Annexon, Inc. (ANNX) Earnings Call Transcript & Summary

[Audio Gap] joining. My name is [ Leon Wang ], on [indiscernible] associates. It is my pleasure to introduce you all to Douglas Love, CEO of Annexon. Doug, pleasure to be here.

Thanks for having us. We're really happy to be here this morning.

Great. Great. So for those who may not be as familiar with the Annexon story, can you give us an overview of the technology, what's in your pipeline?

Yes. Absolutely. So yes, Annexon is focused on complement and specifically the classical pathway, one of the 3 components of the complement system. And what our thesis is, is that by blocking C1q in classical pathway, we're providing more complete protection against aberrant complement activity. So in a nutshell, in indications or diseases where complement is a key driver of the disease, we're stopping that process right at the start with the hypothesis that we'll have increased efficacy. And we're doing it in a selective way by only blocking the classical pathway, allowing the lectin alternative pathways to remain intact. So we think from a safety perspective, they may be fruitful as well over time. We've got a couple of data sets thus far that are intending to prove this out, validating the thesis. One in our GBS program, where we showed rapid improvement in this very aggressive antibody-mediated autoimmune disease. And the second in Huntington's disease, historically difficult-to-treat indication, whereby we showed, again, a rapid improvement in disability and function in that disease as early as week 6. So we've pulled together a portfolio of programs that target 3 therapeutic areas autoimmune, neurodegeneration of the brain, neurodegeneration of the eye. And we currently have 8 studies ongoing. We anticipate readouts over the next 18 months. And we're quite excited about each of these opportunities as we sit here today.

Excellent. Thank you for the overview. And I think what a lot of investors have been curious about really the anticipated readout ANX005. That's going to be in Huntington's. Can you set overview of what you plan to show, and perhaps set some expectations for what might be the target to hit for this program? And what could potentially see in terms of safety and efficacy?

Yes. Really good question. So as you know, Huntington's disease, a classic slower progressing CNS neurodegenerative disease that's historically been very difficult to treat. Our approach is by targeting classical pathway is to preserve functioning synapses, and as a result, provide improvement in disability in this indication. And so we released initial data in January of this year, interim look, which showed our ability to stabilize against progression of this disease in the full patient cohort. That's a really important finding to get a label in Huntington's disease, you really need to only slow the rate of progression of the disease. So we were encouraged by seeing a stabilization in the full patient cohort as well as improvement in function in more than half of the patients. And importantly, those patients who entered the study with excess classical complement activity, 75% of them showed improvement. So really aligns specifically with our mechanism of action, which is blocking this aberrant complement activity right at the start. That's what we showed in the interim. What we will show in the full data set later this quarter is a fuller set of data on the on-treatment period which is a 24-week treatment period. And then there's an off-treatment period, another 3 months, so after 36 months. We will provide data on the off-treatment period as well on the efficacy measures and the other measurements in the study. So what I anticipate producing again later this quarter is data on our drug candidate ANX005. It's a really potent inhibitor of the classical pathway. We've already demonstrated full target engagement, both in the periphery and across the blood brain barrier. We'll look and see how long that inhibition of complement occurs in the off-treatment period. So that will be an important data set. And then on the efficacy side, we will look to see the durability of effect, this durability of stabilization or improvement in patients after we've withdrawn the drug. We think part of that will be tied to the length of suppression of complement in the off-treatment period, i.e., how long is C1q still suppressed after we stop treating a little more about our drug as it relates to that then, of course, the actual clinical readout there as well. Finally, we'll be looking at safety. In the full cohort, our initial safety update in January was a subset of the population.

Got you. And Huntington's has been a big focus. Europe's method targeting Huntington's is very interesting. In terms of potential combinations with other drugs that's currently out well, not out in the market, but in pipeline, right? Do you see this as a -- the ANX005 or the Roche product or depending on what they do with various subsets. And -- or could this be like something that could maybe work synergistically based on the biologic rationale?

