AnaptysBio, Inc. Aktie

So thanks, everybody, for joining. My name is Dave Risinger. Very much pleased to welcome Anaptys, and Dan Faga, the company's CEO. So sorry, we're getting started a few minutes late here, but looking forward to the discussion. So thanks again for joining us.

And maybe you could just start off with some key comments, probably interesting to start on Jemperli first, and then we'll take it from there.

Perfect. Yes. So we announced 6 months ago, we were breaking the company into 2. We're approximately 45 days, maybe less away from, I think, the best case scenario in doing that, which is also our base case. We flipped the Form 10 public last week and described, and we'll get into this later, what the operating business, the biopharma operating business, will be that we're dividending out.

What we're leaving behind is 2 royalties, one for Jemperli, which is a commercial program sold from GSK. The second is imsidolimab, which has a PDUFA date at the end of -- or mid-December of this year, which will be sold by Vanda. So we should exit the year with 2 commercial royalties, leaving behind NOLs, cash, that will be in the parent company that will remain in Anaptys.

So as it relates to Jemperli, there just continues to be quarter-over-quarter excitement with the way the launch has gone in endometrial cancer in the United States, and we think more recently, Europe and certainly through this year, expansion through Europe in endometrial cancer.

Jemperli ended on a $1.4 billion run rate, and GSK has guided to far north of peak sales of $2.7 billion. So they're more than halfway there on a run rate basis for a drug that's growing in the mid-teens quarter-over-quarter. We think that there's a couple of catalysts this year that matter a lot, including pivotal data in rectal cancer that GSK has guided to later this year. They did receive a priority voucher, which would allow for rolling submissions in the 1- to 2-month approval time frame. So it's conceivable that they will be in a second indication in this one, dMMR rectal cancer, where KEYTRUDA is not even present.

So we do see consistent growth as they have geographic expansion and label expansion this year and then continuing on for the next many years. That will be the anchor in the parent company that will remain in Anaptys. So we have a very large outsized royalty as it relates to this program, 8% at $1 billion, escalates up to 25%, north of $2.5 billion of sales. So last year, we did about $100 million of royalties. This year, it could be closer to $200 million at "peak", which we think -- I'll use air quotes for peak. We think that could be as soon as 2029, and we'll have close to $400 million of royalties when GSK achieves $2.7 billion. So really big numbers that are growing quite quickly.

And we think the parent company here that houses these royalties will be cash flow positive as early as mid-2027 after we pay down some non-recourse debt that's still outstanding given the size of the royalty growth. So we don't need a big business to run the parent, less than $10 million of OpEx, less than 10 FTEs. It will be, generally speaking, a virtual company that we're leaving behind. So that will be present in the next 45 days, and then we can answer any other questions on this one or transition to the biopharma business. So it's exciting what's going on.

That's great. That's great. Well, I guess, I am curious if you could just comment on the ongoing litigation with GSK.

Yes. So I just described excitement around Jemperli as an asset in monotherapy development. We have litigation outstanding that really speaks to, we think, contractual breaches in the way GSK is developing their oncology portfolio in combination with PD-1 antagonists. So what I mean by that is they're not only looking to combine their ADCs with Jemperli. They're also looking to combine their ADCs with KEYTRUDA.

We think that violates, breaches in materiality on exclusivity, materiality on disclosures that they have owed to us over time and on an ongoing basis of where they're moving with the drug as well as a breach in CRE obligation. That's a very high bar. It's atypical for big pharma companies, but we did put this contract in place in 2014 with TESARO that requires optimum commercial return.

And very specifically, that high bar, if you're spending money on developing a competitor in KEYTRUDA and/or then commercializing in combination with KEYTRUDA, that's all going to be at the expense of Jemperli and therefore, not optimum if you're only looking at Jemperli in a vacuum, which TESARO, the subsidiary, is required to do.

So there's 3 different claims. If we win on any of them, and the contract is pretty clear that Jemperli would revert back to Anaptys. There is a counterclaim issued by GSK that initiated the public litigation. There was a hearing last week where we filed a motion to dismiss, and we should hear the results to see if their claim will just be dismissed out of hand. It has to be issued within 60 days of the hearing. So I think we -- that hearing, we had good arguments on the merits, and we'll see where the judge comes out later this month or next month.

Excellent.

