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

Okay. So we look forward to that top line data coming out in the next few weeks at [indiscernible]. So let's move on to GA to geographic atrophy. I think some folks mistakenly believe you're a GA company, you're a complement company but GA could be in the near term, potentially your biggest indication. So I think it gets a lot of attention. So as you mentioned in the beginning, you're focusing on C1q, which is higher up on the complement cascade, the most recent new drugs approved in the space or C3 and C5. As you compare in the GA space, what do you think inherently some advantages of C1q could provide that we are not seeing for the approved drugs?

Yes. Listen, we really like targeting C1q and we think it's really important in a disease like GA and auto neurodegenerative diseases. And this really gets back to C1q as the target itself, as you alluded to. C1q localizes on disease tissue. In geographic atrophy, that's photoreceptor synapses and photoreceptors themselves, where vision is housed. The other downstream approaches are targeting kind of a surrogate for vision, if you will, the loss of RPE sales and slowing of lesion growth which is an anatomical biomarker that does not associate with vision with multiple years of dosing. So by blocking C1q we're able to preserve neuronal function in the eye and allow patients to actually protect against the loss of their vision. So it's a paradigm shift in the way that GA would be treated. And we're really encouraged by the data we've seen out of our Phase II study. So what we showed in our Phase II study was a significant dose-dependent impact on visual acuity, preserving vision in patients. And that data was supported by multiple types of assessments. We saw this both in the foveal and nonfoveal population. We saw this in a fellow eye analysis where you treat patients in one eye, but not the other eye. We saw protection to get vision in the treated eye versus the non treated eye. We also saw that once we withdrew drug, the vision projection that we provided over the course of the study, we set a new baseline for the patients, but the treatment effect began to wane once we took drug away. So a lot of biological and clinical rationale for why our drug is providing visual protection. We've more recently started to release data on the anatomical aspect of our drug on the eye. And there just a couple of weeks ago, we were at ARVO. We presented multiple new data sets from our Phase II study. One relates to vision function as well, low-light visual acuity or LLVA, a second measurement of visual acuity. It's really BCVA under low-light conditions. There, we showed we were statistically significant on that endpoint as well, a really sensitive measurement for visual acuity. And what was important about that particular endpoint is because you were looking at vision loss in low light conditions, you're really affecting the cones in the center of the eye, again, right where you lose vision. First and only company to demonstrate significance on that endpoint. We love that. And then on some of the anatomical measures, we show preservation of photoreceptors using the EZ OCT analysis, almost 30% preservation of photoreceptors statistically significant there. And now we are looking at lesion growth. I think the story around lesion growth bears much more attention than what's been seen thus far. What we're showing is impacting preserving against the loss of RPEs in the fovea in the center of the eye, again, where you're losing vision. No other company to our knowledge, has shown data and preserving against slowing lesion growth in the center of the eye. The story really all comes together when you look at our functional vision data, both with [ BCV-815 ] and LLVA and now you're looking at anatomical data showing preservation of photoreceptors and slowing against the loss of RPEs right in the central macula of the eye. So we're really encouraged by this program and looking forward to moving into a Phase III study shortly.

Yes. So on the point of lesion size, I think that was an area of focus because at the time of your top line readout, it didn't appear that there was an effect, a meaningful effect on slowing down the rate of those lesion growth, whereas the C3 and the C5s they did not show an impact on VA but they did on lesion size. So is there a reason theoretically mechanistically why that impact on lesion size would be delayed with C1q?

Yes, absolutely. So targeting RPEs are downstream from photoreceptors. It's, in effect, a lagging indicator for what is going on in the eye. And so what the downstream approaches are doing primarily through the alternative cascade, is they're protecting against the loss of RPEs that happens after you've lost photoreceptors and photoreceptor synapses or i.e., your vision. So it really is a lagging indicator. We're asked by target C1q as I said before, we're targeting really the hotspot for the disease. We're targeting photoreceptor loss and photoreceptor synapse loss, which reads to vision loss. By protecting the photoreceptors, what we're seeing is over time, we're protecting the entire unit of the eye. And what we're seeing is a greater impact on RPEs over time. And so when you look at our data set, the second 6 months of the study, we have a much more -- more than twofold better improvement in slowing lesion growth in the second half of the study, it takes longer because our mechanism is starting with photoreceptors and working downward to RPEs. So we're starting with vision, whereas the other approaches are starting downstream focused on RPEs but unfortunately, have not shown the ability to move upstream. Because when you look at where RPEs are lost in the eye, you've already lost your photoreceptors and the synopsis and those don't come back. And so that's a bit of a challenge for these other approaches.

