Biogen Inc. ($BIIB)

We're good. Okay. All right. Let's start back. Thank you, everybody, for joining us for our next session. We -- I'm Marc Goodman, one of the biopharma analysts at Leerink Partners, and we have Biogen next. And very interesting, Head of West Coast Hub, Uptal Patel. I'll let him give a little bit of background of how we got to the company and how this West Coast Hub has been started, but very interesting for the company to do that through this acquisition that you'll hear about. And obviously, a very interesting asset that we're going to go through all the different indications and stuff. But I do think maybe just for 60 seconds, just give your background and how the West Coast Hub is like what does it look like and how it's evolved, what the goals are?

Sure. Well, my name is Uptal Patel, as Marc mentioned. Thanks for having us, and we'll be making some forward-looking statements. So just the usual disclaimers to look at the risks in our SEC filings because those results might end up differing materially if I talk about any future risks. So I'm a nephrologist. I was in Academia, took a career detour into industry to try to develop new treatments for people with kidney disease and joined a company a few years ago called HI-Bio or Human Immunology Biosciences, that was really focused on developing targeted immune therapies for severe unmet needs. And they had licensed a molecule, felzartamab, from a German company called MorphoSys that had started proof-of-concept studies in 3 different indications. All of those read out positively, and we were looking to advance them into Phase III and get this to patients. And Biogen was a wonderful partner that emerged, aligned with our vision of advancing all of these and saw the broader potential potentially for this targeted anti-CD38 approach and decided to build a unit around it, around the original HI-Bio team that formed in South San Francisco that gave Biogen a connection to the West Coast that they had lost, but the IDEC campus years ago, allowed us to retain some of that start-up feel and act quickly. And in the past year, we launched those 3 Phase III studies. And so we were 40, 45 people initially. We've hired over 100 people and establishing a bigger team as well while we pick on new programs. There's also a connection to the research unit that Biogen has been evolving, with its new focus in immunology that goes back many decades, but a more dedicated one with the pipeline that is bicoastal. So part of the research team sits in the West Coast as well as the East Coast.

Thank you. So you mentioned felzartamab as the key asset. I don't know if you mentioned the name, but that's the name that you got. Let's talk about that product. Let's talk about the different indications. What was the first indication that was the most obvious?

The most was actually primary membranous nephropathy. That's a quintessential autoantibody-driven disease. 80% of people with that have an autoantibody that's very specific to a specific protein on the podocyte, one of these cells in the kidney that helps form the filtration barrier. And that's to a protein called PLA2R. So anti-PLA2R positive membranous nephropathy was an indication where we had a few different proof-of-concept studies. They were our initial readouts, and we were very excited about moving that forward, but investors actually didn't like the 2-year endpoint that was required. This was during a tough funding environment. We still believe in it and have advanced that program to Phase III, see it as an important opportunity. But what kind of stepped in front was antibody media rejection, some really compelling results from our Phase II proof-of-concept study in AMR, kind of put that as the lead indication, and that indeed is the one where we'll have the data readout most early.

So should we start with AMR?

Sure.

Go through that, and then we'll come back to that one. But that was the idea. That was the engine. Okay. So let's go through AMR, talk about...

Yes. So AMR stands for antibody-mediated rejection. It's a complication in people who receive kidney transplants. It is one of the leading causes of late kidney transplant loss. Once people develop it, over 75% will lose their grafts within a matter of years. The median time to graft failure is about 2 years. Classically, it was believed to be caused by donor-specific antibodies. So antibodies that the host develops against the recipient's organ. And -- but there was evidence that anti-CD38 approaches could work and a group of investigators approached MorphoSys, asked to be supported for an investigator-initiated trial, and they ran that trial in 22 people at 2 sites in Europe. And it was a small study, but very well done by 2 key investigators who had been part of the AMR trials for the prior few decades, knew what they were looking for. All of those other proof-of-concept studies were 20 to 40 patients of similar size. And they designed it very well to include serial biopsy samples. They had AMR diagnosed prior to inclusion at 6 months and 1 year. It was a 1:1 randomized trial where people were dosed with felzartamab. They were randomized to that arm for about 5 months, our 9-dose regimen given over 5 months. The biopsy assessment at 6 months sort of shortly after stopping that course of therapy was the primary endpoint. And that showed dramatic reversal of AMR by histology. And that's a diagnosis that is defined by some criteria called the Banff Classification criteria for rejection. And the key score in it is a component called the Microvascular Information Score, which scores the inflammation around the vessels of the glomeruli and the peritubular capillaries. And what we saw in that small Phase II was that not only did over 80% of people have reversal by histology, but over 2/3 of the participants treated with felza had scores that went down to 0, and that had never been seen in the field before. So they knew that this therapy was potentially transformative, and we quickly tried to get that moving forward into a Phase III, which is now being run and look forward to sharing updates on that.

