All right, so welcome everyone to those attending in person in Boston, as well as on the webcast. I'm Yigal Nochomovitz, a biotech analyst here at Citi. Our next company is Zenas Bio, ticker ZBIO. We have the CEO, founder, Lonnie Moulder. Welcome, Lonnie. We also have other members of management in the room. If you have questions for those in the room, you can use the microphones if you want. Just raise your hand. Lonnie, maybe just to start, for those less familiar with the company, you've been public now for, I guess...
One year.
One year, yeah. You know, tell us a little bit about the thesis and the key programs. You have a lot of catalysts, as we'll discuss, coming up in the near term.
Sure. First of all, thanks, Yigal. We're really happy to be here on this beautiful day in Boston. For those of you that may be less familiar with Zenas , let me just give you a high-level few minutes on what we're about. We're an autoimmune-focused company, just about 5+ years old, as Yigal said. The company had a successful IPO last year. Our mission is really to make a difference for patients living with autoimmune disease, initially with our lead program of Obexelimab, which was in-licensed from Xencor. It's a really novel monoclonal antibody that hits two targets: CD19 and FcγR2b also known as CD32B . By co-engaging those two targets on B-cell lineage cells, we potently, deeply inhibit those cells. That's quite relevant as it relates to antibody production, cytokine production, antigen processing, and presentation from B cells to T cells.
It can impact a broad range of autoimmune diseases, potentially. When we in-licensed this interesting molecule, it had already completed five clinical trials: a SAD study, a MAD study, and rheumatoid arthritis. That's quite interesting. A phase 2 study in IgG4-related disease, IgG4RD, we'll talk more about, and a study in lupus that, although it was undersized, showed real activity in the disease. In addition, a Sub-Q IV program. Everything we're doing going forward uses the subcutaneous self-administered formulation of the drug. The company we've assembled has a fantastic team. A number of us have worked together in the past. We intend to fully develop and commercialize globally with our own commercial efforts in Europe and in the U.S., which have already started. Obexelimab in IgG4-related disease will report out top-line phase 3 results around the end of the year. We're already in the BLA planning stages.
In addition, we have a relapsing multiple sclerosis and RMS phase 2 global program reporting out early in the fourth quarter of this year. We're also enrolling a lupus program, a randomized global phase 2 program that will finish enrollment around year-end and report out about middle of next year. A lot is happening with Obexelimab as we advance it. The company finished June 30 with about $275 million in cash. This morning, we announced a strategic collaboration with Royalty Pharma for a total of $300 million of funding. $225 million of that is related to the IgG4-related disease program. $75 million upfront, $75 million potentially at the phase 2 data point around the end of the year, and then $75 million at approval. That puts us in great shape from a cash position. I'll leave it at that and turn it back to you for questions.
Let's actually talk about the Royalty deal since that was announced this morning. It's new information. Just tell us a little bit more about how that came about and the strategic thinking there. I've got a few more detailed questions about it.
Yeah, for us, obviously, we need capital to launch the first indication of Obexelimab and to continue to advance the programs. Based on, I think, the prior data set and what this molecule has demonstrated in other clinical trials and non-clinically, there was a lot of confidence, of course, expressed by Royalty Pharma and others that this could be a really meaningful drug. First of all, a lower-risk type of program, and then an interesting and potentially large market for IgG4-related disease. It became of great interest to them to participate in this even before phase 3 data. A little risk mitigation since two of the milestones are associated with phase 3 data and the ultimate approval.
I think it really shows a validation the same way when Bristol Myers Squibb became our partner in Japan and some other Asian markets, having completed their diligence, that this is a significant molecule and there's a real market here for a drug in IgG4-related disease. I think those are two things to highlight. I think I touched on technically how this works. We'll pay a 5.5% royalty on sales. It's a really clean deal. It's specific to Obexelimab. There's no other aspects to it beyond Obexelimab in our pipeline.
It seems like they or both of you wanted to focus on the later stage of programs because it didn't include, unless I missed it, didn't include MS. It included IgG4 but.