Okay. So you gave a clear reason on why you feel confident about your mechanism versus what's already out there. You're going to start your Phase III. Can you just talk to us, you've gotten, I think, the most robust trial design that we've seen to date right? You're looking at VA benefit as your primary endpoint and you're doing an active control versus Syfovre. How much of this is based on confidence that you as a company, half of your product versus some of the changes that I guess the ophthalmology division within FDA has decided to take in the GA space just given that they now have these 2 approved drugs?

Yes. Really good question. It's both. So we're running 2 Phase III programs. One is a sham-controlled study, so you mimic an injection into the eye. This is a large global study. It will be in U.S. and Europe, and we're really excited about that. That, in effect, is the most close replication of what we did with our proof of concept study. So really pretty much on all 4, what we did we're just going to do it again in our Phase III program. And we'll be looking to get approval in Europe and potentially in the U.S. as well. In the U.S., they have also asked us to do an injection controlled study. So there, we did an assessment of all the different ways in which you can do an injection controlled study. And this will get to kind of your question with regard to confidence. We looked at potentially doing an injection with saline. We looked at potentially doing an injection with low-dose ANX007 our drug. Ultimately, we decided to do an injection controlled study against Syfovre. And the rationale is, one, it does check the box for the FDA to do an injection control with another type of drug or saline, we chose Syfovre. So it checks that box. But two, it is the market leader, and we have a really good understanding of what the visual acuity has been demonstrated with regard to those studies. They've studied 1,200 or more patients, foveal and non-foveal. So we know a lot about that drug and how it operates. And if we're going to go into that space, with visual acuity, we thought it would be good to go after what is currently the market leader.

Yes. So on that point, it's a big debate between the differences between Izervay and Syfovre. So you picked Syfovre. Do you think there's a difference between the 2 if you have picked Izervay? Do you think that the chances of success for your study would be different?

No, I think we probably went there, too, but we know less about Izervay. So Izervay only studied non-foveal patients in our study, we're looking to treat as many GA patients as possible. So we're studying foveal and nonfoveal patients. And so we just -- we knew more about the Syfovre population because they study foveal and nonfoveal patients. Izervay is a little bit of an unknown with regard to that. I do think -- well, I won't get into my thoughts on with regard to the drugs.

Now in terms of your addressable patient population eligible for this study, what's the entry criteria?

Yes, very much similar to what we did with our Phase II proof-of-concept study. So we are taking patients who have a demonstrated impact of loss of visual acuity. I won't give the specific numbers. We've put a lot of time into enriching our Phase III study in terms of kind of the cutoff for patients will take with BCVA vision loss upon entry into the study among other characteristics. But I think the short answer is very much mimics our proof-of-concept study with some enhancements to ensure we're getting patients who we know can have a sufficient number of BCVA better loss events over the course of the study.

And what -- have you talked about the powering of the study? And what level of VA benefit is going to be needed to be stat sick?

Yes. Well, we haven't said what level of VA benefits to be stat sick, but we do need to be stat sick. And so that is not a trivial thing. There's been roughly 30 GA Phase II and Phase III studies in this space, looking at everything from [indiscernible] endpoints, all of them include BCVA15, the endpoint we're going for. And no one has moved that. So our ability to demonstrate that in our proof-of-concept study is not trivial. It's just you can't really look your way into the [indiscernible] point. It results in 3 lines of vision loss, this [ BCBA15 ] letter, which is losing 50% of your vision in a 1-year period of time. You have to legally turn in your driver's license. So it's a really high bar. Statistical significance on that endpoint is clinically meaningful. And so that's really what our aim is for the Phase III study.

Okay. So based on where you think you'll start to enroll, how long do you expect that enrollment to take?

Yes, 12 months. We expect 12 months between the U.S. and Europe.

It's a big population. So I think some folks were wondering whether having the competition from these other drugs would deter patients from wanting to enter a clinical trial.

Well, patients ultimately care about vision and function. These are elderly folks who don't have the ability to drive themselves anymore, who don't have the ability to read in the way they used to or even recognize loved ones. And when you talk about the requirement of having to come in to get a poke in the eye every month or every other month, you're looking to preserve function and vision so that you can maintain your activities of daily living. The work we've done with the patient groups and individual patients as well as the health care community really makes clear there is a strong demand for a drug that can preserve vision and allow patients to live their best lives still, more vulnerable state in their life. So we don't anticipate much of any concerns with regard to recruiting the study.

