Annexon, Inc. ($ANNX)

Good morning, everyone. Thank you for joining us on day 2 of the Goldman Sachs Healthcare Conference. It's my pleasure to introduce the Annexon team. With us, we have Doug Love, Chief Executive Officer and President; and Lloyd Clark, SVP Ophthalmology Strategy. Thanks so much for being here.

Thanks for having us.

And to start here, perhaps a snapshot of how to think about the second half of '20 and beyond. This is a potentially transformational year for the company with pivotal data and geographic atrophy that is expected in the fourth quarter of this year. describe maybe to start here, your asset, how it's differentiated from the other geographic atrophy assets and your confidence in the Phase III study success.

Yes, happy to do so. And thanks again for having us. It's delightful to be out here in Miami with you all. So look, we're really excited about the Phase III asset on approvement for the treatment of geographic atrophy. I would say it's differentiated from the first generation assets in 3 principal ways. First and foremost, recognizing that GA is a neurodegenerative disease, we're targeting exactly that, providing a neuroprotective approach to preserve vision with fine improvement in this disease, which is very different from the prior drugs that are approved target a surrogate biomarker for vision. Secondly, the drug candidate itself is quite differentiated. So this is a small antibody fragment. It's 50 kt, no pegulation with really low viscosity. So the ease of administration is really important for us. Importantly, it's a really small micro leader, 25 microliters, which is about 1/4 of the size of the currently approved therapies -- what that means is when you administer the drug, you don't experience the floaters or temporary blindness that you do with these drugs with higher concentration that resulted in ocular pressure. So really excited by that. And then finally, we're really excited about the data we've demonstrated already in the Phase II in which we're looking to replicate with the Phase III. Panipat is the only program to demonstrate significant preservation of the photoreceptor retina neuros that are responsible for visual acuity kind of even more pronounced impact in the tromaculare of the eye, which is principally responsible for the vision loss in geographic atrophy, and that translated to significant preservation of vision on all of the measurements in our Phase II study, importantly, best corrected visual acuity, 15 letter loss, which is the gold standard. So a really differentiated outlook from the prior therapies, and we're excited about where we are in the Phase III program.

Maybe to jump a little deeper here into the Phase II data. With regard to the -- what we saw, the study did not meet the primary endpoint of GA lesion growth which showed vision preservation for BCVAs you mentioned -- how do we reconcile the benefit on vision preservation with the lack of impact on anatomical markers?

Yes. Really good question. So first and foremost, we did have an impact on the anatomical markers photoreceptor neurons, which is, again, the structure in the eye that is responsible for vision. As you alluded to, did not have a significant impact on the sales or lesion growth. And the reason for that is you actually now lose -- it's now known, you lose photoreceptors prior to your RPE sales. And so that is what we're targeting principally. Maybe I'll invite Lloyd to talk about.

Yes. So as Doug said, it is well -- we know from our work as well as other groups that photoreceptors are lost first in dry AMD with geographic adi. RPE atrophy is a lagging indicator of acted so it's important to -- it's critical to protect photoreceptors first. And that's another key differentiator of our drug as a C1Q inhibitor, C1Q is known to localize on photoreceptors that are lost in geographic [indiscernible] so by inhibiting the function of C1q, we protect photoreceptors first, which then protects our P cells down line. And from our data in the Phase II, we did not show a statistically significant benefit in RP lesion growth, but we saw a 10.5% reduction in the final 6 months of our Phase II program. We expect to see further protection of RPE in our Phase III program out to 2 years as we protect photoreceptors first, which then leads to protection of RPE cells later.

And how do you -- how do you address the elevated BCVA [indiscernible] between the treated and has context?

