Annexon, Inc. ($ANNX)

Good afternoon or still good morning, I think. Welcome back to the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the senior biotech analysts at the bank. It's my pleasure to have our next presenting company with us Annexon Biosciences. Presenting for Annexon this morning will be Doug Love, who is President and CEO. Doug, welcome back to Las Vegas.

Thanks so much, Tazeen. We're always happy to be here. We appreciate Bank of America.

So maybe we can just do a quick overview of Annexon, your platform and your programs, and then we can go into a little bit more detail on some of the upcoming data catalysts.

Yes, happy to do that. I'll be brief. Annexon is a leading neuro and neuroimmunology companies -- it has been already. Anyway, we're targeting complement, which we need you are familiar with, of a very differentiated approach. So we're targeting the classical complement pathway. And importantly, C1Q, the indicator of the pathway it's completely different from any other complementary approach people may be familiar with in that C1Q localizes and binds to disease tissue and a host of neuroinflammatory diseases in the body, brain and eye. We're 11 years into the journey, and we're more excited than ever at where we are. So after 11 years, we are led by 2 leading programs, one is in Guillain-Barre syndrome, an acute neuromuscular disease. In fact, the leading cause of acute neuromuscular paralysis in the world. There, we were successful in a pivotal Phase III study, really showing dramatic improvement in patients within a week and durable out to 6 months and beyond. And so we're really looking forward to getting -- making this drug available worldwide to patients we have filed in Europe for approval, and we will be filing in the U.S. for this program as well. The second lead program is geographic atrophy, a separate drug candidate intravitreal administration via -- approvement there, this is the only program to demonstrate significant vision preservation on all measures of visual acuity, including the gold standard measurement of best corrected visual acuity, 15 letter loss. We also showed importantly significant preservation of retina neurons in the eye responsible digital acuity. These are photoreceptor cells and even more pronounced protection in the central retina. So really excited about this program. We are in a large Phase III program, 659 patients that will read out in Q4. Last program is a really novel first-in-kind small molecule program -- first small molecule program targeting the classical pathway. All 3 of our programs are designed to be market winners. And so as it relates to the small molecule, we're advancing it in a proof-of-concept study with the aim of ultimately taking it into a host of neuromuscular diseases that have currently been clinically validated, but are being treated by antibodies, either by IV and more recently by subcutaneous approaches. So a holistic approach with the aim to treat millions of patients worldwide suffering from neuroinflammatory diseases, and we're energized by that.

Okay. Thank you for that overview. So maybe let's start off on geographic atrophy. You've got the pivotal study that's going to be reading out this year. Just mechanistically, on C1Q, it's differentiated from the other 2 approved drugs in the market. We've talked about this in the past, but just remind us why, mechanistically, you think that there is a higher chance of showing a benefit on visual acuity, which is what your primary endpoint is for Phase III?

Really good question. So as I said before, not all complement is the same in targeting C1Q in the classical pathway is very different than the first-generation approaches targeting C3 and C5. What C1Q does is it binds to the locus of geographic -- the disease, geographic atrophy as it relates to visual acuity. These are photoreceptors, synapses and neurons that are responsible for receiving light so that we can go forth and conquer. C1Q binds that and drives their removal, this process happens prior to what the downstream complement target components we're targeting, which are RPE or lesion growth. It's really important to understand that. So the way geographic atrophy works, the photoreceptor neurons, as I said before, receive light, and that's how we see. Underneath the photoreceptors are called RPE cells that provide trophic support for your photoreceptors to be healthy. These are durable cells. Unfortunately, for the programs that have already been approved, you lose your photoreceptor cells before you lose your RPE cells. The Downstream approaches are targeting RPE cells after you've already lost your vision. And so as a result, you're not able to protect vision by protecting RPE cells, whereas by blocking C1Q, you are protecting your photoreceptor synapses in cells, which we've demonstrated preclinically and now clinically, and that's led to the vision preservation that we see in our studies.

