Good morning, everyone. I hope you're all doing well. My name is Akash Jawhari. I am a pharm and biotech analyst here at Jefferies, and this is our New York City Health Care Conference. I have the Apogee Management Team, which has been a pleasure. We had a great dinner last night. Mike, why don't I hand it off to you for some intro remarks, and then we'll get started.
Yeah, I'm happy to, and thank you for the opportunity. Good to see everyone. Apogee, we are developing potentially best-in-class antibodies, but after the largest markets in I&I. [Atopic dermatitis] is our kind of lead program. A lot of attention on our upcoming phase II readout middle of this year. The kind of crux of the story is we finally know which targets work in I&I: IL-4 receptor alpha, IL-13, OX40 Ligand, TSLP. It's just the antibodies that were kind of the first-generation antibodies against those targets leave a lot to be desired based on where we can now utilize new technologies, new backbones, new formulations to get to much better antibodies against these targets.
Our approach is kind of stand on the shoulders of the giants that navigated the field and go after these validated targets with much better antibodies as model therapies, push dosing out from every two to four weeks to three to six months, push exposures to see if that can lead to better improvement as well, and then come with first-in-class combination approaches of our co-formulated antibodies as well. We've been at this for companies have been going about five years now. We're finally knocking on the door of our critical kind of 16-week data. We think that will show the potential for us to transform the atopic derm market, which is on track to be the largest I&I market with surprisingly a lot of white space.
Got it. So why don't we start with your upcoming data set, long-acting IL-13, kind of your cornerstone asset in AD. And it's funny, when I look at this and we've done a lot of work on it, and you talk to some of your long-term shareholders, I feel like there's three things I'm going to learn. Can Apogee run a clinical trial without having a very high placebo, just like in terms of cross your eyes, dot your i's, cross your t's? Number two, does it look like an active drug that is showing Lebrikizumab-like response?
The third part is, once we get that data set, how do we think about next year, which I think is the really important readout, which is, hey, in a combo setting, can you get like a 10-point delta versus Dupixent or something in that range where this can really be the story? The interesting part is there's so much variability in AD trials. What's the Lebrikizumab study you look at? Do you look at one or do you look at the other? I mean, if you look at [just rocatinlimab's phase II data, it would have been the greatest drug of all time. That inherent variability makes the setup very tricky.
The question I'd ask for you, what is the appropriate bar for you guys internally, and what are you hearing either from a strategic perspective, but more importantly, from doctors in terms of what they want to see in the study?
Yeah, so I think let's start kind of with what we hear from physicians and patients and payers, and that informs the bar. That bar is if we are equivalent on efficacy and safety, and that is a range. What that means to them is on a top-line basis, EASI-75 in the 45%-50% range, and EASI-90 and IGA0, which track pretty closely together in the 35%-40% top-line range, then that is a drug which will be perceived by them as equivalent, roughly the same as Lebrikizumab and Dupixent. To your point, they kind of had like a five to eight point range between their phase III studies and kind of fell in that bucket broadly. If we're that, but with every three-month dosing, it's like universally positive feedback.
96% of patients are taking action either if they're not on therapy or if they are on therapy to switch to us. 2/3 of docs are starting to, 80%+ are prescribing this as their front-line drug of choice, and 70% are starting to move patients from Dupi to this. If we then ask, great, what if we're better on efficacy?
Yeah.
We get five points more in terms of switches, but it's already so high that the main difference there we hear is more from payers who say, well, then maybe you can take a harder stance on rebates to get access. That is what they have told us from the very beginning. That is why we continue to set the bar there. Importantly, nobody is ahead of us. We're coming into a shockingly white space category.
Let's put some numbers there. Sounds like you're not saying placebo-controlled, but there's no doubt you guys care about placebo. I know that's something Carl talked about a lot. Sounds like 50 on the 75 score. What is the bar you want to communicate this straight on an absolute basis for that study on the 75 score?
