Good morning, and welcome to the Zenas BioPharma R&D event. At this time, all participants are on a listen-only mode. There will be a question and answer session following the prepared remarks. Please be advised that this call is being recorded, and a replay along with the presentation slides will be available on the investors section of the company's website following the event. I now turn the call over to Abby Gray, Director of Investor Relations. Please go ahead.
Thank you, and good morning, everyone. Before we begin, I'd like to remind you that today's presentation contains forward-looking statements, including statements regarding the potential approval and commercial launch of obexelimab in IgG4-RD, our clinical development plans, the timing of potential clinical readouts and regulatory filings for obexelimab and ZB021, and our expectations for the market opportunities ahead of us. These statements involve risks and uncertainties that could cause actual results to differ materially from what we discuss today. I would encourage you to review the full disclaimer on the slide, along with the risk factors described in our most recent annual report and quarterly reports filed with the SEC for a complete discussion of those risks. I will now turn the call over to Lonnie Moulder, our Founder, and CEO.
Thank you, Abby. Thank you all for joining us for today's R&D event, which follows the obexelimab IgG4-related disease commercial event we held last month. Today, we will focus on obexelimab, our investigational bifunctional monoclonal antibody targeting CD19 and FcγRIIb, and its potential opportunity in systemic lupus erythematosus or SLE, and on ZB021, our novel, potentially best-in-class oral IL-17AA/AF inhibitor. In addition to the clinical relevance of these programs, we will also review some of the underlying science and provide context in advance of the clinical data we expect to report from both programs later this quarter. I'll start by briefly discussing the overall Zenas pipeline and provide context for the SLE opportunity. Haley Laken, our Chief Scientific Officer, will describe the biomarker work associated with the phase II-B SunStone SLE trial.
Lisa von Moltke, our Head of R&D and Chief Medical Officer, will walk you through the SunStone SLE trial and outline what we intend to report. Haley will then present ZB021, our oral IL-17 inhibitor. We are also very pleased to have with us Dr. Joseph Merola, a board-certified Dermatologist and Rheumatologist, President of the Rheumatologic Dermatology Society, and a member of the Medical and Scientific Board of the Lupus Foundation of America. Dr. Merola will share his perspective on IL-17 as a target for the treatment of multiple diseases and the relevance of oral therapy. We will then take your questions before closing. As I mentioned, we discussed IgG4-RD, obexelimab, and our launch preparations in September, and we encourage you to access that event on our website for a detailed review of our commercialization plans.
While we are very focused on launch preparation and execution as we approach the May PDUFA date, we also feel it is important to highlight how we are well-positioned across our rheumatology and neuroimmune pipeline, which spans multiple indications with recognized regulatory paths to approval and significant commercial potential. We are expecting top-line phase II results from the SunStone study of obexelimab and SLE and pharmacokinetic safety and tolerability data for ZB021, our oral IL-17 inhibitor, later this quarter. Both of these datasets will inform us as we determine our program strategies and our capital allocation decisions in the near to medium term.
The SunStone trial is structured to provide us with information to design a phase III registration program in SLE, and for ZB021, achievement of target exposure levels with once-daily dosing, along with a favorable safety and tolerability profile, provides us with what we need to rapidly advance a potential blockbuster franchise. At Zenas, we are building rheumatology and neuroimmunology franchises. Priority number one, of course, is an approval and successful launch of obexelimab for IgG4-RD. The BLA is under review by the FDA with a PDUFA date of May 27, and we also recently submitted the obexelimab IgG4-RD marketing authorization application to the EMA. We will further discuss the SunStone phase II-A SLE trial today. We previously reported the highly successful phase II MoonStone trial of obexelimab in relapsing multiple sclerosis.
In progressive MS, we are advancing two large phase III global programs with orelabrutinib, a potentially best-in-class BTK inhibitor, PriMroSe for PPMS and Monarch for naSPMS. ZB021, our oral IL-17 inhibitor, which we will also review today, is rapidly advancing in the phase I SAD and MAD program, with clinical data expected this quarter. Our two earlier programs include ZB022, a brain-penetrant TYK2 inhibitor that fits into our neuroimmune franchise, and ZB014, an extended half-life molecule targeting CD19 and FcγRIIb with preclinical data indicating potential monthly dosing. We expect clinical data for both ZB022 and ZB014 in 2027. So over the remainder of this year and into 2027, important development milestones include the SunStone SLE and ZB021 clinical data this quarter, the obexelimab IgG4-RD PDUFA date in May, and initial clinical data from ZB022 and ZB014 in 2027.
Beginning with obexelimab, on September 29, we hosted our IgG4-RD investor event with Dr. Guy Katz from Mass General, who walked through the unmet need and the phase III INDIGO results. Since then, data were presented at the International IgG4-RD Symposium. First, data from the ongoing INDIGO open-label extension, or OLE. Remember, the randomized controlled portion of INDIGO was 12 months. Previously, we released six-month data from the OLE. These data from the OLE included the 12-month probability of remaining flare-free, which was 0.93 based upon investigator and adjudication committee flares requiring rescue therapy, and 0.87 based upon investigator-determined flares requiring rescue therapy. Additionally, glucocorticoid-associated toxicity results were presented. Obexelimab significantly reduced cumulative glucocorticoid toxicity versus control at week 52. The difference in the Glucocorticoid Toxicity Index cumulative worsening score was -11.4 with a P value of 0.021.