Okay. So just remind us about powering of the study and -- how many patients do you have in each of the arms? And when should we -- what should we expect to see at the top line when the press release comes out?

Yes. So as I said before, the data will read out in Q4. The study is a 659 patient double mass study. It's randomized 2:1 treatment arm to the sham arm, it's the 5 mid monthly dose. And what we will read out in the top line is both outcomes on multiple visual acuity measures as well as the key structural measure in our study, which is protection of photo reception as measured by easy or OCT analysis. So we're really encouraged by that.

If VA is the primary endpoint, there was kind of one way to win on this, which is you show a statistically significant impact on that endpoint. With your discussions with FDA, I'm just curious if there -- if the results come, and it looks like it's a trend, but for whatever reason isn't static, is that -- does that provide an avenue to continue to pursue an approval?

Yes, it's a good question. So we do think there are multiple ways to win. Our base case is that we will win -- on the primary endpoint, best corrected visual acuity, 15-letter loss. We are looking at key secondary measures, like I said before OCT, low luminous, visual acuity, et cetera. The way the study is designed is it's a single protocol study of 659 patients. For approval in Europe, we need to win on that single analysis. In the U.S., in agreement with the FDA, we have 2 sub-studies that roll in under the single protocol, ESUB study has been powered at a high Phase III powering, so greater than 90%. And so our base position for winning is in Europe, we went on the overall study in the U.S., we went on the 2 sub studies. If we find ourselves in a circumstance where we went on the overall study and 1 of the sub studies, I think that's a discussion we would have with the FDA for moving it forward as well.

Okay. Now if you think about the uptake that you've seen with the other 2 approved drugs, what do you think has been rate-limiting for those?

Yes, it's twofold, actually. The first is, of course, you are not providing visual benefit for a patient population where vision is the key endpoint for these folks. This is they're looking for. A point about best corrected visual acuity, 15 letter loss, what that represents is 50% of your vision over whatever period of time in which you're assessing that. So that is quite significant. By log, you're having to turn in your driver's license, you can affect lose your independence. And so you can imagine as a person who is elderly, the average age of the patients entering our study is 80 years old. So if you're coming in to get a shot in the eye every month or every other month, you're looking for preservation of your vision. The drugs that have been approved, unfortunately, I have not done that after 4, 4.5 years' worth the data. And because they are targeting a lagging indicator of the disease, RPE lesion growth, it's unlikely that they are going to demonstrate vision preservation, certainly not in a reasonable period of time. We've already seen that. And so that's impacted the market uptake, if you will, we know 80% of patients are not being treated in the GA market currently with the current therapies of those 20 or so percent of patients who are being treated somewhere between 1/3 half of them are discontinuing in treatment within a year of therapy. So the current first-generation therapies, they're an advancement, but they're not really solving the need for this patient population. On the other hand, with our approach with Vonaprument by blocking C1Q and protecting retina neurons or photoreceptors in the eye which result in functional preservation of vision. Again, we've measured that on every assessment, DCBA, low luminous visual acuity, et cetera, we are giving patients their independents in their life back. We expect the uptake to be quite, quite significant and early on because it's a complete paradigm shift. One other thing to note about our data in the Phase II and what we're encouraged about with the Phase III is that when you look at patients who are earlier in the disease -- earlier in the disease process, as described or defined by low luminous visual deficit of 30, 0 out of 56 of those patients in our study lost vision. So this is early neurodegeneration. You want to stop the disease process, so you can go forth and conquer the remainder of your life. 0 to 56% loss vision, whereas in the sham group, about 17% of those patients lost vision. So why that matters for us is we anticipate rapid uptake just because we have vision preservation alone, but we think it's going to be even bigger because we're going to be able to punch into earlier-stage disease and being able to attack neurodegeneration before it gets too far advanced. And that's what you see in all your degenerative diseases, whether it's Alzheimer's, Parkinson's and whatever. You want to treat patients earlier in the disease before you've had too much neuronal damage, and that expands your market opportunity as well. So we're really encouraged by the opportunity of this commercially.

