Apogee Therapeutics, Inc. ($APGE)

Good morning, everyone. Thank you so much for joining us. It's my pleasure to introduce the Apogee team. With us, we have Jane Pritchett Henderson, Chief Financial Officer; and Jeff Hartness, Chief Commercial Officer. Thank you for joining us.

Maybe to start here, on the back of a few key data sets that have read out this year, including the 52-week zumi data in atopic dermatitis and recent dose escalation data in the disease as well, can you outline how the company is positioned in the second half and beyond and walk through the key near-term catalysts?

Yes, absolutely, and thank you for having us, Salveen. Apogee is developing zumilokibart, our IL-13 targeting antibody across type 2 inflammatory diseases. Our first priority is moderate to severe atopic dermatitis. It is the largest of the I&I indications. It is growing the fastest. It is at least penetrated. So far, '26 has been a big year for us in terms of data. Our Phase II Part B data that we disclosed last month showed robust efficacy across lesional and itch endpoints with only 4 dosing days compared to 9 with standard of care. Earlier this year, we reported Part A maintenance data, where not only we showed maintenance response, but importantly, we showed response that continue to improve to 52 weeks, including something very notable, EASI-100, which is very clear skin of over 40% for patients in that maintenance setting. What we're doing next is also exploring pipeline and a product opportunity. At the same time of disclosing the Part B data, we disclosed plans for asthma as well as EoE. Why did we choose those first? Well, asthma has an approximate 30% overlap between AD patients, and there is a significant need to be able to treat both. EoE, we only have Dupixent out there, which is only -- which is dosed weekly. So 2 important indications that between the 3 of them represent over 75% of DB sales. And so EoE Phase II will start the second half of this year and our Phase IIb, which is potentially registrational will start in 2027. Also with the Part B, we announced the largest pre-Phase III royalty and debt financing transaction and collaboration with Blackstone. This is important because combined with the $1.3 billion of cash that we have on the balance sheet, that capital takes us through not only commercialization for zumi in 2029, but also takes us to potentially profitability. When we look at the data reported, we have a differentiated profile that KOLs are so excited about as the next first-line product for AD patients. And again, we look to launch that by the end of the decade. Beyond zumi mono, we're also going to have our combination programs. We will have a readout for 279, our IL-13 and OX40 ligand head-to-head against Dupi in the second half of this year. We'll also disclose more plans on 273, which is our IL-13 TSLP combination. So a big year so far in the history of Apogee, setting us up for the next first-line launch.

Great. And before going into the details here, can you level set us by speaking to where zumi and Apogee's pipeline assets could ultimately be positioned in these markets, AD, asthma, EoE and potentially COPD? And how do you expect the AD mechanism or AD market, sorry, to evolve over the next decade, particularly with new oral agents and novel mechanisms?

Sure. Thanks for the question, Salveen. So I'll start with our monotherapy zumi for AD, right? So this will be the next first-line launch in AD. And this is a market that we believe is growing rapidly into a $50 billion market. If you look at the most recent launches, both Ebglyss and NEMLUVIO, they are just expanding the market dramatically, and we expect this to continue. We're in a market that has only about a 10% biologic penetration rate. So nothing but upside to go for zumi and AD. I think when you look at what we're bringing to the market for this 29 launch, it's not just about dosing, although that is fundamental, you get 2 to 4 dosing days a year versus Dupixent's 26 dosing days a year. But what you get, and this is clear now through lots of different data sets, you have a highly differentiated product from an efficacy perspective. So we now have the highest absolute and placebo-adjusted efficacy across EASI-75, EASI-90, importantly, EASI-100 complete clearance as well as IGA-01, and that is both at week 16 and 52. This is a differentiated product that will sit in the first line. I think the market will continue to develop with products that aren't showing quite the same amount of efficacy, which end up being in the second or third line. The orals that you spoke about are really important for this. And we are rooting for orals. We really want to see a and highly efficacious oral come to the market. We think that just continues to build the biologic market. You're able to then move patients, more patients more rapidly from topicals to systemics. So I think that's the way we start to see this large and growing market in AD. As far as asthma is concerned, we are going right after Dupixent in that comorbid population of AD and asthma. Dupixent is the #1 product from a biologic perspective in asthma, and it's in spite of being fourth to market, it's in spite of every 2-week dosing -- it's because they're the only product with both indications for asthma and AD. And then as Jane spoke about, we're really excited about moving quickly forward with EoE starting this year. And we think that this is one of the largest opportunities. If you look at what Dupixent is doing, they're doing over $3 billion a year in gross EoE sales right now. And that's only with a 5 -- excuse me, 6% to 8% biologic penetration. The reason for that low penetration is because they are taking this every week. We think that we are going to be able to bring forward an incredible opportunity for patients and physicians with quarterly or better dosing in the EoE space.