Really good question. Yes, we think both is the short answer. So as a stand-alone protecting functioning synapsis, we think can be really important in improving disability. In fact, the loss of Synapse has the highest correlation with cognitive decline in motor function of any other measurement you can look at or activity you can look at. So as a stand-alone, we quite like it. But importantly, our approach is not targeting what may be the initial assault of the disease. So whether it's mutant Huntington's lowering-type activity, which may be driving it, we can work in synergy with that. So whatever the initial salt of the disease may be, what we do know is that has solved is triggering complement and then causing the removal of synapses via the classical pathway. That's going to be occurring even if you target the initial sale. So we think we can put the 2 together, I guess, is the short way I would say that.

Great. Appreciate the insight. So why don't we move on? I mean you have a lot of different indications that you're going after. And some of these indications have controversy. Let's talk about ALS, right? What should we kind of -- if you want to set it up for us, in terms of what should we expect later this year? And have some follow-ups on that specifically.

Yes. No, listen, we love the ALS program. And just 1 point of clarification. So we've guided to ALS data in 2023. So not this year. But one of the things we like by ALS is it's obviously a very aggressive neurodegenerative disease that involves both the periphery and the CNS, we have studied similar indications that are nice read-throughs into what we hope to see in the ALS indication. One would be GBS, where it's an acute disease that causes damaged peripheral nerves. So damage in and around the neuromuscular junction and peripheral nurse very similar to what you see in ALS on the periphery side. Then, of course, in the Huntington's disease, a central disease where we're preserving function synapses, which also is lost in ALS. So we look at GBS as a very aggressive disease, Huntington's as a slower progressing disease, ALS is right in the center we produced data sets that showed improvement both on motor function as well as cognition. And so it gives us a reason to be encouraged with regard to ALS. I think the more recent controversion we've seen with ALS is just how do you assess the endpoint there that ALS FRS. And so those are discussions that need to be had with regard to the regulator, but that's different in kind than with regard to kind of your mechanistic approach, if you will.

Got you. And in terms of expectations on the readout, you guys guided to 2023. What do you think that you would be kind of like a home run for what you might show on the readout? And is this potentially first half '23 or second half?

Yes. Great question. So we have not honed in on the specific time frame of 2023, but we will update as we get closer to that. So we know that it's a rapid progressing disease, so a steep decline. And what we also know in from other programs and interactions with the regulators that if you are slowing that rate of progression, somewhere between 10% to 20% statistically, you're meaningfully improving patients' lives and you're likely to get a label. Anything in that ballpark is a real win if we stabilize the disease like we saw in HD. Well, that's more than a home run. So we'll have to wait and see what we see in the data set. But historically, the aim in treating ALS is to slow the rate of progression.

Great. Amazing. And why don't we move on to GBS, another one of clinical trials that -- I think last time you mentioned there's some progress with enrollment. However, it has taken a significant amount of time to get patients. So can you provide any updates on the current enrollment? And also, what is the rate-limiting factor here?

Yes. So GBS is very much on track in the way we guided from the outset of the program. I mean maybe just to take a step back. So GBS is an acute antibody-mediated disease. It caused a -- #1 cause of acute neuromuscular paralysis in the world. 5% of patients in the U.S. still die from it, 25% still go on a ventilator, very early in disease. And because of its acute nature, you have to wait until the event occurs. It happens in about 6,000 patients in the U.S., and another 6,000 a year on an annual basis. And so we've been very much on track, if not a bit ahead in the way we've been conducting the study. We had no slowdowns as it relates to COVID. We are conducting the study in Southeast Asia where there's a high prevalence for the disease. And so remain on track for 2023, and we're excited about the program just based on what we demonstrated in our proof-of-concept study.

Got you. And any expectations on in terms of -- well, actually, any conversations with the regulators about potential path forward? Is this going to be the registrational trial that...

