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

Good morning, everyone. My name is Gena Wang. I'm SMID cap biotech analyst at Barclays. Welcome to our 27th Global Healthcare Conference. It is my great pleasure to introduce our presenting company, AnaptysBio. With me on the stage, we have Dan Faga, President and Chief Executive Officer. Dan, here you go.

Good morning, everyone. My name is Dan Faga. I appreciate the opportunity to present here on behalf of the company. I'll walk through some slides for about 15 minutes or so and then turn it over to Gena for some Q&A. Today's discussion will contain statements that are forward looking. So AnaptysBio, we are focused on discovery and the development of antibodies that target disease-modifying and over-expressed immune cells that are generally found in the state of disease of autoimmune or inflammatory disorders. We have 3 clinical stage programs ongoing right now. Our lead program is rosnilimab. It's a PD-1 depleter, an agonist, and it's currently ongoing in 2 Phase II trials for rheumatoid arthritis and for ulcerative colitis. A month ago, we presented initial top line data in arthritis, and we'll have the full data set reading out in the second quarter this year. And in ulcerative colitis, the Phase II initial data will read out in Q4 of this year. I'll spend most of today's presentation going through these data from the RA study. Our other 2 programs, ANB033 is a CD122 antagonist. It's moving through the Phase Ia in healthy volunteers, and we'll be entering our first Phase Ib trial in patients later this year where we'll hold R&D event walking through this pathway of IL-15 as well as IL-2 blocking as we target CD122 and reveal the disease that we're moving into for the Phase Ib. Our third program is just initiating Phase Ia this month. It's a BDCA2 modulator, which is a receptor predominantly found on plasmacytoid dendritic cells. We're excited about this mechanism of action, again, early days for it, and we'll talk more about this program through the course of the remainder of this year and into 2026. Overall, we have a best-in-class immune cell modulating antibody platform. Anaptys has been a company for approximately 20 years. And we're fortunate enough to have already developed programs that are highly differentiated in the space. We have a collaboration with GSK, which is a financial-focused collaboration for a couple of programs that are focused in the oncology space. So I'll speak a little bit about this later, but we have a very large royalty stream that's generated from this relationship. We're well capitalized overall, $420 million of cash coming into the year and cash runway for at least 3 years to year-end 2027. So diving into our data for rosnilimab. There's 5 key points, and I'll click into each one of these through the remainder of the presentation. We're really excited about what we presented a month or 2 ago. It's a 424-patient study in arthritis and 5 key takeaways is we were statistically significant at week 12 in the arthritis trial across all 3 doses on the primary end point of DAS28 CRP or the change in DAS28 CRP over time. Equally important is we were statistically significant in all 3 doses on ACR20, which is the registrational end point used in the Phase III trials. So beyond that, our program showed robust and distinguished translational data relative to placebo, really show that the drug is doing exactly what we wanted to in a very targeted way, with 90% elimination in the first read of PD-1 high-expressing T cells. So that's at the top of the immune cascade. Downstream, we're seeing an equally strong reduction in the biomarker objectively on CRP. In placebo, you don't see a change. And I think this is important. The drug is working and it's working quite effectively in the first 3 months. Our program, our drug was safe and tolerable. Very few patients dropped out of this trial from a tolerability perspective and the overall profile was benign. Importantly, beyond that, the data that we produced through the first 3 months was 69% of patients hitting low disease activity on the CDAI scale. This is best-in-disease data at 3 months. Further and even more important is these data are stable so far to date. 220 patients hit LDA out of 300 patients who were treated with rosnilimab in this trial by week 14. As of this data cutoff, which was in early December, over 100 of those patients were out through 28 weeks or over 6 months, and they were stable. So we'll come back to this in a little bit. But this is the most important point. When you look at month 6 data as a treater, most patients are in low disease activity and these data stack up to or comparable or even potentially better than a JAK, which is the best in disease. This is a huge commercial market. Second line plus in arthritis just in the United States is greater than $10 billion of revenue, right? So these are post-TNF failures. And what patients do now is switch between classes. All of our doses were stat sig. Two of those doses were once monthly subcutaneous injections. So we have a competitive administrative profile on top of a very big market opportunity in front of us. So now let's turn to some data. What you see on this slide here is our primary end point, the change in DAS28 over time. The gray line is placebo. The 3 solid blue lines are 3 doses. Where you could see a separation starting as early as week 4, the blue lines separate and accelerate away through week 10, through week 12 and further on to week 14. The dotted blue lines are the responders. Those 220 patients at week 14 that