Yes, let's talk through. So what is the design of it?

So the Phase III design is larger, 120 patients. It's global, mostly Europe, North America, South America, Australia and New Zealand. And people will be randomized to felzartamab or placebo. And similar design, biopsy is necessary at inclusion. Primary endpoint is at 6 months and people will be followed to 1 year. Same dosing regimen for the first 6 months for felzartamab. But what we saw in the Phase II is that the AMR activity came back in those who had therapy that was stopped. And so we're going to continue dosing into the second 6 months for those originally randomized to felzartamab. And because of the overwhelming efficacy we saw in the Phase II, the people on placebo will cross over to active therapy at 6 months. And so that was really important because dropouts have been an important part of these trials. We didn't want to.

And you want to make sure they actually want to be...

We want to make sure patients stay and complete the study.

Yes. Interesting. Okay. And -- so the study is just...

The study is enrolling well.

Enrolling well.

We'll share updates as we get to the end of that. That will allow us to start the 1-year clock and -- but we expect to have a primary top line readout next year, with filing next year.

Right. So sometime next year. Give us a sense of the market for this indication. What does it look like?

So in the U.S., where we have very good data, there's about 300,000 people plus who have -- who are living with a kidney transplant and somewhere around 23,000 people have AMR. And the group -- the subset of those that meet the criteria for this trial that are generally -- have had the transplant for at least 6 months, have donor-specific antibodies that are positive, is about 11,000 people. And we know that pretty well because this is a population that's followed very closely, and there's routine monitoring. People usually don't drop out of care. So it's 11,000 people roughly in the U.S. alone.

Okay. And this can be -- well, first of all, this one study should presumably be enough for an approval?

Correct. So we have breakthrough designation, orphan designation and have the ability to interact with the agency.

And how do the other regulatory agencies around the world feel about this?

Similarly excited. So we are...

But this should be good enough for the Europeans. It should be good enough for the Japanese as well, just as far as...

Yes. We're not running the trial in Japan. The transplantation programs are a little different there, but...

Europe.

Europe, for sure.

But yes, Japan might make you do something with their own patients, right? They like to do that.

Yes, that's okay because we have data in Japanese participants from our IgAN study, so we can do that. Transplantation is a little different. They don't do as much [indiscernible] kidney transplantation where the rates of AMR are higher.

I see. So the market is just completely...

So the numbers of people who are living with a kidney transplant are much smaller.

Right. Okay. So it's 11,000 that are right now and is that a growing?

That's a growing number. So there's over 100,000 people on the waitlist for kidney transplant. It is the preferred treatment for kidney failure. People can survive on dialysis, but the 5-year survival is 20%. So people don't do well on dialysis versus transplantation can prolong life to almost near age equivalent. So that will continue to grow.

So what's the competition look like? What's the standard of care, what are people doing?

So the standard of care is really anchored on this idea that this older idea that donor-specific antibodies drive the disease. And so nothing is approved, but people have essentially developed a routine of trying to extract the antibodies through plasmapheresis or interfere with their activity through administering routine scheduled intravenous immunoglobulin. Neither of those are really effective in reversing AMR, but it's all people have. So they're sort of -- they're used in practice. And I think the evolution will be now that there's a potential therapy like a targeted therapy like CD38, that will change. The other therapies in the pipeline are really focused around complement. So there's a C1s inhibitor. There's -- Alexion has their own targeted complement inhibitor. But these are -- these, we think, are downstream from the pathogenesis of AMR, where targeted CD38 therapies deplete not only the autoantibody-producing cells or the alloantibody-producing cells in this case, but they also remove natural killer cells, which also express CD38 and are the drivers of this disease. And that's sort of a newly recognized part of the pathogenesis that our studies helped elucidate.

So we're going to talk about the other indications in a second. But when you think about them, is this the indication that has the least amount of so-called competition, probably?

I think so.

The one where you're probably the leader if it executes on the study.

