Jade Biosciences, Inc. (JBIO) Earnings Call Transcript & Summary

I am Citi's U.S. health care strategist -- filling in this morning, but I'm very glad to have the team of Jade Bio here with us. And from the company, we have Tom Frohlich, CEO; Ed Conner, Chief Medical Officer; and Andrew King, who runs R&D. So we'll go about 30, 35 minutes and then. Okay. There we go. All right. So we'll go about 30, 35 minutes. And if there are any questions at the end, feel free to certainly fire away.

So maybe, Tom, maybe start right at the top. For anyone in the room or listening who doesn't know Jade Bio well yet, how about a quick overview, what is the company and what are you guys building?

Yes, happy to. And first of all, thanks, Trevor, for hosting us and the entire Citigroup. We're excited to be here. Yes, so Jade Biosciences, we're a company focused on developing best-in-class therapeutics for autoimmune disease. We have 3 assets in our pipeline, all of which we've sourced from Paragon, which is a really high-quality protein engineering company based out of Boston with a long track record of developing really high-quality antibodies that have half-life extension to really deliver kind of the maximum efficacy available to any given target with a really long duration of action that really minimizes treatment burden for patients. Our lead asset is JADE101. It's an anti-APRIL monoclonal antibody targeting IgA nephropathy as the lead indication. We think IgA nephropathy is an area of large unmet need and potentially a very large market size, about a $20 billion opportunity in the U.S. alone. And we're completely convinced that the anti-APRIL class is going to become the dominant class within IgAN really becoming foundational therapy for patients because it really does have the ability to have deep reductions in IgA, which is the pathogenic driver of the disease. It has deep reductions of proteinuria and can stabilize kidney function as measured by eGFR with very good tolerability. JADE101 has a very straight line of becoming the best-in-class anti-APRIL. We've recently reported some Phase I data showing that in healthy volunteers, you get very large reductions in IgA, actually nearing 70%, which is the largest reductions seen to date with any agent. So we believe that, that will drive really meaningful proteinuria reductions for patients and then lead to stabilization of eGFR. Also in that data, we showed that, that reduction in IgA can be sustained for 12 weeks. which we think will be extremely convenient for patients and minimize their treatment burden over time. So that program is very exciting for us. We're advancing it. It's currently in a Phase II trial with that data reading out next year in 2027. But we aren't waiting for that data to initiate a Phase III. That data is not gating. We're very convinced by the characterization of the profile from that Phase I data to enable us to activate that Phase III. So we are aiming to get that trial initiated with the first patient dosed in the first half of 2027. So a very rapid pathway to getting to market with JADE101. The second program we have is JADE201, which is an anti-BAFF receptor antibody, really following the footsteps of ianalumab, which is a product targeting the same target at Novartis currently in 6 different Phase IIIs across a number of different autoimmune diseases. And that's a B-cell depleting drug. so has really activity or the potential for activity in any indication where rituximab is standard of care. That's -- so it has very broad utility. We currently are in a Phase I rheumatoid arthritis trial with that medication. We'll be reading out that data in 2027 to really give us a characterization of that product. But what's interesting there is ianalumab, what we're doing is we're solving the limitation that it has. It has a very short human half-life, just 10 days in humans. So with JADE201, we're aiming to extend that half-life, which would allow us to be able to have more complete coverage of the receptor for the duration of the dosing interval and then, of course, extend out that dosing interval as well to make a more convenient product for patients as well. So that program will read out the data in 2027. On JADE301, our newly disclosed program, that's an anti-interferon beta targeting dermatomyositis, a very severe disease that has muscle weakness, muscle degradation and then as well as painful and itchy skin lesions. Current treatment is very burdensome. It's treated by steroids and IVIg -- which is very difficult for patients. There is an interesting pipeline coming along for brepocitinib. The JAK1/TYK2 was just recently approved by Roivant. So really demonstrating the unmet need there and they have very favorable pricing there. But we believe we can deliver a better profile with interferon beta. There is a more advanced asset with Pfizer right now that showed very compelling Phase II data with interferon beta in dermatomyositis with a very robust improvement in TIS. That's the primary endpoint. But very importantly, also very good efficacy on the skin component of dermatomyositis, which historically with other medications has been very difficult to treat. So we're going -- going to improve upon dazukibart, which is the Pfizer interferon beta product. It has a very low bioavailability, so it needs to be delivered IV. And we believe with our protein engineering that we can overcome that and deliver a much more convenient format for patients. So that program is scheduled to enter into the clinic in Q4 of this year with a readout in 2027 as well. So a big year coming up. That's all underpinned with a very strong team and as well, we're significantly financed. We closed the last quarter with $461 million, which will fund us through all of those programs through into Q4 2028. So a very exciting time for us with the big year coming up in 2027.