Finally, the vaccine study is where patients at select INDIGO clinical sites pause their obexelimab treatment, are administered a flu vaccine, a COVID vaccine, or both, wait two weeks, have titers measured that would indicate seroimmunity, and then restart obexelimab. Vaccination during the treatment-free window resulted in seroimmunity to influenza in six of the seven participants, or 86%, and seroimmunity to COVID-19 in four of four participants, or 100%. We intend to add to this initial data set throughout the current flu season. Looking ahead, we will be at the American College of Rheumatology conference in November, where in addition to the vaccine data and GC toxicity data, the OLE data was accepted for poster presentation as a late breaker. Turning to orelabrutinib, a BTK inhibitor for progressive MS, as mentioned, we have two global phase III studies ongoing, PriMroSe in PPMS and Monarch in naSPMS.
There is significant need for new, effective therapies for progressive MS, and we are pleased to see how the BTKI category is evolving. Tolebrutinib is now approved in Europe for NR-SPMS. Fenebrutinib succeeded in a phase III PPMS study, and the NDA is now under review. Remibrutinib succeeded in a phase III RRMS program, and a phase III SPMS study is underway. Having just returned from the combined ACTRIMS and ECTRIMS meeting, MSToronto, KOLs and the broader MS community are very enthusiastic about the potential for BTK inhibitors to advance the management of patients living with progressive MS, and they recognize there are important differences across this class of agents. We believe the pharmacologic properties of orelabrutinib make it well-suited as an investigational agent for progressive MS. First of all, the kinase scan data demonstrate it is a very selective molecule.
It also has desirable pharmacokinetic profile and a low variability and once-daily administration. Because central compartment inflammation and the role of macrophages, microglia, and B- cells are critical to this disease pathogenesis, brain penetration and potency at central targets are critically important. Orelabrutinib stands out with the greatest brain penetration IC90 ratio within the class. We also have very compelling clinical data in hand from the completed orelabrutinib global phase II RRMS trial. Not only strong week 12 and week 24 results, but 96 weeks of follow-up data, including disability progression and NfL data. No other BTK inhibitor is advancing in both naSPMS and PPMS. I'll now turn to obexelimab in SLE. SLE is a chronic autoimmune disease with unpredictable flares impacting joints, the skin, kidneys, and other vital organs, resulting in progressive organ damage. You can see the common manifestations on the slide.
It is a heterogeneous disease, and the driver of the disease varies across SLE patients. More than 80% of SLE patients are women who are diagnosed in their 30s and are patients facing decades of treatment. A significant opportunity remains for safe and effective therapies for long-term disease management. An underlying pathology is B-cell dysfunction, which results in the production of autoantibodies towards cellular and nuclear components. B-cell therapies have been proven effective in clinical trials, so we know B-cells are an important target. We evaluated and learned from prior SLE studies, including the previously reported obexelimab phase IIa study, and incorporated learnings from these trials into the SunStone trial. These include confirmatory central screening for patient enrollment, utilizing the latest guidelines for glucocorticoid tapering, and biomarker identification to potentially select for patients who are more responsive to a B-cell-targeted approach.
The SLE market in the U.S. consists of approximately 250,000 diagnosed cases. Excluding lupus nephritis, this is approximately 175,000 patients, with approximately 125,000 of those having moderate to severe SLE. Two biologics are approved for SLE today, and they generated approximately $2.5 billion in U.S. revenue in 2025. A minority of eligible patients are receiving a biologic, and we believe growth will be driven by the approval of improved therapies. With an estimated 125,000 addressable SLE patients in the U.S. alone, the overall market opportunity could exceed $8 billion. Illustratively, if 30% of this population is defined with our biomarker approach, which Haley will discuss, a focused market of over 35,000 patients could exist. With that, I'll now hand the call over to Haley, our Chief Scientific Officer, who will provide more context to the biomarker under development within the SunStone trial. Haley?
Thanks, Lonnie. Before Lisa walks you through the SunStone trial design, I want to spend a few minutes of background on predictive biomarkers in lupus, which will be a part of the SunStone analysis. Lupus is a complex disease with clinical and biological heterogeneity that can create challenges for drug development. Patients with different underlying biology are often grouped together because they present with similar clinical manifestations. For more than 15 years, researchers have used whole-blood transcriptomics to characterize and understand disease heterogeneity. This work has identified groups of transcripts that change together and can be used to create signatures to classify patients by their biology, rather than by symptoms alone. Published work shows that these molecular subgroups track with disease activity, clinical features, and response to treatment. This establishes a foundation to ask which patients are most likely to benefit from a B-cell-directed therapy like obexelimab.
I'll walk you through the evolution of the predictive biomarker approach for obexelimab. In the phase IIa trial conducted by Xencor, a post-hoc analysis of gene expression data identified candidate predictive biomarkers. A representative biomarker from that trial is shown on the left. At week 32 in the intention-to-treat population, 17% of patients maintained improvement compared with placebo. That increased to 52% in the biomarker-positive population. This was a post-hoc analysis, so we treat it as hypothesis-generating. That brings us to SunStone, where we are including an exploratory analysis of a novel predictive biomarker identified from the previous trial. We will include analysis of both BICLA and SRI-4 versus placebo in the biomarker-positive population.
As our biomarker work continues to be focused on gene signatures where each patient will be assigned a score, our analysis will also include an evaluation of the cutoff of that score for impact on the efficacy endpoints and population frequency. If the data are supportive, we could move to clinical validation of the biomarker in a phase III trial. We would potentially enroll prospectively based on the biomarker as optimized using the data from SunStone. This work offers two potential paths forward: a biomarker-only approach, or a hierarchical analysis where we are able to consider both a biomarker selected as well as a broader group of patients in the outcome. I'll hand it over now to Lisa, our Head of R&D and Chief Medical Officer, to walk us through the SunStone trial.