It's a great question. Yes. And certainly, the discussion that we have been having with the regulators, and we've purposely titled this a Phase II/III study. The aim is to have a single study pivotal. We've designed it as a pivotal study, 180 patients, well powered, fully randomized. And importantly, we have set it up where we have enriched the program based on prognostic factors. So we've titrated patients based on their MRC levels, time to treatment onset from symptoms, et cetera. The discussion with the regulators are at the lead to see the data to see a single study approval is the long and short of it. So we've designed it with that in mind, and we'll wait and see some data and get in front of them with that.

Got you. Okay. That's very helpful. And why don't we move on to ANX007. As you know, there's a lot of activity, especially recently in the potential complement within geographic atrophy. Now there's a lot of players that currently going after GA in different paths of the complement. You guys are going after it in C1q, right? And can you talk about what potential differentiation that 007 could provide? And what gives you the confidence that the complement might not necessarily be C3, C5, but potentially some cases...

Really good question. We really like geographic atrophy indication. First thing I'll say is that we are encouraged by the role of complement in geographic atrophy is validated candidly by the C3 approach downstream. And we respect that data quite a bit, and we think it's providing some benefit from patients. That means that we think there's an opportunity to improve upon the benefit that's been demonstrated thus far. And again, it gets back to our underlying thesis for our approach, which is -- to the extent that complement is driving the disease process by stopping this complement activity right at the start, you're providing more complete protection against this aberrant complement activity, you see a rapid meaningful improvement. And so we think we have an opportunity to improve upon that. Maybe just click into that a bit deeper. When you look at C1q, it actually sits on and anchors the disease tissue in geographic atrophy. So C1q is localized on both sides of photoreceptors in geographic atrophy as well as on Drusen, the hotspot for the disease. And so it is there where complement is actually anchored, and then activated and amplified thereafter. And so by stopping it right at the start, we think we have the potential for really unique outcomes. We've seen that in another neurodegenerative disease, Huntington's disease of the brain. This is early generation of the eye, and they're certainly related in some regard to the extent the eye in the brain are interconnected. So we're encouraged by that. In terms of differentiation, one would be we would hope to be on the efficacy front. ANX007 is another. It's a really strong drug at it. It's been in over 200 patients thus far, been very well tolerated, really complete inhibition of C1q and the entire classical pathway down through C3 and C5, which I think is a very important point. We're not just blocking upstream complement. We're blocking downstream complement as well with ANX007. We've also demonstrated in a placebo-controlled study in patients, our ability to dose the drug monthly, and every other month is our belief. And so we've taken both doses into the study, we can potentially differentiate on every other month dosing, so less frequent dosing as well. And then the last thing I will say is, and I mentioned this earlier. We are only blocking the classical pathway, and we are finally selecting alternative pathways to remain intact perform their natural immune function over time in this chronic disease and an aging population, that may result in an enhanced efficacy profile as well. We'll have to wait and see the data. But we're certainly hopeful that could be the case based on the biology of the approach.

Yes. Well -- and going into a little deeper on that, right? The -- one of the questions that we have is not necessarily specific to Annexon, but just in general, you have complement, but also where is complement best in treating the disease in terms of the progression of the disease? You have folks with extrafoveal, you have folks with fovea, probably broad fovea scarring, then you have people that's approaching even clinical trials, and this is a very different type of disease, subset within geographic atrophy. So when you look at C1q, is this something that could potentially work better, or based on the thesis based on your thesis earlier in the disease in the middle or perhaps this is the back end coming in to say somebody that already has lost a lot of photoreceptors.

Yes. I think the general thinking is in all neurodegenerative diseases of the brain and the eye, treating earlier is better, right? Before you lose too much neurons because they do not regenerate or synapses can't come back and they can't pop back up, et cetera. But so we generally think it's better to treat earlier as you think about folio or non-folio, aggressive or nonaggressive disease, we powered our study to look at both. Again, with the thesis being that if complement is a key driver, we're providing the most complete protection against this component activity by stopping at the start. So we've powered the study where we can win in all comers, so that's both folio and non-folio, and enrolled almost half of the patients who are non-folio, so we can win just in that aggressive population as well. So we've given ourselves multiple ways to show efficacy in this study.