hit low disease activity, you could see separation for the responders versus the overall population starting around week 8 through week 14. And then you see those responders who were able to stay on drug in this trial past week 14 through 28, you see a very stable DAS28 curve over time. So again, those dotted lines in aggregate represent 220 of patients of the 318 that were touched with rosnilimab. As it relates to placebo, you see a deceleration there between week 8 to 10 and importantly, 10 to 12. And as placebo patients come off drug into week 14, you see that line recede. Now I'm turning to the responders, those 220 patients. This is a responder curve. So each data point on here represents the percentage of those 220 patients that hit additional high order response rate. So on the top is ACR50. On the bottom is ACR70. The vast majority of patients who hit LDA at week 14 also hit ACR50. The big takeaway from this page is this is a lot of patients here, robust setting. And post week 14, these patients held on to their high order and responses. This is differentiated in this disease. This is a disease where you look at other biologics, most patients fall off drug between 8 and 12 months. That's because not only do a lot of them not hit this type of outcome of ACR50, 70 or LDA, they lose their response over time. We're not seeing that. So these are the translational data on this slide. And the top left is our data from the Phase IIb trial. There's a dark red line. This is representative of all the doses, but we're showing the aggregate 400-milligram monthly dose, so the middle dose. That's the same outcome for all 3 doses. The dark red line on the top left is the PD-1 high T cells. You're seeing a 90% elimination of them in the first read. This is consistent with prior clinical trials, including the Phase I and what we predicted based on our preclinical data. In the orange line, you're seeing a 60% reduction overall of the PD-1 positive expressing cells. And I think importantly here in blue, you're seeing a neutral to increase in Tregs over time. The bottom left is placebo. You're not seeing any activity. That would be what was expected here. You're not getting immunological benefit on placebo in this drug regardless of some of the subjective end points, patients do see some benefit over time. And you have to remember, in this trial, these patients are on background methotrexate. So it's not true placebo. In the top right, we're now comparing to Eli Lilly's peresolimab in their Phase IIa data. What you see here is they announced only their first 12 weeks results. The red line on the page is a 60% reduction of PD-1 high T cells. Compare that to our 90% reduction. We have a 50% improvement. We have a more potent drug than peresolimab. I think importantly, when you compare back to the left slide -- left side of the page, that red line out to week 38, which is now 12 weeks off the drug, the PD of our program is still better than Eli Lilly's peresolimab's deepest response in the first rate of 60%. We have long PD here. And what I'm setting up now as I flip to -- well, what I'm setting up here right now is if you compare our clinical data set over time, I was -- mentioned earlier that we have 69% of patients at low disease activity at week 14. In Eli Lilly's Phase IIa trial, they only had 55% their high dose, 44% their low dose. We're talking about stability of results on all of our slides. Eli Lilly's Phase IIa trial, they started to lose response, consistent with a lot of other drugs. That 55% on an ITT basis moved down to 37% at month 6 and 3 months off drug, they're down at 22% of the ITT population in response. As I mentioned earlier, our 69% at week 14 out through 28 weeks, we're generally stable, a huge difference relative to our competitor was. As I think most investors are aware, Eli Lilly will not be pursuing RA moving forward their program. They announced that in November. They ran a Phase IIb trial. And what they also spoke to last week publicly for the first time is that in their Phase IIb trial, they saw consistency with what they saw in Phase IIa, which is a decline of response over time and incremental toxicity. Importantly, there's not a class effect on safety. And that's another thing we heard last week from Eli Lilly. And I know that's one of the potential theoretical concerns. Well, let's now talk about the safety of these drugs and what happens in RA. The comorbidities of RA are two to threefold higher than healthy controls when you take into account infections, MACE, malignancy. And if you look at the commercial landscape, HUMIRA, ORENCIA, rituximab and then obviously, the JAKs, generally speaking, they're all black boxes. And again, they're all in background methotrexate, these patients. They're immunosuppressed. A lot of them are on steroids. You see higher rates of infection in this disease just because of the comorbidities where they're exacerbated on drugs. Now let's compare that to the PD-1 program, at least our data sets. And from what we know right now, peresolimab is a relatively benign profile as it relates to placebo. Infections are about the same across all doses. We saw no MACE, no malignancy, no increase in severe infections. This is a great safety data set. And what this allows us to think about in the future is not only monotherapy development but also combination development as we think about Phase III and beyond in this disease and others. And this data set is consistent on the safety profile of what we know is in the space with other competitors over time, relatively benign. And the reason for