Thank you, and good morning, everyone. As previously discussed, we plan to release the top-line data from the SunStone trial later this quarter. SunStone was designed to do two things: confirm obexelimab's activity in patients with active, moderate to severe SLE, and evaluate the association of pre-specified baseline biomarkers with response. It also builds on what we learned from a previous phase II-A trial. SunStone is a randomized, double-blinded, and placebo-controlled trial. We enrolled patients with active SLE, defined by a BILAG score of Grade A or Grade B activity in at least one organ system, and a SLEDAI score of at least 6. Patients were randomized one-to-one to receive either obexelimab or placebo, given weekly for 24 weeks, with approximately 95 patients enrolled in each arm. The primary endpoint is reduction of SLE disease activity at week 24, measured by BICLA, the BILAG-based Composite Lupus Assessment.
We will also report SLE Responder Index, or SRI-4, at week 24. Both endpoints will be assessed in the broader population and in the biomarker positive population. The trial is powered to detect a difference of about 20% between obexelimab and placebo, tested at an alpha of 0.10, and it assumes a placebo response rate of 30%. Compared with the earlier SLE study, there were a number of changes. The trial is larger and uses subcutaneous dosing to improve pharmacokinetics. The trial also uses an adjudication committee to assess both trial eligibility and outcomes, which history tells us is critical for lupus trial conduct. This slide illustrates the populations we will be examining. The outer circle is all 190 randomized patients and is the basis for our defined safety population. We will also look at BICLA and SRI-4 for this group, but this will not be our primary endpoint.
Inside it are two analysis populations. The first is the MITT population of 160 patients. We will look at both BICLA, our primary endpoint, and SRI-4 in this population. These 160 patients allow us to focus on the study objectives without known confounders or incomplete information. 23 of the 190 randomized patients were enrolled in China. Unfortunately, because of challenges with the processing and use of genetic information, the biomarker analysis could not be done there. Additionally, patients were excluded who had proteinuria at baseline that could not be adequately characterized as coming from active lupus as opposed to renal fibrosis. Many had a history of lupus nephritis. At the time of study design, no renal biopsy was required, making it difficult to differentiate active lupus renal disease, which can potentially respond to treatment, from those with renal fibrosis and scarring, which would not be expected to respond.
There were also two patients who were excluded who discontinued within 10 days of starting treatment for a documented administrative reason, such as relocating away from the study site. The second population of note is the biomarker population of 177 patients. This exploratory analysis is based on what was learned from the prior phase II-A trial, as described by Haley. Both BICLA, the primary endpoint, and SRI-4 will be reported. On endpoints, as described, we will report both BICLA and SRI-4 and then decide which is best to potentially carry into phase III. BICLA was designed to be more sensitive to improvements, so we will look closely at how it performs. The biomarker population expands our potential for success in phase II and gives us an additional path forward in phase III.
As Haley previously mentioned, a phase III design could allow for an overall and/or a biomarker population and either BICLA or SRI-4 as the primary endpoint. The purpose of SunStone is to deeply understand obexelimab's activity in SLE and determine our potential path forward for phase III and for the future development of obexelimab in SLE. We look forward to sharing the top-line data later this quarter. Now, I will turn the presentation back over to Haley to discuss ZB021, our oral IL-17AA/AF inhibitor.
Thanks, Lisa. Before I move specifically into ZB021, I want to remind you a few key points around the biology of IL-17 and its critical role in inflammatory diseases of both the skin and joints. IL-17 is a family of cytokines made by cells including Th17 cells and innate lymphoid lymphocytes. The two forms most relevant here are IL-17A and IL-17F, which assemble as AA and FF homodimers and as the AF heterodimer. All of these signal through the IL-17 receptor complex on cells such as keratinocytes and synoviocytes. This triggers a release of chemokines and other pro-inflammatory mediators that recruit neutrophils and other immune cells. While IL-23 sits upstream and helps sustain Th17 cells, IL-17 is also made independent of IL-23. In a healthy setting, this pathway is important for defense against fungal and bacterial pathogens.
When it is dysregulated, it drives chronic inflammation, and IL-17 has been shown to play a central role in the pathogenesis of plaque psoriasis, psoriatic arthritis, axial spondyloarthritis, and hidradenitis suppurativa. The clinical benefit of approved IL-17 antibodies in these diseases has validated IL-17 as a target. That is why we see an opportunity to bring an oral option to patients, which is the focus of the ZB021 program. To characterize the potency of ZB021, we stimulated normal human keratinocytes with Th17 cell supernatant from three human donors and measured inhibition of IL-8 production. Th17 cell supernatants contain both IL-17AA and IL-17AF in variable amounts based on the donor. In this assay, ZB021 had an IC50 of 1.5 nanomolar and an IC90 of 6.8 nanomolar. This measurement of potency will be an important factor for human dose selection.
To obtain further insight into the mechanism of inhibition by ZB021, we crystallized IL-17AA with ZB021. When IL-17AA is not bound to its receptor, IL-17RA, the IL-17AA homodimer has an open, flexible pocket. This pocket closes when IL-17 binds to IL-17RA and signaling is triggered through the receptor. ZB021 binds in that central pocket and holds it open. This prevents the cytokine from binding to the receptor, resulting in the absence of IL-17-based signaling. Structural modeling predicts that ZB021 binds IL-17AF in the same central pocket at that dimer interface with the same binding mode as for IL-17AA. Collectively, this demonstrates that ZB021 is an allosteric inhibitor of IL-17AA and AF. ZB021 has been tested in a rat collagen-induced arthritis model as a representative in vivo model of an inflammation. Compared with vehicle, ZB021 showed a dose-dependent reduction in clinical score.
At 10 mg per kilogram once daily, activity was comparable to a rat cross-reactive anti-IL-17 biologic. The photos on the right offer another way to observe the benefit of ZB021. We have previously demonstrated that ZB021 has high oral bioavailability, about 80% in non-human primates. More recently, we conducted a tissue distribution study in minipigs. In this study, we observed ZB021 concentrations similar to or exceeding plasma concentration when we looked at skin, joints, and in feces, key tissues in IL-17-mediated disease. Across preclinical models, ZB021 combines both high oral bioavailability and high tissue penetration. These data highlight some of the properties of ZB021 supporting potential differentiation among IL-17-targeting therapeutics. Modalities targeting IL-17 include antibodies, antibody fragments, peptides, and small molecules.