We believe so. The other studies that are out there are in Phase II. And so us being in Phase III, I think we've got a good lead.

Yes. And they're complement inhibitors, too. So completely different.

Completely different.

Technology. Interesting. And the pricing for this product?

So we haven't gone into details about it, but just if you took a back of the envelope calculation, current IgAN pricing as an analog for a rare kidney indication, somewhere north of $200,000, just approximately you could do the math, but essentially, for an indication with a defined population of 11,000 people, that's over a $2 billion market. Like you said...

You get half of them, you've got a $1 billion indication.

Exactly. And the goal is to continue to suppress the AMR activity in those who we can treat, the prevalent patients we can treat and there'll be new incident patients along the way.

Yes. So just to say to me, like this seems like the one where you can check the box and feel the best about the opportunity in addition to it's probably going to work.

Yes. And what we're really excited about is what we hear from patients and clinicians. It really has restored hope for a lot of people, losing an allograft once you've got this lease on life that helps you avoid dialysis is devastating for patients. So we're very excited about that.

Good. Okay. So that's AMR. Where do we go next? IgAN?

Well, before we leave AMR, we'll talk about MVI rule.

Yes, yes, let's do that.

That's...

I like that indication.

A newer recognized indication. It stands for Microvascular Inflammation. And again, with the Nature Medicine paper we published last year based on the Phase II studies, we showed that NK cells were directly responsible for this AMR pathogenesis. And MVI is a newer entity where the donor-specific antibodies are negative. They can be negative for a variety of reasons. They haven't met the threshold yet of being positive. It's earlier in the phase of developing full-blown AMR with DSA positivity. And a really nice epidemiologic study was published late 2024 in the New England Journal that was from a number of international registries, and they looked at the outcomes of people who have this MVI, which was identified with an updated classification of that Banff criteria that I mentioned. The 2022 classification included specific criteria for this group of patients because there was growing recognition that their outcomes were almost as bad. And that's what this very nice EPI study showed that they have graft loss rates almost as bad as DSA-positive AMR. The size of that population in the U.S. is about 5,000 patients. So again, the opportunity to have an impact in a large number of people.

And so the plan is what...

So the plan is we started a Phase II study. We've enrolled the first participant this month. Very excited about that. It's going to be at the same centers that we're running the Phase III. So we've got some synergies and efficiencies there. And that's a Phase II study that will potentially be registrational enabling that we're excited about.

It could be pivotal. Interesting. And so how many patients did you say in that study?

That one has 81 patients.

Okay. The other one was like 120...

100.

Slightly smaller.

Slightly smaller.

Okay. Very good. And the pricing on this indication would mesh with the other indication, you think?

Yes. So AMR, we expect that people will require ongoing dosing. And so that's sort of the context for AMR. IgAN, which is probably the next indication we can talk about a little different, larger population, a lot of other therapies and some competition. But what we saw in our Phase II IGNAZ study that was published, the people who received the 9-dose course over 5 months then didn't require -- didn't -- weren't given treatment again through 2 years, and they had durable efficacy from the 9-month assessment of reduction in proteinuria all the way out to 2 years off treatment. And that provides a really compelling additional therapeutic opportunity for patients. The pathogenesis makes sense. So rather than suppressing the maturation of the B cells into these professional antibody-producing cells, the plasma cells, plasma blasts, felzartamab depletes them. And so it gets rid of them entirely until they reform either from maturing from memory B cells or there's a new activation of that person's disease that puts them there.

So let's talk about IgAN a little bit. So what kind of proof of concept do you have so far?

So the Phase II study was a modestly small, so 54 participants across 4 dosing arms and an additional Japanese cohort. So the 4 doses were placebo, 2 doses over 2 weeks, 5 doses over 2 months and 9 doses over 5 months. And then a Japanese cohort that got the 9-dose regimen was followed up to only 1 year. But the other participants, we have 2-year data on. And when we look at the results, what we see is, again, about a 50% reduction, placebo-adjusted reduction in proteinuria, which is on par with the other therapies that are out there with durable effects out to 2 years, no suggestion that they're going to increase. We saw a very good safety. We saw a pattern of immunoglobulin decrease that's different than some of the other therapies out there. We see modest drops in immunoglobulin G, total IgG with return to normal a few months after dosing. So that gave us confidence that in the long term, this could be really potentially differentiated. We have the ability to not treat chronically. We don't interfere with the earlier B cells. So we also showed during our Phase II study that was run during COVID that people would mount the normal immune response to COVID vaccinations, for example. And this is important because some -- there's obviously all sorts of risk that people might be susceptible to with chronic therapy.