Yeah, 45%-50% top line. If you look back at our, a lot of people are like, oh, have you moved this? Have you not? Before we enrolled the first patient in the study last year, we put out what success is, and we set the bar. That slide has been unchanged in our corporate presentation since the very beginning.
Now, it's interesting because I think that's the appropriate bar to set, especially if you talk to doctors. At the same time, I do think, like Jeff will talk about this too, it's not like Apogee is not an efficacy story. It's not that you don't think you're going to have combo agents or the potential you guys will bring up in meetings like, hey, look at this multidisciplinary review with Lebrikizumab, and there is an exposure-response relationship. We see that across the board with some of these soluble I&I targets. Help us understand that bridge, because the way I think about it, there's a difference between in a small phase two study that is not powered and has error bars that are going to wiggle.
This is not the appropriate time to test whether this will also have higher inhibition, leads to better efficacy with an IL-13. That is more of a numbers that you have in a phase II. That is not Apogee saying, we do not think there is some exposure-response relationship with IL-13, and that efficacy is an important part of the story with Apogee. Is that a fair characterization?
Yeah, I think with us, when we think about how do we build a leading company in I&I, we need the leading drug in atopic derm. That is a big statement. We're seeing EBGLYSS and [Ebolivia], which aren't leading drugs, but still good drugs, launch, and they're going to be $2 billion-$5 billion each. They're having great launches. The category is just so large that even not that differentiated drugs can be mega blockbusters. We want to have their front-line drug of choice. For us, that is, we're told by the market clearly, better dosing. I think there are multiple pieces of evidence that suggest that there is a strong exposure response.
Scientifically, it is very credible and very sound, but we do not need it to win on the mono, which will be launching this decade, well ahead of potential biosimilar threats, et cetera, into a market that is only going to have an every two- to four-week dosing option. The feedback is so clear. However, we want to build the strategy, the company in this space. At some point, you will want better efficacy. We want to be the ones that achieve that. Either higher exposure with our monos could, pure upside, not necessary to win, or our combination approach, which we have our testing head-to-head versus Dupixent.
Right. OK, now maybe stepping back on contribution of components. You read the FDA draft guidance. It is vague, and I think it's vague by design. You would think so. I do think the question, when you look at the biosynthetics, I don't think there'll be any benefit on clinical efficacy or safety. I think it's just literally, I don't have to do contribution of components, and it's the speed angle. When you think about, it seems like you guys have communicated there's like two scenarios. If there's no overlapping toxicity and we have the profile we want to deliver, here's our clinical development program. If the FDA wants us to do more, here's what the program would be. Help us understand, A, what you want to see. How do you define contribution of components given your regulatory interactions with the FDA?
What are the two scenarios we can think about here?
Yeah, great. Part of the pathway forward in terms of what we're doing, which is co-development, so two molecules and eventually in a co-formulated two milliliter auto injector, is FDA guidance, vague as it is, wants to see that the combination is better than the individual parts. Makes total sense. Usually in our plan is to do a factorial design here too. Test the combo versus the two monos, 777 and 990 in this case, to show that it's better. Before we do the contribution of component study, our first study launching this year is that combination APG 777 plus APG 990, which we call APG 279 versus Dupixent. That really directionally will help us understand how we are better than component parts and equally important how we're better than the current standard of care.
Because what we hear, not necessarily from the FDA, but what we hear from KOLs and payers is that any multi-targeted agent, whether it's through combinations like we're doing or bispecifics, they want to see that it is better than a monotherapy, in this case, the standard of care monotherapy, which is Dupixent. Bispecifics, they might have an easier path in terms of regulatory, and I'll get into that in a second. What the world wants to see is that a multi-targeted agent is better than Dupixent. We see that J&J has launched their bispecific IL-4 receptor alpha IL-31 going head-to-head versus Dupixent as well too, just like we are. In terms of the regulatory path, what that means is, as I said, the factorial design study is something we would uniquely have to do versus a bispecific doesn't.