Size has been hypothesized to be an important factor for tissue penetration across the biologics, but in general, only a fraction of the drug found in circulation can be detected in tissues. For example, skin concentrations of monoclonal antibodies are detected at 20%-30% of the levels found in circulation. A small molecule, such as ZB021, is 250 times smaller than a monoclonal antibody. The data I just shared from minipigs with ZB021 suggests the potential to achieve similar concentrations in circulation and in disease-relevant tissues where the drug can importantly inhibit the cytokine locally. Moving to clinical development, the phase I program for ZB021 is being conducted in healthy volunteers. The study has a single ascending dose portion followed by a multiple ascending dose portion with once daily dosing for seven days. Each dose cohort has eight participants, six on active drug and two on placebo.
The primary objective of this study is safety and tolerability of single and multiple oral doses of ZB021. Secondary objectives include characterization of pharmacokinetics and a comparison of safety, tolerability, and PK under fed and fasted conditions. During this phase I study, we are exploring the maximum clinically safe dose. These data inform the dose level selected for a proof of concept study in patients evaluating efficacy and pharmacodynamic biomarkers. Dose selection for the proof of concept study in patients will be important. We believe the target is to safely and consistently achieve drug concentrations above the IC90 in disease-relevant tissues, measured as the average concentration, or Cavg, with once daily dosing. The data reviewed today, along with the phase I data we will share later this year, will inform the final details of the proof of concept study.
Beyond this study, we continue to be enthusiastic about the broad opportunity for an effective oral IL-17 inhibitor. Next, we will move to the fireside chat. I am joined now by Dr. Joseph Merola. Dr. Merola sees patients in both dermatology and rheumatology, which makes him a great person to talk to about the different opportunities for an IL-17 targeting therapy. Dr. Merola, thanks for joining us today.
Thanks, Haley. I am very happy to be here.
Great. Let's start with your clinical practice. Talk a little bit more about your patients with both cutaneous and joint disease. Where does IL-17 inhibition fit into your practice today, and where do patients still have an unmet need?
Yeah, that's a great question. I'll start maybe with a little background in my practice. I am, as you said, uniquely boarded in dermatology, rheumatology, and internal medicine. There's about three of us I know about, at least in North America. It's a unique place to sit, I will say. My practice is largely around psoriatic disease. My research area of interest and focus is also in psoriatic disease. So I see patients really at that interface, both with skin and joint involvement. It's not hyperbole for me to say that I really find IL-17 inhibition, both IL-17A, IL-17AF, and that family, to be the ideal mechanism for psoriatic disease, especially among the patients who have psoriatic arthritis.
I have no doubt that we'll get into this in more detail, but to say that it's some of our fastest, deepest skin clearance, and it is also treating patients across all of the domains of disease, in the framework that we talk about, with the GRAPPA research group, for example, where it covers axial disease, enthesial disease, skin, nail, et cetera, across the board, with some of the fastest and highest efficacy across those domains that we've had in our arsenal.
When you think about different options for patients, maybe you can frame that a little bit in the context of where are the biggest unmet medical needs for these patients and then how does that impact your choice of therapy?
Yeah, it's a great question. I think as most folks know, the large majority of these patients have substantial skin disease, and we also know that the way it's been framed historically with moderate to severe skin is probably not appropriate for how impactful it is on patients' lives. We know that patients want to be clear with regard to skin, and this is one of the mechanisms that really pushes the envelope for patients. So because of these mechanisms and interventions, we've been able to really move the needle on the cutaneous side of disease, and move to discussions of things like remission because of these mechanisms. I would say one of the bigger unmet needs still remains in musculoskeletal disease, where psoriatic arthritis thresholds for efficacy have hit a bit of a ceiling. I think there's still a gap there.
We fix a lot of patients' psoriatic arthritis, but they often continue to have pain, stiffness, fatigue. They have other comorbidities relevant to that. So the musculoskeletal domain of disease certainly remains more challenging. To me, that's an area that remains a particular unmet need. I think apropos to our discussion that we are seeing some innovation as well in convenience and in patient preference, with everything from longer-acting injections to more oral therapies coming in the space. I think that's something that really is meaningful for patients where they feel they have more options, they feel they have more control over their disease and their life because they have so many great options.
I think a little bit to bring that together; skin, we've come a long way because of these newer modalities and focus on this axis of pathogenesis, but we still have some way to go in joint disease in the current era.
Great, thanks. As we are then talking about potential options for oral therapies for patients, are you looking for efficacy generally in the range of biologics, and how does maybe the specific disease play into that?
Right. That is a great question. We have gotten spoiled certainly on the cutaneous side of the camp where we have very, very high efficacy, and I do think patients want to be clear, although at the same time, I think it can be a bit more forgiving if it combines a route of administration or other convenience that patients are looking for. I do think that in general, patients are looking for clear or almost clear skin. I think with regard to joints, they obviously want to be feeling and moving better, of course. But then when you come down to the question of injectable versus oral, I talk to these patients every week.
I am counseling patients often either in the decision around their first drug that they are considering systemically, and I will tell you that many patients would prefer an oral option upfront when they are new to systemic. Also, there is some perceived safety, whether real or imagined, and I might actually say it is more imagined, but it is often the conversation that we have in the room that patients feel that oral therapies have more perceived safety. They feel that the drug is on and off faster if they have an infection or they have an issue or a side effect, for example. So for that population, oral is, I think, an upfront option. For those who have been self-injecting for many years, it is more mixed.