It captures Obexelimab. The payments are associated primarily with IgG4RD, $225 million. As I said before, $75 million upfront, $75 million in phase 3, $75 million at approval, and then an additional $75 million for a potential approval of Obexelimab in lupus. As you know, in the royalty model, the vast majority of deals are done with commercial products. This synthetic royalty approach isn't typically done in development stage unless, of course, you already have phase 3 data, maybe you're waiting for approval, looking to fund a launch. I think it's a real vote of confidence that it happened even before phase 3 data. The 5.5% is on all sales of Obexelimab.
OK, so it would capture MS upfront in the future. OK, thanks for clarifying that. Let's talk about IgG4-related disease. I think people are becoming more familiar with it, especially with, obviously, Amgen having launched their drug. Tell us a little bit more about the design of your study, what can be expected in terms of the profile. Of course, the key question is, what do you need to show? What do you believe you need to show to be a competitive product?
Yeah, just backing up a bit, this disease, IgG4-related disease, as many of you know, is a disease of inflammation that can lead to fibrosis and organ damage over time. Most patients have two to four organs involved upon diagnosis. That diagnosis usually takes place because the patient is having a flaring event. They may have underlying inflammation that's causing damage, but it's really a severe flare event that usually causes them to be recognized with their primary care physician and referred to a rheumatologist. Maybe a standard physical showed some lab abnormalities. After a workup from a rheumatologist or, in some cases, gastroenterology gets involved because a number of the organs, pancreas, biliary tract, or liver, are sometimes prominent with the disease. Once the patient's diagnosed, of course, they seek some sort of treatment. Until UPLIZNA's approval, it was really just corticosteroids.
There are some older anti-inflammatory drugs that are used. They're not very effective and not well tolerated. Steroids will knock a flare down. This trial design is based on flares, looking at the number of flares. In fact, our primary endpoint, which is the same as the primary endpoint in the MITIGATE study of UPLIZNA, is time to disease flare. The way the study works, patients who are seen to have a flare undergo an assessment using the ACR/ EULAR criteria to ensure they have a score of 20, which means they're in flare. People between 0 and 20 have inflammation, but not an overt flare. I'll get back to that. If they have flare, it's then adjudicated to confirm they have a flare. We have a homogeneous population. Everybody definitely has a flare coming in. They're treated with steroid to knock the flare down to remit.
That's when they're randomized, one-to-one randomization. Amgen study, Horizon Amgen study, our study, same. The patients are tracked for flare. They flare, that's a failure on the primary endpoint. Then look at the time to disease flare and report it out as a hazard ratio. What was observed in the UPLIZNA study was about a 60% flare rate for placebo and about 10% for drug. In our phase 2 data set for Obexelimab in an induction and maintenance study, Obexelimab had a flare rate in single digits. We know it's a highly active agent. Now, with the data set showing that the placebo control arm, without any steroids, flares at more than 50%, actually 60%, that gives us great confidence in our trial design, which is almost identical. That is what we'll report out about year-end.
With a flare rate in the same range, that would produce a hazard ratio somewhere in the teens, which is where Amgen came out. These are highly effective therapies for patients. Where are there differences? I think one thing to consider, first of all, is the approach we're taking, inhibiting B cells versus depleting B cells. There are a number of clinicians that are concerned in these diseases that are chronic diseases. This is not a hematologic malignancy. Depleting the full B cell compartment every six months for decades, is that a good idea to do that? Whereas an inhibitory approach, you can pull back anytime. I think right there, there's an important difference, even before looking at the clinical data. Secondly, our drug is an at-home subcutaneous administration. Ultimately, it'll have an autoinjector. Within a year of our first launch, we'll launch our autoinjector.
It's a low-viscosity formulation, so that's under 10 seconds, once a week. I saw a piece of information the other day. 15% of all adults in the U.S. have now administered themselves weekly GLP-1s. It's sort of a thing to do pen injectors now. People are used to it. That will be the ultimate commercial formulation. It's quite convenient, as opposed to going to an infusion center, which I think in Boston, you could probably get to one pretty quickly. There are parts of the country where you can. In parts of the world, it's hard. Some patients just don't want to go to an infusion center and spend all day there with their premedication, their infusion, their post-infusion follow-up and monitoring to ensure there's no hypersensitivity, potential anaphylaxis. Having an inhibitory approach that's convenient, the patient controls their own disease, right there, I think, differentiates.
