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

Welcome to the second day of the Citi Global Healthcare Conference. So I'm Geoff Meacham. I'm the senior biopharma analyst. My team here too, Nishant, Ross, Mary Kate. So we're thrilled to have Apogee with us. So we have Jane Henderson, CFO. We have Jeff Hartness, CCO. So guys, thanks for joining us. Good to see you.

Thank you, Geoff.

Good to see you as well.

So we have some questions, but do you want to like kind of give maybe a quick summary? Or do you want to get ready into questions? It's totally up to you.

I can give a very quick summary. First of all, thank you for having us. We're really pleased to be here and look forward to a robust discussion. 2026 is a transformative year of important clinical readouts for Apogee. And we're going to walk through each of those in our discussion today. Some of those we accelerated recently. So we have Q1, two data points for our LEAP program, 777 in AD, we have maintenance data. We also have asthma data for 777 in Q1. And then in Q2, we have our Part B Phase II, where we're testing the dose response curve for 777 in AD. And then finally, in the second half, we have our combo trial of IL-13 and OX40 ligand, where we have a Phase Ib ongoing in head-to-head against DUPI. So an important year for us and look forward to going through more details with you.

Yes, yes. Well, Jane, let's talk about the initial 777 data. I think the positioning was match DUPIXENT in efficacy, similar tolerability and then you have the better dosing profile. The only nuance of that, I think investors are past it now, but was the conjunctivitis. Maybe just give us some context for that, like why that's not a big deal and looking forward, obviously, you guys have your expanded trial and you're going to have data, more meaningful data next year?

Sure. Absolutely. So when we talk to physicians and KOLs, and they see our data from Part A, they say it's in line with real-world experience with the DUPIXENT and with Ebglyss. What's interesting in trials now is investigators ask patients, do you have red eye? When Dupi and Ebglyss trials were run, physicians would ask patients are you feeling okay? So certainly, it's now being looked for. They are typically mild and either resolved on their own or they are treated with over-the-counter Visine. So as we talk to KOLs and our own market research and those that are done by GuidePoint and others, our physicians do not see our conjunctivitis data to date as a reason why 777 would not be the biologic of choice all around that transformative dosing of every 3 and 6 months.

And just a follow-up to that. When you talk to physicians in the community that love experience with Dupi, maybe what are some of the opportunities that you may have with 777? What are some of the pushbacks you get with like, why don't you use more Dupi? What's the sort of the theme and either discontinuations or underperforming patients that may be an opportunity for you guys?

Sure. Well, I'll touch upon it and then Jeff can talk about some of his market research and conversations with the KOLs. So the #1 reason why DUPIXENT is discontinued and within two years, over 50% of patients go off of DUPIXENT. There is needle fatigue, but there's also injection site pain. And that is where we see the discontinuation rate, not from conjunctivitis. And just as a reminder for our Part A trial, we did not see any ISRs in our Part A data to date, not that we'll never see that, but to date, we haven't seen it.

Yes. And maybe I'll add, Geoff. The biggest opportunity in the AD biologics space is really biologic penetration. We are at about 10% right now, much less so than other I&I diseases, plaque psoriasis or IBD, 10%. So it's a huge opportunity for us. Right now, when you look at patients that are on topicals, they're less likely to move over to a biologic, but they need to take 9 dosing days and induction and then they're injecting every 2 weeks. So 26 a year versus the ability to move into maintenance with an every 2 to 4 times a year, 777. So we fully expect an opportunity with physicians and with patients is to drive much deeper into that biologic penetration with 777.

Okay. Yes. That's helpful. And maybe from a -- I know we're going to talk about the Part B of the study. What opportunities do you see for differentiation there? Maybe what does kind of a win look like from a clinical perspective and we can talk about the commercial implications?

