Apogee Therapeutics, Inc. (APGE) Earnings Call Transcript & Summary

Good morning, everyone. I'm Alex Thompson, biotech analyst here at Stifel. Happy to introduce the Apogee team. We have Carl, Jane and Jeff. So maybe I don't know, who wants to do the quick overview of the company, and then we'll go over to the Q&A.

I'll go after Jane.

Well, a quick overview. We are focused on some of the largest I&I markets, including atopic dermatitis that is not only the largest but the least penetrated, as well as the respiratory [indiscernible] area with asthma and COPD. We have a really simple strategy. We're targeting known biology, known mechanisms, known epitopes, but working on differentiated antibodies that could not only provide transformational dosing, but we have numerous opportunities to also have potentially better efficacy. So we're going to walk through some updates on our pipeline today as we go through the questions from Alex. We're excited to tell you that we have an R&D Day on December 2, at 10:00 a.m. Eastern, where we'll be providing updates across the pipeline, but going deeper also into our combination approach as well as an overview on the commercial strategy, and we will include a number of KOLs as part of our discussion.

That's great. Yes, I just registered. Thanks, Noel. Yes. So maybe kicking things off, I do want to kind of set the stage for -- to what to expect at the R&D Day in terms of the breadth of updates across your pipeline. What should we expect to see? Are we going to get 808 data?

So on 808, we've reported that we're on track to deliver data this quarter. Our goal is to have a comprehensive data set for that Phase I PK and safety. So we will have that at some point this quarter before year-end. R&D Day itself will be updates across the pipeline, including on 777, our monotherapy, as well as then, again, looking at where we can take combinations so we can look at both deeper efficacy as well as a broader patient population. Jeff just joined us in September. He's done a lot of work on the commercial opportunity as well as market research, we'll be talking about that. So it should be a very productive day for us.

Great. And so let's dive then into 777. So maybe, Carl, how is 777 not just lebri with a YTE modification of the FC region?

Yes. No. So great question. So 777 is our lead program. It's targeting IL-13. So similar mechanistically to lebrikizumab in that it has an overlapping binding site and targets kind of key biology in atopic dermatitis and other inflammatory conditions, which is the heterodimerization of IL-13 receptor alpha-1 and IL-4 receptor alpha. But it's much more than just slapping a YTE, amino acid substitution on to lebrikizumab. We've done a lot, not me, but our antibody engineers in collaboration with those at, Paragon have done a ton to optimize the antibody overall. This includes a new backbone, IgG1 backbone instead of an IgG4 backbone, really important for a variety of reasons, including manufacturability and so long term, much better COGS with an IgG1 backbone. And it also improves improved formulation. So we're at 180 mg per ml versus lebrikizumab, which is at 125 mg per ml. And why that's important is what we've really seen in AD, but also in inflammatory conditions broadly is we're really constrained commercially by a 2-milliliter auto-injector, not by safety. And so the more drug we can fit into that presentation, the more we can push things in terms of dosing intervals as well as the potential for better efficacy.

And I definitely want to talk -- Jane, do you have a...

I was just going to add as a reminder that while we were in stealth mode, tested hundreds of antibodies, screened hundreds to come up with the optimal version. And we stayed in stealth so that we could keep a first-mover advantage. And it was only when we were about to enter the clinic and slip public that we actually disclosed what we were working on. And we think as a result of that work, we have a first-mover advantage.

Yes. And I think you alluded to the cost of the formulation that you achieved. But maybe just sort of quickly because I do want to get to sort of the forward-looking things here, but kind of recap the key takeaways from the Phase I that you presented back in March.

Yes. So Phase I data we released back in March and did an update in October. So APG777 in healthy volunteers showed an approximately 75-day half-life. That's a threefold increase over lebrikizumab, which has kind of a 23- or 24-day half-life. We show really nice both deep and sustained responses to key biomarkers, those being pSTAT6, where we show near complete and prolonged inhibition of pSTAT6 out to 9 months with the most recent data and deep and prolonged responses to TARC, which is really the kind of key biomarker in atopic dermatitis as well. Really then we translated that moving forward in terms of our dosing regimen for our Phase II study in atopic dermatitis, which is ongoing right now, that's second half of 2025 readout, where we're testing 30% to 40% greater exposures with half of the injections in the induction period compared to lebrikizumab.

