Biogen Inc. (BIIB) Earnings Call Transcript & Summary

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?