So you're talking about our sham event rate in the Phase I, right? So our -- the data that we've pulled forward is our definition. We've confirmed 15-letter loss at 2 visits. -- that number in our Phase II was 16.9%. That compares -- it's very comparable to other studies in the medical literature. Probably the best comparator for our program is the lampalizumab natural history cohort, which is somewhere between well and 14% at a year. So these are very similar numbers. Now we've done a good bit of internal analysis of this data to feel very, very comfortable with where we are with our sham event rates. So we're comfortable with that number and understand that our study really was recruited for a functional outcome. That's the other important difference between our study and really all the others that have been evaluating of patients with geographic atrophy is that their specific patient population was to study RPE lesion growth. There are specifics to our characteristics as well as our understanding of our data that demonstrates that we're recruiting to a functional outcome. In terms of our fellow eye analysis, the fellow eye studies are difficult because the baseline characteristics are not balanced between treatment groups. We're essentially in all-comers analysis in the fellow eye group. So it's not surprising that we see some differences, both in the sham event rate as well as the treatment event rate. But it's important to emphasize that we saw a directional benefit with an improvement in the federal fellow analysis as well as a dose-dependent benefit, the every other month doing well, the monthly group doing better. So consistent with what we saw in a much more controlled group in the study eye.

Yes, I guess the way we put out the -- the reason we put out the LOI data to the point is, is a sensitivity analysis. So as you've seen in our data, we put out all of the data related to vision preservation letter, 15-letter 20-letter LOIs and other sensitivity analysis at dose-dependent and certainly, a pronounced effect, 57% versus the fellow eye, the eyes are not matched at baseline, because you can't do that in these studies. And that's why these studies have not been recognized for approval.

Maybe looking forward to the Phase III here, frame for us your expectations for that data in the fourth quarter, including the sham arm and what your view would be on a favorable outcome here?

Yes. Maybe I'll start and then get you on the a favorable outcome is statistical significance in 15 loss. Again, it's the gold standard represents about 50% of your vision loss over whatever period of time in which you are studying it. And there's just been no false positives. -- an exceedingly high bar. And so we're really encouraged by that. So any statistical significant demonstration on BCBA15letter and talking to the regulators as well as the physician communities deem clinically relevant and sufficient. -- for an approval with regard to kind of what we...

Yes. In terms of the performance of the group, I think it's sorted to your question, again, we've informed our expectations with the trial with a number of data points but we leaned very, very heavily on the data that we have collected in the Phase II study because we have a number of parameters that we've evaluated to have a good understanding and an expectation for what a sham event rate should be in this specific population, which is different than other clinical trials. And so we feel very good about those estimates as we move forward towards the debt.

It's really an important point because I think what we're seeing is folks are trying to compare sham rates from study to study without really understanding on the objective of the studies are they the same? And two, at a patient level, are you really clear on what are the key factors with regards to each patient characteristics, whether lesion size, location, baseline visual acuity, what do each of those factors contribute to a patient actually losing vision at a prescribed period of time. We have the only data set in geographic atrophy, where we can look at that deeply on a per patient basis. And that's what we use the power of the Phase III study. So this comparison from 1 study to the other in sham rates in absolute terms, really difficult to do even more so in an energy tertiary done.

And given geographic atrophy is initially so sparing, how -- I guess how confident are you that this ECBA endpoint is achievable in this in the context this disease just given what we've seen with the other 2 drugs.

Yes. I mean, our enrichment strategy and making sure we're identifying patients who are losing vision but not so far gone that you can't protect vision is very, very important, which gives us a great deal of confidence. We're able to do it in the Phase II. We expect that was doing the Phase III but elaborate.

It boils down to patient selection. There's really 3 phases of disease in geographic atrophy, early disease there's several years of progression where patients lose no vision. And then towards the end of disease, once patients develop large subfovial lesions, they've lost all the vision that they're going to have. So our inclusion criteria are designed specifically to pick those patients in this middle phase of the disease where they have rapid vision loss. And so that -- we know that our drug is beneficial to all patients with geographic atrophy and dry and it protects photoreceptors. But from a regulatory perspective and from the perspective of designing a trial for approval, it's critical to pick that specific group of patients to evaluate.

