scale that you need for the phase III programs, as well as we're working internally on phase II expansion to other indications with our agonist once we get on the flip side of the near-term data.
How would you characterize the IL-33 licensing progress there? I think is that.
IL-33? I haven't been asked that.
Is that guidance still on track?
So for the IL-36 receptor, it's Imsidolimab. So we had positive phase III results in generalized pustular psoriasis. Yes, we've guided a year-end 2024 to out-license that drug. It's an exciting molecule, differentiated efficacy in a modest market in derm, not where we're investing our resources. There's out-licensing of the drug, and that's happening in the background. It's not the biggest market. Tempered expectations. What's bigger is potentially our royalty that remains on Jemperli from GSK. There's been a significant amount of label expansion with this drug, particularly in endometrial cancer in the frontline. That's driving revenue uptake. GSK, this is our guidance, not theirs, but their trend line is well north of $600 million this year. Last year, they were doing about $200 million of revenue.
When they hit $1 billion for the first time in a calendar year, we get a $75 million milestone. We have monetized some of this royalty, which is 8%-25% non-recourse debt. So we will eventually get that back in their kind of peak years. So we do have a sizable value stream and cash that will come in, including that.