Great. Yes. Thanks for that very extensive overview. So I guess I'll start with a competitive question just because it's -- I would say it's the sort of the freshest thing on the taste. So you had an earlier-stage competitor out last week with some Phase I data for their long-acting anti-APRIL drug. And the regimen that they're taking forward is -- seems to be landing in a pretty similar place to yours on dosing interval. So how do you read that data set? And does it change how you think about where JADE101 sits in the class?

Yes. So we obviously looked at that data in detail and remain really excited about the best-in-class profile of JADE101. When we started out with the selection of a best-in-class anti-APRIL, we really focused on 2 properties that needed to be optimized relative to the first generation. One was half-life extension to be able to extend the dosing interval. IgAN is a disease that's diagnosed in 20- and 30-year-olds, and they require lifelong therapy. So reducing the patient burden and giving them freedom from their disease with a disease-modifying mechanism of action, we think represents a significant value for those patients. The second property where we saw limitations of the first-gen agents was on potency. And there's a large amount of APRIL within the body that needs to be neutralized to drive rapid and deep and sustained IgA reductions. And the first-generation agents had relatively modest potency. JADE101 was selected with ultra-high binding affinity to APRIL. It's actually a femtomolar inhibitor to APRIL with a Kd about 750-fold lower than sibeprenlimab, the drug approved by Otsuka and about 2,000-fold higher than Climb Bio.. So when we review the new data set from CLM, they look to have effectively half-life extended the agent similar to JADE101. But where we see the big advantage for JADE101 is the superior potency, resulting in faster, deeper and more consistent IgA reductions that we think has the ability to deliver the best-in-class efficacy, the full efficacy available to B-cell modulation with a convenient infrequent quarterly dosing profile. So strong competitor from CLMb, but we still really comfortable with the properties and profile of JADE101 and are excited to really focus on rapid development and advancement of that program.

Great. So you had mentioned the Phase I interim results and you presented those back in June. So maybe just take us back before that readout, what were you hoping to achieve with the data? And how did you sort of -- and how does the data that you eventually generated actually compare to that coming in?

Yes. So healthy volunteer data in IgAN, as you know, is very significant because you can measure IgA levels in healthy volunteers, and that's a direct read-through to what you anticipate seeing in patients, and it's a predictor of clinical activity. So it's really derisking for the program on the whole, as I mentioned in the intro and allows us to move really quickly. So going into that, we wanted to have kind of comparable IgA reductions as was seen with the first generation of anti-APRIL therapies, which all of which achieved around 50% to 55% reductions in IgA with a single dose. And then the other thing we want to do is have extended dosing on that. What we've managed to achieve was nearly a 70% reduction in IgA, which is unprecedented and really hasn't been seen with any other agent with a single dose to date. And that was lasted for up to 12 weeks, which really does support that idea that we can have Q12-week dosing interval. So it was really exciting data for us, really derisked the program, showed that we did achieve that best-in-class profile that Andrew described and gives us confidence to move forward really, really quickly.

Great. And on the biomarkers, so historically, how well have they sort of carried across from healthy volunteers into actual patient studies?

Yes. It's really exciting that the IgA reductions observed in healthy volunteers have been highly consistent with those observed in IgAN patients. So it really does set up our program to move forward quickly in clinical development. What we've seen is that these early IgA reductions, whether they're in healthy volunteers or IgAN patients as early as 8 weeks are highly predictive of the proteinuria reductions you see at week 36, which has typically been the primary endpoint of Phase III IgAN trials to support accelerated approval. So we do feel this data set is highly derisking in terms of translating to that disease-modifying clinical benefit we've seen consistently with the anti-APRIL MOA and allows us to have confidence in our dose and dose interval selection to move the program forward as quickly as possible into pivotal trials.

And what's the feedback from nephrologists that has sort of most shaped how you're developing JADE101? And is there something in there that you think maybe investors or even some of your competitors in the space are underappreciating at this point?