Yes. And so thinking about the IIa next year, what kind of data do you want to see to validate your thesis around differentiation versus lebrikizumab, both at induction and I guess, maybe looking forward towards maintenance as well?

Yes. So great question. And what we hear both in blinded market research and one-on-ones with KOLs is that equal efficacy and safety to lebrikizumab and dupilumab, but every 3- to 6-month dosing is transformative for the space. As a reminder, in AD right now, everything is every 2-week dosing, a couple of drugs with the potential to go to every 4-week dosing. So when we're talking about every 3-month to 6-month dosing, it's up to a 13-fold decrease in terms of injection burden for patients. So when we look at that induction data, we're looking to get similar efficacy to lebrikizumab and DUPIXENT there. That will be the second half of 2025 readout. And then subsequent to that, we'll -- there is a maintenance component to even that Phase II trial, which I think is something not many people have done or if anyone has done in their Phase II trials to date in atopic dermatitis. So excited for that, as well. There is -- we are testing an exposure hypothesis here, right? So when we looked at the lebrikizumab data, really multiple sources of evidence pointing to greater exposures having the potential for better efficacy. Now we don't think that's needed, but also we'd probably be irrational to not test that hypothesis. So we're looking at 30% to 40% greater exposures, both the Phase IIb as well as the recent approvals show that there's a potential for greater efficacy with greater exposures.

Yes. I guess maybe, Jeff, there's certainly a question around if you were to achieve the same efficacy as lebrikizumab and dupilumab, you have less injection burden. -- will payers pay for that? Like what's your research suggests? What are your conversations suggest about that?

Yes, Alex, thanks for the question. It's incredibly important, obviously, with the go-to-market strategy. So I think the first thing before you get to the payer is to understand what's going to drive their decision. So you think of patients and physicians. So we have quite a bit of blinded market research showing exactly what you said, a TPP that says equal efficacy, equal safety, but 3-month dosing. 94% of patients said in that scenario, I choose 777. 92% of physicians said in that scenario, I would start my biologic naive patients on 777. So you can see that there's going to be this push from the bottom up, which means that payers will see these scripts coming through. I would say similar, if you think about SKYRIZI and Plaque Psoriasis going to [ Q3-month dosing ], driving that market, really becoming a market leader within just a few years' time. So I actually have done multiple blinded research with payers, specifically since coming over and looking at the largest GPOs, PBMs and health plans. With that TPP, we are told that they would look at this as a first-line biologic equal to DUPIXENT from an access perspective. And I think the market shows that right now. I think that with our multiple shots on goal to have better efficacy, that could absolutely upend how atopic dermatitis is managed.

Yes. Yes. And sort of with the current commercial landscape, how has the early launch progress been for lebrikizumab? And what do you think are the important things to watch out for over the next couple of years?

Yes. Yes. No, that's so relevant to us right now. So I would say, first and foremost, we are encouraged by the launch. And I think you have to first look overseas and you got to look at the EU since we have more data there, so specifically Germany, the largest market. And what you see is quickly EBGLYSS has moved to a double-digit new-to-brand Rx, which is incredible versus something as large as DUPIXENT. Secondly, you also see that quarter-over-quarter, they are growing at 35% or about that 35% quarter-over-quarter. So that's really encouraging for us. I think as you look at the U.S., it's a little early. You see some early shipments to their specialty pharmacies, but much more to come. We're encouraged and we're really excited about the opportunity that they will continue to drive the market forward. And what I mean by that is this is a -- Jane alluded to this earlier, atopic dermatitis has a single-digit biologic penetration right now, whereas some of the other I&I markets, the older, more mature ones are as much as 60 -- so we look forward to Lilly really helping to drive that forward, and it sets us up perfectly for a launch this decade.

Yes. Yes. And I guess before we move on to the rest of the pipeline, obviously, you're not just looking at atopic derm. Do you want to talk about sort of the time lines and maybe some of the high-level rationale for asthma and potentially other indications for 777?