Okay. What type of commercial footprint do you think you'll need to have, assuming that you're able to launch?

Yes, good question. It's a really efficient opportunity here. So there are about 3,000 retina specialists here in the U.S. Most are in large practices, although not all. And we know that we can get to these patients or these physician practices in a multitude of ways, but in a very concentrated way. The thing I love about the retina community is it's very well integrated. There are a lot of conferences. There are a lot of communications. They read the publications, et cetera. We anticipate a really very efficient footprint overall, but it will be reasonably sized to attack these 3,000 physicians. Two of the larger practices in the retina space see about 50% of the patients so it's really quite nice being able to contract with some of these larger practice groups and then making sure we're doing the effective education with these sites around the country are really important. We're doing that now. from a disease perspective as well as educating on the mechanism of action with Vonaprument. So we have a full Medaffairs team out a full disease campaign behind that. we're bringing them along now as we work through the Phase III study and then ultimately, we will launch with some bigger thereafter.

Okay. So maybe let's -- one more question about GA, and then we can move on to GBS. For the other 2 drugs that were launched, over time, it became a little bit more apparent that safety became a little bit of a concern. Now this might just be a numbers game. You haven't had any similar type of events as it relates to infections with patients after injection. But how should we be thinking about that in a real-world setting? This does get approved. This does get adopted. What should we think of over time, you start to see similar side effects as to what the other injectables have.

Yes. Well, so a really good question, a really important question for this community. Again, safety is very, very important. And you're right, a number of just pokes in the eye will help inform your safety profile over time. But you're also right, as we sit here today, we just have not seen the types of safety events that have been seen with some of the downstream approaches. And we've got a few views on why that's likely the case. First relates to the drug candidate itself on approvement. So this is a fab fragment. It is a small fragment. It is 50kt. So really small, with low viscosity, no viscosity at all. The volume is about 25 microliters, about 1/4 of what it is for CIFORI, for example. So that allows for really simple and efficient ease of administration. And importantly, it's non-PEGylated. So you're not getting kind of the viscosity and other issues that are shady with pegylation with our drug. So that's really, really important. The second aspect from a safety perspective is our mechanism itself we are solely blocking the classical pathway. We're allowing the lectin and alternative pathways to continue to function to perform their immune support for the eye. That's really important from an immunologic perspective. As a result, what we saw in our Phase II study is we saw very little of no conversions to wet AMD. If you'll recall, the approved drugs have conversions to wet AMD, somewhere in the neighborhood of 10% to 15% of their patients come in to get treated for GA, they come out with GA and wet AMD. When you look at our Phase II data, our conversion to wet AMD very much resembled sham and natural history over time in many other studies. So we're not seeing the conversion to wet AMD, which we think is really important. And then that, coupled with allowing the other 2 pathways to perform their immune function. We think over time, this drug is going to have a really positive safety profile. And I don't want to underestimate or underemphasize the route of -- the way we are administering this drug and 50KD and 25 microliters is really, really important. It just allows physicians to do a quick administration and move on. And so you don't have, at least thus far, the infection risk that we've seen with other approaches.

Okay. So let's move on to GBS. Can you just give us an overview of that program? And we can talk a little bit more about the market opportunity and where you stand on.

