AnaptysBio, Inc. (ANAB) Earnings Call Transcript & Summary

Welcome, everyone, to the 40th Annual JPMorgan Healthcare Conference. My name is Anupam Rama, I'm one of the senior biotech analysts here at JPMorgan. I'm joined by [ Sumant Cota ], [ Malcolm Kuno ], Caleb Smith and Priyanka Grover from the team. Our next presenting company is AnaptysBio. And presenting on behalf of the company, we have CEO, Hamza Suria. I want to remind everyone that there is an ask a question feature in the portal. [Operator Instructions] With that, Hamza, take it away.

Good morning. Thank you, Anupam. I appreciate the opportunity to provide an update regarding AnaptysBio today. I will be referring to slide numbers that are on the bottom right of the slides for the audience to be able to follow along. As indicated on Slide 2, we'll be making forward-looking statements. We encourage you to review our SEC filings for relevant disclosures and considerations. On Slide 3, to introduce AnaptysBio. We are a clinical-stage novel and antibody engine. We have been focusing on generating and advancing to the clinic novel therapeutic antibodies that modulate the immune system in both directions, both as far as anti-inflammatory approaches, but also immuno-oncology approaches that upregulate the immune system. We have a deep expertise within the company on immune biology, and we also have coupled that with a very deep experienced team on antibody generation and our technology platform that has been responsible for all the development that you will hear about today. Using this strategy, we have developed a number of wholly owned programs to the clinic and have a number of key clinical readouts coming up in the next 18 months or so. We are currently in Phase III in our most advanced indication, and I will be talking about some key events coming up from our pipeline later during the presentation. Our internal efforts are currently most focused on immunodermatology opportunities, and we have multiple immunodermatology indications currently in development. And in addition to that, we have a deep undisclosed preclinical pipeline with a number of programs focused on novel opportunities in inflammatory disease settings but also novel opportunities as far as checkpoint antagonist for immuno-oncology as well. All of these programs, as I mentioned, were developed within the company and advanced to the clinic over the last few years. We've put 8 antibodies that were internally generated into the clinic since 2016, which is a really remarkable efficiency and a very productive team. In addition to our internal pipeline, we have a strategic relationship with GSK, which has been generating significant revenues for us over the last few years, and we're currently earning royalties on 2 commercialized products, which are JEMPERLI or dostarlimab and Zejula, which is Niraparib. In addition to that, in December, we closed a $0.25 billion royalty monetization deal, which brought significant monies to the company. We anticipate ending 2021 with over $600 million in cash. Our burn last year on a net basis, excluding the royalty monetization, was approximately $100 million. And we anticipate that 2022 will be relatively similar in terms of our net burn, and we anticipate that the cash on hand provided us runway for several years moving forward. On Slide 4, you'll see a representation of our wholly owned internal pipeline. We have 3 assets in the clinic that we are driving ourselves. The most advanced one of those is an anti-IL-36 receptor antibody called imsidolimab, which is currently in 3 indications, including Phase III for generalized pustular psoriasis and Phase II for acne and hidradenitis suppurativa. We're also developing rosnilimab our anti-PD-1 agonist which is advanced into a Phase II trial in alopecia areata. And we are also advancing a BTLA agonist called ANB032, which is currently in Phase I. On Slide 5 is a summary of our partnered pipeline. Most notably here is our GSK relationship. Our lead antibody there which is dostarlimab now called JEMPERLI on a commercial level was approved last year by the FDA for 2 indications and is currently in multiple Phase III trials, including first-line endometrial, first-line ovarian. And just earlier this week, it was announced that dostarlimab is about to initiate 3 additional registration studies in combination with antigen antibody in non-small cell, head and neck and other undisclosed indication. These were all antibodies that were generated within the company and are being advanced currently operationally by our partners in commercializing them. On Slide 6, you'll see a summary of our key wholly-owned pipeline catalysts for the upcoming time frame. With respect to our imsidolimab program, we presented data from our 16-week readout of the GALLOP GPP Phase II trial at EADV in October of last year, and we have initiated our Phase III program in GPP called GEMINI in the latter part of last year as well. We're anticipating 2 key phases, 2 readouts this year. In the first half of this year's ACORN, our acne Phase II trial. And in the second half of this year is HARP our hidradenitis suppurativa Phase II trial for imsidolimab. With respect to rosnilimab, we had top line Phase I data in November of last