Zenas BioPharma, Inc. (ZBIO) Earnings Call Transcript & Summary

Okay. And Japan is a future consideration or...

Japan is our partner, Bristol-Myers Squibb. So they'll take the lead. They'll take the lead on that.

Okay. That makes sense. And now you mentioned the second-generation longer half-life version. That one, that would be sort of a life cycle extension or would it launch -- I mean you have both available in the market, I gather?

Yes, that's a way to think about it, life cycle extension. Our current dose administration for obexelimab is a weekly subcutaneous administration. We'll launch with prefilled syringes. We'll submit an sBLA for the auto-injector pen as soon as the BLA is approved, and then that should launch within a year. And so a low viscosity 2-ml solution. So it's about an 8-second subcu, pretty convenient. And then the product profile for ZB014 which is CD19 Fc gamma RIIb antibody with 2 mutations in the Fc portion of the antibody, the target based on the preclinical data would be a monthly administration. And then we would also anticipate longer exclusivity. So strategically, we'll make decisions about which future indications would go to obexelimab and which indications would go to this new molecule. Obviously, those strategic decisions will come after we have the initial clinical data next year.

Okay. All right. Let's switch over. So the other big catalyst you mentioned is SLE. Actually, I'm getting a lot of questions on that one from people interested in the story. So everyone is trying to understand the expectations. And so just tell us -- well, first of all, just sort of summarize the SunStone study, what your design is and then what are the endpoints? And what would be -- what are you aiming for in terms of a profile there that would be competitive?

So this is a randomized study, 1:1 obexelimab versus placebo with background lupus therapy, corticosteroids with a target deescalation down to 5 milligrams prednisone equivalent. The study really takes in moderate to severe disease. We put in place a screening tool where investigators who then assess inclusion/exclusion criteria to enroll a patient leads to a screening additionally by an expert, which interestingly enough, removes a number of patients to make sure we truly get moderate to severe disease that controls the placebo response. And the trial also, although we would call it an all-comer trial is interrogating a biomarker in all patients, and that biomarker was based on some earlier work that showed a much higher level of responsiveness to the drug in a Phase IIa lupus study. So it's a biomarker assessment in a classical design, looking at BICLA. We'll also look at SRI-4 and a number of other measures.

Okay. So the biomarker is something that you haven't specified yet or you talked about it?

Actually, in the Phase IIa study that was previously published, the biomarker is well described in that publication. At that time, it was a -- it was RNA sequencing, identifying really a gene profile, several gene profiles that happen to be highly responsive. We've taken that and we're working with a commercial entity who have simplified the whole process to -- so that it's not deep sequencing, and that's what we're using in our study.

Okay. And so as far as what you're looking for in terms of an effect size relative to placebo, potentially reduced use of background therapy. Can you speak to some of those endpoints as far as what investors should look for?

Sure, sure. The study, as you know, the currently approved agents on the market, there's 2 on the market that are approved for SLE. Both of those had effect sizes in the teens. And then there's some recent data from a B-cell targeting agent, an anti-CD20 depleting antibody that had an effect size just over 20%. So we're looking at that around 20%, put an error bar around it. That says you have a drug. We think our profile based on our ease of administration at home, the tolerability would play well. But then we're assessing the biomarker population. So in the fourth quarter, we'll present the biomarker top line results and the overall top line results. And where we go from there really depends upon that data. The biomarker in the Phase IIa study showed up in about 1/3 of the patients. We think it could be a little higher than that based on the work we've done since. So that alone could be a stand-alone if, in fact, the effect size was dramatic enough that, that would be a really compelling program. If the overall fits into the range I was talking about before, that could be a program or you can combine it where you would do an overall population, but test the biomarker population first and then test the overall. So think about oncology studies, think about PD-1, think about PARP inhibitors. That's the concept. But we won't know. We have plans for all scenarios, but let's see the data.

So I guess at the risk of getting too into the weeds on this, what -- just kind of can you frame what aspects of this biomarker signature that you've got from the prior studies would suggest or imply a stronger performance with Obex? Is there evidence that would suggest?

So in the original Phase IIa study on the primary endpoint of the study that was conducted by the discovery of the molecule. The overall effect size was an intent-to-treat population was 17%. In that same study, that was using an IV dosing regimen that lost target coverage at Ctrough. In that same study, if you looked at patients that were at the median of Ctrough or above, the effect size doubled to 35%. Our current subcu regimen puts every patient at Ctrough above that level. So that's encouraging as a signal finding study, and that's why we went into this program. In the biomarker population, again, smaller numbers, retrospective, the effect size was 52%. So that was the signal that told us we should investigate that in a Phase II program.