Got you. That's helpful. And in terms of the market size, let's say, roll forward, you have your products on the market, but so is Apelli's or Iveric's, potentially NGM. Do you see yourself as needing to capture market share from other folks who may have gone on to the market before you were? Or do you think the overall market size and opportunities within complement is big enough that you potentially have 3, potentially 4 different players in it?

Yes. I mean, certainly, it's a big enough market to have multiple players. I think when you look at GA, to me, the analogue is wet AMD, where you have multiple players. And so we think it certainly can house multiple strong players in this market. But ultimately, the need to capture market share or displace others will depend upon profiles of the drugs, right? No approved therapies yet, right? And so understanding the profile of the competition or potential competition in our drug ultimately would be the final arbiter on that.

Got you. And with the number of updates with other folks and complement this year, which one do you think will have the greatest read through to your products?

What is the complement like? Certainly, right? The complement approach is that, again, with the Apellis and they continue to produce data out over periods of time, which is encouraging from our perspective. Iveric in their C5 approach will be important. Again, the complement approach is provide the validation for our approach, and we're just moving upstream and in the mean upstream and downstream versus just downstream.

Got you. Okay. So why don't we move on to WAHA. Can you just give us a quick overview and what to -- when is the next update? What should we expect?

Yes. Yes. It's a program we really quite like for many reasons. So WAHA, Warm Autoimmune Hemolytic Anemia is an antibody-mediated disease where red blood -- where antibodies attack red blood cells and cost anemia. Happens at about 45,000 patients in the U.S. We are taking a precision medicine approach in this particular indication. There's a fair amount of heterogeneity in the patient population on what is the underlying primary driver of each patient's disease. We see approaches like [indiscernible] SYK inhibitors and FcRns, which weren't appears in a subset the patient population. But what we've done is we've characterized the role of complement in this disease to understand these patients who do not appear to be responding to other approaches. These other approaches impact at best roughly 50% of the marketplace. And so we see these other patients, we've characterized the role of complement, and where we have identified patients who have excess or advert complement activity, classical pathway activity. Those are the only ones we're targeting for our study. So it's a very targeted precision medicine approach that we think should have a higher PTS. We have a Phase 0 study which is doing the screening process for all patients to identify their complement signature. We profiled more than [ 50 ] patients there now. Of those who meet the criteria, those are the ones who are being enrolled into the Phase II study that is ongoing. So again, a very enriched program. We anticipate initial data later part of this year, where we'll be looking to show impact on hemolysis and hemoglobin levels in that study.

Okay. So one of the questions that we are getting in terms of within just WAHA for the disease. It's just the market size and opportunity, especially if you're also targeting complement within the disease state. What are your thoughts about, one, the potential market size, how much you can potentially penetrate within that market?

Yes. It's a great question. So we know -- or the literature has told us, and then we've confirmed it with our non-interventional study that about 25% of this population has complement as a key driver of their disease activity. And so with 45,000 patients as the overall U.S. market. That's a sizable portion of patients to treat on a chronic therapy that are otherwise uncontrolled. We also have the potential, over time, we believe, to go further than that. And so when you look at why not? There's a gradation of what's driving it? Is it Fc, FcR receptor-type activity? Or is it complement and patients are on a continuum we are a target patient where complement is clearly the key driver. But there is a mix of patients who have a mix where the FCR receptor activity is driving it as well as complement. And so we think we can potentially expand into that space as well, which would be roughly 50% of the overall population. So we're comfortable with 25%, and then there's a path forward to maybe increase that.

And this is 50% of the total or is it additional...

50%.

So that's a 50% of the total.

Yes. That's correct.

What has been kind of the screen-out that you conducted -- screen-out rate so far that you conducted?

It's about 25% that we confront. Yes. So we pulled again, we screened profiled more than 50 patients. And again, if you look at the literature, it's very consistent with regard to that, and about 25% of them are who meet this primary complement-driven disease.