Just moving back to the Blackstone Life Sciences transaction. Walk us through the rationale for that at this juncture here? And how do the specific provisions regarding a change of control in the agreement preserve the flexibility here with regard to a potential acquisition scenario?

We were very excited to announce concurrently with the Part B data, the collaboration with Blackstone. We've been talking over a period of time of sources of capital beyond equity. We very cognizant of dilution to our equity shareholders. So over a period of time, we've looked at what could be nondilutive for us. With the Part B data as well as the Part A maintenance in the market opportunity for zumi line launch. And so as we were speaking with them, 3 topics were very important as we negotiated. One was quantum of capital; two, cost of capital; and three, strategic flexibility. On quantum of capital, I mentioned we have access up to $1.3 billion in capital, $800 million of flexibility on the royalty financing and up to $500 million on the debt. That capital with the balance sheet takes us through commercialization and potential profitability. That means we are not beholden to the equity markets. Cost of capital, the next piece. It was very important that we look at royalty rates that were attractive from a cost point of view and that scaled down very quickly as sales grew annual sales over $5 billion and then $8 billion. It was also notable that we do not have any milestone payments back to Blackstone, which would also be a cost of capital. And then third, strategic flexibility. It was important that terms would be frictionless from a strategic point of view. So if there would be a change of control in the future, a strategic party has the option to buy down the royalty to a low single-digit royalty rate, and that was important. What else would cause friction to a strategic? If there were any IP leans after a change of control, if there was unwieldy governance structures. So this combination of innovative terms that Blackstone worked with us on plus standard change of control terms also meant that it was frictionless. So these 3 key areas came together very quickly as we announced the Part B data.

And in the context of your pipeline, which is clearly poised to address multiple large market opportunities, how are you thinking about strategic partnerships to accelerate expansion into other indications or ahead of potential commercialization as well as potential M&A optionality here?

Our #1 goal is to get zumi to as many patients as possible. as quickly as possible. We wake up every day as a company thinking about how to do that and bring this to a first-line launch. We now have the capital to do that and to move quickly and to build the organization to bring zumi to launch, again, not only in AD, but as a pipeline and a product. If a strategic party can convince us that they can do it faster, bring zumi to more patients at a lower cost of capital as a public company, of course, that we would be obliged to live.

Great. Jumping in here to the zumi atopic dermatitis data that we've seen to date. So you recently presented Phase II Part B induction data for the drug reaffirming its clinical program. Walk us through the key insights that you learned from the dose escalation data.

The objective of the Part B was to replicate the strong data that we saw in Part A. and we did that. As Jeff walked through, not only did we see robust EASI-75, both absolute and placebo adjusted. But as we look at the higher order endpoints, EASI-90, IGA-01, we also saw very robust data there. And now we're talking about EASI-100, which is completely clear skin as well as an endpoint called very low disease activity. And so those data points confirmed the profile that we have with zumi, particularly with the mid-dose. And so we achieved the goal of the Part B, which was to replicate to do a full dose optimization study. It was important to make sure that we weren't leaving any efficacy on the table. So we did that with a higher dose. And of course, with a lower dose, we determined what was not going to be efficacious. So in our view, that trial was very successful and now sets us up to kick off Phase III trials in the second half of this year.

And one of the points of focus for investors was the improvement in outcomes on the higher order endpoints such as vIGA-01 and EASI-90 at the mid-dose versus what was observed at the same dose in Part A. Just speak to Apogee's hypothesis of why this was observed.