There are some who would like the convenience of an oral for travel, for many reasons, not having to deal with the same kind of home delivery and all of those things, and some who are very comfortable with injections and feel that they would not want to shift from that. They see the efficacy inconvenience. Again, I think it is nice to be able to have options and meet patients where they are with their preferences.
Great. Thank you. Let's shift a little bit to talk about biology. ZB021, Zenas's IL-17 inhibitor blocks IL-17AA and IL-17AF. What is the role of IL-17F in IL-17-driven disease, and do we know if this is different depending on the disease itself?
This is a great question, and this is something that's really come to the forefront because we've had some opportunity to take a deeper dive into the biology, and I think the field is a little bit even still working this out. I don't want to overclaim. Maybe worth a step back. IL-17 is not a single molecule. We know that there's a family of IL-17, IL-17A through F, and we know that the AF, in particular, seem to be highly relevant to both skin and joint disease. To get in the weeds, the A and F molecules can form homodimers of AA, heterodimers of AF, or homodimers of FF.
Some of the highest efficacy that we've seen going, I'd say, bench to bedside is that our AF inhibitors have shown some of the highest efficacy in skin, and I would argue in multiple of the domains of disease across the musculoskeletal disease spectrum as well for psoriatic arthritis. Again, we've known that neutralizing IL-17A has been effective and used for years, but that rubber meets the road moment of how does this translate clinically, I think, came when we saw what it meant to also neutralize IL-17F with, again, showing some of the highest skin clearance rates that we've seen, and treatment value across that psoriatic disease spectrum. That said, we don't really have a head-to-head study per se, either mechanistic or clinical, showing the complete head-to-head value to that end, especially when it comes to looking at joint disease, for example.
Certainly, it seems to be a key player, especially in the skin disease. Certainly, the rationale for blocking both is, I think, more than there at this point.
As we know, cytokines themselves, as a family, are very dynamic molecules that fluctuate considerably over time. Although I know you're not a pharmacologist, I'm curious from a clinical standpoint, what does adequate IL-17 inhibition look like to you given all the considerations that you've already covered?
It's a good question. I'm going to be a minimalist to answer this because I have enough pharmacology background to be dangerous, as they say. For me, what matters at the end of the day is probably not the levels per se, although I will comment on some of the translational work that's been done. It's the fact that patients are completely clear. I think the rubber meets the road for me is what does the patient look like. We can block all the cytokine in the world. If the patient is still active and unhappy, we haven't accomplished our goal. Here, when we see good control of IL-17AF, for example, clinically, it translates to deep treatment goals, deep efficacy with very favorable safety tolerability profiles. So that, to me, is the rubber meets the road moment.
That said, there have been some translational studies looking at so-called molecular remission and molecular scar. These newer mechanisms, IL-23 inhibition, IL-17A, IL-17AF, do show very robust impact, not just clinically, but then looking a little bit molecularly, we see suppression of the key cytokines and see the key pathogenic factors when we look at skin biopsy expression profiling. I think it's more than theoretical in terms of what these mechanisms are doing in psoriatic disease.
When we're thinking about drug concentration itself for an IL-17 inhibitor, there's beyond what we're measuring in the blood. What are the important tissues that an IL-17 targeting drug needs to reach?
Yeah. This is a great question, too. I have to say, one of the reasons I get a little excited, and although this is theoretical, I will go on record, excited about small molecules in this space is the idea that perhaps not only are we getting into synovium and places where we know that psoriatic arthritis exists. But the pathogenesis of psoriatic arthritis has been largely anchored over the years in the concept of enthesial inflammation and enthesitis. This is true both at peripheral joints as well as the axial spine. One of the questions for many years has been if we get, and we are able to get small molecule penetration of enthesial tissue, of axial tissue, might we see enhanced efficacy beyond even where monoclonals get?
For a while, we were also excited about nanobodies to that end because we said, "Well, this is a smaller construct. Maybe it is going to get in or penetrate tissue differently." But the truth is, those are largely anchored to albumin and large proteins as well. So, I am intrigued by the theoretical framework that a small molecule might concentrate better in the target tissues and have a meaningful impact. I think, one of the other gaps in our world is also areas like palmoplantar psoriasis, for example, and that is another place where there has been some theoretical suggestion that maybe smaller molecules might penetrate deeper into tissue and have impact where we have struggled with more difficult-to-treat disease.
Great. I think this is an aspect that is really exciting to me, too, and that is making the start of our clinical journey very exciting with a lot of anticipation. Shifting to clinical development, novel IL-17 inhibitors have quite commonly been studied first in patients with psoriasis. What do you think about psoriatic arthritis as an indication for early clinical development of an oral IL-17 inhibitor?
Yeah. For me, and again, I hope this sounds as unbiased and honest as I can share, I actually think that is really the place for these drugs to be looking, both in psoriatic arthritis and I would argue, axial disease as well. We have come a long way, again, on the psoriasis journey. We have many options. It is still useful to have an oral option, and increasingly so for psoriasis. But the truth is, again, the bigger unmet need in my mind remains psoriatic arthritis for some of the reasons we have already mentioned. There is still a ceiling effect. There is still an unmet need. There is a lot of patients cycling between drugs and mechanisms over years. For me, again, we have now seen that this is a mechanism at the forefront of PsA.
We have some newer data from studies like BE BOLD looking at how IL-17AF versus IL-23, for example, adds additional value in terms of time to response, depth of response, when looking at joint-specific endpoints, for example. I do think that this is a mechanism highly facing PsA and axSpA and axial PsA. I think that's been shown time and time again, and it brings the added value, of course, of treating the main comorbidity of disease, which is psoriasis, incredibly well. When I look out to my patients and I look at unmet need, there's no question from me that it's in the PsA arena. The other piece that I think is crucial is understanding now this burgeoning field of axial disease because there is traditional axSpA, and we're seeing increasingly data facing the concept of axial PsA.