I'll start, and then I'll have Jeff add. So first of all, on Part A, we see a win with the dosing that we could provide patients of every 3- and 6-month dosing, right? We are the first company to test maintenance dosing in Part B, and it will inform our Phase III dosing where in any scenario, we're going to be testing every 3- and 6-month dosing in maintenance. So there's a win there. For Part B, our goal is to replicate the strong data that we saw in Part A, where we saw very strong EASI-75 results, whether it was absolute or placebo adjusted, including similar efficacy on IgA-01, and EASI-90 to Dupi and lebri. What we are doing in Part B is testing the dose response curve. So we are testing a lower dose so that we can go to the agency with a lowest efficacious dose but importantly, we also want to see whether we're leaving any efficacy on the table. So we are also testing a higher dose in our Part B and that higher dose is twice the exposure of Ebglyss.

Yes. And commercially speaking, Geoff, I think when you look at the product profile that we presented coming out of IIa, it is clearly the most preferred product profile of any biologic in AD by both physicians and patients. So if in Part B, we're able to replicate that product profile, we see that as a huge win. Anything above and beyond that, it doesn't change the way we go to market. It doesn't change our marketing strategy. We already have the most preferred product with the Part A data. So it could impact things like gross to net positively for us, if there is any additional efficacy that's left on the table, but we certainly do not need that to win.

Yes.

Yes. Dosing alone wins.

What are the challenges, though? And do you -- and moving from maybe 3 months to 6 months, do you, from a mechanism or from a tolerability perspective, do you add extra risk if you have higher dose? Or I just wasn't sure what the -- maybe the nuances between every 3 months is very differentiating in its own right. But like 6 months is like a real like Gold Star, like that's an amazingly commercially relevant product. Obviously, you want to aspire for that, but I wasn't sure of the extra challenges to get to that and frequent of the dosing.

Well, we have confidence based on what we see from a PK modeling point of view for every 6 months. So just as a reminder, our every 3-month dosing is exposure that is slightly higher than what is seen with lebri and our every 6 month is slightly lower. So all we would need to do if we saw in our Part A maintenance, a lower efficacy on the 6 months is to increase the dose in our Phase III trial. If we saw the efficacy that we're looking for, then we can decrease the dose of every 3 months. So again, in any scenario, we are going to test both and launch with both. It's just going to be optimizing that dosing going into the Phase III.

Okay. But you don't engage, for example, the immune system or have other, it's all in your mind, like just PK, PD and pharmacodynamic kind of situation?

That's what we've seen generally with this class and also with our own data so far.

Yes. Okay.

Yes, along those lines, any PK/PD metrics that you will show in the maintenance -- the part A maintenance data that gives more confidence in 777's profile versus dupi?

The answer that we're looking for that matters and is well laid out from DUPIXENT, the market leader, is showing maintenance of response at 52 weeks. So for those patients that achieved EASI-75 or IgA-01 response, what is the percentage that is maintained at 52 weeks? And for DUPIXENT for EASI-75, that's just over 70%. For IgA-01, it's just over 50%, so that is what we'll be looking for to then determine how to optimize that Phase III dosing strategy.

And recently, you also presented data at EADV about the rapid itch relief profile of 777. So just give us some color on how important that property is for the drug and how that competes with the other kind of in the market -- revenue market.

Yes. So thanks for the question. We are thrilled with the data that we presented at EADV on statistical significance for itch at 48 hours. And I'll tell you, it is really important to the product profile. So when you ask physicians, what's most important for them, they'll tell you EASI-75 scores when they're trying to decide what product to use for their patients. When you ask patients what's most important, the rapid itch relief kind of floats to the top. And I think you can see this in the launch of Nimluvio, right? Really strong launch, subpar in terms of lesion control, but really good on itch. So it shows the value of that itch. And for us to come forward with a product that has statistical significance on itch at 48 hours as good or better lesion control with EASI-75 than DUPIXENT or Ebglyss and the dosing of SKYRIZI, it's really the trifecta. It's the perfect product in the biologics space for AD patients. And we're really diving into what's taking place with the sensory neurons. And if you look at the IL-31, it's clear in the Nimluvio data, that IL-31 does, in fact, impact those sensory neurons. For us, we've seen a lot of great work come out of Brian Kim's lab out in Mount Sinai, which now we know that IL-13 at the right dose, at these higher exposures does, in fact, have impact on those sensory neurons. And we believe that is why we're able to show that 48-hour relief.

