Dianthus Therapeutics, Inc. ($DNTH)

Great. Hi, everyone. I'm Matt [indiscernible]. I'm on the health care investment banking team at Goldman Sachs. I'm joined here today by Marino Garcia, the CEO of Dianthus Therapeutics. Marino, thank you for making the time.

Well, thank you for the opportunity to update everyone on what's going on with Dianthus. I appreciate it.

Excellent. So I guess for those a little less familiar, can you just provide a brief background on diets.

Sure. So Dianthus Therapeutics, we are building a really exciting autoimmune company focused on rare diseases. Our first program is a very potent classical pathway inhibitor, an active C1s inhibitor called claseprubart, where we are taking it into building a nice sort of neurology neuromuscular franchise with it. We've already had two very strong catalysts or proof-of-concept moments in myasthenia gravis, the first indication with our Phase II data back in September of last year, where we raised $288 million. And then earlier this year with an interim responder analysis, it was actually in early [indiscernible] the IDP, the second indication where we raised $719 million on that announcement. So we have $1.2 billion in cash, which will take us as a runway into 2030. It will allow us to read out multiple catalysts for claseprubart, including the Phase III for MG trial, which we're starting imminently, and we'll provide further guidance on when we expect the Phase III results in CIDP. And in terms of -- and the third indication we're going after with claseprubart MMN, multifocal motor neuropathy. And for that, we have our Phase II results, which we'll read out in the fourth quarter of this year. And we're on track, and everything there from a blinded perspective is looking really good in terms of the safety and tolerability, very consistent with everything we've seen in the two other indications with claseprubart. And the whole idea here is with this pipeline of product claseprubart is that we are going to deliver really great efficacy in the 3 neuromuscular conditions. And as a comp inhibitor, do it in a safer manner, where we can avoid a box warning for the risk of infections from manage [indiscernible] infection from capsid bacteria like meningitis. And do it with an auto-injector, a 2-milliliter auto injector actually the exact same one DUPIXENT users, where patients could self-administer it every 2 or 4 weeks. So in a very convenient form for patients to be able to live their lives independently of infusions or having to go through very long sort of self-administered subcutaneous injections like, for example, with [ cartigamab ]. So that's our first program. Our second program, we licensed in from leads [ Biolabs ] in China. It's a bifunctional fusion protein. Again, pipeline of product potential, potential best-in-class or best-in-disease potential there. And that is targeting both BDCA2 or looking to reduce type 1 interferon on one side and on the other, BAFF/APRIL. And the idea here is to bring about two mechanisms that we know work in certain conditions, like the first 3 indications we've announced, like SLE, Sjögren's and dermatomyositis, where there's very strong evidence for both mechanisms put that into one therapeutic and hopefully, to bring about better efficacy than any one mechanism can provide. And so we are in the clinic. We're in a Phase I trial with healthy volunteer patients, and we are -- sorry, healthy volunteers, and we're looking to read that out in the second half of this year. And we're very excited about that as our next program and in Dianthus.

Excellent. So you touched on this a bit. You had two very positive data readouts for claseprubart over the last year. Can you just go a little deeper, summarize the success that you saw in myasthenia gravis and in CIDP?