What we are talking there is somewhere on the order of 100-150 more patients in that study versus what a bispecific would do. With the ability, everything else we get from that pathway, the ability to optimize the ratios of the two drugs, I think here we know that generally we do not want one-to-one targeting. We want more IL-13 inhibition than we want OX40L inhibition for our combo. It gives us the ability to play with those ratios and get benefit-risk rate. Everything we get from that to push the efficacy bar way outweighs an extra couple hundred patients in the study. We talked about this at dinner last night, but one of the things that could happen after that study is the FDA says, this is interesting. We want to see more on contribution of components.
There, I think you just add more to your phase III study. It really depends on what we see in that initial study on whether we would even have to do it and how many patients that would add to it too. I think in our base case, and we say this because what we've seen in our tox studies has been incredibly clean. Combo tox, no dose findings at any dose level. We do not expect any safety issues. That is the reason they would really push you to do more.
Got it. Jane, you also had some helpful commentary. In terms of cost per patient, what are we generally thinking about for some of these AD phase III trials?
Yeah, as we advance to phase III and global trials, we're estimating about $250,000 per patient. Just to add to Carl's point on the benefit of combination versus bispec, we also can maintain that convenience. With the bispec, it's more difficult to push out the half-life. We will also expect our monotherapy to have more attractive cogs, which is important as well. We think also from an ADA point of view that there could be lower with a combination than in bispecs. There are multiple benefits to the combination and argues to why doing about 150 more patients makes sense.
Got it. Now, when we kind of step back and we think about, it's interesting, and Jeff, you had a good point about this. I think when we think about HUMIRA and why did I&I get so big and why has Apogee been able to create this kind of behemoth, part of the point, the feature and the bug of HUMIRA was you get off therapy. Because you develop ADAs, you lose a response, and so people are going to have something next. If you have something you can give to patients, there's this kind of one-two punch that you get. There's a sense that's not the case for atopic dermatitis because Dupixent's a great drug. I think most investors think once you have a response, why are you getting off? There's two parts.
A, can you talk about the real-world adherence rate that we're seeing on Dupixent? Number two, can you talk about some of the data Lilly has shown for patients who are actually post-Dupi and either for reasons on insurance or actually just not responsive? I think the third part is, and you've worked on the payer side, when you think about the adherence rate of a long-acting three months or longer, how do you see that from an actuarial table? What happens when adherence gets into the 90% plus from a payer perspective?
Yeah, really good questions, Akash. Thank you. First, I would say when you look at Dupixent, it is a good product. It has changed the lives of patients that only had topical options in the past. The reality is you get an EASI- 75 about 50% of the time. That means you have a lot of patients that it's not working as well for. They're going to need to cycle through. They're going to need to try something new. You also have persistency rates in the first year at about 73%. Quite a bit of drop-off, and there's a number of reasons for that. Keep in mind, these are cold chain products, and you have to take them every two weeks, 26 2 mL injections a year. Not easy for anyone. If you look at their overall compliance rate across two years, the discontinuation rate is about 50%.
Again, lots of reasons for that. Loss of efficacy could be just needle fatigue. A lot of reasons for that. Patients will switch. They will move to other products. If from a payer perspective, why would EBGLYSS get early access by so many large health plans, both from a PBM perspective and a health plan? Payers know that they're cycling. We've seen this with plaque psoriasis, just as you talked about. You start on HUMIRA, you go to the next one. You're going to see cycling. If you see cycling and you do not have contracted access in place, what happens is you are then paying full whack every single time that product is used. As a PBM, you do not get admin fees. You do not get data fees. These are issues for the payer long-term.