Yes, we love this program. This is a labor of love. As I said before, the #1 cause of neuromuscular paralysis, you're completely healthy. That's an indiscriminate disease. It can strike anyone at anytime and anywhere. You're completely healthy. You get some preceding infection like food poisoning, or something or another your immune system classical pathway kicks on to rid the body of the 6 cells, which is the appropriate role for whatever reason, a month or so later, your immune system kick on aberrantly targeting peripheral nerves, which leads to ascending paralysis of your body -- up through your body, 1 in 4 patients are on a ventilator within a matter of 10 days. So a really significant debilitating disease in many, many patients never fully recover. In fact, 20% of patients with GBS even with current treatments are unable to walk without assistance a year after the disease. We know the mortality rate for GBS within a year after GBS if you are 60 years or older, is around 25%. So this is a devastating disease. And we're really proud from a company perspective to be the only company to study this disease in a controlled study in over 40 years. And the reason we did it is because we know C1Q is the key effector driver of the autoantibody attacks to drive the disease. And so that's led to robust outcomes in our Phase III study as I alluded to before. And so we really, really want to emphasize that this is an important medicine for patients to give them their lives back and their families around the world. Where we are today, having one of Phase III studies as I said before, we have filed for approval in Europe, we will file for approval in the U.S. And I just want to make sure I'm answering your question.

Yes. So let's talk in a little bit more detail. So you filed for approval in Europe -- what type of feedback have they given you so far.

Yes, we've had really good engagement with Europe, some initial responses from them in terms of questions exactly what you would anticipate. And so really nice ongoing dialogue. They've also begun the inspection process of our facility or our sites in Southeast Asia, which we like. So it's a really active process -- the thing I will say about Europe, which is a bit different than what we see in a there's a lot of expertise in Guillain-Barre syndrome in the European setting. There are multiple institutions in Europe that are studying and there have been a round of studies that have been conducted over the last 15 years. They are not controlled studies, but studies nonetheless. None of that has happened in the U.S. Why that's important is the regulators in Europe understand GBS at a depth that we've not necessarily seen here in the U.S. yet. We will get there with that. So we got a round of discussions with them at the country level. We've had rapporteur meetings, and we filed the document, and now we're engaged in discussions with them on our submission for EMA approval. So we really like where things are with Europe. I'm sure you're going to ask me about U.S., but I'll wait for you to do that.

Yes. A couple more questions on Europe for we move on. So what type of treatment regimens that they have there that might be different from how they're treated patients are treated here.

Yes. In Europe, it's pretty much the same types of therapies are being used. So IVIg is used in Europe like it is here. IVIG is not approved in the U.S. It is approved in Europe, but it's approved on a compendia for use is not based on a study that's been run. About 80% of patients get IVIG. The other 20% get plasma exchange or plasmapheresis. So that's a really involved approach. IVIG is 5 courses of therapy over 5 days and unfortunately, about 1/3 of the patients get a second course of treatment. So they go 5 days. look and see how the drug is affected. And if the drug is not working well, it happens in many, many instances, there'll be an additional not ideal for patients, not necessarily a safe approach for patients, but it's what's done given the debilitating nature of the disease. And then for plasma exchange, you're -- that's 10 days of plasma exchange is not at all comfortable versus our approach, which is a single infusion in a matter of hours, hospitalized and you're really arresting the disease right away day 1, if you will.

And how would you think about what reimbursement would look like in Europe.

Yes. Reimbursement in Europe is obviously an important topic a more relevant topic today than any other time I can think of. So very much like most drugs in Europe and it's certainly rare drugs. It's done at country level. And so we've begun having those discussions at the country level, really educating on the disease and the burden of illness of the disease and the cost associated with the disease. So we've done significant, I would say, the most extensive health economics work ever done in Guillain-Barre syndrome. There's one paper out there 20-some-odd years ago from an academic institution. We've done robust assessments. We had multiple publications at AAN, and you'll see additional ones out at PNS and other conferences upcoming. That's predominantly centered on the U.S., and we've now pushed into Europe with some of that work as well. So we are educating the payers in Europe, if you will, on the advantage of using our drug and the cost savings associated with it. Europe is very much a value-based system in terms of reimbursement for your drugs there. So we like where that is today. More work to be done from an education perspective.

Do you expect to keep rights to Europe, you're not going to partner it?