this is it's a very targeted therapy, really only interacting with these PD-1 high expressing T cells that are found exacerbated in diseases like RA. In healthy controls, 2% or 3% of your T cells are PD-1 high. In disease, about 40% are PD-1 high and 80% are PD-1 expressing. It's a gross difference. We're targeting what's driving the disease on target, but we're not interacting with naive T cells, which are the majority of the T cells in a healthy control and the whole idea here is to bring these patients back to homeostasis. So you're seeing that play out in the safety of the patients -- safety results of the patients. All right. So let's bring this home. What this slide is showing is a comparison, is the highest bar that's available in the data sets to date in RA. The blue colored bars are our data across 3 high order response rates, LDA on the left, ACR50 in the middle, ACR70 on the right. We're comparing this to active comparator trials, RINVOQ versus ORENCIA, which have the highest response rates reported in this disease until what we've now seen. Further higher bars, we're reporting our week 14 results relative to their week 24 results. Now put this in context. All patients know for these gray bars, they all know they're on active drug. It's a similar equivalent to being on an open label. The handicap for us here is that at week 14, if you didn't respond, you were removed from the study. So this is only now responders moving forward for us. A hypothesis is, and you saw the slide earlier on the DAS28 change over time, is that patients who maybe didn't hit LDA at week 14, some percentage of them probably would have gotten there over time if they're allowed to stay in the study. So we believe that these data are even handicapped and potentially could have been better out to week 28, knowing that our data results to date are stable. So this holds up really well. The most important thing if you're treating patients in this disease is are your patients feeling better at week 12. We showed that. 70% of the patients were in ACR20. That grew to 80% over week 14. The vast majority of patients are feeling better. Drug is tolerable. So what would happen in the commercial setting is you would stay on this drug and drive towards low disease activity or even remissions over time. These data hold up very well to anything in the commercial landscape. We hit our TPP by beating all the other biologics. Not only do we approach the JAKs. We look equivalent and potentially even superior to the JAKs. Again, this is a 424-patient study, quite robust and representative of the size of the study that would -- that you would look like in the Phase III. So the commercial landscape. In RA, you have a mature market. Patient cycle off of TNF between 3, 4 other classes before they're in salvage. That's a $10 billion market post-TNF today. We would play very well into the second or third-line setting and with this type of a profile, once-monthly injection sit in front of the JAKs. That's the commercial vision. Second, we're moving forward in a second trial I mentioned earlier in ulcerative colitis. Translationally, we saw data that I just presented with the reduction of PD-1 high T cells that in the setting of UC is correlated with remission of disease. That's just in the periphery. We should see a drug effect in the site of inflammation no different than the synovium in RA, but also in the lamina propria of UC patients where there is an overexpression of this PD-1 high and PD-1 expressing T cells. Quick word on the ulcerative colitis trial. It's ongoing, currently enrolling 132 patients, 2 active arms versus placebo. This is treat-through design to month 6. Nonresponders would stay on this drug through month 6. So hopefully, we see peak response at that point in time. We were unable to do that in the RA design. Placebo, nonresponders would cross over at 3 months. They have moved to the high dose of the drug. At 6 months, responders stay on for a year. So we'll now see in this trial 1 year of durability as well as 1 year of safety. We're really excited about this. We think the translational data from RA read well into the study design. The disease biology and what we're doing here is similar to what we just did in RA and the bar is lower. You do not need to be JAK like. This is a growth market where in the future, you're going to see patients moving through biologic classes just like the mature RA market. So a lot of opportunity here. Initial results will be presented in Q4 of this year. And lastly, on our cash position, like I mentioned earlier, $420 million of cash coming into the year. We have a $75 million milestone due from GSK on a drug called JEMPERLI, a PD-1 antagonist, which has been on the commercial market for 3 years. When that drug hits $1 billion of sales, that's very possible this year. If not this year, in 2026 based on Q4 growth rates from last year. So the trend line here is really strong. You can see in the bottom right corner, Wall Street consensus in blue, $1.3 billion of peak sales, it's about half of what GSK is guiding to, which is north of $2.5 billion. We have an 8% royalty up to $1 billion. This escalates to 25% royalty up to $2.5 billion, so big value creation just on the royalty backbone on top of our current strong cash position. We do not need to tap into this royalty anytime in the near future. We can continue to watch and see this value accrue in the background while we continue to develop the -- out the portfolio of rosnilimab in the earlier 2 programs. So with that, I'll leave us on the slide for catalysts. Thank you.