So talk about the competitive market, what's it look like?

I think there's 3 buckets of therapies out there. The first is sort of the foundational class of therapies that really treats the injury that exists. So there are CKD therapies that generically will help minimize the decline in kidney function, but not be disease-modifying. So that's the SGLT2 inhibitors, ERAs, MRAs on top of ACE inhibitors. The next group is a group of therapies that can help treat active inflammation driven by complement. So complement gets activated because of immune complex deposition in the kidneys. Those immune complexes are formed by the galactose-deficient IgA1 that is the hallmark of the disease and the autoantibodies to it that plug up the kidney filtering units and cause inflammation. But if you stop the production of those abnormal antibodies and the autoantibodies, then you presumably will have fewer immune complexes and potentially not have the need for a complement inhibitor. So that's the benefit of the last group of therapies, the ones that essentially are probably disease-modifying that include the APRIL BAFFs as well as the CD38 therapies. In the APRIL BAFFs, there's a lot of them. They have different features and -- but they're all looking to have about the same efficacy and safety, but they require chronic administration as soon as you stop dosing them. It's very clear that within 3 to 4 months, you have a return of your proteinuria and other markers of active disease.

Interesting. Okay. All right. So the Phase III...

Phase III is underway.

Underway.

Global study going very well. I think that helps us see the enthusiasm and opportunity that patients have.

And it's the same endpoint, just remind us.

So yes, similar design as all the others. So randomization, 1:1, felzartamab 9 doses over placebo. People followed out to 2 years with a 9-month interim analysis based on proteinuria. We also have a small subcohort of people with lower levels of kidney function that we're interested in studying. Those people have GFRs between 20 and 30.

Got it. Okay. Good. Next indication should we...

Next, we'll go back to PMN.

I was going to say let's go back to the start. Yes, let's go over.

So Primary Membranous Nephropathy, again, quintessential autoantibody-driven disease. And what we saw in our Phase I/II proof-of-concept studies was that the 9-dose regimen of felza rapidly depleted this pathogenic autoantibody, PLA2R. The population we studied were high risk, so they had high levels of this autoantibody. And then that led to kind of a deepening over time even past the interval of therapy. And so that, again, consistent with this idea that if you deplete the cells that are causing the disease, you can get durable efficacy. We did see heterogeneity there, and we did see some people have return of the pathogenic autoantibody close to 1 year. And so our Phase III design, we took some lessons from the data we had, which was only up to 1 year. And we have essentially a trial that includes 180 participants randomized to felzartamab or active treatment tacrolimus, and we'll talk about where that fits in the constellation of available therapies. And people who received felzartamab will get the 9-dose course over 5 months at the beginning of year 1 and then again, at the beginning of year 2. And the approvable endpoint in this space is complete remission at 2 years. The available therapy, so today, there's nothing approved, but there's sort of 3 different therapies that people generally cycle through. The first is anti-CD20s wherever they're available. And those do work in a large number of people, but 20% to 40% of people don't respond initially to therapy and then about 30% actually relapse after maybe an initial response. So that probably reflects the biology that these plasma cells and plasma blasts that produce these pathogenic autoantibodies don't express CD20. And so that fits with this idea that there's really a need for something that actually gets that population of cells. The other therapy that people can respond to is tacrolimus or calcineurin inhibitor, which works through immune and non-immune mechanisms to reduce the proteinuria. But it can't be given too long. Otherwise, it can cause some kidney injury, and so that's a real downside for that therapy. And then the last that generally works, but it can be quite toxic is cyclophosphamide, essentially an antichemotherapeutic agent.

And give us a sense of the size of this population.

So in the U.S., about 36,000 people. So it's sizable. There's, I think, room to sort of say it might make sense in a world where there are available generics for CD20s to see if people respond to that. And then felzartamab, what we've shown is that people who either relapse or don't respond can respond to an anti-CD38. The other patient group upfront that we think could really benefit are those that are really high risk. So people with very high PLA2R titers generally have been unresponsive to anti-CD20 therapy. And so there's this, I think, still a good proportion of patients that would benefit from a targeted CD38.

