Good afternoon, everyone, and thank you for joining the H.C. Wainwright 28th Annual Global Investment Conference. My name is Josh Corson, and I am a Senior Equity Research Associate. Today I am joined by Chris Murphy, who is the CFO of AnaptysBio. Thank you for joining me today.
Thanks for having me.
Of course. To kick things off, I would like to start by getting a broad overview of the company. Anaptys has gone through a pretty transformational year, where you had completed the spin-out of First Tracks, and that is now moved into the clinical stage pipeline. You have moved that into a separate company. Today, Anaptys' story is really driven by the economics from JEMPERLI, as well as imsidolimab, as well as you having a much smaller operating footprint. Definitely for investors who may be unfamiliar with the story, if you could give an overview of why you had this, the rationale for the separation from First Tracks, and then how you are thinking about Anaptys today.
Sure. To give a little bit of history. Historically, Anaptys was very much a traditional biotech company. Had discovery capabilities and development pipeline, but also happened to have two valuable financial collaborations. The company is always proactively, objectively looking at strategic options. Last year, did a valuation analysis and realized that the valuation of the two financial collaborations significantly exceeded the market cap of the entire company, including the development pipeline. That triggered a broad strategic review, and the outcome of that, what we believe is the simplest solution. Split the two companies into two independent, completely separate public companies. As Josh mentioned, on April 20th of this year, we completed that split. As of April 20th, the development operations, so all the people, the development pipeline is now First Tracks, which is ticker TRAX. So completely separate company.
All that remains now in Anaptys are the two financial collaborations. We have significantly slimmed down our operational footprint. It is effectively a virtual company today. Less than 10 FTEs, less than $10 million of OPEX. Actually, I am the only individual who is full-time, day in, day out, focused on Anaptys. We have a transitional services agreement with the First Tracks team for accounting, finance, IR, HR. Even our CEO is CEO of both companies today. It is very much a slimmed down organization with the sole purpose and sole focus of protecting and returning value to shareholders. That is our focus today, and we will talk more about the details of the portfolio with JEMPERLI and with imsidolimab, which is now Quimilza, with Vanda.
We believe that the Anaptys story today, with the two royalties, is very much an equity story for the next couple of years, with a lot of upside. Then obviously at some point, for the remainder of the IP of the two collaborations, it becomes a yield play, but definitely an equity story over the next few years.
Yeah, great. Let us definitely start with JEMPERLI first. It is definitely a big part of the story for you guys. That is your partnership with GSK, where you receive tiered royalties, and the product has definitely grown to be pretty significant, especially in endometrial cancer. I would like if you could talk a little bit about the economics with GSK, and then how we should think about the growth of that royalty stream as you have JEMPERLI sales continue to increase.
Of course. So, a little bit of background. AnaptysBio had discovered JEMPERLI, originally out-licensed it to a company called Tesaro in 2014. Tesaro was subsequently acquired by GSK. The royalties are particularly attractive to us because they are tiered and progressive. In any given calendar year, the first $1 billion of sales provides 8% royalties. $1 billion to $1.5 billion is 12% royalties. $1.5 billion to $2.5 billion, that is 20%, and then anything north of $2.5 billion is 25% royalties. It is paid out quarterly, within 60 days at the end of each quarter. I think the important takeaway here is that the ramp for our royalties exceeds the growth ramp of the royalties, given the progressive and tier nature of our royalties, which we think is important takeaway for investors.
When we think about JEMPERLI today, we think it has a very strong and growing foundation in endometrial cancer. GSK had already released Q2 results for this year. In the first half of 2026, had $644 million in net sales for JEMPERLI globally, which is 34% growth year-over-year. We think it is significant growth in just endometrial, and then we think there are additional pillars of growth beyond that. Beyond just the base that exists today, we think there is additional growth in endometrial cancer that obviously is continuing, particularly ex-U.S. Beyond that, there is additional growth in indications and geographies in those indications, particularly rectal cancer, colon cancer, and potentially head and neck cancer.
Given all of that, GSK has guided towards peak sales for JEMPERLI, just monotherapy for endometrial and rectal of well north of £2 billion, or $2.7 billion. That is just in rectal and endometrial cancer. We think there is significant upside beyond that, and as each of these indication geographies come on board, as we talked about with the progressive nature of the tiers of royalties, they are more and more valuable to us.
Yeah, great. Definitely want to dig a little bit deeper now into, you are mentioning the colorectal indication. We feel like that could be another important part of the story. You had the phase II AZUR-1 study, which had met its primary objective, and that was in previously untreated patients who are locally advanced rectal cancer. You have the PDUFA date coming up for that in February 2027. Then you have AZUR-2 in colon cancer, AZUR-4 in the broader patient population. You have all these three different programs, and I am just curious how you are thinking about the opportunity across the colorectal space and what that could mean for JEMPERLI.
Yeah, absolutely. We think CRC as a whole is definitely another important growth pillar for JEMPERLI's future. As we discussed, AZUR-1 is the most advanced. Had positive data that was announced in July of this year. GSK will provide more detailed data later this year at a scientific congress. In February 2027 is the PDUFA date. GSK does have a priority review voucher, so it is potentially going to be approved sooner than that, but February is the PDUFA date. I think that is important, obviously. This is really important for patients. For patients in this setting, today, it is chemo, it is radiation, it is major surgery. What this data has shown is that for the right appropriate patients, it could eliminate the need for all three of those, which is really important. We also mentioned AZUR-2, AZUR-4 in colon cancer.