Great. Thank you, Dan. So maybe I will start with question you did show tons of also the data, maybe the RA data, 28-week data. What can we learn from the data? Maybe like what are the data points you will be presenting a number of patients and then the follow-up, and then what can we learn?

Yes. So we're really excited about what we can present in the full analysis that's coming up in Q2. So we've seen only 100 of those 220 patients out to week 28. We'll have all patients out through week 28. I alluded to this from the translational data. What we're also potentially able to see here is given the PD of this drug, the potential for sustained durability 3 months off the drug. Now we're not projecting that you're going on drug holiday forever here. But compared to what happens in this commercial landscape where most patients fall off after a year because they lose response while on drug, potentially here, we're seeing sustained response for the majority of our patients even off the drug. So we can show that. I think the hypothesis here is that you're staying on the drug, you will have stable disease over time well out through a year. I think that will be comparable to other drugs that have been developed in this space. Second, again, we don't know the answer to this today, but those nonresponders at week 14, they still may have had a lot of improvement. They all received drug up through 14 weeks. After that point, they did not come back for further treatment, but they did come back for further assessment. So there's a potential where we can see increased response rates just from the nonresponders coming back. And then third, we're going to have a lot of translational data. We only had pretty top-level results right now with the T cell impact. We still have to show and look for the cytokine impact in the periphery. We also have a robust set of synovium biopsies that were done where we can look at the effect of what's happened with immune cells at the site of inflammation as well as the cytokine activity. So it's a pretty fulsome update. And I think right now, we have a great data set that could probably only get better from here.

Great. I think you mentioned a little bit maybe there's some confusion about week 12 versus 14 data. Maybe if you can clarify a little bit and help us understand how should we interpret the week 12 versus week 14 data.