Operationally, we've been very focused on this. And it comes down to, we think, 2 things. One is the larger end of the trial and also having the larger geographic footprint that resulted in seeing the activity, the efficacy on the deeper order endpoints.

And in the context of the Part A maintenance data, how should we think about the durability and depth of response over time relative to approved products?

What we saw with that continued improvement in maintenance is our conclusion on the biology, which is IL-13 is a master cytokine in atopic dermatitis. We saw that with data showing IL-13 was greater than 99% inhibited. We saw that in the skin tape data from Dr. Emma Gutman that showed not only type 2 inhibition, but also type 1 and so we believe it's the combination of that master cytokine with that also breadth that resulted in what we saw of a deepening of response from week 16 to 52.

And maybe talk about the itch profile here and how that compares to what's been seen.

Yes, Salveen, that's such an important question just because of the impact of itch on patients suffering from AD. And if you look at NEMLUVIO, right, they have launched very well, and they're being marketed as an itch product, right? The lesion control is the least effective of all biologics, including Ab. So we see how important itch is through the NEMLUVIO success. And in Part A, we read out Part A, and we showed 48-hour itch, statistically significant itch, very similar to that of NEMLUVIO at the same time point, but in combination with TCS. And then so in Part B, what we just presented on, and we really took the focus to the 4-point itch because that's really what's going to be in the label. So the 4-point itch at 16 weeks, zumilokibart was actually stronger than NEMLUVIO with TCS and even stronger than what you see with JAKs. So we're really excited about that because what it does is it prevents physicians from having to choose between either managing itch or managing lesions. And in fact, with zumi, they have the ability to manage both.

And maybe talk about the APEX study in the context of enrolling a slightly less severe population versus the Phase III trials for Dupixent and EPLI. How should we interpret the results in that context?

Yes, it's a good question. I think -- so the days of baseline 30s are gone, right, with a few products on the market. But I think importantly, if you look at our results from both Part A and Part B, they tell the same story, which is to say the more severe patients do at least as well, if not better on zumilokibart. So we feel very confident in zumi's ability to manage both that less than 21 and greater than 21 more severe patient population.

As we look to the Phase III here, speak to the study design here and Apogee's confidence in replicating the Part B data.

So as we look at the Phase III for zumi that we're going to kick off the second half of this year, it follows a pretty standard path that we've seen for AD, and that is 2 replicate trials. It will be 400 patients each of zumi versus placebo. And then important for the label, a third trial in combination with TCS. Based on what we did with Part B replicating the success of Part A, we plan to have a very similar geographic footprint, similar criteria. And based on that, we have very high conviction in the ability to replicate in Phase III the success that we've seen in APEX Phase II.

And how are you mitigating the potential for a high placebo response rate, which has been seen in recent atopic dermatitis trials?

A key part of that is the geographic footprint. And so we will do that for the Phase III. I think what we're seeing a leveling out for EASI-75 is about a 20% placebo rate. But then when you look at the higher order endpoints, which are harder with the placebo, you can see those rates coming down. So all the operational things that we did in our Phase II trials in terms of site selection, in terms of derm specialty, in terms of, again, the geographic footprint, we think all of that will lead to a good outcome on the placebo side.

And is the goal to get a label with both every 3 months and every 6-month dosing? And how do you see that playing out commercially? What type of patients will be best suited for 3 months versus 6 months? And maybe also speak to physician willingness to put a 6-month therapy in a patient?