Good product, but a lot of discontinuation, low persistency rate. Going back to one of your questions, why does that matter to a payer? Payers, even PBMs, in most cases are owned by a health plan or the health plan owns the PBM. It is an integrated system now. If you are integrated, it is a total cost of care. If I am on a product that either I am not getting the results I need or I am dropping off, I am discontinuing product, I have higher costs from office visits. I have higher costs from polypharmacy. Polypharmacy is a huge increase in cost for patients in the plaque psoriasis or the AD space, I&I in general. For example, a topical JAK might cost $2,000 a month. That is $24,000 extra dollars in the system a year.
Lastly, if I have a patient who's compliant on a product, so a Q3 month dose, by the way, SKYRIZI persistency rates in the first year, 95%. If I have a compliant patient, then I don't have switches. Switches are costly. Why? You go back into the induction phase. If you move from Dupixent to EBGLYSS, remember the first year of EBGLYSS is about
30% price increase.
You got it. You got it.
That's interesting. Maybe to that point on the rebate wall, it's one of the things we've noticed, and you can see this in the court documents with Sanofi and Regeneron. Regeneron's like stop discounting more. It is interesting that Lilly has launched well. I think going into launch, they're saying we're going to do something different than Taltz. We're going to discount more. They've launched well, and I have not seen Dupi gross to net widely fluctuate, which I think is the large expectation you would expect. Why has that not been the case? Just help us understand that.
Yeah, it's a great point. If you are the payer and you're bringing out another product that's a competitor to the product that you have contracted, then you actually have some negotiation leverage as well. It's not just on the payer side. You would think that the payer says, hey, there's another product coming out. I need additional rebates in order to keep, I need additional rebates from you or else I can put this product in front of you. That's not what's happening. The market as a whole, first of all, AD needs new products, and you can see that in the market. They need new options for patients.
There is no reason if you're Dupixent and you're the market leader and you have the volume and demand that they have right now to have to pay additional rebates just because a new product's coming to market. Also, no reason that a Lilly needs to pay some additional number of rebates in order to get access because payers know that the product will be used. One of the questions you asked is talking about if you're a Dupixent experienced patient, how did you do on EBGLYSS? You did basically the same as a non-Dupixent experienced patient. You did the same from an efficacy standpoint. You know you're going to have that cycling.
If I have that cycling and a patient moves from product A to product B, then I need to have access as a payer to both of those or else it becomes a financial burden for the payer.
Makes sense. Now, there are other players in this space that have data sets. Sanofi, I think you've got bispecific data. I think something that's not necessarily well understood is depending on how some of those card flips go, there could be changes in terms of your powering and your design for your phase II studies, both from RESP and atopic derm. Talk to me about the data sets that are coming out from Sanofi right now and how you're looking at that to inform your clinical trial design.
Yeah, so I think on the mono side, there's not much ahead of us aside from amlodipine mab. I think it is important that we see that amlodipine maintains response and hits in the phase three. I think that's quite likely. They took forward similar doses from their phase II B, and they didn't get as adventurous as Amgen did with rocatinlimab because they haven't needed to from the safety point of view. I think we want to make sure that we continue to see OX40 Ligand again be quite safe, which it has, and replicate that efficacy. That's really on the mono side. On the bispecs that could inform our respiratory strategy is really IL-13 and TSLP. The second big is IL-13 TSLP antibody that Sanofi is currently running in a phase II B in asthma.
That reads out first half of next year is, I believe, the latest guidance. That will, I think, show is there a greater depth of response or greater breadth of response across certain populations in asthma. That will help to inform our combo of IL-13 and TSLP on the respiratory side.
Right. And Carl, you did a good job. I remember talking and I was saying, oh, it was OX40 for RESP, interesting. And you said, keep in mind that Sanofi trial got extended. I do not think I would understand, oh, like an ENTYVIO and IL-23, they are totally different mechanisms. When I look at TSLP and then I look at IL-13, it is like, OK, both of these are kind of T2 high. The kind of dream, I would think, because it does seem like Regeneron's getting some pushback on the 300 EO cutoff, is can you go either no pheno, no EO in COPD and asthma? What is your confidence that a very potent IL-13 TSLP combo could deliver on that? And also, when you think about the Sanofi phase two data with the bispec that is coming out, do you think that that study is powered to show those type of deltas?