The trial for our claims will be July 14, the bench trial in Delaware Chancery Court. So it's upcoming over the next 4 months.

Perfect. And then why don't we transition to the business that will be spun off? I guess, clearly, you're not worried about it because it's an opportunity, at least as I see it with respect to the litigation, but you're planning on the spin-off irrespective of the timing of the resolution of the litigation with GSK. Is that correct?

Yes. So the separation of the biopharma assets with cash, specific liabilities like our lease, and these types of things, all our -- effectively all our employees will be transitioning over to First Tracks Bio, ticker will be TRAX. It's not dependent on the litigation at all. And we've been saying that for quite some time. We announced the intent to separate long before the litigation existed.

From a legal perspective, we filed the Form 10. This is a dividend. We'll be giving out shares that represent the biopharma business. It will be a taxable transaction to the corporate parent, which is Anaptys, which I believe any potential tax will be shielded principally by the NOLs that we're leaving behind. So it's just not dependent on the litigation. We are in a best case scenario from when we announced the intent to separate on how things have gone with the financial audits, the dialogue with the SEC, where, like I said earlier, April is the fastest time, and we're trying to target into April and make the separation effective. So yes, it's exciting. It's close, long time coming, it feels like.

Phenomenal. That's great. So why don't we pivot to ANB033. So super exciting opportunity in celiac disease. And it's in Phase I development. So if you could just start with just a high-level quick framework, and then we'll go into some details.

Perfect. ANB033 is we're describing this as the anchor for the biopharma business. And it's not necessarily a value driver. We'll talk about rosnilimab later, and there's a lot of opportunity there, but it is where we're going to be focusing on our operating energy.

We believe that this program in celiac disease, EoE, these are 2 markets where we can run quickly for a biopharmaceutical company. We can grow up the business and really have aspirations to be fully integrated. We can commercialize in disease like celiac where there are no approved therapies to treat patients who otherwise are on a gluten-free diet, and there's 0.25 million patients that are diagnosed with celiac disease who are not controlled on their gluten-free diets in the United States alone. So it's a big market opportunity if you have the right drug that can target the inflammatory pathways in that disease.

ANB033 is a CD122 antagonist. So it binds to a dimeric or trimeric receptor on various immune cells and blocks IL-15 and IL-2 signaling. So in the landscape of development, there's a lot going on here right now. There's a couple of IL-15 only cytokine blockers in development by Teva and Novartis. And there is one other CD122 focused biopharmaceutical small cap player that we're also competing with.

I think when you step back and look at celiac disease, since you raised it, there's already proof-of-concept in all 3 other players in celiac disease. We think we're doing something different. We think we have a differentiated drug, but it's an exciting first place for us to be targeting in Phase Ib.

And remind everyone about your differentiation versus Forte CD122?

Sure. There's a lot of preclinical data that we've generated. I think the output of why we think these molecules are differentiated is we are administering a subcutaneous formulation. We've shown data from our Phase Ia study at a mid-dose SAD data that was highly effective. It eliminated 98% of CD122 expressing NK cells in the periphery in healthy individuals and mid-70 percentile of CD8 expressing CD122 cells, which are one of the target cells in the diseases that we'll be talking about.

The fact that we're doing this in one subcutaneous administration allowed us to then pull through in the Phase Ib, the trials for both celiac and EoE, a subcutaneous formulation where we're dosing in one of the cohorts in celiac at week 0, 2 and 4, and we're waiting 8 weeks before we take biopsy results at month -- I'm sorry, week 12. So 8 weeks later, month 3. So we're already looking at long-term PD that we observed preclinically and we observed in the Phase Ia study.

And so we think there's a lot of opportunity for a commercially viable dose right out of the gate, and we'll explore more dose finding in the Phase IIbs. The reason we can get to subcutaneous dose is ultimately a difference in potency. Forte is an IV-administered drug at this point in time. We do think Forte has a -- I mean, they've obviously shown enough potency to see results in celiac disease. So there's a drug there, but we do think there's a distinction.

Excellent. So why don't we talk a little bit more about celiac disease. So how is that condition currently managed? How many people really need treatment that can't manage their disease with food management?

Yes. There's, in the order of 2 million to 2.5 million prevalent -- from based on prevalence, celiac patients in the United States. More than 1 million have been confirmed, diagnosed via biopsy. About 0.25 million patients in the United States are not controlled on a gluten-free diet. And so all patients cannot be near gluten or they generate a response. Some patients -- and it's to be determined, trace amounts of gluten really initiate the autoimmune cycle here. And that's where that 0.25 million patients.