And how likely it is statistical significant benefit on GA lesion growth rate reduction at the 18 24-month time -- and if you don't achieve that, how do we reconcile the vision benefit with the long-term risk of a lesion growing?

Good question. I'll start and please dive in. So first, I think it's quite likely. Well, maybe even before, let me just back up on RP and Lesion Grill. It's just really a debunked hypothesis, and I just need to say it that plan. there is 0 data preclinically or clinically that protecting RPE lesion group translate division. As a result, Europe has not required us to study that as an endpoint nor has the FDA. We're looking at it as an exploratory endpoint in our study. So scientifically, there's just not a wealth of information that supports that as a viable end point. Be that as it may, we are studying it as an exploratory endpoint because we continue to get the question and we just want to take it off the table. As Lloyd alluded to, if you look in the second 6 months of our study in the Archer study, what we showed is that we protected against lesion growth at a rate more than 3x greater than in the first half of the study. The reason we're doing that is localizes on photoreceptors, we're protecting the strengthen the retina neuron, which then, over time, strengthens the RPE sales that provide trophic support for the neuron. So we're quite confident we'll do that. And I don't know to add that.

Mechanistically, I guess, how much data is there or this literature to kind of support this new protective dynamic that plan with 1Q?

Great question. Yes. So well, it's clear, there's loads and loads of basic science evidence to support the idea that C1Q localizes on-neuronal synapses or removal. That occurs in the brain, it occurs in the retina that occurs in the peripheral nervous system. That is well established across multiple different neurodegenerative disease states. So this idea is universal if you consider this drug as a neurodegenerative disease state. So the mechanism of action is well worked out. The other thing we know is that in the aging retina, C1Q was upregulated almost 200x above normal levels and it localizes on damaged photoreceptors in a light animal model. And so we know that it's there. And we also know that when it is inhibited with a C1Q knockout model, then the retinal function improves as well as retinal anatomy does. So we have both preclinical as well as animal evidence to suggest that this is absolutely a violent mechanism and central for protecting neurons as well as photoreceptor.

I'm glad you referenced the preclinical data away. We invite folks to go in and look at the package, different again from RPE story, we actually demonstrated preclinically, what we demonstrated clinically. -- that is C1Q localizing on the photoreceptors and stopping the damage or loss of these photoreceptors and protected their function. So we measured all of that before going into the Phase II study, which is why we prespecified BCA 15 as a key secondary.

What are your thoughts just long term on immunosuppression or just overall safety in the context targeting upstream in the complement cascade?

Well, specifically with our drug, I'd say in terms of safety, this drug is very similar to all of the other small fragment biologics that have been used in retina. I'm still a part-time practicing retina specialist. So I have 20 years of experience in development of these drugs as well as using them. And this -- our drug has all the same characteristics of the imported drugs in the exadata space. So from a safety profile standpoint, we feel really good about that. In terms of the systemic risk associated with our drug, it's important to understand because it is a small fragment antibody, and it's delivered in the eye. You're giving my new concentrations of the drug in the eye of a systemic concentration. Now once that drug leaves the eye, it's metanalized almost immediately. So the take home is you cannot -- you can't identify any on improvement systemically in our patients in the Phase II.

And on a regulatory standpoint, the Phase III trial has been designed to be evaluated as 2 independent substudies speak to your confidence in the powering of these individual subsidies.

Yes. First, maybe just to clarify on status. Single pivotal study is all that's required for approval in Europe with EMA. With U.S., we have a single protocol, 2 sub-studies, as you alluded to, Opa-powered at high Phase III, greater than 90%. And at the substudy level? I don't know anything.

No. I mean it's -- we're well aligned with FDA in terms of our 2 sub-study approach. In fact, it was really their idea when we were in the trial design period prior to the initiation of the -- so we have a prespecified plan where we'll split at the site level to identify 2 very, very similar patient population, which should increase our...