Sure. So myasthenia gravis in September was a very important moment because it was the first time we had actual patient data. And it was a small Phase II, but despite only having just over 20 patients in each arm, we tested 300 milligrams our target dose and then a high dose, 600 milligram. We didn't see any efficacy difference. We knew there wouldn't be. The 600-milligram dose was really just there to reassure that we weren't going to leave any efficacy on the table and so on. But despite the fact that there was just over only 20 patients, and it was primarily a safety study, all of the efficacy endpoints for secondary end points. It was really strong, robust, statistically significant data, whether you look at the MG-ADL or the QMG or multiple other efficacy measures, I mean, we had efficacy like within the first week and all the way through the 13 weeks and very, very robust despite the fact that placebo patients had an outsized response. The placebo response was actually higher than we would have liked to have seen. And the lesson learned there is we had an MG-ADL as a screening criteria. MG-ADL is a very simply questioned, self-administer patient questionnaire. And -- but we didn't have a QMG. The QMG is let's say, maybe a little more objective. It's physician administer and it takes up to 2 hours. And we didn't want to have that as a screening criteria because we were a young company. It was our first trial. We wanted to encourage people to put patients in our trial, and we thought this would make it too burdensome. But what we saw is that our placebo response was a little bit higher than we had hoped. And I think it was because some patients self-reported as being moderate to severe when maybe they weren't. And so of course, when they got placebo, they had an outsized response. We did a post-hoc analysis, and we said, well, what if we had a QMG screening criteria like other comp inhibitors had. And we saw that the placebo response would have been closer to 2%. And then the separation from placebo would have been much more dramatic. And so we have very strong statistically significant data. The safety looked really great, and it confirmed that 300 milligrams every 2 weeks was absolutely the target dose. What really excited us though after when we did some of the post-hoc analysis and looked at some of the open-label data, it seems to indicate when we took patients who are on placebo and put them into the open-label portion of the trial, we didn't give them a loading dose. We started injecting them only every 2 weeks. And as at PK levels crept up to the target PK level of 300 milligrams, what we achieve with 300 milligrams every 2 weeks, we saw that patients were having a really robust response on top of the already robust response they had in the blinded portion. And what that told us is that at PK levels, half of what we achieve at steady state with every 2-week dosing, we see a very strong response. That's the PK level we achieved out every 4 weeks. So like I told you before, we always thought we were overdosing. And our open-label data seems to indicate that we don't need to achieve the high levels, the PK levels that we achieve with dosing every 2 weeks, that what we could achieve with every 4-week dosing will be enough. And then there was this independent data from Regeneron. They have a C3 inhibitor [indiscernible]. They read out in August and they had a pretty nice bolus response versus placebo. And what's interesting, we don't know a lot about the drug. But what they did reveal at that point is that they only achieve 75% inhibition of the classical pathway. We get above 90% ambition with every 2 weeks. Every 4 weeks, we get above 75% inhibition. So what they proved is as a comp inhibitor, if you're just somewhere in the high double digits, above 75%, you should -- you're maxing out efficacy. So our every 4-week dosing should have a pretty good shot at being the same as every 2-week dosing. So we're taking both those doses into Phase III versus placebo. But that was a big moment, obviously, and it reassured folks