And we're showing this in our trial. We're running a gluten challenge, which are patients who are well controlled ultimately versus placebo. You're administering drug or placebo for that first month. You're giving gluten for 14 days. And then you're doing a biopsy at week 6 to see the patients on placebo should be getting worse. You should see injury via measured by the villi deterioration, measured by VHCD, Villus Height/Crypt Depth Ratio. You should see that getting lower. You should also see acute symptoms rising if you're on placebo. If the drug is effective, you won't see those things happen, you should be preventing disease. That's the gluten challenge.

But for patients who end up presenting with VHCD ratio less than 2, that means that the villi already shrunk; there's already injury. So these are patients who actually think they're controlled. But when they go to the biopsy at the baseline, they find out they're not. And that represents a big portion of what we believe this population will be. So these are patients with no to mild symptoms that have deterioration in the villi.

So the purpose of our second cohort is to treat these patients with VHCD less than 2. And like I mentioned earlier, you're giving drug versus placebo for that first month, then you're waiting a week 12 to see if you've induced healing. So that population is representative of -- we can show a numerical trend towards healing at 3 months of the broader 250,000 patients that would present regardless of symptoms, not just none to mild acute symptoms, but also the moderate to severe acute presenting patients. So we think it will be a much larger population for Phase IIb, but we'll be able to show in a very controlled setting, you can treat the -- target the inflammation and treat the mucosal injury with our drug.

So that's the idea: 2 different cohorts, 2 different sets of information. One would be comparator. We're looking for statistical significance in the gluten challenge. You can look at our drug relative to the others in the class. And then a very unique set of data that we will be the only ones that have that will inform the way we think about dosing and the design of a Phase IIb trial, the commercially relevant and we think what the FDA would be looking for in terms of endpoints on VHCD and the PRO around symptoms for the Phase IIb trial. We should have that data across both cohorts in the fourth quarter of this year.

Excellent. Let me pause there to see if there are any questions from the audience. All right. We'll keep rolling. So what are you watching from a safety standpoint?

With any autoimmune driving disease that targets inflammation, you're always looking at things like infection rates. In the Phase Ia, we didn't see any evidence of infection or any safety issues whatsoever. It's often talked about there's a PD marker. Many NK cells, somewhere in the order of 60% to 80% of NK cells in healthy individuals are expressing CD122. We showed a 98% elimination of those NK cells that are expressing CD122. The remaining NK cells that don't are functional. We do believe that there's enough there, a lot of discussion with KOLs that you sustain immune competency by not touching the NK cells that don't express CD122. That's something that we're tracking over time in the Phase Ia.

Others in the class, Teva has a potent IL-15. These NK cells are highly sensitive to IL-15 for survival. So you're seeing a similar PD outcome with an IL-15 targeting agent as well as the CD122 blockers. Teva has data that's out over 2 years with long-term PD similar and no safety issues. So to date, we haven't seen anything. We weren't limited in tox and where and how we're able to dose. The data we presented in our Phase Ia data, the 1 SAD dose, I was referencing on NK cells as well as CD8 expressing CD122 cells. This drug is effective at the mid doses there, and that's what we're showing.

So we have a lot of room here to continue to push dose. And then we have a no regret dose is what we're calling in the Phase Ib. So there's nothing we've seen so far. There's nothing we're specifically, therefore, looking for of concern. And I think that goes for the whole class at this point, not just our drug.

Excellent. That's great. And is there anything you could say about the latest on enrollment, the investigator experience to date?

Yes. So we are -- these -- each of the cohorts, it's a 60-patient trial in celiac disease. Each cohort is 30 patients. It's 1:1 randomization, so 15 on drug and 15 on placebo. So it's not a huge trial. We've started in Australia and New Zealand. We're incrementing into Europe in real time right now in terms of enrollment. We'll ultimately be progressing into the United States. So we're going to have more than enough sites, robustness across countries and the heterogeneity of the patients. So things are on track. We guided to Q4 when we initiated the trial in October of last year, and we're on track to deliver the data in that time frame. So things are going well.

Perfect. Can you talk a little bit about onset of action for your CD122 and potential differentiation?