Yes. No, happy to. And we really see APG777 as a pipeline and a product potential here, too. I mean, we're -- we look at what Dupi has done, right? And I think the biologic rationale for many of those indications is just as strong, if not stronger, for IL-13 targeting like APG777. So our first expansion indication that we've already announced, right, is asthma. One of the key drivers there is the 30% overlap between AD and asthma patients. So a lot of comorbid patients there. So we think it's really important to be able to properly have the data and treat that population overall. And our first asthma study will begin in 2025. As we build from there, looking at other indications to continue to hopefully build on APG777's success, not only from the Phase I study, but from subsequent data releases next year.

Okay.

I was just going to add one point is everyone is really focused on AD because it's going to be a $50 billion market and rightfully so. But I think if you look at the follow-on expansion indications, each one of them can, in fact, be a blockbuster in and of themselves.

Yes. Yes. Totally fair. Speaking of other blockbusters, let's talk about 808, right? Can you talk about, again, the rationale and the design for this molecule and how it compares to dupilumab?

Yes. So from -- it's not this easy from the antibody engineering standpoint from -- but when we talk about it, it's really simple how we think about this at least, right, which is take known and validated biology and optimize the antibody to get to a better state too. And so that's what we've done with APG808. This time, the non-YTE or the non-808 version being DUPIXENT. So APG808 also targets IL-4 receptor alpha in a similar manner to DUPIXENT, meaning similar binding site, similar potency overall. But here, again, we've added a YTE amino acid substitution to increase the half-life with the data for that Phase I study coming in this quarter, so before year-end, overall. Again, I think as Jane hinted at earlier, slapping a YTE on Dupi is not that simple, right? And we've had a lot of trial and error with each of ours where we thought, well, this will obviously work and then it doesn't for one reason or the other. The potency doesn't -- isn't maintained. The half-life isn't extended in preclinical studies, et cetera. So it's not that simple, but the output looks -- sometimes looks that simple. So excited to share data before the end of the year.

Yes. So maybe you could talk a little bit about kind of what your expectations are, what is really the bar for achieving like a half-life that's competitive relative to dupilumab and kind of the nonhuman primate to human translation that we've seen for YTEs to date?

Yes. So one of the main differences between APG808 and APG777 is target type. So IL-13, which APG777 targets is a low concentration soluble target. And the YTE amino acid substitution is most or is able to overcome all the degradation pathways associated with low concentration soluble targets. That just compares a little to a receptor target like IL-4 receptor alpha, which YTE overcomes some of the degradation pathways, but not all of them for APG808, specifically TMDD, which is target-mediated drug disposition, where your drug and the target, the receptor target are degraded together. And YTE amino acid substitutions don't overcome that degradation. So we kind of have different expectations for a receptor and nonreceptor target overall. And then there's an additional, I think, complexity with APG808 or IL-4 receptor alpha is it's a very, I guess, dense receptor target. So it's a little -- sometimes you have a little of the target on the membrane. Here, you actually have a lot and you have a pool of receptors within the cell kind of waiting to come out too. So in some ways, IL-4 receptor alpha is a unique target, something uniquely that DUPIXENT has figured out how to target and hopefully will improve on. But that just kind of affects the half-life somewhat, too. So we don't have as ambitious of half-life expectations as we did for APG777. I actually think that we can do nonhuman primate to human half-life translation. I also think another interesting one to look at is just the non-YTE to the YTE. So when we look at APG777, lebrikizumab is a kind of 23-, 24-day half-life -- did I say lebrikizumab, lebrikizumab and APG777 has 75 days, so about 3x. You look at Spire, which released data, so a sister company of our Spire, alpha 4 beta 7, [indiscernible] has 25-day, 26-day half-life and theirs at a kind of a 90-day half-life, so about 3.5, 4x translation there. And so if you look at DUPIXENT, it has somewhere between a 8- to 10-day half-life, right? And so somewhere in the 3 to 5x range over that is what we would expect in the clinic. So somewhere between 30, 50 days. Our target is 40 -- around 40 days. And the reason for that target is, one, based on that data, but two, based on what we think is clinically meaningful. So -- as we move forward in terms of DUPIXENT, we think a meaningful change in terms of dosing frequency is moving to every 6- to 8-week dosing. So three to fourfold decrease in the dosing interval compared to DUPIXENT. And to enable that, we need around a 40-day half-life. So based on biology, analogs we have here as well as what is clinically meaningful, we're targeting somewhere around a 40-day half-life for APG808.