that, yes, active aC1s inhibition works and it is very well tolerated. Then we had the CIDP data in March. I think most people expected it would work in CIDP. So we had this interim responder analysis. We said after 40 patients complete Part A, just to reassure people and let them know it's working. These same people felt they should work is because riliprubart, which is an active C1s inhibitor in Sanofi's pipeline. I think they're only pursuing CIDP. There are some other indications they might be doing some earlier studies in. But CIDP looks like to be the only indication. They had a really strong proof-of-concept Phase II study that showed somewhere around 50% of patients when switched off standard of care for CIDP would had additional benefit on riliprubart. And I think most people like we expect that we would have similar data despite the fact that we're about 7x more potent. What's interesting though is what we started seeing in our open-label CIDP data is that we were seeing significantly better response rates than what riliprubart demonstrated, meaning that our difference in potency in CH50 mylytic assay, we weren't sure what that mean better efficacy. It definitely seemed to result in better cat least in CIDP. So what that meant is that we saw -- we got to our target of number of responders in the open-label Part A much sooner than expected. We were able to make the announcement sooner than expected. And that, of course, really turning into [indiscernible] that's how we were able to raise that $719 million in the follow-on. [indiscernible] at least from my perspective, where I stand now across [indiscernible] is this antibody in my mind is derisked. It works in neuromuscular conditions, we know an MMN is going to work. Empasiprubart, the C2 inhibitor from argenx has shown proof of concept. They'll have Phase III data later this year. We were more -- we are 7x more than riliprubart, and we showed better efficacy in CIDP. In the assay that argenx used to demonstrate potency as a cost copath inhibitor for their C2 inhibitor. When we replicate their assay and they lead, we're 38x more prone than them. whatever efficacy data they show, we will at least be able to show that. Will we be better in MMN? We don't know. In CIDP, the answer seems to be yes, potency matters. We're not sure in and we'll have to see the data. So from my perspective, from an efficacy standpoint, safety tolerability, again, we're not done with all the trials, but it's looking really, really good. My focus with the team now is execution, just execute as fast as possible, get to market as fast as possible. Why? Because in MG, the market is evolving, still less than 20% of U.S. patients are -- that are eligible for biologics, [ ACHR ] positive patients are on biologics, less than 20%. That market is evolving. And the sooner we can get out there, the more we can do with this asset with patients. In CIDP at one point where riliprubart had a 3-year advantage. Now it's looking like it's less than 2 years. They'll have another update later this year. Every time they have an update, they delay their -- when they went to expect our Phase III data, we'll see what they say later this year. We'll have an update later this year on how our CIDP trial is going to. I'd like to get that advantage down to as a smaller kind of advantage as possible because every quarter, every few months that we can cut in their advantage just means more market share for us. So that will be -- that's why it's so important. And with MMN, of course, it's really just us and empasiprubart. So the sooner we can get to market [indiscernible] for [indiscernible] and Dianthus. So that's [indiscernible] with 212, it's about making sure we understand what's the optimal dose in terms of risk benefit or in terms of tolerability and the PDs. We were looking to maximize the impact on type 1 interferon as well as on the B-cell side with the BAFF/APRIL side of 212. And so now our focus is on making sure we get that right and kick off the clinical programs showrooms and Dermatomyositis as quickly as possible as well.