I'm just going to say, is there -- I know from the Part A, there wasn't like -- it's hard to look into some of the smaller numbers. But is there any, like a DUPIXENT experience patients, someone who has either failed or nonresponder or is that a more difficult patient for you guys? And is that a meaningful part of the market? I'm just looking to a larger Phase III and like what you kind of focus on?

Yes. So to -- Jeff will address the market. To clarify in Part A, we had all biologic naive. In Part B, we are testing up to 20% biologic experience. So we will see the answer from that data that we expect in Q2 on Part B induction. From a market point of view, it's interesting in terms of new patients versus existing.

Yes. So that's part of the reason why we will, in fact, have up to 20% biologic experienced in our IIb. It is an important part of this market. And the reason is because when you look at DUPIXENT, only one out of two patients actually reach an EASI-75, right? And that's a critical end point for physicians because it really moves patients from moderate disease to mild disease whenever you move to EASI-75. So we believe that there are really two major areas that we will build share with APG777. The first is simple, and that is, in fact, switches. So you're going to have patients that want more efficacy or you're going to have patients that just either have ISRs or they're just -- they don't want to take injections every two weeks. Those patients will look to move. In fact, we have some really strong market research with patients, even controlled patients who would prefer to switch at a very high rate, close to 90%, if they have similar efficacy and safety, but in every 3-month dose. So it shows the value of that dosing proposition. And then secondarily, we will build share, not just with switches, but with biologic-naive patients. So again, only a 10% biologic penetration in the AD space. Meaning that we have loads of patients that are on topicals that haven't made that transition yet, that are much more likely to make that transition to a quarterly dosed option. In fact, market research shows that they are 3x more likely to move toward 777 quarterly dose option than DUPIXENT every 2-week injections.

Patients want to take the drug and then not think about their disease. And that's what every 3 and 6 months will provide in addition to all these other features.

I know you guys haven't -- you talked about Phase III at a high level, but is that kind of the thought that 20% would be biologic experience also in the Phase III? Or you haven't quite like...

We haven't quite finalized what that's going to look like, but yes, we would expect to have biologic experienced. It's a pretty straightforward path laid out by the FDA. We will need to replicate Phase III trials versus placebo. Companies often will then do a third trial with TCS to make sure that it's part of the label.

And then on Part B, you have also mentioned that you're going to test higher doses, higher exposure levels. Maybe talk about like the efficacy or other profile that you could see with higher dose levels and whether there is like a ceiling that you could reach with...

Yes. Maybe I'll start with this one. I think it's the right experiment to conduct right, is to increase exposure just as we're doing in Part B, right? We already had higher exposures than Ebglyss in Part A. We're going to increase those exposures or we have increased those exposures in Part B and the data -- it's the right experiment to do. The data will come back. Here's -- I'll reiterate a point I made earlier. We do not need higher efficacy to win in this market and become the most preferred product. So anything that comes back to us from Part B higher exposures is complete and true upside for the product.

And remember, of course, we do need to test that lower range of efficacy dose for our conversations with the FDA which we expect to have before the end of '26 so that we're prepared to start our Phase IIIs by the end of '26.

Let's switch to -- sticking with 777, but asthma and beyond. So maybe give us some context for biologic penetration there? And then maybe what -- in the Phase Ib, which is, I guess, early part of next year, like what -- how are you guys thinking about that, how that could play out from a headline perspective?