Yes, it's a great question. So first of all, the goal and the expectation is that we will have both every 3 and every 6 months on the label. So that's the expectation. I think if you look at the 52-week data, you see maintenance of response was similar and both incredibly strong with both Q3 and Q6 months. physicians and patients really both are telling us that they want optionality, and we want to give them optionality, and we have the ability to do so. I think when you do market research with physicians, it's split sort of evenly as to if they would prefer every 3 or every 6 months. And I think both are going to be transformative, right? The Q3 month alone is going to help us to be able to dive much deeper into biologic penetration, pulling more patients from topicals over. But we think Q 6 months as we talk to patients, is going to be even further helping us to move patients to biologics. I think the way it plays out is we -- first, we want physicians and patients to use it however they'd like. I think the way it plays out is you're likely going to get a lot of physicians that want to get comfortable on 3 months. Keep in mind, they're only going to have 4 dosing days in induction versus the competitors at 9. So those 4 dosing days, I think you'll get a lot that move straight to Q3 months and then slide over. We do hear some that would prefer to just start at Q6 months. They're getting some repetition in that in asthma, for example. So they're getting more comfortable with it. And interesting, Salveen, is when you talk to physicians and ask them what the 6 months will do, 92% of physicians have told us that in market research that with the addition of Q6 months, they will continue to increase above and beyond the high percentage that they're going to use for zumi already. So we think that it's important to the market, and it will continue to drive more and more patients to zumi.

And the rate of conjunctivitis seen with zumi has been consistent with the broader. What would you think is an acceptable rate for conjunctivitis and antidrug antibodies in a Phase III?

With Dupi and Enbrel, we've seen a rate of about 14% to 30%. So we would need to be within that range. For our Part B mid-dose, our pool conjunctivitis rate was 10%. On ADAs, we continue to see no impact of ADAs on PK, on efficacy or on safety.

Great. Looking ahead, can you discuss the market access strategy for zumi at the time of launch, noting it will enter a market with other branded agents? How will positioning evolve as biosimilars for Dupixent enter the market potentially as early as 2031? And walk through the economics of why PBMs could favor branded agents such as zumi in the frontline setting versus someone who has an established presence or multiple drugs in their portfolio?

Yes, it's an important question. So first, I would say our market access strategy is to have early frontline access, and we're already starting this strategy. We're in front of payers already. And that is our expectation, early frontline access. If you look at both Ebglyss and NEMLUVIO, very small differentiation to Dupixent, both have frontline access, meaning they do not have to step through Dupixent nor will we. I think when you look at a product that is going to be used in high demand, payers see the value of extended dosing options in the I&I space. Obviously, if you look at something like a Skyrizi, 40-plus percent market share in plaque psoriasis, they know that physicians and patients will want this. So they have to find a way to have access and have this on the formulary. Otherwise, what will happen is every time a product is used, they will pay full list price. They will not have rebates, admin fees, data fees, they will not get enterprise fees. All of that goes away. So we have a high level of confidence for early first-line access. I think to your question on how this changes with biosimilars, I would say that it doesn't change anything for zumi. So a biosimilar Dupixent, for example, in time will not have an impact on zumi. What happens is -- and you can see this across other disease states, what happens is when a product goes biosimilar, that product is the product impacted, not the products around it in the I&I and biologics space. And I think there's a misunderstanding on this topic in the investment community. For example, you look at STELARA in 2025, it goes biosimilar. So when a STELARA prescription is written, the payer will force a much less expensive biosimilar STELARA. But what you do not see is any product around that having an impact, a negative impact to access, not in '25, not in '26. Why is that? Simply put, it's because if a payer were to force other branded biologics through a biosimilar their contract becomes null and void. So they no longer then pay the rebates, admin fees. And when you look at AD specifically, you have Dupixent with the lion's share of market. And if you look at their 2-year rate, they have a discontinuation rate of about 50%. Those patients are not just cured from atopic dermatitis, they end up on other products. And as they move to other products, if the payer does not give access to those other products, they're paying full price. And when they do that, it negatively impacts their financials. It increases the cost of the entire class of products, which changes what everyone pays for insurance. So it does not work for them, and that's why you don't see that elsewhere, and that's why we will not have an impact from a biosimilar Dupixent.

Moving to the respiratory side. So Apogee is advancing the drug into a Phase IIb study in moderate to severe asthma patients, which you noted could be potentially registrational. What needs to be achieved for you to be able to file on this? And you're evaluating an annual dose here in Phase IIb. Could you speak to that choice and what supports a different dosing schedule here versus our strategy versus AD?