That makes sense. For MMN, in particular, so you've touched on this a couple of times, you have the data coming -- 2 data coming later this year. Can you just talk a little bit more about what we should look for in the data? And why investors should be excited about that as a commercial opportunity?

Yes. Look, MMN has been always a little bit underappreciated and living in the shadow of MG and CIDP. Now that we have those two big pivotal moments behind us, more tension is being paid time to MMN, which I'm happy about. And it really helps that argenx is also talking about MMN a lot more now. And we really like argenx, believe this is a blockbuster opportunity. This is a 70% to 80% of physicians, if you talk to the neurologists that treat MMN in the U.S. will tell you, nothing really works out well. IVIG is not that effective. Certainly not as effective as it is in CIDP, for example. And partly because of that, it's severely underdiagnosed. They agree 80%, I think, of the physicians we talked to said, it is definitely underdiagnosed. So yes, it's smaller than the other two, but nothing really works. And there's only one other competitor. It's really only two biologics, two classical path inhibitors. [indiscernible] with Dianthus and riliprubart from argenx. So I think this market is a multibillion-dollar opportunity. I think in our side, we have at least a $5 billion market in the U.S. in biologics by 2035. So it's us versus empasiprubart. So what are the difference between us and empasiprubart. Well, first off, we know we have a much more potent [indiscernible] inhibitor. So they're a C2 inhibitor. They block both the [indiscernible] and classical pathway. They finally published using the Quidel MicroVue CH150, what their potency looks like at the IC50, they didn't give the. So we said, okay, that's their assay of choice. That's where they talk about their potency. So we use the exact same assay. We did a head-to-head where our antibody versus theirs. At the IC50, we got very similar numbers for them, so we know we're doing this right. It's very consistent results. At that -- at the IC50, we're about 6x more potent. But I think what you want to do is maximize your inhibition of the classical pathway to really make sure you're maximizing efficacy in any disease, especially one like MMN where we know [indiscernible] innovation works. At the IC90, we're 38x more potent. I mean that's really dramatic. I remind you, versus riliprubart, we're 7x more ponent at the IC90, and we saw better efficacy in CIDP. In MMN versus empasiprubart, we're 30x more potent at IC90. I can't say yet whether that means better efficacy in MMN. We'll have to see what the data looks like. But we have a much more pone antibody. We don't touch [indiscernible] alternative pathway that the precedent for this mechanism, C1S inhibitor in Enjaymo, Sutimlimab is out there and approved for [ coldeglutinint ] disease, and it has no box warning, no REMS. I believe if you block the lectin pathway, you're going to inhibit the complement system's ability to fight against the risk of infection. So it's very likely going to end up with a box warning, just like alternative pathway inhibitors have it, C3 inhibitors, C5 inhibitors, et cetera. So very likely they'll have a box warning, and we won't. And then finally, they're an IV. I don't know what dose every month. But it's a dose that did not, I don't think, a test in Phase III. They had 10- and 30-milligram per kg once a week or once every 2 weeks in Phase II. But they're testing a once-a-month IV and I don't think they've disclosed what dose in their Phase III for MMN. So we'll obviously have a more convenient option because we're testing 300-milligram, 2-milliliter every 2 weeks self-administered auto-injector. So that's it. That's going to be the competition. Will we have similar efficacy? We'll see. Safety, I think we'll have an advantage on box warning and then certainly on convenience. We will have a better option for patients with MMN. So I think this is definitely a multibillion-dollar market opportunity that we will layer on top of CIDP and on top of MG, all with one target, neuromuscular specialists and neurologists in the market. So I'm really excited about it. So we have this data coming later this year. In terms of what to expect from our data, we have to remember, this is a very small study. There's only 12 patients per arm. We're testing 300, 600 and placebo. So it's primarily a safety trial. And I can tell you from a blended perspective, it's looking very consistent with what we saw with MG and CIDP. So very reassuring. Yes, we're looking at some efficacy endpoints, like grip strength, so on and secondary endpoints. But this study is far from being powered for static. And I know I said that for MG, but MG was almost twice the size of this trial per arm. So really trying to manage our expectation. All we're looking at for signals and trends that look right in efficacy. We really want to move to Phase III as fast as possible. Empasiprubart has shown that claseprubart inhibition works and we hope that they'll have really good data when they report out their Phase III in the fourth quarter. There will be the inevitable temptation to compare our Phase II to their Phase II, the [ ARDS ] trial that read out a couple of years ago. I'll caution, again, there's a couple of reasons why you can't do cross-trial comparisons for other than the obvious -- other than the obvious reasons. One is it's a smaller trial. We have a much smaller trial. But secondly, they really focused on how patients on empasiprubart didn't need as much IVIg rescue as placebo patients. I think it was somewhere around 90% reduction and the need for IVIg rescue. We obviously are looking at that as well, but that endpoint is now irrelevant. The primary endpoint of Phase III is scrip strength. But the reason you can't compare whatever we're going to show in terms of percentage of patients who required IVIg rescues because empasiprubart, if you have a deteriorated by at least 2 points on the MRC 10 or 30% on grip strength, that meant they saw clinical deterioration, you would get IVIg. But they also had another element. If a patient just asked for it, we don't have that. We have the MRC. We have the [ crypstrength ] to define clinical deterioration. But if a patient just asked for the IVIg, we didn't, that was not enough to give it to them. So obviously, they had some patients on not an insignificant number of patients on placebo that asked for IVIg, even though they weren't showing clinical deterioration, and we're not -- we won't have that. So you're not going to be able to compare percentages. So I just caution on that. But essentially, what -- like I said, what we're looking for is the efficacy -- sorry, the safety tolerability looked the same as what we've seen previously in MG, CIDP and what we're seeing currently in CIDP? Yes, perfect. And then are we seeing some trends, some signals on the efficacy that we expected. And really, the job for the team is going to be to get to a Phase III as fast as possible.