That's a TBD. So it would be much more efficient to put it in the hands of the partnership. We've had multiple partnering discussions. In fact, we've had multiple partnering term sheets. I don't mind saying that. We want to make sure we do this in a way where we take a global perspective on the overall availability of the drug and the pricing of the drug. So MFN is relevant to us as it relates to an ex-U.S. deal. And so as we navigate through that, that may or may not lead to a partnership. They're certainly at the table. I feel like there's a path forward for that, but so we get a bit further we kind of hold that back a bit.

Okay. All right. So now let's talk about the status in the U.S. Just remind us about everything that's happened up until this point.

Yes. So for the get approval for Guillain-Barre syndrome, both in the U.S. and Europe, there are 2 requirements. One is demonstrate substantial evidence of effectiveness. The standard there. because we ran the studies outside of the U.S. and Europe, we have the additional requirement of demonstrating generalizability, that is the patients in our study are consistent with the patients that would be treated in the west and the outcomes would be consistent. So we did a real-world evidence analysis of the patients in our Phase III study, we matched them with a 2,000 natural industry data set run worldwide countries across the globe, including the U.S. and Europe and Bangladesh. And we were able to match our patients one for one in a propensity score matching. So we feel very good about the patients in our study are considering what you would see in the West. We also compared outcomes with the patients who were matched in our study with patients who were treated with -- exchange from the natural history data set. And we showed that we were superior on every measure as it relates to GBS. So that's really, really important. So those are the 2 requirements for approval. Both in the U.S. and Europe, we've submitted a full package on both of those requirements in Europe. In the U.S., we are going to submit both of those the U.S. appears to get some additional data in the U.S. as it relates to treating patients in the U.S. and Europe with our drug. That's an important concept for us. We've, of course, treated patients in the U.S., in Europe with our drug in other diseases like HD and ALS, but had not done so in GBS. So we took it on. We've got an open-label study that's ongoing called the FORGE study really pleased with how that study is going. We're able to kind of track that on a per patient basis. And the purpose of that study is really a bridging-type study to show that the patients in the U.S. and Europe progress similarly as they do in Southeast Asia where we ran our Phase III studies. And the outcomes with our drug are similar. We're looking at things like PK and PD predominantly. We're also going to show efficacy data because we're encouraged by what we're seeing.

How long do you think it will take to collect that data and so it's FDA?

We're well on the way on that. We still anticipate filing this year. Obviously, there's been some adjustments in the FDA more recently.

Sorry, you do and you don't?

We do. Yes, we do anticipate filing on that this year. We're watching kind of the landscape within the administrate the FDA to make that final determination. But we're data perspective, we'll be in a position to file this year.

Okay. And then you mentioned the change that was announced yesterday at the head of FDA. Does that have any impact, do you think?

I wouldn't think so. I mean, I think one of the things we're in the neuro division, the thing I would say about the neuro division of the FDA is that really well familiarized with our program. We've had more than 10 interactions with them over the course of the conduct of this program and their experts, and they're showing up every day and doing their jobs I expect they'll continue to do that.

Okay. So how do you think about the market opportunity in the U.S.?