So we've shown preclinically concentration curves, which I don't think is exactly what you're asking about, but relative potency to the other IL-15s and CD122s. And a little bit of what I was saying earlier is in a subcutaneous formulation, we are highly potent with a lot of room to operate. And then our modeling and what we saw in the Phase Ia, we did have a pretty profound impact on TEMRA, CD8 expressing TEMRA cells. It's about 75% reduction off of 1 dose. You see that within the first 3 weeks of the trial in the Phase Ia.

We used the CD8 -- CD122 expressing CD8 cells to model what we need to be targeting in diseases like celiac IELs, which are generally speaking, a CD8 phenotype, but we would need to hit the IELs in the gut. So we use that to model what we're looking for. But in terms of the PD effect, it's less so about speed of impact, although that's there. It's really more around the long tail you have on the elimination of the cells that are expressing CD122. And that was what was observed and consistently with the more potent agents targeting these NK cells as well as the CD8 cells.

Got it. And then with respect to the frequency of dosing, so 033 would be dosed more frequently than Teva's IL-15. Is that relevant? Or how do you think about that?

I think it's way too early to project what the dosing will ultimately be here as we get to later-stage trials. When you're running a 1 dose Phase Ib, we like to think of that as a no regret dose. So we are administering subcutaneously at week 0, 2 and 4. We think of that as an induction. And the idea here is based on the modeling is to drive above the IC90 in tissue. So in this case, gut, lamina propria, and then remain above the IC90 for concentration through the week 12 endpoint.

We're not -- we don't believe we're going to miss that by dosing 3 times in that first month. It's to be determined if that's what's needed in an ongoing basis, but we're not going to miss that right now when you're only taking one shot. I think the other way to think about that is we're looking at an endpoint, the key efficacy endpoint is 8 weeks off the drug. So Teva is talking about 1 dose that could be quarterly, maybe longer. And we're running a Phase Ib that starts to directionally get towards that type of thinking after an induction. I think there's always opportunity to bring the dose down lower in the Phase IIb/III is when we're doing more dose finding.

Got it. Okay. Very helpful. Let's talk about EoE. So if you could go into some detail on that, please.

Yes. I'm just going to refer back quickly on celiac, because there's 2 pathways of inflammation there. We're targeting the CD8-driven IELs, and we're also targeting CD4 cells that are really Th1 expressing CD4 cells. And they're the ones that are activated when the downstream product of gluten is processed, digested, presented, and that's what's instigating the cycle. So we're targeting both the CD4s that are then secreting interferon-gamma and IL-2, which is a big characteristic as well as then IL-15 that gets instigated with epithelial destruction, which pulls in the IELs. We're hitting both sides of that.

In a similar way, we're doing that in EoE as well, slightly different cells. So there's proof-of-concept in this disease with Calypso, which Novartis bought an IL-15. They ran a small Phase Ia or Phase Ib study, and they showed that targeting CD8 cells by blocking IL-15 prevented the recruitment of eosinophils. And so in EoE as a disease, there's 2 primary endpoints the FDA looks for approval.

One is the reduction of eosinophils, which are stimulated by the inflammatory environment in esophagus. And the second is a PRO. So it's the clinical outcome, which, in this case, is measured by DSQ, is the acronym for the questionnaire. We're powered to see both of those outcomes. But in Calypso's Phase Ib study, they showed just targeting the CD8s prevents eosinophil recruitment.

There's one therapy approved in EoE today, it's DUPIXENT. Neither an IL-15, CD122 targeting drug or DUPIXENT, which targets the IL-4 receptor, none of those are expressed on eosinophils. They're all upstream.

What's interesting about CD122 is we're obviously going to do the same thing on CD8. So we're going to block their survival, blocking IL-15. But we also are going to be able to hit the CD4, similarly in celiac. In this case, they're Th2 cells. Our preclinical data supports this, there's an animal model that we put out on aspergillus-induced eosinophilia. And we can show that there's an impact on Th2s. But I think what's also unique here, and this is what Dupi also does well, is they starve ILC2s, which are not really present in a meaningful way in healthies.

You see these immune cells, which are also densely saturated with CD122, where in our animal model, we're showing the prevention of ILC2s as well. So Dupi is hitting the Th2 and ILC2 cells upstream, we're doing that. CLPS already showed targeting CD8 cells impact eosinophils, we're doing that. So we think there's an opportunity here for the 175,000 patients in the United States that are biologic eligible, meaning that they are no longer responsive on PPIs.