There's some new classification criteria coming to that end as well that's going to help increasingly define the field of axial PsA. We've seen more and more interest in that area, and I believe it still remains an unmet need. In fact, I would argue that there's a large number of patients who still remain undiagnosed with PsA and even more undiagnosed with axial disease. As we, again, have more light kind of shining in that area, I think we'll uncover that there are a larger number of patients than we imagined, and that they would benefit from these targeted interventions.
Great. Thank you. To wrap up, Dr. Merola, maybe bringing this back to the patient perspective, if an effective oral IL-17 inhibitor existed, what would that mean for your patients?
Yeah. I think, again, for us, it is a go-to mechanism. Assuming that we saw the right efficacy, the right safety tolerability balance, for me, IL-17 is a first-line therapy for PsA, period. I'd like to see that bear out in guidelines over time. I think that's the experience of myself and many of my colleagues in this area of the field for all the reasons that have been mentioned. I think the idea of having an oral option for patients would be welcomed. In PSO, we have a number of effective oral options now. We don't have that same level of efficacy and targeted opportunity in PsA at the moment. I think the idea that we would have this sort of convenience oral opportunity for patients, I think would be very much welcomed.
I think the other place, again, where it would primarily be considered, I would hope, is in that first-line position where patients are new to a systemic, looking for therapy for their PsA/PSO. As mentioned earlier, I think there's a certain perceived safety and convenience to a daily option oral that patients are enthusiastic about. It makes a conversation in the office quite easy for patients. The other thing I would just say is I think often patients assume that they are more sick somehow if they're getting injections. They equate that with more severe disease underlying.
Somehow, this also sometimes feels a little bit less scary for those who are new to systemic. Then again, it may open some convenience opportunities for patients who are already on a systemic therapy and maybe want to switch, although I'm not sure if that's as compelling for that category of patients. Overall, very enthusiastic about the idea of having an oral therapy that makes life easier for patients without compromising efficacy or safety.
Great. Dr. Merola, thanks so much for sharing your perspective with us today. I'll now turn the presentation back over to Lonnie.
Thank you, Haley, and thank you, Dr. Merola, for joining us and sharing your insights regarding IL-17. I hope today provided a clear picture of the opportunity for obexelimab in SLE, the science behind the SunStone biomarker, and the potential we see in ZB021 as an oral IL-17 inhibitor. We covered a lot today, and we have some time for questions. Although Dr. Merola has a commitment to see patients now. We're happy to open up the line for questions. Operator?
Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Roger Song with Jefferies. Your line is now open.
Hi, this is Fiona on for Roger, and thanks for this very informative session and for taking our question. My question is mostly on the SLE upcoming SunStone data. How should we think about the trade-off between this potentially larger effect in a smaller biomarker positive population versus a smaller effect in a broader population? I guess, what's the delta that could help you decide the path forward? Thank you.
Good morning, Fiona. Thanks for your question. If I understand it correctly, you're asking about how we think about and trade off the outcome of the trial, specifically maybe the effect size in the overall population compared to the biomarker positive population, and then make a decision of how we go forward. Is that what you're asking?
Correct.
Yes.
Yes.
I think, and I'll let Haley and Lisa jump in here, but at a high level, I think you heard that there are options of course, and we could incorporate a biomarker strategy within an overall population, and you've all seen that in oncology studies and how one goes about doing that with a hierarchical analysis. I think what's critical is the data we receive, and how substantially different the effect size is from the overall compared to the biomarker population. In addition, the biomarker population, exactly how large is that? What is the percentage in this study that we believe will be representative of the overall lupus population, but what percentage of the patients will be biomarker positive?
And in the slide I presented to outline the market opportunity, we picked about a 30% size population that is biomarker positive, and that is based on the early work from the phase II-A study that Xencor had conducted. Since that time, a lot more work has been done, and I will let Haley talk a little bit about how we can somewhat toggle to determine what would be the optimal way to bring the biomarker positive population forward, trading off the percentage of patients that represents and the effect size.
Thanks, Lonnie. As I mentioned earlier, the gene expression based biomarker then results in a score, and there is a continuum of scoring that we will essentially be able to look at. In optimizing the cutoff score for the biomarker, we will be able to really optimize that for the best place where we are seeing the most efficacy and then look at how that changes the size of the population. I think as Lonnie was referring to as toggling, we will be able to look along that continuum for that relationship between efficacy and population frequency of the biomarker.
That is very helpful. Thank you both.
Thanks, Fiona.
Thank you.
Just one final comment on that. I think everyone recognizes this is early proof of concept. Once it's established at the cutoff that Haley was referring to, the biomarker would then be validated within a phase III trial if we move in that direction. Next question.
Our next question comes from the line of Johnny Phan with Evercore ISI. Your line is now open.
Hi, it's Johnny on for Cory. Thanks for asking the question. One question here on the design potential at phase III in lupus. Can you give us a little more detail on the difference in design, especially the size, if you guys go with a hierarchical versus a biomarker population? I do have one question on the IL-17. Can you give a little more color on how a small molecule could be differentiated from emerging peptidic approaches? Thank you.
Thanks, Johnny. Two questions here on the SLE study. I think if we look out in the field, we can see what the size is typically for these trials and how people power them to achieve a certain successful P value on an effect size. Effect sizes have varied in classically designed studies with either BICLA or SRI-4 from the mid high teens up to the low 20%. The overall sizing, are you asking how big a single trial would be? Is that really the question, Johnny?
Yeah. Versus whether you decide to go with forward, like at all, like a broader population versus just a biomarker alone.