There's an economic consideration in many cases. Almost 50% of the IgG4RD population are of Medicare age. If you're receiving an infusion, one of the B cell-depleting antibodies, that's a medical benefit. That's under Medicare Part B. The patient's responsible for 20% of that expense, which in this case, it's over $50,000 patient burden. How do they do that? They might have to buy co-insurance, which costs money. With an at-home subcutaneous administered drug, that's under the pharmacy benefit. That's Medicare Part D. As of January 1st, it's a $2,000-a-year cap. There's an economic burden that's reduced with our approach.
If you just take those factors, I think that leads us to being able to gather a reasonable amount of share of a market that we think is a 20,000 prevalent number in the U.S., actually diagnosed, maybe 30,000- 40,000 that exist, but only 20,000 are diagnosed now since there hadn't been a drug. About half of those patients will need this continuous therapy. If you just take the current pricing in the market and only that half, that's about a $3 billion opportunity. With our profile, which share of that can we obtain? If you look at the clinical data, I think we come in around the same range. I think one potential clinical advantage is our continuous dosing because with Obexelimab, we've selected a weekly subcutaneous dose that maintains target coverage, strong exposure, C trough, to continually inhibit. In the non-clinical data, showed this inhibition occurs.
If you take lymphoid tissue, spleen, look at the B cells in there in animals, the antibodies attach and it's inhibiting. We're protecting the patient. This goes back to what I said earlier, that patients may not be in a flare, ACR/ EULAR score of 20. They might be 0- 20, but they have inflammation. How do you keep that under control? We know with every six-month B cell depletion with the infusion agents, a number of the patients replete sooner. In fact, in the prior situation, 15% of them have normal B cells before their next dose. If that's the case, there are patients that are in that 0- 20 that have inflammation. The way you measure that in the clinical study is something called complete remission.
Although that agent had a 90% protection from flares, its complete remission rate at six months was only 37%, 30%, and 50% at the 12-month range. That shows you there's patients that still have disease. We want to manage the disease continually, not just the flares. I think that's an important potential clinical differentiation that could read out of the phase 3 study.
Would that manifest that through some of the other endpoints, presumably? Complete remission rate?
Complete remission is the endpoint one would look at.
You might expect you could see something higher than what you cited, the 30%- 50%.
Yeah, the way we would look at it is, what's the % difference over the control arm? That's how you would want to compare. Although comparing cross studies is always complicated, I think the complete remission rate is something you'll want to see beyond the primary endpoint.
Will that data emerge with the top-line readout towards the end of the year as well?
Yes.
OK. Are there other efficacy measures that you want to highlight beyond those? Those seem to be the key ones.
I think another important measure, obviously, what you're trying to do in treating these patients is eliminate their corticosteroid use. That will happen, and it happened in the mitigate study. We have an additional instrument that we inserted into our program called the Glucocorticoid Toxicity Index, the GTI. I think that is really helpful because it doesn't just measure the amount of steroid used in the two arms, the active drug and the control arm. It actually measures the toxicity associated with the steroid use. That's really important with payers to not just bring the number, but say, here's what it meant clinically for the patient by reducing the steroid use. It's a bigger concept.
OK. On the other side of the equation with any therapy is the safety. What can you say in terms of competitive differentiation there? Is it essentially similar to a prisoner in terms of what you expect?
We will see when we have the phase 3 data set. We know to date it's a well-tolerated agent. With any autoimmune agent, you're going to have some level of infections. If you're knocking down the immune system, you're going to have that. With a B cell inhibitor, such as this approach, you know you can pause the drug and get B cells back if you need them. Something interesting that's pointed out quite a bit by the KOLs and our investigators is the negative experience they had during the pandemic where patients that were receiving a B cell depleting agent succumbed because they couldn't mount an antibody response with a vaccine. An interest they have is being able to pause an inhibitor such as this, vaccinate the patients, and then restart it several weeks later, having created memory.