And then your strategy here a little bit different in that your first indication is going to be COPD, which is the newest approved DUPIXENT indication. Can you walk through the rationale for choosing COPD as your lead indication here?

Yes. We actually have an ongoing Phase Ib asthma study for that, too, which we see as an important first step for APG008 in addition to the healthy volunteer data to kind of understand dosing interval and potential in terms of biomarker changes in a respiratory population. That's ongoing enrolling right now, and we'll have data in first half of next year. And so what we were looking for and what we're still looking for with 808 versus APG777 is really a place where we know IL-4 biology plays a unique role, too, right? So I mentioned we're going after a lot of similar diseases for APG777 as DUPIXENT, right? Because we see those diseases like AD as IL-13 being the key driver there, too. So if we can target IL-13 as the key driver with every 3- to 6-month dosing makes a lot more sense to go after those indications with APG777. And then for APG808, specifically, we're looking at indications where we -- there's either greater heterogeneity where IL-4 plays a key role or a secondary driver role, and we see potentially COPD as one of those areas.

Yes. So there's a lot more to get through. And I do want to talk about the rest of your pipeline because you have more stuff going on, too, right?

Yes, we have more stuff going on. Maybe I could give do you want to give a brief overview of the pipeline.

Yes -- no, let's do -- let's get into it. So let's talk about OX40 and the OX40 access and why you think that's a compelling foundation for your first foray towards combinations?

Yes. Yes. So our third compound, APG990 is targeting OX40L, similar manner as amlitelimab, which is Sanofi's OX40L. That entered the clinic in August of this year, and we'll have Phase I data first half of next year for that compound. We've really always seen APG990 and OX40L for us as a combination partner. And what we're looking at with AD is we have kind of 3 areas where we think we can potentially increase the efficacy bar in AD. One is our Part A dose for our ongoing Phase IIa data -- Phase IIa AD study, where we're targeting 30% to 40% greater exposures. Second piece is in that same study, we have a dose optimization portion of the study where we'll further optimize the dose. And then third is this combination of APG777 and APG990, IL-13 and OX40L looking to further increase the efficacy bar, all of those while still maintaining every 3- to 6-month transformational dosing for patients with AD. And the reason we think OX40L is really a great combination partner for IL-13 is when we look at AD, it's a heterogeneous disease, but we know that the primary driver is Th2 and specifically IL-13. So we want really deep inhibition of that pathway. We want really deep Th2 and IL-13 inhibition. We get that with APG 777. But we also want to make sure that this heterogeneity Th17, Th22 and some type 1 inhibition, we're also inhibiting some of that -- some of those cytokines as well, and we get that through OX40L. So when we look at the landscape, right, [indiscernible] have done an incredible job of breadth of inhibition, but they've probably gone too deep on too many things, right? And because of that, have a black box warning. So we're trying to get the key depth of inhibition, which we know is really safe through IL-13 targeting with some of that breadth of inhibition to really increase both the breadth and depth of responses we see in AD.

And specifically, when you think about the OX40 axis, there's the nuance of targeting OX40 ligand versus OX40 and then OX40 via depletion versus just blockade. Can you talk a little bit about sort of the ligand -- why targeting the ligand makes more sense here mechanistically? And then maybe your view on how to interpret the rocatinlimab Phase III top line data?

Yes, right? So we're going after OX40L, the ligand and not OX40, right? I think that there's a lot of debate on which one is better. And for OX40 specifically, whether you need an ADCC component to get to better efficacy. I guess we tend to want to just stay a little above that and say what has we seen that has been -- has the greatest clinical validation and the best safety profile. For us, the safety profile is really key because we see this as a combination partner. And thus far, amlitelimab has really shown itself to be really safe and get to the efficacy or the breadth of inhibition that we're really looking for with this as well. So we see that kind of as the best combination partner overall versus Rocha, which is -- whether it's from OX40 targeting or ADCC, has seen double-digit rates of pyrexia and chills, right? That's going to make it harder to be a combination partner. And then there's this unknown now with their Phase III data first reading out, which maybe was a little below some people's expectations. But there's a lot of unknowns. The kind of Amgen put out maybe 3 or 4 bullets of data and not really a comprehensive data. And we actually don't know the dosing of that drug yet, too. So I think a lot of unknown still for that. I think regardless of where that ends up, I would say both OX40 and OX40L are looking still, in my view, very promising, but they don't rise to the level of Dupi and lebri efficacy. So we're really excited to be looking at these as combination partners moving forward. That's where we think they fit in kind of best to their overall landscape, not just in the near term, but in the long term.