Perhaps jumping over to the commercial here. Maybe frame how you view the opportunity today. We have 2 players that have pretty much divided the market here. How do you plan to, a, integrate into that market, b, lead the medical education effort to kind of shift the narrative towards vision preservation from lesion growth, which -- to be honest, I think the doctors understand vision preservation but I'm just curious or you're thinking about this?

Well, exactly how you said. So vision is what matters. It's very clear to us. We've done extensive research with the physician community to the patient community as well as the payers who are questioning now on some level, continuing to pay for these RPE preservation type drugs that after a year, you're losing 50% of your patients to drop out rate is really quite enormous. So we expect to displace them all together with a vision preserving therapy. We're excited by that. So we anticipate we will get the switchers we will bring new patients into the fall. We only about 20%, 25% of GA patients who are currently getting therapy. So the vast majority are the sidelines with the opportunity to preserve their vision, they're going to come in. And then when you look at our data, which is what you want to see with a neuroprotective approach. Patients who are early in the disease process, 0 out of 56 lost their vision in our study. And so we have an opportunity to capture patients earlier in their disease. And with the new imaging techniques like EZOCT, where you can assess damage to your photoreceptors earlier, even before you've lost significant vision. We really think we're going to open this market up and it's a real opportunity.

Yes, 1 other comment. -- physician activation is key in this space. This is still, in many ways, considered maybe not an optional therapy, but 1 that clearly patients and their physicians have to consider only 20% of the retina buses in the United States are currently participating in the GA market. And there's a number of reasons for that. But I think the efficacy safety balance is a very, very important piece there. So I think with a drug that demonstrates functional benefit, I think physician activation will be increased, and that will be key to utilization. So the market is significantly underdeveloped.

One just quick thing is sometimes we get questions on durability of our treatment effect and whether or not that will be lasting. What we saw in our study is that the protection against vision loss was increasing over the 12-month period of time. If you look again at the second 6 months not only in the RPE and on the photoreceptors, but also on vision preservation, really a pronounced growth. And then when we stopped the drug, we saw that vision began to return. So our drugs haven't a disease-modifying effect. And that's why we built our study with this off-treatment period where we could follow the patients. So we expect that we're going to convert patients early, both new patients and switchers and grow the market, and we expect we will keep them over the course of their lives.

Just to go back to a statement you made about 20% -- 20%, 25% of the market's penetrated and only 20% of the doctors are actually prescribing -- do you feel that over time with the existing drugs, they've gotten more comfortable with the safety profile in the context of efficacy or what are the -- is it -- I guess I'm just trying to?

Yes, the headwinds. The headwinds, yes. So I think the headwinds have differed depending on the time, right? So I think that the initial launch of the first-generation therapies were is quite brisk, actually very successful. I think the safety headwinds were significant post-launch and that really blunted market development and growth. From there, I think that there's -- to me, I think there's a fair amount of fatigue based on the -- both on the physician side as well as on the patient side because they're not seeing they're not experiencing a functional benefit. So I think the market is fairly stagnant. And it's kind of the way it feels and the way it's going to be until there's a breakthrough therapy that demonstrates more of a benefit than an anatomic benefit alone.

How do you think about the competitive landscape here in terms of drugs in development, there's a systemic era drug from Regeneron, among others?

Yes. As for me and Voya, I'm confused by the follow-on approaches in development because you're still targeting this RPE lesion growth story. One, you just said to yourself, you're throwing away the EU market, like you're not going to get an approval. And how are you going to penetrate in the U.S. market because physicians and patients aren't going to continue to use those drugs if you don't demonstrate vision. So at a macro level, it's just a little confusing that development strategy. But I don't know what.

No, I agree. And the other issue with systemic complement inhibitors as to your question earlier. Issue of risk in an otherwise healthy but elderly population. It introduces a significant amount of systemic risk. Is there really going to be any benefit over the currently available complement inhibitors that you can deliver in high concentration to the eye. So I think that, that's a difficult program, in particular, to have a lot of confidence.