If you look at the market population, the market size, Dupi has only showed efficacy in 60% to 70% of patients at various levels. The 30% that they don't, there is a correlation to an increase in IL-15. We think we can potentially have an answer here for the entire patient population. Now the base case is, if Dupi is not efficient, you go into a second line, there's nothing else in the second line, which we might have a leg up on for those types of patients. But there's a chance here that we look Dupi-like or better across the entirety of the population and then potentially better since we're hitting both inflammatory pathways.

So that's the biologic case for why we think this should work and how that translates into pretty big numbers. Dupi is estimated to sell, I think, over $2 billion last year in EoE alone. So it's a big market for the only biologic that exists. Dupi is administered weekly subcutaneously, chronically. There's a lot of drug that they're also getting for only 60% of the population that's effective or mildly effective in them depending on who you are.

Excellent. That's a great rundown. Thank you. And so, I guess, just to wrap up since we're going to be running out of time shortly, beyond celiac and EoE, how do you see additional optionality?

So there's 4 drugs that are covered in this landscape. Today, they're being developed across 5 diseases. So we're focused on celiac data later this year, EoE data in 2027. Atopic dermatitis is being developed by Novartis with their IL-15. Forte and Teva are going to have vitiligo data in the second quarter. Forte is also in alopecia, Teva is talking about moving into EoE and alopecia, you're going to start to see more and more overlap across those 5 diseases and there are other opportunities.

So what we're talking about in the biopharma business is seeding with enough capital to get us through at least the back half of '27 out through the back half of 2028. So it depends on how much money we put into the business, but all the assumptions drive towards Phase IIb for celiac, Phase IIb through EoE as well as 2 additional patient indications running Phase IIb trials. So we are looking to exit 2027 into 2028 in 4 different diseases. We have to make a selection of what those are. We have plenty of ideas, and we just named a couple that could be interesting just based on where other people are playing.

Phenomenal. And then just in terms of First Tracks, when will we get more details specifically on the numbers?

As soon as the Form 10 becomes effective, there will be a number in there for how much cash we're putting in. And the rationale not to put all the capital in, again, the CEO of one company today and both companies in the future, the royalty business isn't going to be consuming cash in the way the biopharma business will, but we do think there's an opportunity to do things like repurchase shares in the short to medium term when the company is not cash flow positive. We do view Jemperli and imsidolimab on top of that, which we didn't even get to today as being undervalued even at today's total market cap of the companies combined. There's opportunities both ways in terms of how deploying cash, and we think we can create value for shareholders in both businesses today with the capital we have.

Excellent. Well, that's a great way to wrap it up. Thanks so much for being here with us.

Thank you very much, David. Appreciate the time.

Hello again, everyone. I'm Etzer Darout, senior biotech analyst at Barclays. My pleasure to have AnaptysBio CEO, Dan Faga, with us this morning. And maybe just to kick us off, Dan, if you could just give us an overview of AnaptysBio for those less familiar with the story.

Perfect. We're in exciting times right now. We're approximately a month or 2 out from creating a second company called First Tracks Bio, which will be the biopharma operations from Anaptys that we're spinning off. Anaptys has been around for over 20 years, developing antibodies. We have 2 successful programs so far out of our platform, one Jemperli dostarlimab, which is being sold by GSK, it's an oncology drug PD-1 antagonist.

And the second has a PDUFA date at the end of the year. It's called imsidolimab for GPPs, which hopefully will be sold at the end of this year by a company called Vanda. Those 2 programs will stay behind, forming a royalty-based financial company that will retain the name AnaptysBio. In the biopharma business, we have a couple of exciting programs. One is AMB033, CD122 antagonist. It's being developed in celiac disease as well as EoE Phase Ib. We have rosnilimab, which is a PD-1 depleter. We had positive Phase IIb data in arthritis this past year. And currently, we are assessing how best to move that program forward into Phase III.

We're meeting with the FDA this quarter, and we'll be looking for strategic or other financial capital to further finance the program with an update in the second quarter. And lastly, we have AMB101, which is a BDCA2 modulator in Phase Ia. There's a proxy program being developed by Biogen, which is in Phase III and SLE and CLE. We think we have best-in-class programs across all 3 of those antibodies. So excited to get that second company up and running in the next month.