Yes. So I think the ultimate goal for nephrologists and patients is to stabilize kidney function for a long time. And these patients are typically diagnosed in their second or third decade of life. So they really do need lifelong treatment. And if someone is diagnosed, let's say, at the age of 25, they have a 10 to 12 year -- a 50% chance of losing their kidney functions over 10 to 12 years. So this is something that's chronic that will need to be really administered for the entire life of the patient. And so that really long-term view is kind of resonating and coming back to us a lot. And so from that aspect, obviously, convenience is going to be a big driver because if you're a young patient, maybe in your work, maybe you're starting a family, you're really going to want to not think about your disease as much as possible. And actually, this disease is largely asymptomatic. So that convenience is really going to be important to make sure that the patients are staying compliant, but also managing their disease. So that's kind of one element that's maybe a little bit underappreciated. The convenience is going to be a big choice driver for clinicians. The second one as well is we're seeing with the more advanced agents, the first generation of anti-APRILs that we're seeing good eGFR stabilization in the clinical trials over a 1- or a 2-year period. This is really, really encouraging because patients typically lose 5 to 6 mls per minute of eGFR function per year. and then stabilizing that back to kind of a normal kidney function is actually groundbreaking. And the data was actually presented recently at a conference and the nephrologists got up and applauded because they haven't seen anything like this before. So -- but a lot of investors come back to us and say, well, you can't do better than stabilization, which I think is a fair comment because we don't aim to do better than stabilization. But I think what people underappreciated is it's over a short period of time. It's only 1 or 2 years that these agents are stabilizing in the studies. But patients need to think about 30, 40 years out. And the best predictor of that long-term stabilization of kidney function is actually getting to very low levels of proteinuria. In fact, all the longitudinal studies say, you need to get patients below 0.5 grams a day of proteinuria to really minimize that long-term risk of disease progression. So what we think is going to emerge in the differentiation of these products is not only having a good profile, but getting more patients down to below that target range of 0.5 grams a day, and that will be a key differentiator because that's what nephrologists are worried about for the long term for their patients. And that's actually a big driver why the KDIGO guidelines just recently changed to say the target for all patients is to get them below that 0.5 grams a day and in fact, down to below 0.3 grams a day, which is back into that clinical remission range. And so we think coming out with JADE101 that has the most potent reduction in IgA and potentially has the ability to get more patients into that range will be a big differentiator.

Great. And you mentioned eGFR. So I guess maybe diving a little deeper into that. Going after both BAFF and APRIL versus targeting just APRIL on its own, like what do we know about the effect on that particular endpoint from the dual mechanism versus single mechanism?

Yes. We've had a long-held conviction that selective APRIL inhibition is really the disease-modifying mechanism in IgAN because IgAN is a plasma cell-mediated disease, which is uniquely APRIL responsive and it provides a targeted and least immunosuppressive approach to IgAN patients. What was seen in eGFR, only one Phase III has read out, and that was the sibeprenlimab trial that Tom referenced earlier, showing stabilization of eGFR with a selective APRIL inhibitor over a 2-year period relative to the inevitable decline of about 10 mls over that 2-year period in the placebo group. EGFR was actually numerically above baseline at the end of that 2-year study in that patient population. So a really remarkable treatment benefit. So the best pivotal trial evidence to suggest that selective APRIL inhibition alone is sufficient to provide that full eGFR stabilization benefit, which is the best we can hope for in IgAN because the loss of kidney function really represents loss of nephrons, which won't be regenerated with a therapy like this. In the Phase II studies, we have seen consistent stabilization of eGFR for various periods of time across selective APRIL inhibitors as well as dual APRIL/BAFF inhibitors. Zigakibart from Novartis has open-label Phase II data out through 2.5 years, which looks remarkably similar to that of sibeprenlimab in Phase III, full eGFR stabilization numerically above baseline out through that 2.5-year period in a high-risk IgAN patient population. We've also seen open-label data from atacicept, a dual APRIL BAFF inhibitor, showing a similar profile of eGFR stabilization through 2 years and 1 year with [povetacicept], the dual APRIL/BAFF inhibitor in Phase II. So it appears as though both agents, both mechanisms, selective APRIL or dual APRIL/BAFF are both effective at stabilizing eGFR, but it really adds to our conviction that selective APRIL is the preferred strategy because it provides that full eGFR stabilization with the most targeted approach, the least broadly immunosuppressive a way to provide that disease-modifying benefit to IgAN patients.

Maybe just move on to the commercial market. So the Otsuka launch, I think, continues to outperform and probably beyond some of the lofty expectations that some people are going in. But when you look at that and you position that against Vera, who is just launching, Vertex, who are likely to have a launch in the coming months. How do you think about the commercial opportunity in front of you coming on what is likely to be in a couple of years' time or a few years' time?