year, and we have since initiated a Phase II study in alopecia areata in Q4 of 2021. And we anticipate top line data from our BTLA modulator, ANB032, in the first half of 2022 and anticipate advancing that program into a subsequent Phase II trial later this year as well. Let's spend a few minutes talking about imsidolimab and the biology of the IL-36 pathway as shown on Slide 8. The IL-36 pathway is a really key immune process involved primarily at the level of our skin but is also involved in other organs in the body. IL-36 cytokine activity is an innate initial driver of inflammatory response. And when our skin is insulted with either an infectious agent or chemical insult, there is release of IL-36 cytokines, and that drives an innate response, particularly at the level of neutrophils and neutrophil infiltration into the skin. And that then feeds a specific loop that drives subsequent acquired immunity at the level of TNF-alpha, IL-17, T cell functions and various other subsequent inflammatory activity. So for us as normal individuals, that process is balanced through an endogenous receptor antagonist. In the case of disease, what happens is 1 of 2 things. One is you either have a mutation in the receptor antagonist that leads to uncontrolled signaling through the IL-36 receptor or you have a dramatic upregulating in your IL-36 cytokines that overwhelms the receptor and leads to the same outcome because you have uncontrolled signaling downstream through the IL-36 receptor, leading to neutrophil filtration and subsequent acquired immune responses. In both of those situations, we anticipate that our proprietary antibody, imsidolimab, which blocks the IL-36 receptor, would dampen that inflammatory response and restore homeostasis. As you can see on Slide 9, the first indication that we pursued with imsidolimab is a really horrible systemic inflammatory disease called generalized pustular psoriasis or GPP. This is a life-threatening condition, and you can see on the pictures that there's pustular inflammation all over the body at the level of skin. But what also occurs is organ damage and inflammation throughout the internal organs. These patients typically die of cardiopulmonary failure, and they also have a lot of other morbidities, including systemic infections as well. There's no approved therapies in the U.S. for GPP at this point, and we have been granted orphan drug designation for the treatment of GPP with respect to imsidolimab. This is an underdiagnosed medical condition, we believe, in the U.S. and claims analysis has indicated up to approximately 37,000 patients have been diagnosed and treated for GPP. These patients are very tough to deal with for the physicians and the health care system. They often involve extended inpatient hospital stays and a lot of other supportive care that is rather expensive and obviously, life-threatening for the patient. So as a first step in GPP, as shown on Slide 10, we conducted a Phase II trial. That was a single-arm study. And on Slide 11, you will see the results of that which was presented at the EADV conference in October of last year. The pictures on the bottom right of that slide tell you the story. These are patients that started off with various frequent disease, about approximately 24% of their body on average was covered with pustular disease. And that was resolved very rapidly even in the first week, but certainly in the first month of treatment with monotherapy with imsidolimab. There was no other background therapy involved. And we've demonstrated at EADV that, that efficacy was maintained out to 4 months or 16 weeks with robust maintenance of that anti-inflammatory response and appearance of the skin and also resolution of inflammation at the level of circulating CRP and also patient-reported outcome at the level of DLQI. So this is a really encouraging result, to be able to manage this disease with a monotherapy with a safe antibody in imsidolimab. We were really excited about this. And we pursued this program into an end of Phase II discussion with the FDA and aligned with them on a Phase III registration program, which is outlined on Slide 12. So our registration program involves 2 different studies with 45 patients that roll over from the first study to the second one. And the first study is the primary efficacy end point of the program, which is a 4-week end point, which is educated based on the Phase II data that I showed you earlier. And we'll be assessing that as a primary outcome at the level of GPP [ TGA01 ] at week 4. Those same 45 patients will then progress on to a safety follow up for 6 months, which is called GEMINI-2. And the key aspect of that safety follow up is to demonstrate safety with continued dosing on a monthly basis, which we've already done out to 4 months in our Phase II trial, and this will be extended out to 6 months. as an aggregate safety database. We'll also be randomizing patients off of drug in one aspect of GEMINI-2 to show the effects of randomized withdrawal, and that will also be an important readout from this Phase III plan. Moving on to indication #2 for imsidolimab on Slide 13. We're currently conducting a Phase II in acne vulgaris. Acne is a very significant unmet medical need in the U.S. It is