Speak to the commercial here in terms of whether you'll go at it alone or look to a partner?

Yes, we like it. We're going to go out in loan Yes. It's a super efficient commercial footprint, about 3,000 retina doctors in the U.S. and a couple of large practices control roughly 50% of the prescriptions there. And so there's a well more in template for smaller biotechs to come into these spaces and commercialize and we are appreciative of the first generation. It's done a lot to make the market already. And we just feel like is a highly differentiated asset on safety, on efficacy and on route of administration. So we're looking forward to getting after sales.

Switching over to your drug 10 roof for Bart for the development of Gillian Baresyndrome. Describe the development path here and where you stand with regard to regulatory approvals, and remind us of the key features of the Phase III data sets that drive your confidence here.

Yes, we're really excited about this asset. Really the first clinical demonstration of blocking upstream classical complement in a neuroprotective way in Ganbare syndrome. In our Phase III study, what we saw is roughly 90% of patients benefited by week 1, which translated to a 2.5x greater likelihood of improvement by week 8, which was the primary endpoint at a 2.5x greater likelihood of being normal by month 6, which are whopping effects in this disease that has not been studied in more than 40 years by anyway is first randomized study program. We're really encouraged by that. We ran this program ex-U.S. because it was deemed unethical to run placebo-controlled studies here in the U.S. and we run controlled studies. We don't rely on kind of natural industry, whether it's a rare disease or now we really kind of fundamental in that regard. So we ran these in Southeast Asia with alignment of the regulators, both in Europe and the U.S. on 2 fronts. One, we needed to demonstrate substantial evidence of effectiveness as well as secondly, generalizability of the patients in our study with patients in the West. Clearly, I've satisfied the first box, and so we're really pleased by that. We also feel like we satisfied the second box. We did a lot of work to establish that the patients in our study are comparable to the patients in the U.S. the propensity score matching of the patients or patients in the US and measure their outcomes versus placebo as well as against IVIg, which is the standard of care. And so we are now on file in Europe for approval, we're on pace for an approval early part of 2027. So we're really encouraged by that. And we anticipate filing shortly in the U.S. The U.S. asked for additional information on patients here in the U.S. and Europe, just to really satisfy themselves, I guess, across every t, if you will, every eye to ensure themselves that the patients were comparable. So we initiated an open-label study here called the FORWARD study. FORWARD study is really designed to provide experience with our drug in the U.S. and Europe as well as provide additional information to the regulators should it be a topic. Really encouraged by that. We will release data probably later this summer on the FORWARD study, it really shows the impact of tariff in the West, which is quite similar to what we've seen in the Phase III study.

Just going back to the Phase III studies, they were conducted in Bangladesh and the Philippines to speak to the translatability of this data to in Europe?

Yes. The most important part is GBS is GBS. So GBS is an antibody belated disease, preceding infection drives at -- it's the same all over the world. And that's been widely studied. We have every KOL in the globe, working with us on this program, which we're really encouraged about. So really important that the disease presents and plays out similarly across the board. Secondly, with regard to the patient populations, it really is the same. It doesn't matter. You have an antibody-mediated attack. And the question is whether you can stop that attack soon enough to show protection to your peripheral nerves and recovery there from. And so we've seen that now, as I said, not only in our Phase III study in the FOD study as well as the propensity score real-world evidence work that we've done. So we're really confident in that.

In the context of the Ford study that's here. What is the regulatory risk that's left around that trial itself?

Until we go back to the regulators, we don't know. What I can say is we're really, really pleased with the consistency of the data that we're seeing in the Ford study with what we're seeing in the Phase III study. And that's in 3 regards. One, the PK/PD profile. So if they were different profiles that would be an area for concern. We don't see that. If there were differences in safety outcomes, we would be concerned. It's important to know this is a single infusion. Our safety profile is really akin to placebo. So really, really important. And I alluded to some of the efficacy outcomes that we're seeing really rapid benefit that's durable over time. So we're not really seeing anything that's different between the patient populations. And we did expect to because GBS is GBS wherever you are in the world.