Excellent. Let's talk a little bit about commercial dynamics than in CIDP. You touched on competitive landscape in MMN. Let's just talk for a second about competitive landscape for complement approaches in CIDP.

Yes. Look, I think a lot of investors are very excited about CIDP, and it makes sense. There is a treatment paradigm change coming and CIDP. That's pretty significant. Up until very recently, IVIg was seen as the gold standard in efficacy. And frankly, it still is. It's still seen as the most effective treatment for CIDP. [indiscernible] is a very nice novel innovation for CIDP patients. but it's inferior to IVIg on efficacy. It's just a much better tolerated, much easier to use version of IVIg, but not as effective. So I think that's why, for example, you didn't see, I think, any company studying [ FcRns ] won't study refractory patients to IVIg, Because if IVIg didn't work, it's very unlikely a [ FGR2 mod ] or an FcRn will work. So it's clear that IVIG is still the most effective treatment, and now we have a nice option for patients who may be naive, [indiscernible] first because if they respond fantastic, it's much better tolerate and easier to take than IVIg. So that's great. Maybe if a patient couldn't tolerate IVIg at all, you try [ efgartigimod ]. But if a patient doesn't respond to IVIg or they respond really well to it and can tolerate it, there's really no other option. What we saw with riliprubart in their Phase II, and we're seeing in our open-label Phase III portion of our Phase III trial is that classical pathway inhibition seems to be more efficacious than IVIg. Patients who are on IVIg or standard of care and stable or refractory to IVIg or standard of care, switched immediately to [indiscernible] you saw about a 50% improvement. We did the same thing we switched immediately within 7 days to claseprubart, we're seeing materially better results. again, I spoke to the potency differences earlier, it seems to be translating to better efficacy so far. We'll see at the end of the trial if those numbers hold up, but it's looking very promising. So when I look at the CIDP market in the future, what I think we're going to see is that classical path inhibition is seen as the most potent, effective way to treat CIDP, than IVIg and then [ FcRn ]. Now which one will be used first, second, what would be the -- how will physicians tackle CIDP patients? We'll see. But I think if you have a more -- clearly more effective treatment that's much better tolerated and safer than IVIg and certainly a lot more convenient, I don't see how classical path inhibition won't be the first line. And like I said, up to this point, the efficacy we're seeing looks superior to riliprubart. It looks superior to the other active C1s inhibitor, and I think it's because of that potency difference. So it may be that the most effective treatment will be claseprubart, then riliprubart, then IVIg and then [ Assurance ], below that. And where does [ empasiprubart ] fit in there? I don't know. We have to see some data at some point. and CIDP. But certainly, in terms of its potency around cost both inhibition is the least potent of the 3 [indiscernible] inhibitors, or [indiscernible] and [indiscernible] least potent. So I don't know what that will mean in efficacy, but right now, it looks like the more potent you are, the more efficacy you have.

Excellent. Let's then move -- shift gears a little bit to myasthenia gravis. -- can you talk a little bit more about the Phase III design and some of the enhancements that you made based on what you saw in the Phase II.

Yes, I kind of hinted at it earlier. So the first thing is we are going to have a QMG screening criteria. We're going to try to keep that placebo response down to what we've seen historically around a 2-point improvement. So we can let the antibody really do show what it can do. We're testing, of course, 300 milligrams every 2 weeks, 1 shot every 2 weeks, [indiscernible], like a DUPIXENT exactly the same dosing administration as DUPIXENT. And then we're testing it once every 4 weeks. So we are making the trial larger, but we think it's worth to test that every 4-week dose because, again, as I mentioned, the open-label data, there's some [indiscernible], [indiscernible], everything is telling us that just north of 75% inhibition [indiscernible] half of our steady state at 300 milligrams every 2 weeks seem to look like it could be just as efficacious. So -- and that trial, we said would start midyear. Everything is on track to get that study started. The part I'm most excited about is we had a regulatory update after our CIDP announcement, where we agreed with the FDA that looking at ANAs, testing for ANAs, screening out for high ANAs or even double-strand DNA is irrelevant, right? That was just something to look at in Phase II, but we should not bother with it anymore. It doesn't mean anything. Our #1 reason for screen failures in MG, and the reason we weren't able to report out our data even earlier than when we did, is because MG patients just have high ANAs. And so we had a huge amount of patients that basically couldn't come into our trial, very frustrating for the investigators, for the patients, for us. We couldn't put them in our trial because of their very high levels of ANA. That's gone now. We agree that we don't need to track it. We don't need to screen for it. It's irrelevant. That should help between the enthusiasm we're feeling with our investigators from our -- because they've seen the Phase II results from MG. They're hearing about the CIDP results because it's open label. So everybody -- they're talking to each other. It's a small community, the neuromuscular specialists. I think we have a really good chance of meeting or certainly meeting the timing expectations we have for data in the second half of '28. So that trial we're really excited about. And everything is going really well. The team is just doing a phenomenal job on execution.

And how do you see the commercial market playing out in myasthenia gravis? Is that more crowded [ FcRns ] have a foothold, what's your prospective?