Okay. So there's sort of 2 higher levels there. There's the exposure, as you point out, and then this additional lever of the biomarker. Okay. That's all and the timing for that, you said fourth quarter, but gather, you haven't been more specific than fourth quarter. Okay. All right. Great. So let's talk a little bit about the product that you got from InnoCare, orelabrutinib.

Which one? We have 3.

That's true. Okay. Well, let's talk about -- let's start with orelabrutinib. So there have been some interesting good developments in MS even last week, the RMS data from Novartis. But in any case, so just tell us a little bit more about the MS strategy at Zenas because you had started after the IPO, there was a potential for obex to be an MS drug. You've brought in orelabrutinib, the BTK inhibitors, as we know from speaking with the experts in MS is sort of the next frontier in terms of innovation. So tell us a little bit more about orelabrutinib, how does it differentiate from some of the notable pharma molecules that are getting a lot of attention to.

Yes. So we have 2 strategic components to the franchises we're building, rheumatology and neuro-immunology with MS being the initial focus. So as you mentioned, obexelimab, we had conducted a Phase II study in RRMS and those results were highly positive. In RRMS, the challenge today to start a Phase III program with a primary endpoint of ARR or annualized relapse rate is challenging because the patients who are available for clinical trials have such low relapse rates. The ones that tend to have higher ones are already receiving a B-cell targeting agent. So it's a bit challenging. Now if we can evolve to a different primary endpoint, let's say, disability progression, then it's a different story, perhaps. But that's B-cell targeting with obexelimab in MS. And if we get an evolution in regulatory thinking, perhaps 014, our extended half-life molecule might be a reasonable thing to consider. So we landed on -- at this point, we're pursuing progressive MS forms, which is where the greatest need is, and that's primary progressive, PPMS and secondary progressive and specifically with FDA guidance, non-active or na-SPMS. So that's our strategy, progressive MS. So we know level setting across the BTK inhibitors, of course, we have the tolebrutinib challenges that they face with FDA in nonrelapsing SPMS, which isn't quite what FDA is asking for and some toxicity. That drug, though, is now approved in Europe for patients. And then we had earlier in the year, fenebrutinib from Roche report out RRMS data, relevant to us, the progressive data in PPMS. And you might recall that the PPMS trial compared fenebrutinib to Ocrevus, which is the only approved agent for PPMS. A data set that's probably not overly impressive, but it works, it's approved. And numerically, fenebrutinib beat it. Not statistically, it was a non-inferiority trial. So that NDA is in, and we would expect an action in the first quarter if they get priority review. I think that's likely in the first quarter of next year. And I think that will be interesting news for the BTK inhibitor class in MS. And then most recently, you mentioned remibrutinib from Novartis in an RRMS trial with data to come at the MS Toronto meeting, where we'll also be with additional data on orelabrutinib, we'll get to see, I would assume, their full data set from an efficacy and a safety standpoint. And then that molecule is also in an SPMS trial that we'll report out at some point. At least what's publicly available, it doesn't look like a pure na-SPMS trial. But for us, we're focusing on PMS, PPMS and na-SPMS. And both of those Phase III trials are up and running and results from those trials should be in 2030. Now when we look at the molecules, we think this molecule, although it's indicated in other parts of the world in heme malignancies, it is purpose-built for progressive MS, a combination of potency and CNS penetration. If you look across the BTK inhibitors, you'll see that tolebrutinib and remibrutinib have the lowest CNS penetration. Very modest CN penetration. Remibrutinib, very potent peripheral agent, effective, hits B cells, works in RMS. But we believe in progressive disease, you need to get in the central compartment, not only hit B cells, centrally resident macrophages, microglia, that's what's going to make a difference on disability progression. So those agents, less brain penetration, reasonable potency. Fenebrutinib, a combination of potency and brain penetration steps up just a bit. It's multiples when you look at our orelabrutinib ratio of CNS concentration to potency. So we think this molecule has an opportunity to be best-in-class and also compared to those other 2 agents, might sound simple, but really important to patients, it's the only once a day being investigated in progressive disease. So that's how we see it, and we're executing on the studies right now.