That is additional upside beyond the rectal cancer, dMMR rectal cancer that we are talking about with AZUR-1. When GSK talks about CRC as a global opportunity, over $9 billion in global opportunity, and for just the AZUR indications, we are talking about over 220,000 patients in the U.S., EU5, and Japan. We think it is a large opportunity. As we talked about, because this is all on top of the base that exists today, these are all very valuable to AnaptysBio for those additional royalties.
Great. Before we transition over to imsidolimab, I just want to briefly talk about the Sagard agreement, since that is important to part of the JEMPERLI story. That is where you had monetized a portion of the royalty stream. Just for investors who may be less familiar with that, if you could just walk us through just an overview of how that agreement works.
Sure. The Sagard agreement was put in place years ago. It was a great deal for the company at the time for non-dilutive capital, in early days in JEMPERLI's commercial launch, and JEMPERLI has obviously done really well since. The way it is structured, it is non-recourse, it is capped at $600 million. Once $600 million of royalties and milestones through the GSK agreement are paid to Sagard, then every dollar thereafter is reverted to AnaptysBio. The way it is structured today, 100% of any royalties and milestones that are generated from JEMPERLI are paid directly from GSK to Sagard. Then again, once that is paid off, then it will come to AnaptysBio.
Great. Moving beyond JEMPERLI now to imsidolimab, which could be another potential second royalty stream to you. This was the program you had licensed to Vanda in early 2025. You have the BLA in generalized pustular psoriasis, and that is under review with the PDUFA date of December 12th. Could you walk us through the structure of that deal you have with Vanda and how we should think about the economic opportunity for Anaptys if imsidolimab ends up getting approved in that indication?
Sure. The agreement is very simple. For any future sales, Vanda pays us 10% flat royalties on any future sales for imsidolimab, now Quimilza, its brand name. 100% of all development and commercialization costs are being paid by Vanda. Very simple deal. I think it's great for patients in this rare setting of GPP. For us, we think it's an important second royalty stream for our portfolio behind JEMPERLI. At this point, it's a little early for us to provide any guidance, nor has Vanda provided guidance on what the sales might look like or the economic opportunity, but it's definitely important for us.
As you look at the potential royalty stream that you could be getting from JEMPERLI and imsidolimab, and having more of that cash flowing back to the company, I want to talk a little bit about capital allocation and how you're thinking there. You've shown already a willingness to return capital through your share repurchase program. Just like to get your thoughts on how you're thinking about capital allocation moving forward, if you're thinking of continuing to use those buybacks or holding onto cash for more opportunities or a mixture of both.
Yeah, good question. Prior to the split, AnaptysBio had done a share repurchase plan, which ends up looking very attractive at this point since it was done when the stock was under $20. Combined now, the two companies are between $90 and $100 on any given day. It was definitely the right use of proceeds at that time. There is a $100 million share repurchase plan in place at AnaptysBio today. We have not used it yet. It's effective through the end of the year, so it's on the table for us should we think that it's the right thing for shareholders. As I mentioned earlier, the sole purpose, sole focus of AnaptysBio today is protecting and returning value to shareholders. There's no plan today to use cash for any other reason than that.
We have no plan to build out a BD investment team to become the next royalty aggregator and look like any other royalty aggregators in the space. We're focused on collecting that cash once Sagard is paid down, and then returning that to shareholders, or maximizing shareholder value in any other way.
Yeah. You are going to want to end up staying focused on JEMPERLI, imsidolimab. You do not see yourself branching off onto any other potential royalty streams at this point.
No plan to do so.
Okay. Before we wrap up, I also want to talk about the litigation you have ongoing with GSK and Tesaro. This involves the JEMPERLI collaboration, and I know you probably cannot say too much, but what you can, could you give us an update on this litigation, where things stand today, and whatever the remaining steps are moving forward with this?
Yeah, absolutely. The trial was held in July, in Chancery Court in Delaware. Right now we are in the middle of our post-trial brief process. We filed our initial post-trial brief on August 21. GSK will file an answering brief sometime in the next week or so. Then we have the opportunity to file one last reply brief, all leading up to an October 20 oral argument, which is really the last step prior to the judge or Chancery in Delaware going back and making a decision.
There's no set timeframe after October 20th that the judge will provide a judgment or decision. However, GSK has provided guidance publicly that they expect it in Q4, possibly Q1.
Okay.
Can't really speak much more beyond that, but what we've been clear and consistent with is that we have a strong and credible case, and what we're asking for as a remedy is reversion of the product to AnaptysBio.
Great. You clearly have a very active next 12 months coming up, a lot of potential inflection points. If you could just give us, I guess, a few key milestones and catalysts that you're most focused on going into the end of the year and then into 2027.
Absolutely. First, I'd say the GSK litigation. Judgment expected Q4, Q1. Second, AZUR-1, beyond endometrial cancer, AZUR-1, the BLA, the PDUFA date in February. We are looking forward to potentially getting approval and then launching that in rectal cancer, all on top of the commercial execution in endometrial cancer that will come out every quarterly results from GSK. Third, adding a second royalty to our portfolio with imsidolimab or Quimilza with Vanda. We're looking forward to potentially getting approval, or Vanda obtaining approval in December of this year. We think there's, like I said, it's an equity story now. There's a lot of upside over the next couple of years, and we think it's an interesting opportunity for investors, particularly those that haven't caught up on the story since the split.
Yeah.
We think it made a lot of sense for us to align as an investor your philosophies with two very different business models, different risk profiles, and different costs of capital. So, appreciate the time.
Awesome.
Yeah.
We do have a few minutes if anyone in the audience would like to ask a question as well. If not, I want to thank Chris from AnaptysBio for talking about the company with me, and feel free to reach out to him today and tomorrow during the rest of the conference if you have any questions. Thank you.
Thank you