Sure. It's the most crowd of the 3 indications going after, but I want to point out a few things, and argenx is saying this as well, which I'm really happy to hear less than 20% of patients who should be on biologics in the U.S. with MG, are on biologics. This market could easily be 2 to 3x larger. So it's not just about competing for market share. It's about growing this market. And what does the market need to grow? Well, if you look at autoimmune markets and historically, what got them to 40%, 50% penetration biologics. You got to make it really easy, an auto-injector, no box warning, just really simple, good efficacy. That's what claseprubart offers. And we'll see if anybody else can offer the same combination of those three things, efficacy, safety and the convenience of an auto-injector self-administered infrequently. The other thing is, well, [ riliprubart ] launched from [ Amgen ]. I mean that it takes months for that to kick in and really show any efficacy if it does show efficacy. It's got a side effects and its issues. The big advantage is simple is it's once every 6-month IV. That's really nice. It's very convenient. Patients don't get these drugs if you have MG for convenience. They're not -- they're looking for efficacy. So despite its less than ideal profile, I think it's beating expectations. And I think it's because, again, even with -- it's being used second line, by the way, mostly. Even with the [ FcRns ] out there. Even with the underpenetration of biologics, there are a lot of patients out there who are just looking for more options. And that just proves it. So for me, the MG market, people feel like, oh my God, that's it. It's over, FcRns on it, not really. There's a huge potential for growth, and there's still a lot of patients out there that are not satisfied with what's offered. So even in the worst-case scenarios where you assume claseprubart is a second-line option to FcRn, which I do not believe is going to be the case at all. I think we're going to have a very nice first-line position in MG. It's still a multibillion-dollar blockbuster. And then just add on top of that [indiscernible], I mean the numbers -- it doesn't take much to get to a multibillion-dollar peak [indiscernible]. I think with MG, it's about continuing to grow the penetration of biologics, continue to educate physicians on why we should be treating those patients earlier, faster with biologics. And then just having more options that are very convenient, safe and with good efficacy.

Excellent. Switching gears then just to the 212 asset and the rheumatology franchise. You mentioned the in-licensing, how it came into Dianthus and the prioritized indications. Maybe just touch a little bit on clinical development plan and how you're thinking about pursuit of those indications in the months ahead.

Yes, we're very excited. I mean it looks at least similar or better in terms of PDC depletion and type 1 interferon reduction to Litifilimab on one side, on the BAFF/APRIL, reductions look like the new year is like deeper and longer than povi, so could have a nice infrequent biologic in our hands here with a best-in-class, both BAFF/APRIL and BDCA2 inhibitor. So right now, the goal is to figure out what's the right dose. We're taking two mechanisms, putting them together into one bifunctional fusion protein. It's about figuring out how do we maximize the PDP [indiscernible], while also making sure that we manage for any potential tolerability or safety signals. So that work is ongoing with healthy volunteers. We plan to report out what we found and what doses we think we have planned to take into the Part B of our Phase I trial, which is SLE patients, and potentially to MAD or Phase II studies as quickly as possible. That's really the next step. We're very excited. We're working with Lee's, our partner in China, the Phase I study is being done in China. And yes, I'm very excited about the potential here for 212. If we can get to that optimal PD profile and dosing profile, without any significant new safety or tolerability signals that kind of change the risk-benefit profile, then this drug could be really, really big. It will be a nice way to build the company over the next few years on top of claseprubart as our foundation.

Excellent. Last question here. Just keeping an eye on time. You're very well funded. You talked about $1.2 billion of cash and runway into 2030. You're in a great spot. Can you just talk about your focus areas for this year and just general aspirations for the company?

Yes. Look, what we -- from the very beginning, this has been about building a very exciting, independent, self-sustaining biotech autoimmune company, which focus on rare diseases for now over the long term. And pipeline has always been a priority. And so I'm very, very pleased with where we are today. There's more to do and stay tuned for any future developments there. But the immediate focus, like I said, [indiscernible] about execution, just speed and quality, not or both. And it's to be able to get this option to patients as quickly as possible in the market and therefore, be able to be part of that solution to growing the penetration of biologics in MG and change the treatment paradigm in CIDP and potentially in MMN. And with 212, again, it's just making sure we 0 in on a tight range around dosing to take into the MAD Phase II portion, and get moving as fast as possible. And now that we have the cash, potentially try to do as many of these -- as many of the pivotal trials in parallel as quickly as possible with the team and build a really nice rheumatology franchise there to complement our, no pun intended, our comp inhibitor in the neuromuscular space. That's our primary focus. The team is growing. We're doing really, really well. I'm just really, really eager to see how the company develops in the next couple of years. But it's been a fantastic 5 years and the way we've grown every year, and I expect that we're going to continue that trajectory in the next few years.

Excellent. Thank you again for the time.

Thank you, Matt. Really appreciate it.