So we announced the IIb plans, a 500-patient trial. We are going to, given the biology, enrich for EOS greater than 150 as well as exacerbation history. There's good precedents from and the respiratory division of the FDA that a IIb can be registrational, and that is with a 500-patient study. We're building this trial off of the very good data that we saw in our Ib trial for zumi in asthma, which we reported earlier this year, which we showed durable pheno suppression out to 8 months. Pheno is an accepted biomarker in the asthma space. And so building on that data, building on the data that we've now seen for zumi overall, we've designed the trial to include, as you noted, 3-month, 6-month and 12-month dosing. Based on what we know of the PK, based on what we know of IL-13 and asthma, we think it makes sense and it's logical and with where the field is going to not only test 3 and 6 months, but also to see what it looks like on a 12-month basis as well.

And speaking of TEZSPIRE, so you are going to advance your drug 273, the IL-13 plus TSLP in respiratory indications here, asthma and COPD with trial plans to be announced in the second half. Outline the areas of potential differentiation from the other TSLP targeting agents and such as Sanofi's and Genmab's drugs.

So for Lunsekimig, we think...

[indiscernible] sorry.

I know what you meant. For Lunsekimig, which is given monthly, we clearly could see our 273, our IL-13 and TSLP have a dosing advantage. The other opportunity by the combination of the 2 mechanisms is reaching a broader patient population. With a T2 targeting antibody like IL-13, you're looking at the EOs greater than 150. By combining it with TSLP, we think we could get breadth of patients as well as exploring higher efficacy. And so whether it's Lunsekimig on the dosing or generates t:SLEP mono, those breasts and seeing how we can push on the efficacy ceiling.

Great. And on the EoE side, what would you need to see in the Phase IIa proof-of-concept trial to take this into registrational studies or to establish proof of concept?

Yes. This is an open-label trial. We're going to enroll 30 to 50 patients. The primary endpoint is histology, it's eosinophil count as well as look at patient diaries as well as endoscopy. And so you can't have a placebo effect on histology, eosinophil count. So we believe that data will help us then design the next trial. It is potentially one that could be one of the most exciting. We hear from patients and docs all the time. Our patients don't like taking Dupi every week. It is a painful injection. Please see if you can come up with something monthly. And we are, of course, working on something that could be every 3 or 6 months. So as Jeff outlined earlier, it is a large indication, the third largest for Dupi between AD, asthma and EoE that represents over 75% of Dupi sales. So a very, very important indication.

Great. And your 279 drug here, with first data expected this year, what is the target profile of your IL-13 OX40 co-formulation in moderate to severe AD? And also speak to the rationale here of moving forward with this in the context of 2 large players ending their OX40 trials post Phase III data?

I'll start first on what's the bar. The zumi data for Part A and Part B has raised the bar for 279, frankly. And so as we look at that head-to-head DU, which reads out the second half of this year, points higher than efficacy than just zumi, which translates into north of 15 points better than Dupi. So a high bar, a high bar means from a capital allocation point of view that if it does not meet that bar, we will not take it forward.

Great. Jeff, do you want to add anything from a market point of view and from the second line?

Yes. From a market perspective, if we are able to increase efficacy by that 10 points that Jane is speaking of, this becomes the second-line product of choice, and it pushes JAKs back. So why is that? You're going to get JAK-like efficacy with a co-formulated combination biologic that is much safer than JAK. So when you look at the JAK profile and the multiple black box warnings and so many things that dermatologists cannot control, deep vein thrombosis, for example. These are things that concern derms and physicians versus the ability to do skin checks for Cosi, much, much safer product, and you're going to get that same sort of efficacy. So it becomes the second-line drug of choice if we're able to deliver that.

Great. Well, with that, any last things that you want to highlight given the extensive portfolio here?

It's been a really important 6 months for Apogee, probably the most important in our history. And the team is very excited to bring this to Phase III, bring this to launch and answer the ask by physicians, which is please bring it to the market as quickly as possible. And we're really happy to have the capital now to do so without any need for equity and to also bring the pipeline and the product opportunities forward as well.

Great. Well with that, Jane and Jeff, thank you so much.

Thank you, Salveen. We really appreciate the discussion.