It's an interesting potential opportunity from a safety perspective that a lot of the KOLs and investigators point out.
Talk more about that in terms of the rebound of the B cells. If you were to withdraw Obexelimab versus withdraw with UPLIZNA , which is every six months, how quickly are the B cells coming back if you were to pause?
Yeah, we get back to 80% of normal within a few weeks.
OK, quickly.
Yeah, quickly.
OK. That's coming up. What's the exact guidance on that as far as the timing? You said towards the end of this year for the phase 3.
For the INDIGO Phase 3, around the end of the year.
Around the end of the year. OK.
Yeah, last patient out is November 15th. It's just a normal calculation. Clean the database, the last group of patients coming in, run your statistics, do your quality check. Is that really going to happen on Christmas or New Year's? Probably not. Around the end of the year.
OK, sure. You talked about the Royalty deal. I just wanted to ask one other question. In that press release this morning, they specifically said, or you specifically said, define success criteria in terms of hitting that milestone. Is that essentially meeting the primary endpoint? Do other things need to happen too?
There are a few things that relate to efficacy and tolerability that are part of our base product profile. Because it's competitively sensitive, we don't put that out there.
Fair enough. OK. That's obviously a key milestone coming up. Let's also talk about the one, the earlier readout for relapsing multiple sclerosis, which is obviously a higher-risk program, earlier program. That's coming in the early fourth quarter. Talk about the premise there. You've had some nice preclinical data supporting that thesis. As far as I know, not clinical data yet.
No clinical data to date. Obviously, the anti-CD20 depleting antibodies give us a sense that hitting B cells can significantly impact disease. We know because in RMS, in relapsing multiple sclerosis, the B cell agents are now 60% of the category, with sales that are probably going to be well north of $10 billion over time. That is somewhat validating hitting B cells. You hit B cells, you also hit the B cell-T cell axis. Even though it's in the periphery, it still makes a difference in annualized relapse rates. That is validating in some ways. We know there was a CD19 monoclonal antibody because the current agents are targeting CD20, but a CD19 that successfully had a phase 2 trial looking at MRI GAD-enhancing lesions. That validates CD19. I think it's logical CD19 would do well. Our approach is an inhibitory approach.
As you said, in the preclinical model, comparing Obexelimab, a surrogate in the mouse model, to an anti-CD20, it looked quite potent and sustainable. That's great news. Now we're conducting, of course, this phase 2 trial. It's a phase 2 trial that's classic in design. MRI readout is the primary endpoint, a 12-week endpoint. The study is randomized two to one, Obexelimab to placebo. The primary endpoint is cumulative new GAD-enhancing lesions. It's classic. It's what others have done. What you want to look for in a study like that, obviously, is how that compares to the placebo arm at the 12-week point. Ultimately, what the number of lesions are, because as you approach 0, you're doing a lot.
If you looked out there in the field and looked at all the anti-CD20s, looked at the BTK inhibitors, looked at the CD40 ligand targeting agent, you see a vast array of data that shows for the active agents, I don't know, 80%- 90% decrease compared to the control arm. As you approach 0, if your drug's driving it to 0, then it becomes a little harder to reduce 80%- 90%. You have to put it all in context. That's what we'll describe when we have the top-line release. Importantly, we then continue another 12 weeks to a 24-week series of endpoints.
We have almost 20 endpoints, exploratory and tertiary endpoints, looking at biomarkers, novel scanning techniques, all of that, trying to really assess neurodegeneration and serving as a translational basis to how this agent could actually impact the disability progression that occurs even when you don't have relapses. Because if we move to an RMS Pivotal Registration program, we would want to include PIRA, the clinical endpoint PIRA, which is Progression Independent of Relapse Activity, as an important secondary. That would be a real differentiator over all the approved agents that have not used that endpoint because it really wasn't validated at the time. We think that could be an interesting differentiation. The 24-week data will give us more information about that.
You mentioned sort of some of the comps in the CD20 and the BTKs. I mean, are you suggesting you could potentially get as low as 0 lesions with these patients, or that's maybe too high a bar?