Absolutely. So our Phase Ib asthma in Q1, we selected it as our first expansion indication because there is an approximate 30% overlap between AD and asthma patients. And for DUPIXENT, it's the second revenue driver after atopic dermatitis. For our data in Q1, we're looking at a FeNO readout, where we're looking to have a similar reduction in FeNO in terms of parts per billion of 15 to 20. Lebri was lower in the 10 to 15 range. And so for us, a win is to have that 15 to 20. We look at FeNO as an endpoint because it's a good surrogate marker for what we would look at in later trials, which is exacerbation. And then our plan is to take this data from the Ib trial, along with the dosing data we get from our Phase II Part B and then start a Phase II trial in asthma later in the year.

Got you. And the biologic penetration as a comp, I know lebri just launched more or less, but is there a Dupi ceiling, I guess, on the utilization?

For asthma?

Yes.

Yes. No, it's -- again, these are relatively new compared to think about the more mature I&I markets like an RA or an IBD that's closer to 60% penetration. So there is an incredible amount of runway available for asthma. And it is a large market. It's not the size of AD, but it is a large and growing market. And we expect, to Jane's point, our first expansion to go there for a number of reasons. We think that the [out word] already is going to be in the allergist offices anyways. So it's a nice secondary indication for us, and it is growing. Now AD is growing at about 25% a year right now, year-to-date. So -- and again, a little bit lower biologic penetration. But the reality is both of these indications have -- we're scratching the surface on, lots of runway from a biologic penetration. And they continue to grow year in and year out.

And as we look at the mono therapy, there is for asthma patients that we've seen in DUPIXENT is a type 2 driver, right? So we will be looking at a subset of the patient population that is EOS greater than 150, which would be consistent. So how do we then break through an efficacy ceiling? It's done through a combination, similar story that we had for atopic dermatitis, for respiratory. We're looking to combine IL-13 with our TSLP antibody to see if we can get a higher efficacy potentially across a patient population.

So you wouldn't do monotherapy, you would do the doublet, you think, if you look to, say, COPD or you think that -- would that be a better approach outside of AD?

We will take forward a mono and then we will follow up with a combo approach, so very similar. We want to be a serial innovator particularly in AD. So we will launch with mono therapy and follow with the combo 279 and then the same in the respiratory. We will launch with a mono for asthma and then look to follow up with the combination.

Okay. Makes sense.

And for [Technical Difficulty] what kind of cost reduction that you're seeing?

We have a clear bar. Anything below 15 would be a failure for us. And so we're looking for 15 and above, similar to Dupi in terms of parts per billion reduction.

Let's say, it's around like 13, 14 , would you still use it as a combo therapy like or do not proceed with the program?

For the combo, there's a few different things that we want to see. Right now, Lunsekimig, which is their IL-13 TSLP nanobody. We'll have data in '26, including asthma in the first half. That data will help inform how we're going to take forward a combo in addition to our IB mono data.

I know for DUPIXENT, COPD is the newer indication versus asthma. There are some similarities and some differences on pathophysiology, how are you thinking about COPD in addition to asthma and then beyond looking to say IBD indications, et cetera?

So as you point out, there's different drivers of the disease, right? COPD could have more diverse drivers disease. What we like with the combo is you're addressing both central drivers as well as local drivers of disease. So we think that could be important whether it's asthma or whether it's COPD. Anything to add from the market point of view? I mean, certainly, the unmet need in COPD, right? That is meaningful to what we see as to why we would take that forward in there in addition to asthma.

It's just opportunity, right? It's -- each one of these markets are underpenetrated when it comes to the biologics. COPD, you're really dealing more with pulmonologists versus asthma, could be pulmonologists, but high level in the allergist office, it's also dealing with AD. So it really allows us with our first expansion to unlock the entire opportunity within AD, while also increasing our footing with asthma and then in time, just as we saw Sanofi and Regeneron do, you can look to move into COPD and other disease states.

Yes. Makes sense.