What are you looking for in that study?
Yeah, no, two really good questions on why I say why this combo and then what are our expectations for what it would look like. I think separately in asthma and COPD, because I think those are different answers. How we think about the combo in general and what we really like about it is kind of TSLP is a more central player in asthma. IL-13 is a more peripheral player, so acts at the lung level in terms of mucus production, in terms of airway hyperresponsivity, et cetera. What we like from it is you're helping control disease in asthma or COPD at the tissue level with IL-13, as well as controlling external stimuli by blocking TSLP, so new external stimuli coming in.
Kind of a central versus peripheral approach here too, blocking both of those signals simultaneously, although both of them have shown better responses in more T2 dominant patients. That is definitely true, although I think the breadth of response we've seen with TSLP across phenotypes has been greater than what we've seen for Dupi or other IL-13s in the space. For asthma and COPD, what we kind of want to see there for asthma, I think we know we have really good drugs, both TSLP or Dupi, so Tezi or Dupixent in this 300 plus population. I don't think there's a ton of room for better responses in that population.
What we want to see is that with a combination, we can potentially get to better responses or more similar to that really high T2 population with the combo in a less T2 dominant population, so lower than 300 EOs then.
Like a 150?
Yeah, 150 would be good. I mean, obviously, the whole population would be good, but I think 150-300 would definitely be a win. And that's something like 25%-30% of the population. So it's not a nominal number there. I think the Sanofi data for lunsekimig not really powered to show that. I think trends there will be important. With COPD, similarly, but here we have two dimensions to work on. One is that breadth, so stretching to 150 or more EOs instead of 300 and above. And then two, there you really still have room to move up in terms of AER reduction. We're talking 30%, 35%, maybe 40% AER reduction. I mean, there's still a ton of unmet need in terms of higher reductions in annualized exacerbation rate there too. That's not as true in asthma.
I think we have more room to grow there.
Got it. Now, Mike, you always talk about this is what payers want. These are what patients want. In the back of my mind, I'm also thinking what strategics want. It's interesting. My conservative sell-side brain's like, all right, this AD study, I know atopic derm, IL-13s work. I know you're going to have good half-life. Your team does seem to think that this is a meaningful strategic card flip as well. Talk to me about outside of just the bar and what is it going to show and the variability. From when you're stepping back, what do you think you're going to be able to show to everyone with this study that you think is underappreciated?
Yeah, I think right now, and I get it, the market's weird. Everyone's trying to get a foothold and understand when are we going to stop being surprised. Everyone is trying to focus on kind of downside risk as much as anything. I think for us as a company, over the next 18 months, starting with this readout, we are going to be transitioning from a pre-data, pre-efficacy data, risky, will it work, can they run a trial, is this feasible, do they have an active drug? As you point out, is the question mark to a they have an active drug, pending data, of course. They have a meaningfully differentiated drug to patients, physicians, payers. They have a drug which now has a line of sight to launch in this decade and has the potential to be a mega blockbuster.
I think that is a very different risk and company profile than where we are before data. I think that will be appreciated with time.
Especially with the reminder that there is almost a one-to-one correlation between phase II and phase III success in atopic dermatitis.
Yeah, so while we do see variability, as you mentioned, Akash, across these trials, if you just look at the correlation, it's incredibly strong between them too. Yeah, the Lebri 2b and the two phase III, so some variability, but they're all directionally very similar. We're talking like 51%, 59%, and 60% top line EASIs. A lot of things don't replicate that well. And that's true not just of Lebri, that's Dupi, that's RINVOQ, that's Abro, that's everything that's been in. That's Tralo. There's no surprises in phase III here. Plus or minus a couple of points, of course, because of variability, but there's no surprises.