If you look at some of the agents that have ranged 0.03, I mean, that's pretty low. One of the BTK inhibitors showed that. That potential is there, but you also look at it relative to what the control arm did. That kind of describes the patient population you got into the study. Some patient populations have more active disease than others. You're going to have that difference compared to the control arm. The question is, how low is it?
Right. Have you talked at all about the baseline demographics in these patients, what they have at baseline, or what you aim for?
Yeah, we've outlined, and it's in our corporate deck that's publicly available, we've outlined the inclusion criteria. The inclusion criteria are standard for these studies, and our baseline characteristics line up with what's on that list of inclusion criteria.
At the 12 weeks, which is coming in early 4Q, we'll get what we just talked about, those lesion data. At 24 weeks, we'll get a follow-up.
More lesion data. Imagine, initially, you're going to see new and total T1. At the 24 weeks, you get T2, and you get volume, and you get NFL and the novel scanning and a lot of other measures around, even some clinical measures at 24 weeks.
OK. How are you approaching the future? Obviously, assuming it goes to the finish line, you'd benefit from, you'd have the royalty with Royalty . Would you be partnering this program? It's a big space. It's a big market, obviously.
It's a big market. We feel like we could commercialize. The thought is, how do we capitalize a program? If we went to RMS, for instance, those are two 800-patient trials looking at annualized relapse rates over almost four years. That's a big thing to bite off. We'd have to contemplate how we might want to go about doing that if that was our decision.
OK. As far as the different subtypes, like the primary progression, progressing, the secondary, third.
Yeah, the other thing you could consider, and as you know, there's only one approved drug for primary progressive multiple sclerosis, and that's Ocrevus, an anti-CD20. It tells you right there that B cell targeting can be active there. That is something that will be part of our internal strategic discussions. Let's play out the 12-week endpoint, the 24-week data. Obviously, we have thoughts in mind as to how we might move forward, either collaborating or funding this in some mechanism. It is premature to go much further than that.
You mentioned this novel endpoint, the Progression Independent of Relapse Activity. Are there benchmarks for that? Will you be a pioneer in demonstrating the feasibility of this endpoint?
Good question. There are benchmarks because although not part of a reported-out prospective randomized trial, in the Ocrevus program, there were two phase 3 RMS trials. Post hoc, they put the databases together from the two trials and then retrospectively applied the PIRA endpoint and then actually showed an impact, a positive impact. It's not in the label, wasn't prospectively designed into the program. It was post hoc. I think a B cell targeting agent with that data gives us a foundation to say we could do this prospectively in a randomized program, potentially.
OK. At the beginning, you mentioned the third program, which I guess is sort of intermediate in terms of the development progress, the lupus program. Can you just review what happened with the Xencor trial? You talked about it a little bit and some of the possible flaws that you uncovered there and how you've rectified those.
Yeah, so actually, if we played everything out, lupus would actually be second between IgG4RD and MS if we did registration programs. The phase 2 data, as I mentioned, from the ongoing trial will be about mid-year next year. If we look back in time, there was a phase 2a program conducted by Xencor. That utilized the design where they ended up powering the study in a way where each arm had about 50 patients. I think over the years, we've learned that that's probably not enough, especially with how control arms perform in lupus trials, to hit a P-value. If you look at the intent-to-treat analysis from that study, which is the standard way of looking, they used an efficacy evaluable analysis in their primary endpoint. If you just go back and look at ITT, the effect size on the primary endpoint was actually 17%.
The two approved drugs, one from GlaxoSmithKline and one from AstraZeneca, range from 12%- 17% in their label from their phase 3 studies. That shows the drug is active for sure. We learned a few things. One, you need to power the study to the right size. Two, you need to really ensure that patients are meeting the exclusion-inclusion criteria and truly have moderate to severe disease. If not, you're going to get mild patients, and those mild patients are going to drive the control arm success up. Three, you need to use the optimal dosing regimen. That original lupus study used the original IV regimen that had a high Cmax and a low C trough. It had activity. When we went back and did a PK efficacy analysis on the program, we looked at that, and it was obvious that C trough was the driver of efficacy.