understood that a key aspect of acne is immune response and inflammatory response to infectious disease, and solved particularly by [ pricking ] acnes, which leads to an integral infiltration into the skin and leads to the lesions that you see on the face and the rest of the body, as shown on the pictures on Slide 13. The current standard of care in acne has real safety concerns, both at the level of antibiotics that are difficult for patients to be able to treat, and isotretinoin or acute and generic versions of acutane are indicated for a subset of patients that have very severe cystic acne and are rather difficult to manage and have a REMS program that is very cumbersome for the health care system. So the question that we're asking ourselves on Slide 14 in our ACORN trial, which is randomizing 120 moderate-to-severe acne vulgaris patients between 2 different dose levels of imsidolimab versus placebo, is the impact of IL-36 receptor inhibition in that patient population and the efficacy at the level of change from baseline and facial inflammatory lesion counts at week 12 in this patient population. We anticipate that data over the next few months in the first half of 2022. And this data set will inform us on subsequent development plans for acne within our wholly-owned pipeline. The other indication that we're also pursuing at a Phase II level is shown on Slide 15, which is moderate to severe hidradenitis suppurativa. This is a very well understood condition that is rather difficult to manage given that patients have to suffer through lesions and nodules in the folds of their skin. The current standard of care is anti-TNF therapy, in particularly, Humira, which is approved which has efficacy, but the durability of that response is rather mixed in patients. We know from published biology that these patients are rather neutrophilic on a systemic level and also the specific nodules involved in hidradenitis suppurativa are full of neutrophils, and this is a rather neutrophil-driven disease, which has a lot of analogies to [ what is referred to as ] GPP. And we're currently assessing in our HARP trial on Slide 16 the efficacy of imsidolimab as a monthly treatment approach out to week 16 in moderate-to-severe HS patients. And we will be looking at multiple endpoints here, both at the level of the various different abscess and [ factoring ] nodule counts involved in the disease, but particularly HiSCR as well. as the key ultimate registration endpoint for this indication. So we'll be assessing efficacy out to week 16 as a primary endpoint. But to assess durability beyond that, we'll also be dosing out to week 32. And we look forward to the week 16 top line data in the second half of 2022 later this year. So that's the imsidolimab program, which is spanning 3 different indications at this point. I'd like to spend a few minutes talking about 2 other programs in our wholly-owned pipeline, which are checkpoint receptor agonists as shown on Slide 18. Here, we're doing the opposite of what we understand in immuno-oncology. We're positively signaling through checkpoint receptors to inhibit immune cell activity. And this is the metric opposite of what we have seen to be efficacious in cancer. In particular, these antibodies are rather difficult to generate, and they require really sophisticated technology platforms such as the one that we have been utilizing to develop our pipeline. On Slide 19, you'll see a representation of the more advanced checkpoint agonists in our pipeline, which is rosnilimab, which is a PD-1 agonist antibody. The function of rosnilimab is to supplement signaling through the PD-1 receptor and compensate for the absence of PD-L1, which we believe is a key driver from translational and genetic information of T cell-driven inflammatory diseases such as alopecia areata, such as RA, such as [indiscernible] and other things. We disclosed in November of last year top line data shown on Slide 20 from our healthy volunteer Phase I trial of rosnilimab in addition to demonstrating robust PK and safety and bioavailability and receptor occupancy. One of the key aspects of that data set is the reduction of circulating peripheral T cells without affecting the total T cells or regulatory T cells. We saw a really marked dose-dependent inhibition of activation of T cells and reduced the level of circulating activated T cells by about 50%. This is really comparable to what has been published in the literature as level of effect on T cells by JAK inhibitors, which is in that neighborhood, but obviously, the safety profile of rosnilimab and the dosing profile is very different and has some key advantages over JAK inhibitors. So the first indication that we're pursuing with rosnilimab is alopecia areata on Slide 21. You'll see an outline of the Phase II trial that has been initiated and has been dosing since Q4 of 2021. We're assessing the efficacy and various endpoints associated with alopecia areata, with monthly dosing of rosnilimab in 45 patients randomized 2:1 drug versus placebo. And the key endpoint here will be week 24 assessment and SALT score in patients that have moderate to severe disease and have at least 50% scalp hair loss for at least 6 months at the start of the trial. The other program that