Okay. Very good. In the minutes that we have left, I did want to touch upon an area that's become exciting both for you and other companies focus on C1s as a target. Can you just talk a nuancing of C1s versus C1Q?

Yes, absolutely. So C1s is just part of the C1 family. When you look at the classical pathway, C1q is the initiator of it, but part of that family of C1s and C1r. These are serine proteases, which allow us to target for a small molecule approach. So we like C1q and all of our antibodies are targeting C1q but you can't drug it from a small molecule approach. So we went to C1s which is just right downstream of C1s -- C1q.

And so does that open up -- so you're formulating an oral. Does that open up indications that were not under consideration before?

Yes, absolutely. I think so. So our oral is targeting antibody-mediated autoimmune diseases. So a host of autoimmune diseases. We're already in that space with for example in Guillain-Barré Syndrome is one of those diseases. But it's hospital-based, it's an IV. You can treat that with an infusion. The oral allows us to go much broader. So it allows us to target a host of autoimmune conditions that are chronic and devastating where patients have severe [ sequeli ] and how they go about their lives, providing them appeal really from the comfort of their home is a game changer. The other thing we like about it is that it's still upstream complement. So it's still upstream of C3 and C5. So it's still providing more complete protection against this inflammatory cascade than some of the downstream approaches. So it's kind of got 2 aspects of it that we really quite like.

Yes. So large pharma, I think, puts C1s on the map recently in terms of attention. As far as your program goes, when should we expect to see the next round of data come?

Yes, we will have -- we're initiating a proof-of-concept study shortly, and we'll have proof-of-concept study with our oral drug in the second half of this year. We're doing that in cold agglutinin disease with good data there, we will move into, hopefully, multiple autoimmune conditions where we can bring the small molecule oral to patients.

And in terms of where you think the company has most of its value now. So back when we took you public, it probably would have been a different answer than it is today. But we've talked about a few programs. But if you were asked, where do you think the valuation is mostly focused what would those items be?

Yes. I mean, candidly, I don't think we're getting value for anything. That's my honest answer, but I'll tell you where the value is, right? GA is the floor from a valuation perspective. It's a really large market. There are 8 million patients worldwide, 1.5 million or more in the U.S. and we've got what is note undoubtedly the most comprehensive, powerful set of data in that space that completely aligns with our mechanism of action. So we love that. But we also really love GBS. GBS is a unique disease. We are absolutely looking to change the lives of these patients who are one day healthy and the next day, they and their family's lives will never be the same. It's really, really devastating. And there's a lot of patients, and it's causing the health care system a lot of dollars. And so we feel like we can very efficiently transition into a commercial stage company without a large footprint, really help a lot of people and create a lot of value for those patients and for shareholders with GBS. And it's a gateway to other types of autoimmune conditions, like what is it, kind of a cousin of GBS chronically is CIDP. We've been doing a ton of work on CIDP over the last 9 years. that's something we would potentially like to take forward with our oral drug candidate, et cetera. So we think that GA is the floor. GBS is kind of the next opportunity or it's a really meaningful opportunity that's near term. And then the oral just has really kind of unlimited potential as it continues to advance as it has been.

Okay. And maybe last question, just on macro. The interest rate environment went from not clear to maybe we're going to have some rate cuts to not sure again. As a biotech company that's keenly aware of needing to make advances, but needing to also manage expenses. Is that in any way affecting the decisions you're making at the company?

Yes. We certainly pay attention to it. Obviously, as money gets tighter, then we have to manage our company with that in mind. And that's one of the things we like about biotech, right? It's -- it's discovery. It's drug development is commercialization, but it's the macro market as well. And you have to factor all of those into -- so it's certainly a consideration for us. And we have a multipronged strategy to always continue to capitalize our organization. Historically, we've used equity markets to do so. But as our programs have advanced and really have gotten to kind of value inflection points we are increasingly having discussions about potential for non-dilutive funding partnerships and the like to really leverage how we can bring this portfolio forward to as many patients as possible.

Okay. With that, we're out of time. So thank you so much for joining us from San Francisco today. And thanks, everybody, for coming into the room and listening to the presentation.

Thank you.