Everyone above the median of C trough were the ones, the patients that were responsible for the benefit of that study. When we chose our Sub-Q regimen, we picked a C trough level that is actually several multiples of what was seen in that overall program. We're putting everybody up at a level with full target coverage. We think our regimen is more effective. The study is sized at 95 patients per arm, so it's powered properly. To ensure we're getting the right patients, not only are they meeting the inclusion-exclusion criteria from the investigator, but we then have an adjudication committee that re-reviews them. Interestingly enough, we screen out a number of patients that the investigators would have put in. We think we're creating a really clean, appropriate population. That takes longer because you're screening way more patients out than what's typical. We built that into our timelines.
We just assumed it would take longer when we set our timelines. I think all of those factors together put us in a good spot. The other thing we're doing, we learned of a potential biomarker path from the Xencor work where they deep sequenced 70% of the patient samples and showed some gene expression patterns that are grouped, makes up about 30% of the lupus population, where the effect size, I discussed 17% effect size in the ITT. When you use the right C trough, it went to 34% effect size. When you look at the biomarker population, it went greater than 50% effect size. All patients are being evaluated. If we find we have a really interesting biomarker approach, we might consider working that into the phase 3 program. I know that's a lot to unpack, but that's what's happening in the lupus program.
When you mentioned some of these screenings where you're screening people out that even the investigators are OK with, are you referencing the biomarkers, the deep seek, or something else?
No, that's just basic inclusion, exclusion, laboratory testing, ensure patients truly meet the criteria that they belong in the study. If you talk to investigators and KOLs, they'll tell you about sites they know of that have enrolled patients just to get patients to a study. They wanted to get their patient on a study. It's for good reason. They want to get them on a study. At the moment, they weren't in moderate to severe lupus. They barely made it. That harmed many studies. We're not allowing that to happen.
Is the sort of effective enrollment, I guess, somewhat lower than 90%/ 95%? That's the net effect after you do the further screenings?
The screening is just the screening.
You'll still have the 95%.
Yeah, there's still 95% patients per arm.
OK, got it. The timing for that data is, you said middle?
About the middle of next year.
Middle of next year. OK.
When we finish enrollment, it's a 24-week readout. We finish enrollment at 24 weeks plus final data cleaning, analysis, release.
OK. As far as the next steps for that, would you go into a phase 3 potentially in this biomarker population, or you'll have to see what it looks like?
First, let's see the data. We feel we're well positioned to conduct phase 3 lupus programs, and we're building a rheumatology franchise, first with IgG4-related disease. How we would work a biomarker in, we'll see. It's all based on the patient benefit that we will see in the study and what we think we could demonstrate in a phase 3 study. You can imagine what's been learned from the oncology field, where we've spent a lot of time in the past, how you might want to set up a hierarchy around a biomarker test while still doing a phase 3 program in an overall all-comer population.
Right.
More to come on that when we have data from phase 2.
Across the three programs, is it the same dose, different doses, and the administration and the interval?
It's the same dose, same interval because we're basing it on the pharmacology. We want target coverage, and we know the drug is well tolerated. We're using the same dose everywhere.
OK. You mentioned the cash at the beginning. Now, of course, you just got the $75 million plus potential for another $150 million, I guess.
For IgG4RD.
Another $75 million with lupus, potentially. That takes you till when? You're comfortable with the.
With the additional $75 million, that takes us through the first quarter of 2027. We'll just keep it there for now.
OK. Very good. As far as other plans, you said you're already starting the BLA process for IgG4. I'm always asking all the companies whether you're leveraging any of the AI engines to facilitate the processing of that on the back end.
Yeah, we're still a little old-fashioned. This is a, I almost hesitate to say this in front of Lisa, who heads up R&D and is our Chief Medical Officer. It's a smaller type of BLA because it's a single pivotal trial in 190+ patients. We can manage all that without getting too far out there with technology. Obviously, we need to apply technology over time. I can imagine how useful that could be if you were doing a large registration program in MS or even lupus. We're doing it the old-fashioned way, right?
Fair enough. OK. All right, good. I guess there's no questions in the room. Lonnie, thank you.
Thank you. Appreciate it again.
will have the data very soon.
All right.