[Technical Difficulty] can kind of pivot to combo strategy, so next year, you're going to be [indiscernible] and you running head-to-head trial against you. So if we talk -- talk to us about the confidence you have in the combo and then you have kind of a bold move to compare against Dupi, your expectation in terms of it?

So we chose the combination of 777 and 990, which is our 279 co-formulation because of the orthogonal mechanisms, right? IL-13 has that deep type 2 inhibition that you see across all AD patients. Where you see heterogeneity is where the Type 1 and the Type 3 inflammation contributes. And OX40 ligand as we've seen with Sanofi's and [indiscernible] has that breadth of type 1, 2 and 3 inhibition, but not the depth on type 2. So by combining the two, we hope to see a greater efficacy than we see with DUPIXENT. So what kind of greater efficacy? We're looking for 8 to 10 points greater efficacy on any of the end points whether it's EASI-75. So we're bringing more patients up to that level or the deeper end points, IgA-01 and EASI-90. So that trial, as you noted, reads out in the second half of '26. It is designed to provide a signal with the total patients of 50. And then from there, we'll determine a Phase II trial and the contribution of parts that we would need for a Phase II. But the goal is to get in efficacy that is more similar to JAK's, but without the safety concerns, which terms don't want to deal with labs with JAK's and the concerns that come with that class of drugs. In our preclinical trials of this combination, we do not see any signal on the safety side. So we'll have to prove that out in this Phase Ib head-to-head.

And then I know for keeping on the combo conversation regarding the -- your 333 and 273 combo in the asthma. And you mentioned you are waiting for the competitive readout in the first half. What specific like efficacy or safety signals you are looking at from the readout that will inform you on your own, like development of the program?

Yes, certainly, the exacerbation rates, right, and are those greater than what is being seen with Tezspire and others. So that's what we're going to look at and use that information combined with our own data to date.

As you look to the combo, the 279 combo, are there inflammation biomarkers that maybe could predict where you could go next from like atopic dermis here and asthma COPD or IBD or here that you could maybe fine-tune the indications that you could go after? Or are you just looking at it, like let's get the first set of the data and then we'll kind of move from there?

We're pretty focused for 279 on atopic dermatitis, right? And so I think the data and the additional biomarkers, et cetera, will inform us what if. But the priority is to determine the next steps to bring that is our second franchise, our serial innovation in AD for atopic dermatitis, right? So that is the foundation of the company. We want to be a serial innovator in atopic dermatitis like you've seen with the success of Vertex or Gilead, constantly improve upon ourselves in addition to the pipeline and a product potential that we see with 777 as a franchise.

Okay. That makes sense. It's funny because a lot of the more mature legacy franchises have into things like HS and the nasal polyps like all the many other indications, but it definitely is well after they established atopic derm or respiratory as like the foundational, I think. So maybe they didn't have as many growth opportunities there, but you have to be in it in the core indication first, obviously.

And we have a path that's very well established, right? What DUPIXENT has done is determined that the efficacious dose in Phase II for a therapeutic category and then for additional expansions within derm, within respiratory, within EOE, they go straight to a Phase III. So that's very well established in terms of the pipeline and a product opportunity.

Each of these indications can be and many are already blockbuster status for DUPIXENT, right? The difference is if you look at their overall revenue, the majority comes from AD and the biggest opportunity. It's not just the largest market. It's the fastest-growing market and the least penetrated. We think that by 2040, this could be a $50 billion biologic market. So does it make sense to expand? Absolutely. But to your point, Geoff, I think it makes good sense to start with your largest opportunity, and we see significant differentiation in that space.

And then looking at bigger picture in terms of like a commercial landscape, your drug would launch in '29 or around that timeframe. And given the strong performance of Ebglyss, Nimluvio commercial launch, how do you think the kind of market segment could look like by that time and when 777 potentially launches?