Yes. I think you almost first have to step back from week 12 and 14 and look at those curves starting at week 8. You see separation. The PD of this drug, we're hitting full translational effect on the T cells through the 3-month period. CRP, the biomarker, we're hitting a very meaningful effect through 3 months that holds. We're seeing in terms of the outcome of the clinical activity starting at week 8 is separation from placebo. You're accelerating to week 10, into week 12, into week 14. And what I was just mentioning earlier, these nonresponders that didn't hit LDA by week 14, we do think that some bolus of those patients potentially could have continued responding if we had more time with them. We didn't hit peak response by week 14, I think, is the key takeaway, but we do see an acceleration to that time frame. Placebo patients at week 12, just like any other assessment, they come in, get assessed. They got their dose of placebo just like you would have got an active drug in a blinded fashion. Going into week 14, sites were notified that a patient on placebo would not be staying in for further treatment. However, the independent assessor, the patient per protocol, were unaware of this. Going into that visit, they were assessed. And after the assessments were done, the patient was notified that they were no longer going to be in the trial and i.e., they were on placebo or they were removed from the study at that point in time for further placebo treatment. So it was a blinded study. The study design was pushed on us by the FDA. Eli Lilly had the same. There could be a potential for some bias. But the reason we are comparing to week 24 data in active comparator studies is on a theoretical worst-case scenario to consider our longer-term data open label, just compares to active comparator study is where everyone knows they're on a therapy and the data holds up, and importantly, there over 6 months is stable, both immunologically through translational and objective end points like CRP as well as these higher order magnitude thresholds that you don't see generally speaking on placebo over time.

Okay. Good. Now quickly switch of your UC data. 4Q, we will see tons of data. Maybe what is your bar or threshold you will be looking for regarding the primary end point?

Yes. So we have yet to set specific quantitative numbers, but qualitatively here, we have a disease state where, historically, you would take 1 or 2 advanced treatments and you move to a surgery. And what's happening here in this landscape is now there's more options that are coming and will be coming available. Patients aren't moving to surgery. And what we're seeing emerge is a true second, third and fourth line market post ENTYVIO or TNF exposure. The way we ran our trial, we'll have a mix of bio-experienced and bio-naive patients. We'll be able to see all-comers across both subpopulations. But what we're looking for here, unlike in RA, where you really need to be approaching a JAK to compete in the maturity of that market, we're going to be looking for something that's bioequivalent, bio like to therapies like SKYRIZI or the IL-23p19 or potentially the TL1As. And what's happening here with our drug is a very different mechanism of action coming down from the top, hitting the T cells and broader activity well upstream of things like IL-23. So different mechanisms of action giving physicians and patients a very different choice as they move through lines of therapy, whether that's second or third line, so big growth market, big opportunity relative to other biologics. And I think you also have to put in perspective, it's highly differentiating to have no loading doses and being a onetime once-monthly injection subcutaneous relative to everything else that's out there.

So the last question. We have 1 minute. So what -- I think in the past, you said you only maybe keep one internally. So if you see also positive, like how do you decide which one you want to keep internally? And I assume the other, you wanted to look for the partnership.

If you asked me 2 to 3 years ago what we were most excited about, it actually was ulcerative colitis, both in terms of disease biology, the animal model data we have, now the translational data. But I think from a commercial perspective, importantly, we can go launch in ulcerative colitis given the growth dynamics in the United States independently. We can't move 2 Phase III programs forward on our own. But if UC looks great, it's an obvious choice for us to move to Phase III in that program because that's the independent path forward. That said, we're going to look to do what's the best return on equity for this drug. That could be just moving forward in UC and expanding in GI, other diseases. But it also could mean looking for a partnership where we could expand and move forward in Phase III in multiple indications. I think with our cash position and these options for an independent path forward that would create equity value for investors, we're going to have a choice on what to do. And when you really step back from it, we do not have competition in clinical development. We are the only PD-1 depleter that's in development for these diseases. Eli Lilly is not moving forward. They're not moving forward because they have declining efficacy with a less potent asset. J&J also isn't moving forward with their program anymore. What's out in the marketplace right now is they had manufacturing issues in terms of their cell line and the stability. We're in a great place. We're a first-in-class now program. With anything else behind us, that's a depleting PD-1 antibody, still in preclinical development. So it gives us a lot of flex as we think strategic about what to do with the program in the future.

Great. Well, thank you very much, and we look forward to the several data update later this year.

Thank you very much. Thank you for the opportunity.

Thank you, everyone.