we're pursuing in the checkpoint agonist strategy in the clinic currently is on Slide 22, which is our BTLA modulator antibody. This is an antibody that has a very unique binding profile and very unique function at the level of anti-inflammatory effect on BTLA, which has been validated by various different translational work that we've done and also animal models. We're currently in a healthy volunteer Phase I trial with this program and anticipate top line data from that Phase I in this half of '22. And interestingly, from a competitor recently, there has been quite a lot of derisking encouraging demonstration of efficacy with this mechanism in SLE. That allows us to make some educated decisions on how we would pursue our ANB032 antibody beyond the Phase I that we'll be reading out in the top half of this year. I'd like to spend the remaining minutes briefly talking about some other key aspects of the business, including on Slide 24, our GSK relationship, which has been yielding us significant revenues and there's a lot going on there, as you can see from a list of trials that are listed on Slide 24. The key driver there is dostarlimab or JEMPERLI lead program, which is a PD-1 antagonist antibody that was developed at AnaptysBio and is now being advanced through the clinic and the commercialized by GSK in 2 different indications that were approved last year and is in Phase III studies for first-line ovarian and first-line endometrial, and is currently in a number of different combination trials including with Zejula, including with GSK's BCMA agent, their anti-CD96, their STING agent. And it was announced earlier this week that dostarlimab is about to initiate into 3 additional registration trials in combination with antigen antibody in first-line non-small cell with high PD-L1 expression in head and neck squamous cell cancer and also a third undisclosed indication. In December of last year, we completed monetization of a segment of our dostarlimab royalties from GSK, which is represented on Slide 25. We received $0.25 billion from Sagard as our monetization partner. And that monetization deal was specifically focused on sales of dostarlimab and the royalties that we would receive on the sales of dostarlimab below $1 billion on an annualized basis. And that monetization deal is also capped in terms of aggregate return to Sagard. And the modernization deal does not reflect combination therapies of dostarlimab and does not include the Zejula royalties that were also been receiving from GSK. To wrap up the discussion today, I'd like to just mention our technology platform shown on Slide 27, which has been the genesis of all of the antibodies that you're hearing about today. And we continue to use that platform to generate additional novel therapeutic antibodies, both in the anti-inflammatory setting, but also in the immuno-oncology setting that are undisclosed preclinical programs within our wholly-owned pipeline. The key aspect of our platform is a very important biology that is endogenous to humans and through [indiscernible] biology which is called somatic hypermutation. This is a required process because we actually have a very limited set of antibody diversity within our genome that we inherit, and the diversity that we need to survive in the environment is generated in situ by somatic hypermutation within our B cells. AnaptysBio is the knowledge holder and is the IP holder and has been leading the world in utilizing somatic hypermutation for drug development. That's how we've generated the 8 antibodies that are currently in the clinic from our pipeline and the multiple additional antibodies that are in preclinical development. And the key advantages of this platform are shown on Slide 28. Particularly, we access difficult biology and difficult targets to the unprecedented diversity provided by our platform. We focus on high potency and functional antibodies, and we derisk manufacturability early and often such that we can go from concept to IND in a relatively quick manner in approximately 2.5 years. So to wrap up today's talk on Slide 30. I'd like to remind you of the key clinical catalysts coming up for us in the next little while, which in 2022 are particularly focused on our ACORN acne Phase II trial in the first half of this year and hidradenitis suppurativa Phase II trial, HARP, in the second half of this year. We will continue advancing rosnilimab in alopecia areata and also be considering additional indications. And we look forward to the Phase I data for ANB032 and initiating Phase II trials with that program in subsequent development as well. Slide 31, as I indicated at the very beginning, our strategy is to focus on first-in-class novel approaches to modulate the immune system in both anti-inflammatory and immuno-oncology settings. We have a deep, wholly-owned clinical pipeline with a lot of clinical activity and multiple readouts. We also continue to utilize our platform to generate additional antibodies that we'll be driving into the clinic over the next few years, earning lots of revenue under our partnerships in a very well capitalized and a capital-efficient approach with runway out for several years. Thanks very much for your time today, and Anupam, happy to take questions.