Got you. That's very helpful. And in terms of what -- in terms of how -- obviously, COVID has impacted everybody also war in Ukraine, has these kind of global macro factors affected Annexon in any way? More specifically, do you anticipate any slowdowns in the clinical trial readouts? Or is there a potential like do you have sites in Ukraine that's potentially enrolling the...

No sites in the Ukraine, and we've really been able to manage COVID quite well, really pleased with the team's effort and engagement. We've hired a team of really seasoned strong drug developers who are playing with their hearts and minds like they really are into the science. And so what we've seen across these multiple studies, and we've got a lot going, right? Like we are not faint of heart in prosecuting this platform. We've been able to, for example, enroll the GA study ahead of schedule, almost 2 quarters we crushed it. GBS on track, not a little bit ahead of schedule. WAHA, we will have data later this year. Lupus nephritis later this year. And then ALS will continue to work through HD. We actually brought in earlier, and we'll report final data later this quarter. So we've been able to navigate that, and including healthy volunteer studies, which we're doing in Europe as well with our next-generation drug candidates. So...

Got you. So in terms of other macro factors. We're in a very turbulent biotech market. So when an investor looks at your company, right? They see you have -- you are targeting a lot of different indications. And a lot of them would need a lot more capital to potentially drive it to approval. How are you thinking about your portfolio -- from a portfolio strategy perspective, any insights or colors that can help investors understand like what would potentially the next 24, 36 months potentially look like?

Yes. It's a good question. How do we capitalize to do all of this, we're going to do this, right? So the first thing I will say is that we will capitalize to cover our 8 current studies. So we have cash into runway into 2024. So that's encouraging. The other thing I will say is that -- we have multiple catalysts between now and then, in which to read out and to potentially raise as early as maybe the second part of this year, if not sooner, as we begin to roll out data, and then into 2023 with additional studies. So that's 1 strategy is to continue to look for opportunities where it makes sense to bring additional cash in. We, of course, have to balance that with the overall dilution and things like that. So we're assessing all of that kind of real time. But there's certainly the way we have set up the cadence of catalyst, an opportunity to do that. We also have had a fair amount of inbound interest with regard to the neuro program, in particular, because pharma has really dove into the HD data. I think differently than maybe what we've seen on the equity side, stand the reason that larger companies would be diving into the neuro space and neurodegeneration in a different way. We've been really pleased at what's circled around the table. And so if that is an accretive opportunity for us where we could perhaps grow the pie or some such thing we're open to that. We're certainly having the discussions, and we'll see. But that's a potential for less dilutive dollars sooner, and opportunity to bring on additional capabilities, et cetera, to continue to expand in neuro where maybe we focus a bit more on the autoimmune and ophthalmology side, but we will see how that plays out. And then the third thing is, maybe just natural attrition to the portfolio. Our thesis has been that protecting complement right at the front is going to be very effective in multiple therapeutic areas, multiple indications. And you think about what we're doing, we're studying all of these in parallel and leveraging learnings where we're targeting complement in the kidney, in the blood, the peripheral nerve, the neuromuscular junction in the brain and in the eye. We think it works in all of those based on our preclinical work, but that may not translate into the clinic. And so that will help inform what we need going forward as well. We're really rigorous about assessing data and following the data. We're not going to push forward if the data doesn't support it. But if it does, we'll look for ways to figure out how to do that.

All right. Excellent. And one last question before we wrap up. For your neuro programs, is this something you're looking for as a potential out-license or do you want to do a partnership type of a deal maybe regional just kind of...

Good question. Yes. It would certainly at a minimum be a partnership, not just a complete out license. We know it's a first-in-kind approach. Our scientific co-founder Ben Barres discovered it. We've been working these models from early preclinical now into the clinic. We know a ton about it, and we know it to about the drug candidate. So at a minimum, it would be some type of profit-sharing partnership. Regional, may be a very smart play to do this as well. So assessing all of that real time.

Got you. Okay. Well, that's it. Doug, thank you for coming over, and I hope you enjoy the rest of the conferences.

Yes. Thank you so much. Thanks for having us. We appreciate it.

Definitely.