Great. And I think we've sort of heard both sides of the debate about sort of separating a company where whether you have the ability to self-fund or being able to kind of unlock value, if you will, for the 2 individual entities. Maybe just go over sort of the rationale for now being the right time to be able to separate those 2 businesses.

Yes. I mean I think we've had a great response from the separation. We have 2 very different -- we will have 2 very different businesses in the end. One is a financial instrument that, again, with what we're leaving behind at Anaptys will be very high EBIT margin in the mid- to high 90% range, less than 10 FTEs or contractors, less than $10 million OpEx a year. And on the top line, with the royalties and just with the lead program with Jemperli out of GSK.

Last year, Jemperli did on a run rate coming into this calendar year, $1.4 billion of revenue translated into approximately $100 million of royalties for us. And that is a very fast-growing mid-teens quarter-over-quarter growth asset. So that's getting very big quickly just from the monotherapy development that's ongoing there and the approval already in endometrial cancer. So that's really exciting and very different type of investor that's looking for profitability and high EBIT profile. It's really a proxy of the high-growth vertical at GSK, which overall is a neutral growing big pharma. So very different and unique in what we're creating relative to the biopharma business, which is pretty typical in terms of the shape and size. When we split out almost every employee will be transferred over to the new business. Our labs will be transferred over along with the assets. And we will fund that company off our balance sheet out of the gate, we'll have cash through milestones being driven by celiac and EoE disease into next year. Minimally.

Yes. Got it. And you talked about sort of allocating capital, obviously, across the pipelines for First Tracks Therapeutics. I'm assuming ANB033 is going to sort of take the bulk of that. And maybe kind of talk through sort of how you're thinking about capital allocation in the new business.

Yes. So we had $310 million coming into the year. It's approximately $10 a share -- on share counts. So a large portion of that will move into the biopharm business. I was saying earlier, the Anaptys company on an OpEx basis, it does not need a lot of cash to get through cash flow positivity. It will be GAAP positive right out of the gate. But we project cash flow positive when we pay down nonrecourse debt with Sagard, which we expect to be into mid-2027. So it doesn't need a lot of cash. The biopharm business does need capital.

More specifically, $100 million will put us into Q3 of 2027, $200 million will put us into the back half of 2028, fully funded, which is dominantly AMB033. We have a choice to make, which we'll make over the next month of where within that range off the balance sheet, we look to capitalize any capital that we do not put into first tracks will remain behind it will be available for return of capital to shareholders and out of the gate, potentially things like share buybacks.

Got it. Maybe shift gears to AMB033. Obviously, a product candidate that you're excited about. First, maybe the design strategy for celiac disease, which will have obviously an update in the second half of this year. How it's sort of different from what others have done, and can you just take it from there.

Yes. So AMB033, like I mentioned, is a CD122 antagonist. It blocks the signaling of IL-2 and IL-15, which are 2 pathways that target inflammation within celiac disease. So gluten is digested, the byproduct, gliadin is picked up. It's the antigen in this disease. It's picked up by APCs that are then presented to Th1 CD4 cells. You see a release of IL-2 and instigates the inflammatory cycle. So we're hitting that pathway direct by blocking the activation and proliferation of CD4 T cells.

We're also blocking IELs, which are very similar to phenotype and CD8s, and they survive off of IL-15. So by blocking that signaling, you see a reduction in ILs. So we're hitting both sides of it. In order to test the hypothesis, we've taken a very creative design of Phase Ib. It's traditional to see patients who are very well controlled that have celiac disease treated with a gluten challenge or targeted with the gluten challenge. So you're inducing damage or mucosal injury in patients who don't see it otherwise. We measure that via histology look of the destruction of the villi measured by VHCD, villous height-to-crypt depth ratio. So these patients start with a higher VHCD.

We're giving them drug versus placebo, 1:1 randomization at subcutaneous at baseline, week 0, week 2, week 4. Then for 14 days, they're ingesting gluten. So now it's week 6. We're doing a scope. If you take in the placebo, the gluten will induce that damage. You just see a deterioration of VHCD. On drug, you'll see something more neutralized in terms of the impact. And we're looking for statistically significant difference between placebo and drug at week 6 on those biopsy results relative to baseline. The second thing we're looking at is severity and frequency increase of symptoms for patients that were on placebo relative to drugs so looking to prevent symptoms. So this trial design is relatively standard. You see it typically with all celiac drugs in Phase Ib.