It's maybe premature, but Lisa, do you have some commentary around that?
No, I think just the obvious that if you are going for a bigger effect size that you see, that allows you to reduce your numbers. As we have noted, we don't necessarily have to choose one over the other. Then you need to figure in your hierarchical steps once you've decided which one you choose first. I think you could start with the idea of a classical size if you were doing your general population first. That's not the only option if you decided to target a bigger delta.
Stay tuned.
Yeah, stay tuned.
On the IL-17 question, Johnny. Haley, did you capture the question, or should we have Johnny repeat it?
I think that just repeating how I understood the question, that it was about differentiation for ZB021.
Right.
Yeah, versus emerging peptidic approaches like peptides.
Sorry, versus which approaches?
Like emerging peptide approaches in the space.
Yeah, certainly. As I talked about in my portion of the presentation, as we go to molecular sizes that are smaller than, I would say, the traditional biologics, we would anticipate some advantages to tissue penetration, and that may be also applicable to some of the peptide therapeutics, oral peptide therapeutics that are in development. I think, though, on the flip side, on the oral peptide therapeutics, some challenges with oral bioavailability that is not, certainly from our hypothesis, what we see as a major challenge for ZB021. We think still for ZB021, we're really combining the totality of high oral bioavailability and that tissue penetration for once daily dosing. It's certainly in the IL-17 space, both the data for ZB021 as well as peptides in that space are still very early.
But do think that the small molecule approach still offers some advantages in the way it's going to distribute in the body.
Great. Thank you.
Thanks for the question, Johnny. Next question?
Our next question comes from the line of Martin Fan with Wedbush Securities. Your line is now open.
Hi, everybody. Thank you for the presentation and congratulations on the progress. We had a question on the IL-17 oral. Dr. Merola mentioned a perception among patients about improved safety for orals. We were wondering, in your conversations with other KOLs, have they mentioned the ability to rapidly discontinue treatment as a real factor for safety?
Yeah, I think a few of us can chime in here. We do hear that, and I think everyone's hearing that a bit because of the ultra-long-acting monoclonal antibodies that are now advancing into the clinic, which I think are going to be substantial products and important for patients. At the same time, that's one concern that is expressed from time to time is, once it's on board, that's it. If there's an issue, you have a problem. I think for us, we're ultra aware of that going back to obexelimab and IgG4-RD. We hear this all the time when a conversation comes up between utilizing a depleting antibody and utilizing obexelimab for the disease, where as an inhibitor, it can be turned off. That's one of the points that's emphasized quite a bit.
Now in the IgG4-RD population, of course, approaching 50% or 65 and older and a lot of comorbidities. I would suspect in diseases we might target ZB021, there will also be populations where there's a greater concern for safety and not being able to turn it off as a switch. Is that getting at your question, Martin?
Yep, that was exactly what we were asking for as comparisons to the injectables, especially the long half-life ones.
Thank you. Our next question comes from the line of Yatin Suneja with Guggenheim. Your line is now open.
Hey guys. Thank you for hosting the session, very informative. Just maybe a couple questions from me. First one is on the IL-17 front. Could you talk about, at least for this upcoming readout, what exactly are you planning to disclose? I understand you've talked about bioavailability. Is there a good number for that? Are there any PD assessments that can be done that sort of give us more comfort that you are blocking it the way it is designed, at least in humans? On the SLE front, maybe one more question. I think it's been asked, but I want to ask it again. Could you talk about the placebo response for a shorter study versus a longer study? You have a 24-week endpoint, just maybe help us understand, is there any nuance around that? What is success here?
Statistically significant on the overall is successful, or is there a particular delta you're aiming for, whether it's overall or the biomarker enrich? Thank you so much.
Haley, the IL-17 question that Yatin had, and thank you, Yatin. What we plan to report out relative to the SAD and MAD study.
Thank you for the question. I would go back to where we talked about the primary and secondary objectives of the study, so safety tolerability as primary objective, then characterization of pharmacokinetics as secondary objective and say that that's where we will focus our study results going forward.
Clearly, the safety of the drug and the tolerability are important. We're confirming it's once daily, so that we know, and it's really that as presented on the slide, the Cavg seems to be really important here. I don't know if you want to comment on that more, Haley, but that Cavg and then relating that to the IC90 is important.
Right, those.
Could you also comment on our view on biomarkers?
Yeah. Will do.
In phase I studies in this setting.
Yes. I think the Cavg concept is quite important here and may be a bit different from how we often think of drugs where we might be targeting a certain C trough at the end of a dosing interval. Because of the way that we know cytokines are molecules that fluctuate quite a lot from day to day or even hour to hour, especially in these inflammatory-mediated diseases. Really focusing on the average concentration of drug and then targeting that average concentration to be above the IC90, I think data from IL-17 inhibition in general as well as other IL-23 inhibition and TYK2 inhibition all really indicate the same direction, that Cavg is the critical exposure measure for efficacy.
In this case, as Lonnie Moulder mentioned, we will focus on putting into context the data with respect to the Cavg and its relationship to the IC90. For biomarkers in healthy volunteers, there's not much to see actually with respect to IL-17 that you can measure in circulation in healthy individuals, and so biomarkers will be more of a focus for the pharmacodynamic side of things once we are in patient population.
Lisa, can you comment on the SunStone SLE trial? I believe Yatin was asking whether there is any nuance or anything we should be talking about regarding our endpoint being at 24 weeks and what we know about the pattern of placebo response out to that point in time. I think there was a second part asking about the expected delta that I will first just comment on that. As Lisa said, the trial was sized for a 20% difference, and effective therapies are from the high teens to the low 20s, so I think I will just frame it in that manner. The biomarker effect size we would hope is greater, and we will see what it will be shortly. Lisa?