Yes, Hamza, if you want to introduce the broader team on the line, we can get started.

Yes. I've got 3 of our colleagues here with me today. Eric Loumeau, our Chief Operating Officer; Dennis Mulroy, our Chief Financial Officer; and Paul Lizzul, who's a practicing dermatologist, our Chief Medical Officer. Welcome, team, to the discussion.

Maybe we'll start out with a couple of the readouts that are coming here. So the first one maybe to talk about is the Phase II ACORN study in acne. So what is going to be the severity of patients that are enrolled in that study? What is it powered to show on facial inflammatory lesion count at 12 weeks? What if -- maybe Dr. Paul, you can talk about what is a win scenario or a clinically meaningful change as well?

Yes. And Paul and I can probably both chime in on that. So the segment of patients that we're treating are moderate to severe acne vulgaris. We have not required them to fail various standards of care. So we think that there will be a mixture of patients in -- that have tried prior therapy, and some that have not yet. And so in terms of the powering from a statistical perspective, we looked at standard of care and designed the trial based on -- and to get to a 0.05 or less than 0.05 p-value with an 80% power as the standard. And in terms of scenarios, the key advantage of imsidolimab in acne is the safety and the dosing paradigm relative to the intolerability standard of care. So there's various different efficacy ranges that could be applicable here, and we'll just ultimately look at the data and make decisions from there in terms of what threshold of efficacy is meaningful from a future development perspective. Paul, as a practicing dermatologist, and you've seen a lot of acne patients. Do you want to talk to that as well?

Yes. I think you hit the nail on the head there, Hamza. Certainly, we're enrolling a population of moderate to severe acne patients. And as you said, we haven't restricted that to failures of prior therapy, whether that be antibiotics or isotretinoin. And in terms of efficacy, I think you're correct, we'll see where the data lands in terms of falling in between where we see antibiotics and isotretinoin in terms of activity.

We've got a question in the e-mail portal here, which is -- and by the way, if you want me to ask a question on your behalf, just send a question in the e-mail portal, which is do you actually intend to go after acne? Or is it just a proof of mechanism study? How would going after acne be capital efficient? What PD markers could you obtain from acne?

So acne, as a clinical indication and a commercial indication, has been underserved for decades with lack of innovation. And the standard of care is relatively dated at this point. And there has not been introduction of novel mechanisms and particularly anti-inflammatory mechanisms, which could have a meaningful impact in that disease. So we think antibodies and anti-inflammatory approaches, such as anti-IL-36 receptor, could be meaningful there in terms of safety and patient care and providing alternatives relative to the toxicity and the standard of care that exists today. So we're certainly conducting acne to understand the profile of IL-36 receptor inhibition and provide proof of concept as far as the role of IL-36 and open up the gates to multiple inflammatory diseases, including hidradenitis suppurativa, et cetera. And it's possible, from our data and from the efficacy that we observed, that we may unlock further development in acne for imsidolimab and change how physicians approach that patient population. So it's proof of concept in the sense of this has not been done before, but it's certainly an opportunity to advance an anti-inflammatory approach. Whether we do that ourselves and how we maintain capital efficiency will be a decision that we'll make once we have the data, whether we do that solo or whether we do that leveraging third-party financing as well. That's something that we'll assess as we get into the data that we'll have in the first half of this year. We continue to be a very capital-efficient company and continue to leverage partnerships in the past and you might anticipate that, that may be something that we consider in the future as we move forward.

And then maybe another question here from me, which is in the HARP study for HS, why focus on AN count versus the more traditional endpoint of HiSCR?