Yes, I love it. I mean the thing about GBS because of its devastating nature, everyone gets treated. 90% to 95% of patients currently are getting treated with IVIG or plasma exchange. Now these patients are getting treated way too late. Way too late to have a meaningful effect. In fact, we know 1 in 4 patients are diagnosed -- first presentation in the U.S. And that's because there's been no education for the physician community out here on the diagnosis of GBS, which is really straightforward, really just have to capture a history of the patient. And then the protocols are very diverse across institutions around America. And again, because no one has centralized this in. So a new therapy is going to allow for better outcomes for patients across the board. From a market perspective, it's about 8,000 patients in the U.S. every year inside -- disease, get GBS another 15,000 in Europe or so. And given that 90% to 95% of these patients get treated every year, that's a meaningful market. That is a large rare disease opportunity, one of the largest I've seen before, which we're really encouraged by. From a commercialization perspective, it's an instrument-based disease, which means these patients tend to show up in larger population areas. There are 50% of the practices in the U.S. see about 50% of GBS patients in larger centers. Because we're running this FORGE study, we're in many of these practices. So we're working with them already getting them familiarized with our drug how to diagnose GBS a bit more efficiently and making sure the protocols of moving the patients through the system are really, really efficient. So I really love the experience that's happening with this study as it relates this opportunity. From a commercial footprint, however, really, really small. And that is we're not going to have a bunch of sales reps walking the halls and hospitals, they're not going to allow you to do it. So our focus is really twofold. One on the medical education side, which, again, we're already out there with our MS cells and others with disease education, education on our Phase II or Phase III program, et cetera, on that. And so really making sure people understand that we have just started to educate on our health economics outcomes are really demonstrating the cost to the health care system at a system or hospital level basis. for treating GBS on an annualized basis and the potential savings of a drug like ours where we showed patients get out of the hospital or they walk 30 days sooner. They get off the ventilator 30 days sooner. They get out of the ICU 10 days sooner. These are hard dollar savings to the health care system. And so we're going through that burden of illness burden of cost to these systems with them now. So we really like this from a commercial setting in the U.S.

And then maybe on the point of pricing, obviously, you're not going to announce that right now, but what's the range or what's the comp to look at.

Yes, and I appreciate you saying that. Yes. So we are doing the work now on that. I think the thing I think about when I think about pricing is, I think this drug is quasi analogous to a CAR-T type of therapy. The reason I say that is hospital-based single treatment, but it doesn't have all the downside kind of circumstances that go, right? Like it's just an infusion. You're not having to go through difficulty in terms of administering and have some of the issues with it. we don't anticipate pricing anywhere close to where the CAR-Ts are. When I look at the analyst reports covering it, they have somewhere between $150,000 for course of therapy for the drug. That's probably not unreasonable, but we're continuing to do a lot of work. So to help say, the value of the drug and getting patients back to our live sooner is where the opportunity is from a pricing perspective.

So this would be a little bit of a paradigm shift in terms of how patients are treated. Not a little bit, it would be. And so how do you anticipate what the initial responsiveness if this does become available would be by physicians?

Yes. Just based on what we're seeing in the FORWARD study, I think it's going to be quite robust and exciting. What we're seeing is, is that patients are having a really rapid benefit. If you looked at our data in Phase III, just by way of example, 86% of our patients showed MiFID by week 1, day 8. And we're seeing consistency in the FORWARD study. You've never seen that with the current therapies that are out there. Well, firstly, it takes 5 days to infuse these therapies, 5 to 10 days, right? So we are immediately arresting the disease and getting patients back on their feet and the response to that has been really dramatic. We're really, really encouraged by that. More to do, but so far, so good.

Okay. In the minute that we have so I wanted to quickly touch on 1502. So you've got program, a proof-of-concept study that you're running in CAD can you just talk to us quickly about that and why you've chosen that indication.

Yes. We chose an indication really as a tool indication, if you will, objective measurements of impact on hemolysis by measuring bilirubin as well as complement levels which are elevated in this disease. So really objective measures, and that's why we chose it. We will not advance commercially into coated disease, but it really will allow us to understand our drug's profile.

So what would be good data?

The data would show that you're normalizing bilirubin and importantly, you brought your complement levels down to normal in a reasonable period of time. And then safety as well.

Right. Is there anything mechanistically to look out for on safety?

Not that we're aware of or we have seen.

So what would be the next step if you see what you want to see.

Yes. One of the things we have seen in the study is that we have seen a food effect with this formulation. So what I will need to see, we'll need to see when we get all of the data pulled together. Should we stop and do a reformulation or do we advance and move forward. So that's a TBD. Otherwise, the next step is to moving into late-stage study and 1 of the neuromuscular diseases like MG or CIDP.

Okay. All right. We're about at the end of time, so we'll have to leave it there, but I love to continue that conversation next time.

Absolutely.

All right, Doug, thank you for spending time. Thanks everyone for listening.

Really appreciate it. Thank you.