And then on the sort of the -- that's the efficacy side and the convenience side. In terms of the safety side, obviously, in this class, we've seen other -- some of the other compounds have seen liver signal. Can you just speak to your comfort around that with orelabrutinib and what you might expect?

Yes. I think across the agents that did Phase II trials, all of them showed up with an elevation of liver enzymes and sometimes bilirubin, a few highs law cases here and there. In the orelabrutinib program in Phase II, some was also observed. No clinical sequelae, no clinical symptoms, all patients recovered. And that moved everyone towards doing liver monitoring because you need to catch the trajectory early. Interestingly, remibrutinib was not the subject of Phase II. So everyone else experienced that in Phase II, then put the monitoring into the Phase III. Remibrutinib went right to Phase III and put the monitoring it. So it's a different ball game. The other thing to think about here is this disease. These patients -- the orelabrutinib Phase II trial, 7.5% of the patients had elevated liver enzymes in the placebo group. A year ago, Roche issued a Dear Doctor letter on Ocrevus to assess liver function before starting therapy because a number of patients had shown up on the liver transplant list who had taken Ocrevus. Dear Doctor letter went out. What does an anti-CD20 antibody have to do with driving liver toxicity? There's something background happening in MS patients, and we would hope to figure it out, but no one's figured it out yet. So for us, in our trial program, aligned with FDA and EMA, we have liver monitoring over the first 3 months. You catch the trajectory, you should be in good shape. What's really interesting, these patients that have elevated liver enzymes, a large percentage of them, if you pause the drug and restart it, you don't see it again. It's a real interesting dilemma, but what you do is monitor and you keep patients safe. This is progressive disease. This is PPMS, SPMS. This is a serious disease. The risk benefit, we believe, is there with a highly effective agent, and that's why the agency is allowing for these trials to go forward with monitoring.

And then so RMS, you mentioned potentially the longer half-life next generation could be applicable there. If we see the full data from Novartis, you mentioned an RMS in a few weeks, maybe would orelabrutinib potentially be something you would consider for an RRMS trial or not necessarily or the bar would not be good there.

Yes. I think RRMS is in a parking lot until the primary endpoint evolves potentially.

Okay. Fair enough. All right. The -- so some of the other assets, if we could speak to those quickly, the IL-17 and the TYK2 inhibitor, where those?

The TYK2 inhibitor is an IND-enabling and we'll initiate the initial Phase I next year. The IL-17 inhibitor, it's an AF inhibitor is really exciting and moving quickly. So we're almost through all of SAD, the single ascending dose. We're well into the MAD. We'll report in the fourth quarter, the safety, tolerability and the pharmacokinetics and then we'll move right to a patient proof-of-concept study next year. So what we want to look for is the kind of exposure we're getting. I can tell you now, and we've already discussed this openly that this is a once-a-day drug. This is a true small molecule. In primates, it had 80% bioavailability. That's been a challenge. and trying to come up with good molecules in this area. So we're excited about the potential here. It's early days, but we'll have that data next quarter.

Okay. Looking forward to that, too. One more, which we're asking all the companies today and tomorrow is just anything you want to say in terms of the use of artificial intelligence tools at Zenas, either on the drug discovery level or the efficiency level, helping filing your -- you've submitted the BLA, obviously, has that helped in any way? -- just quickly tell us.

Obviously, this is a topical subject. We're not a discovery organization, so we don't use AI in that arena because we don't do drug discovery, where we search and we in-license. And -- but across the organization, we spent some time and we picked what we would use, and we use Claude, and we have a number of use cases and a lot of training going on and appropriate policies in place. And it's touching all parts of the business in the administrative parts of the business, obviously. We do a lot of it things that you would do with Internet searches in the past, how quickly you can assemble information across a field in all the published studies and all the science in an area and have that summarized for you. In writing, we use it in writing. We did not use it in the BLA for obexelimab. For our very first BLA, we did it the old-fashioned way. I'm quite comfortable doing it the old-fashioned way. So over time, it will expand. And we imagine all the ways we can use it. I can't say we've implemented nearly what's possible at this point in time.

Sure. Any of us have fully leveraged its potential. All right. Well, there's a lot to look forward to with the several readouts next quarter and then, of course, the PDUFA in the second quarter of '27. So very good. Looking forward to all of it. Thank you, Lonnie.

Thank you all.