Yes. So we do believe HiSCR is the right ultimate endpoint here from a regulatory perspective, and that's been the precedence from Humira. And ultimately, our assessment of abscesses and nodules, which will count in multiple different aspects, enable the HiSCR assessment that's also involved in the trial. So we're not trying to move away from HiSCR at all. In fact, we're moving towards HiSCR and believe that's showing efficacy in HiSCR on a long-term basis is what's applicable from a regulatory perspective for this disease. I know there's other companies in hidradenitis suppurativa that have talked about alternative endpoints. We don't believe that and showing efficacy in the well-established endpoints is what we would like to see.

And then so thinking about the HARP study, maybe you talk about the severity of the patients enrolled, what's it powered to show on AN count? Remind us if the HiSCR is being looked at in the study? And kind of what's a win scenario clinically meaningful update?

Yes. So HiSCR is being looked at in the study. The severity of the patients is moderate to severe across the different measures of enrollment criteria. We've utilized enrollment criteria that are roughly reflective of what Humira has done as a comparable population. And we've designed the statistical powering based on historical data with Humira as well in terms of what size of the trial and what efficacy we've assumed in the statistical assessment. A win scenario here is not just to show efficacy and [ stats ] but also to sure potentially durability of therapy with imsidolimab, which is a key deficiency in the current standard of care. A lot of patients with anti-TNF inhibition in hidradenitis suppurativa end up relapsing in the first 3 to 6 months and rolling off of therapy and end up having to surgery. So it's not just efficacy but also durability of the efficacy. And then the other aspect is that current standard of care is weekly biologics treatment, and we anticipate that with every 4 weeks of dosing of imsidolimab, that would be a meaningful difference relative to the current biologic standard of care in that indication as well.

And maybe another question here in terms of longer term, how you think about imsidolimab pricing? Because you've got GPP, you've got acne, you've got HS, like there's a range of indications with prevalence widely different. So obviously, you priced for GPP initially, but how do you think about the broader pricing strategy given the range of prevalence?

Yes. So the pricing discussion is relatively aligned between GPP and hidradenitis suppurativa. They're both relatively consistent in the current thinking, and the use of weekly Humira with hidradenitis suppurativa establishes a certain price point that is our current operating assumption and is friendly to both of those 2 indications. The difference there would be potentially as far as acne. And I think we're going to let the clinical data from our ACORN Phase II trial educate us on how we think about the positioning in acne. At this point, our operating assumption is not that we would have a lower price for acne or that we would discount the value of the entire program to drive to acne. We would maintain an HS GPP-like priced across the continuum and revisit that once we have the ACORN Phase II data in acne vulgaris in the first half of 2022.

And maybe a final question for me here is, what are you looking for in the healthy vol study for ANB032? And how do you think about potential indication selection in the context of what you've seen from some of the competitors in the space?

Yes. So the Phase I healthy volunteer trial will primarily look at safety and PK of ANB032 in single and multiple ascending doses as we've done in prior Phase I trials, including the recent rosnilimab Phase I trial. We also, for ANB032, have certain pharmaeconomic assessments that will help us understand when are we in a dose level that is active in vivo. And that allows us to then define a Phase II dose for us to move forward into subsequent efficacy trials. As far as specific indications, we believe the recent competitor news flow that demonstrated placebo-controlled efficacy in SLE is quite meaningful. One, it derisks and demonstrates the activity of the BTLA agonist mechanism in a disease setting, which is helpful in itself, but particularly the magnitude of the effect in SLE after just a couple of months of dosing was very meaningful, and that was demonstrated at the level of a cutaneous readout called CLASI. So in addition to SLE, there is alternative subsets of the disease that are more dermatological focused or more cutaneous focused, including CLE or cutaneous lupus cytosis, which is highly derisked by the competitor data that we saw. And we're very excited by that in terms of the magnitude of derisking that provides to our ANB032 program as far as subsequent clinical development into Phase II following the Phase I data that we anticipate in the first half of this year.

Okay. Hamza and team, I want to thank you guys for a super productive session, and I hope you guys have a great rest of the day.

Thanks so much, Anupam. Take care.

Thank you.

Thanks, everyone.

Thanks. Bye.