Right, makes sense. Now, stepping back and also just thinking about this strategically, there's kind of the way I've thought about it is Merck entered into, obviously, with Mark and TL1A. Let's put it this way. I get asked a lot by investors, why did Bristol spend so much for the BioNTech asset? And then Pfizer spent a billion on the PD-1 VEGF class. There's some analogies here. The response I give is, you bought an entire strategy because BioNTech had multiple ADCs in combo portfolio. They had a strategy, not just an asset that they kind of got licensed to. The way I think about it is when I think about strategic interest for Apogee, I always think it's not going to be a company that already has an established I&I platform. It's going to be someone who's going to want a plug-and-play portfolio.
Is that the right way to think about this? Or maybe we should be thinking more broadly?
Yeah, I think you should ask the strategics kind of like for their own strategery. I would just kind of preface it with that. I think when we look at if you're looking to build a company and to replace losing revenue, you need big drugs. The closer those big drugs are to your existing franchise or represent new franchises, I think it can be attractive either way.
Got it. The last question I'll ask you was a little cheeky one at dinner last night. Obviously, Mark's a huge success story in terms of what happened in Prometheus. I do think that's going to be a good deal for Merck. I think we've covered Argenx for a while and seeing how Tim's been a company builder. I asked you last night, Mark or Tim, if there is someone you're looking at in terms of who you want to be as CEO of Apogee, there's the pragmatists, and then there's also the long-term shareholder potential. How do you kind of balance both of those types of polls when you have an asset that obviously your team's very confident on?
Yeah, I think we landed on TARC as the.
Yeah, yeah, exactly, TARC. Yeah.
I think if you look at kind of how Mark framed it and exactly how we frame it as well, he built that company until someone proved to him that they could do it better, could get it to more patients, could accelerate development, all because of a lower cost of capital. I think that we are going to continue to build Apogee unless someone can prove it to us and shareholders that they can do it better. We are very excited, and we have a very meaningful drug. It could be the foundation of that Argenx Vertex-like company because of the size of the drug. I would have to ask them kind of how they each balance it and how they made their decisions.
I think it's just how can we do the best for the patients that we're seeking to serve and accelerate development kind of broadly. I think there is a path for us to do that as an independent company, but we're not going to be hubristic in any sense.
Maybe just lastly, when we think about value that investors talk about versus internal value, RESP is obviously a big card flip. Look, we totally were wrong on the IL-33 for Regeneron, I'll be honest with you there. There's been kind of a vacuum because Regeneron had a strategy where they're like, hey, nonsmokers, ex-smokers, we have for T2 high, we have Dupixent. I think there is probably some unmet need in RESP right now. When you think about, and Carl, I'd love your perspective too, the combination approaches that you have right now, how do you think they can kind of stand out? Do you feel like you're getting value for your respiratory franchise? Maybe that's for you, Mike.
Yeah, I'll say we're definitely not getting value for our respiratory franchise. I think we're not getting value for our AD franchise. If you look at different analyst models and do your own work, 10% of this market's a $5 billion-$10 billion drug. SKYRIZI's got 40% with more competition and a similar setup just a few years into launch. This is three times the size of that market. I think we're not getting value, which is understandable. We need to put data out for AD or for any of our expansion indications, asthma, EOE, and others that are planned. For respiratory, I hope that someday we will get value, and it will likely depend on data.
Yeah, and I mean, just to add, because I know we're at time, just I think that when we look at, you mentioned asthma is a little more crowded. We have a couple of good drugs there, but by no means is that like a place that is completely solved. I think we see a place there. I mean, COPD, we have Dupi with a 30%-35% reduction in AERs for EOs greater than 300. That's it. That's all we have right now. The heterogeneity of COPD lends itself so well to combos. I just don't think you're going to get that much further than that without a combination approach too. I think five, ten years from now when we're launching, hopefully, in respiratory diseases, the bar is not going to move that far without combinations.
Understood. Hey, we're out of time. Thank you so much, as always. Really appreciate it.