So you're running the Phase I right now for OX40 ligands, what should we expect to see coming out of that Phase I? Are there any interesting additional biomarkers of broader inflammation that you can share to sort of further that hypothesis?

Yes. So I think 2 things. One, the Phase I is ongoing, and we'll look at kind of a larger panel of biomarkers there. And then the second piece is, I think, R&D Day. I'll plug it again December 2, 10:00 a.m. Eastern, where we'll be further looking at our combination approaches preclinically. And I think that will kind of give you guys some direction on what to expect from the Phase I trials. And then we're planning to start our phase -- first combination study in AD patients of APG777 and APG990 in 2025. So we're excited to talk a little more about that at R&D Day as well.

I guess you probably aren't going to answer the question, but I guess any sense of the size or the type of a proof of concept that you would run in a combo setting? Would it be a fulsome IIa? Or is this something more streamlined to get to an answer more quickly?

I think that's a great question. R&D Day, December 2.

That's my question. That will be my question if you don't answer it.

I'll just keep repeating Alex.

And then...

Some people have like 3 or 4 calendar invites for it already.

I definitely have this one. Okay. So your fourth program that you announced earlier this year as well, you have a TSLP program. Sort of where does TSLP fit into the broader T cell inflammatory biology that we've been talking about? And why did you choose that as your fourth indication?

Yes. So excited, 333 is our fourth compound planning to move into the clinic late this year or early next year with that one. Extended half-life TSLP, same as before, similar biology to tezepelumab, but an optimized antibody overall. Similar story to, I think, APG990, where we put this in our pipeline specifically for its combination potential. And where we see TSLP biology and I think alarm in biology in general has been so important is in respiratory diseases. And for monotherapies, I think we're seeing some plateau in efficacy there, whether you look at TSLP or Dupi or IL-5s, right, some potential plateauing there. And we really think the way to increase efficacy in the years to come is through co-targeting approaches. So we're excited for IL-13 and TSLP, more to come at R&D Day. I won't give the whole plug this time because I think you guys know December 2. But, December 2, 10 a.m. Eastern. And to talk a little more about that preclinically, but we really see that as a combination partner. And I think just in general, where I&I is going in the next 5 to 10 years is the need to increase efficacy is not going to be met through, in my view, through a novel target discovery. It's going to be met through co-targeting of known biology, in addition to things we can add on to in terms of optimized PK profiles, less frequent dosing, et cetera.

Yes. And then maybe finally, you've -- you did a raise back in March. Can you talk about your current cash runway? And what is embedded in those assumptions as it relates to the breadth of the pipeline and additional proof-of-concept work?

Yes, absolutely. So we have over $750 million of cash that provides a cash runway into 2028. And it enables us to prioritize 777 in AD to generate that Part A 16-week proof-of-concept data in the second half of next year, as well as advance with the Part B design and Phase III preparation, as well as the mono expansions we are very focused on and then advancing the 3 additional programs, 808, 990 and 333 through the early trials for proof of concept. We're going to be really careful that we deploy capital once we understand data and once we further derisk the pipeline. We'll have opportunities to finance in the future, particularly as we deliver that data. And we have an opportunity to not only think about equity, but to think about structured financings as well.

What do you -- when you say that, what do you mean by structured? Like what is in mind when you talk about structured financing?

We think of, for example, something like a royalty financing. When you're talking about the largest IMF market, this could be a pretty attractive opportunity from a point of view.

And when you're looking at the correlation between Phase II and Phase III data is actually incredible in AD, right? That's stronger than I've seen in every disease state before, too. So that Part A data next year is like a real derisking event. It's not kind of a stepping stone to some other data to some other data, et cetera, right? That trial has greater than 90% power for the primary endpoint. It's not some tiny POC trial, and that correlation is really important, I think, moving forward.

Great. Any additional questions from folks? Great. Thank you all.

Thank you.