I didn't ask you, but the other population, the IgAN -- I mean that's over 100,000 patients population.

In the U.S. estimate, you'll see different numbers, but at least 130,000.

Yes. I forgot to ask you, but I think everybody knows that's a really big one. So okay, good. What are some other indications besides those that you're looking?

Yes. So one -- a couple of things that we're working on is we recognize felzartamab in the format that we inherited it, is an IV formulation. We're working on generating a subcu format to optimize patient convenience and get this to as many patients as it might benefit. We don't want that to be a limitation. The other is that I think we really believe in this target and are working on a next-generation anti-CD38 as well. And the goal for that is that it really would help us expand beyond this initial set of indications. You and I previously have spoken about how the original people who developed this molecule as well as the HI-Bio team that licensed it recognize that over time, out of desperation, a lot of clinicians have used anti-CD38 therapies that are available for myeloma off-label to treat very challenging patients with autoimmune diseases. And so there's an entire series of autoantibody-driven diseases that there's case reports or controlled trials for using available anti-CD38s off-label to show essentially proof of concept, some safety and kind of gives us a road map for other indications where there may be an opportunity.

Like what? Like what do you think?

There's a number of dermatologic, neurologic, rheumatologic disorders. And yes, we're planning to actually start 2 POCs this year in a few additional indications and look forward to sharing that when we get it.

Still don't want to talk about it yet. Okay. Fair enough. What else? What else should we talk about in the last 3 minutes? We kind of went through all of that. What else is kind of happening at the West Coast Hub? And what other areas are you involved in?

Yes, working very closely with the research team and thinking of ways that anti-CD38 might be paired either in combinations or sequential therapy for some of the new immunology indications we're going after. So there's a lot of work there and working with them closely to help build out our immunology portfolio that's becoming quite exciting.

Are you involved like with the lupus studies as well?

We're not directly involved. We've got enough stuff to do. We -- although we've grown as a team, we're still much smaller than the development team that has been working on this for a very long time. And yes, they're...

I was just thinking any of these overlap with that at all?

No.

Partially. I mean, they all seem a little different.

Yes. No, quite different. So I think the one thing to recognize is that the -- people might say, well, you're looking at a lot of different indications, how are you going to get this to patients? What's the commercial build going to be like? I think if we just take AMR first, there's roughly 250 transplant centers in the U.S. But really, most of the patients, probably north of 80% are followed at 50 to 100 of those centers. So that's not an unreasonable place to start. And many of those centers are specialized centers that also have the type of specialized glomerular disease clinics where difficult to treat IgAN patients and PMN patients are going to be. So it provides a nice foundation to build out further. As we think about the rare kidney indications, IgAN, PMN, there's about 10,000 nephrologists in the U.S., probably 5,000 are actively treating people with glomerular disease. But what's happening in the space is that because of a number of new therapies in development, the community is recognizing there probably needs to be glomerular disease centers of excellence, which might sort of shrink that number even further by the time we get to the launches of IgAN and PMN.

Interesting. And that's happening kind of behind the scenes right now.

That's happening in the community organically because you want clinicians who are comfortable helping patients get on the best therapy for them. And if you don't use these therapies enough, you may not be familiar with some of the advantages or disadvantages.

Yes, there's been a lot of consolidation in the doctors' practices of nephrology. I've seen a lot of private equity kind of roll up a lot of industries. I didn't know if nephrology was one of them.

Nephrology is trifurcated. There's kidney transplant specialists. There's just general CKD docs take care of patients inpatient or outpatient. And then there's some who focus on dialysis. And then there's obviously people who wear all 3 hats or 2 of the 3 or 1 of the 3. And there's been -- obviously, there's always been large consolidation on the dialysis side. 80% of the market is controlled by 2 groups.

Certainly on the dialysis.

But on the provider side, generally, there are larger practices. There's strength in numbers. And because of that, a lot of these larger practices will identify one or a few people to focus on glomerular disease, for example.

Yes. Good. Anything in our last 30 seconds that we didn't hit on that you want to say or.

No. Thanks for the update.

Yes. Good. No, it's great. Thank you. Thanks for the overview and very exciting. I mean that's a product with what we do, 4 indications.

4 indications and adding.

And 2 coming.

Yes.

So, who knows, it's the next dupi. Right?

Chris would love to hear that.

All right. You tell them that. Thank you.

Thanks a lot.

Yes. I appreciate it.