You speak to the commercialization dynamic here because this would be 1 where you would partner ex U.S., but I believe take it forward yourself in the U.S.

Yes, absolutely. Yes. So it's a rare disease, and it's just really not our baby way to partner or to commercialize it in Europe -- and so we will either do that in the ex U.S. partnership or in some type of distribution type of an agreement. In the U.S., however, a very efficient footprint. TBS is a population-based disease. So there are about 50 or so health care centers that see more than 50% of the patients year-over-year for 7 years. That's a very targeted footprint. What's key is this is a hospital-based disease. So you need to be on formulary. You need to be reimbursed in a large field force. MS sales, you need field managed care. We're well underway in that process here in the U.S. So we're encouraged and we're really excited. The other thing I should just say is it's a really significant market opportunity. I mean, there are 8,000 patients a year that get GBS and about 95% of those patients are being treated currently with standard of care IVIg. Even though it's unapproved and its treatment effects for Midland. What that means is you have a ready-made market -- we have an approved therapy, particularly when you look at the outcomes in our study. So we're excited to really make hay with this in the commercial.

You do also have a pipeline behind these 2 programs. And -- how do we think about 1502 and when we could get proof of concept from that oral small molecule?

Yes, we like it. It's coming. So this is the first small molecule in the classical complement space, really designed to target activated form of C1S which is a target that's been clinically validated by multiple antibody approaches in diseases like myasthenia gravis, et cetera. Our thought is that if we can provide a oral therapy, we really have an opportunity to capture a market where -- about 70% of the patients are currently on oral. And so we really like this from that perspective. We're in a small proof-of-concept study, really a translational stage study to show that we can effectively engage this activate and complement and normalize it as well as looking at disease markers like bilirubin, et cetera, in a very objective fashion to see if we can normalize that as well. We anticipate data this year, second half of this year before the GI data.

And how would it be differentiated versus the other complement targeting drugs in mysenigrabis, for instance?

Well, importantly, C, as I said, has been validated. So it will be similar in that regard. Could be a little better, but we will that back until we see the actual data. The big differentiation is ease of administration, though. These patients are really, really in significant conditions. And so the ability to take an oral at home is a game changer.

And then speak to your cash position given the current set of programs that are advancing, do you foresee the need for additional funding as you look to commercialization?

Yes. So I think we reported $225 million on the books at our last earnings, which gives us runway into -- well into the second half of 2027. So through all of the key catalysts -- that includes the GBS filings and approval that includes 1502 proof-of-concept and importantly, the Phase III readout in geographic atrophy. So we are really comfortable from that perspective. That being said, we're engaged in a lot of nondilutive efforts. We do have -- all of these assets are wholly owned. We're not commercializing GBS, for example, outside of the U.S. So we'll look to do some things there to kind of beef up our balance sheet in the not-too-distant future.

Great. Maybe as a last question here. Anything else that you want to highlight about the company's strategy. And as you look to these big data reads that are all?

Yes. Listen, we're excited. We call this a win season for us. Like we've been at it now for 11.5 years after we brought this technology out of Stanford University, and we're encouraged more encouraged than ever that by stopping inflammation right, where it starts on disease tissue, we're seeing differentiated outcomes than downstream approaches in all the diseases that we've been folks talk about GA and upstream versus downstream. But look at GBS, I mean, Alexion ran a Phase II and a Phase III in GBS. Our outcomes are dramatically different. We're seeing it in GA. So for us, this is a period of execution, like we're really sharply focused on executing, coupled with that, doing a bit more -- actually a bunch more on the education front, making sure that people understand this is a novel approach, all complements not the same, and we're looking to return people's lives by really providing function depending upon the disease in which we're pursuing. So it's an exciting time for the company. We appreciate being able to talk about it here.

Great. Well, thank you so much. Okay.

Thank you -- appreciate it.