Yeah. I think when we think about placebo response and length of trial, it is really hard to disentangle that from the other factors that we know affect the placebo response. Those are the disease activity level and severity, whether or not there is a forced steroid taper in there or anything else that makes it easier for a patient to fail. Then obviously, that pulls them out of the trial and out of the responder list. So I think those are the factors that we look at when we are thinking about evaluating or expecting a placebo response.
On the 24 weeks, if you go back and look at all the trials, there really isn't a reason in a phase II-B trial like this to go beyond 24 weeks. People have, but the separation between active drugs and control doesn't vary much between a 24-week, a 36-week, or even greater. We spent a lot of time thinking about that and talking to the people in the field, and that is why we landed on 24 weeks. Next question.
Thank you. As a reminder, to ask a question at this time, please press star one one on your touch-tone telephone. Our next question comes from the line of Chris Yu with Morgan Stanley. Your line is now open.
Great. Good morning. Thank you for hosting this event and taking my question. I have a two-part question for ZB021. A competitor in oral IL-17 chose to go into psoriasis first to avoid ambiguity around the clinical data. What are the factors that would go into your consideration for choosing the right POC disease? Then, let's say, if you choose a rheumatology condition, for example, is there any risk that the clinical data might be a little bit more difficult to interpret? Thank you.
Good morning, Chris. Thanks for the question. Let me just make a comment and then turn it over to Haley. We are building a neuroimmune franchise and a rheumatology franchise, so strategically, where we prefer to take ZB021 is in a variety of rheumatologic conditions. I think Dr. Merola highlighted just why that would make a lot of sense with an IL-17 agent and specifically an oral agent, a small molecule. That's where we're headed, and we haven't made a final decision. As you said, many people will do psoriasis, then it's something you can look at all the benchmarks because there's so many, and you can line it up, and you can decide, well, is this going to be a competitive agent in psoriasis? We're not moving forward in phase III in psoriasis at this time.
It's not going to be one of our first indications. If we're going after a rheumatologic indication for registration, why wouldn't we spend our capital to evaluate dose levels in the disease that we're ultimately pursuing and to advance the program more rapidly by conducting a phase II-like study in that specific disease? That's really the trade-off. Would it be nice to have psoriasis data along the way? Yes. Does that really send us down a path that doesn't lead to where we're ultimately going in a registration study, which could come along rather quickly in a rheumatologic disease? That's strategically how I think about it. I don't know, Haley, if you want to add to that from other aspects.
I think I would second all of your comments about the rheumatologic indications being our long-term destination and looking in that direction for proof of concept to really think about the most streamlined path for development makes a lot of sense. If we go back to our conversation with Dr. Merola and really think about the validation of IL-17 and his comments that it is a go-to mechanism in certain rheumatologic conditions like psoriatic arthritis, as an example, where you would also potentially have the opportunity to then look both simultaneously at the joint disease as well as the skin. This is also a place where we hear a lot from KOLs, some questions about, again, whether monoclonal antibodies are efficiently penetrating into some of these critical structures, such as the entheses, for example, where you really need to be inhibiting the cytokine at that local site of action.
That really gives us additional excitement in the rheumatology direction to really think about the opportunity to have ZB021 penetrate these fine structures that are quite important to the symptoms that are still a bit unaddressed in the rheumatology indications with IL-17-targeting antibodies.
Thanks for the question, Chris.
Thank you.
Our next question comes from the line of Yigal Nochomovitz with Citigroup. Your line is now open.
Hi, this is Joohwan Kim on for Yigal. Thanks for taking our question. Maybe just one quick one on clarification. Apologies if I missed this, but when you are looking at the SunStone results and disclosure, are you going to be looking at how efficacy looks like across the multiple biomarker score ranges and potential different cutoffs, or primarily focusing on the cutoffs that you might be using for a future phase III? Thanks.
Haley?
Sure. We will be looking at multiple cutoffs. Our goal in doing that would ultimately be to select an optimized score or cutoff, however you want to refer to it, for then potential incorporation into the phase III study. But in SunStone, we will be looking at multiple cutoffs.
Got it. Thank you.
Thanks for the question.
Thank you. Our next question comes from the line of Jason [inaudible] with Wolfe Research LLC. Your line is now open.
Hi. Thank you so much. I am taking this for Andy Chen. Just a quick question on ZB021. Are you guys thinking of any sort of head-to-head comparisons to maybe biologics IL-17 in any future trials just to firmly establish a definitive benefit of tissue penetration in any sort of efficacy way? Thank you.
Thanks, Jason. Haley, do you have a comment on that?
Yeah. I would say that I think that we should be able to focus really on clinical endpoints and the key clinical endpoints that Dr. Merola discussed in really looking at the efficacy of ZB021 in addressing remaining unmet medical needs to really give us a view on penetration into those tissues, like the entheses, for example, where we wouldn't be able to look there directly at those tissues, but I think are a strong clinical signal, specifically in those areas would really be a big win for ZB021.
Got it. Thank you.
Thank you. I would now like to hand the conference back over to Lonnie Moulder for closing remarks.
Thank you, operator. Let me close with what's coming. We will be at ACR from November sixth to the 11th, where obexelimab OLE and vaccine data will be shared with a broad rheumatology audience. And of course, later this quarter, we will have the SunStone phase II SLE top-line results with both the biomarker population and the overall population. And we will have the SAD and MAD data from the ongoing ZB021 phase I study reported, which it sounds to me like a lot of people are quite interested in. The obexelimab IgG4-RD regulatory applications are now under review by both U.S. and Europe, with a May 27th PDUFA date. And if approved, we expect to launch several weeks later within the second quarter. It is a really exciting time for Zenas, and we appreciate your interest and support. Have a good day.
This concludes today's conference. Thank you for your participation. You may now disconnect.