Yes, thanks for the question. I think, first, I would say, we are really encouraged by the recent launches. Nimluvio is annualizing at about $500 million a year right now. Ebglyss is annualizing at about $650 million a year, both right in their first year of launch. And what's really interesting, going back to the point of the size of this market is they're doing that well without much differentiation and they're doing that well as DUPIXENT continues to grow and have its best quarters. So the market as a whole is growing at 25%. The new-to-brand prescriptions are growing at 49% right now in this space. So we expect that the market continues to grow, continues to move patients from topicals over. We believe that both physicians and patients have a high expectation around dosing options in this space just as they've been given in other I&I indications, like plaque psoriasis. So we think that if you look at our market research, if you look at this product profile, when you can bring forward a product that impacts EASI-75, we've had the highest -- as a reminder, we had the highest in IIa highest absolute and placebo-adjusted EASI-75 scores of any biologic. We now have this rapid itch relief that you get with Nimluvio in that first 48 hours, and we're bringing forward what both physicians and patients want quarterly and semiannual dosing. So we expect that the market evolves, but we also expect that we are a first-line agent, and we are the most preferred product by physicians and patients.

And in terms of securing kind of payer access, I mean, these drugs were able to get good access at the onset of like launch. How do you see like 777 kind of being able to get favorable access considering there will be other drugs in the market at that time as well?

Yes, I've had a number of questions on access in the last year, and I continuously say that the AD market, it needs new options. And what I mean by that is, right now, so you think about DUPIXENT, only one out of every two patients is going to reach an EASI-75, 50% of patients discontinue within the first 2 years. Patients will be moving. It's -- this is not a winner-take-all market. It's not a one and done, similar to plaque psoriasis. There are 8 products in plaque psoriasis that do north of $2 billion a year. I mean, the clear winner is the quarterly dose SKYRIZI, right? But 8 products doing that. Why is that? It's because patients need options. If something is not working or you have a side effect or whatever the case may be, you need to move to something else. If you're a payer, and this is why I said before, and it's -- you can see the reality, both Ebglyss and Nimluvio have a really strong commercial access, 80% and 90% commercial access. Because as patients move from one product to the next, if it is not covered by a payer, then that payer (sic) [patient] is paying full list price. When you have that many patients that aren't getting what they need today, even whenever we come to market, two out of every three patients are reaching EASI-75. There's still going to be a portion of those patients that may need something more. So we have the highest confidence level that we will get first-line access. Payers pay for products that will be used. There's not a product in the AD biologics space, more preferred by physicians and patients. In fact, we had a market research done recently, looking at our Part A profile versus all of the other products in the market and just simply asked physicians to force rank what product they would use first through fifth, what's the #1 biologic? 60% of physicians said with your IIA product profile, this is our #1 product. So it will be used if it's going to be used, it needs to have contracted access in that first line space.

I guess just a last question to follow on Nishant's is when you think about the overall sort of commercial strategy, is there something that you can do in Phase III to maybe help you with the -- maybe a new onset with either differentiation with payers or physicians that can maybe give you a bit of a leg up as you think about like formulary discussions and negotiation?

Yes. I think -- yes, there's quite a bit that we're learning from conversations with payers, market research and one-on-one conversations. And one of the reasons that we've created our commercial team here at Apogee so early is to ensure that we have that dialogue, that open dialogue with payers. We're looking at ensuring that our Phase III program includes what's important, not just for the disease state physicians and patients but also payers for access. And there are a number of things that we are including. But I'll tell you, like, for example, the quarterly and semiannual dose to really push both that early gives us that advantage to bring forward an auto-injector and a prefilled syringe at launch gives us that advantage. Most have not done that, frankly. So there's a number of things that we're learning to ensure that the most amount of patients early on can be prescribed, get the product, it pings the payer. They see the value early and the more they see that, the more they know that they need to have access for patients.

Awesome Jeff, thank you so much. Great conversation.

Perfect. Appreciate it.

Thank you so much.