The second cohort that we're assessing is patients who show up thinking they're well controlled, but via the biopsy results, we're finding that their VHCD is less than or equal to 2, meaning that their villi is showing signs of mucosal injury. It would be unethical to give them gluten. Instead in this cohort, so 1:1 randomization again versus placebo, giving subcutaneous drug at baseline week 2 and week 4. But instead of administering gluten, we're waiting. We're waiting until week 12, so 8 weeks later off drug to assess if there's been healing. So is there an improvement on VHCD on drug relative to placebo. This patient population is more representative of the commercially viable population for patients with celiac disease.

The difference here, these patients are -- have mild symptoms, whereas in a Phase IIb, you would be assessing patients with mild, moderate and severe patients. But it's a good proxy to show that we're driving at targeting the inflammatory pathways and inducing improvement via the histology assessment. In this population or in this cohort, we are not expecting or putting a prerequisite for ourselves that we need to see statistically significant results for placebo. It's exploratory. We're looking for a numerical trend on VHCD. No one has done this before with this cohort, but it's an exceptional additional piece of information that we will have to then go off and design a more robust Phase IIb that should be further derisked that we would typically see from just the gluten challenge and the information there.

Got it. And with that information from the 2 cohorts what would the Phase II look like? Would you sort of design maybe 2 separate trials? Would you ultimately find sort of some way to kind of measure and include sort of both cohorts of patients in a Phase IIb? How would you think about that?

Yes. So there is draft FDA guidance on the primary endpoints. And I've now spoken to both of them. You need a histology outcome, which VHCD would -- the ratio there and the change of ratio there would qualify, and you need a PRO. The PRO that we're assessing is the celiac disease symptom diary. It measures frequency and severity of symptoms over time. So again, statistically significant results in the Phase Ib and the gluten challenge on both of those that we're assessing.

In the second cohort, we're looking at only VHCD numerical score. We're also capturing symptoms, but I'm not sure we're going to see since patients present feeling better controlled than the typical population. So we know what the primary endpoints would be. The difference is we have a 3-month trial in that second cohort. We'll be looking more at 6-month, 1-year long plus endpoints. In a much larger trial, we'll probably look at multiple doses. We're looking at one dose in the Phase I. And it's to be determined how Phase IIb into Phase III looks like. But we'll generate the data this year. We should have results from the Phase Ib in Q4 of this year, and then we'll go speak with the FDA on how to move forward in the fastest way possible.

Got it. And sort of the competitive landscape, one is sort of you've had data from competitors, I think that ultimately gave people more confidence around the mechanism. But then inevitably, the question around differentiation will come up. So how are you thinking about sort of the competitive landscape here for ANB033 relative to what we've seen from others?

Yes. So I think there's encouraging signals that targeting one or both of these inflammatory pathways can drive meaningful results for patients. There's 3 other programs that are in the IL-15, CD122 pathway right now that have proof of concept in celiac disease specifically. Teva and Novartis have IL-15 blockers. That's only going to hit one side of the 2 inflammatory pathways in this disease. And there is just another CD122 program that had positive trending Phase Ib results.

The Teva program should have data from their Phase IIa as a gluten challenge later this year as well as the CD122 competitor with Phase IIa gluten challenge data later this year. So again, the distinction here is the gluten challenge there will be read-throughs not just from the Ib data that exists from these competitors, but also from Phase IIa, which will be longer tenured trials beyond 3 months, but also only in gluten challenge. So I think we'll be generating something very different with that second cohort. I described earlier how the mechanism of action at a high level works with the CD122 antagonists. We have a subcutaneous format that is very potent is based off the combination of the affinity and the epitope of which we bind onto CD122, which on CD8 and CD4 cells, the way this works is there's a dimeric or trimeric receptor, you're targeting one of those receptors.

But based on where we are in the epitope, we think we have distinguished signal blocking of IL-2, which is really bound to directly the CD25, which is part of that trimeric receptor on CD4 cells. So there's differences between the drugs. We think we potentially have something that's more potent. And like I said, the administration profile is differentiated. So excited about what we have. I think when you look on paper in a year, we're all more or less on the same place in celiac disease and development time lines. However, we have that additional information from that second cohort, which I think gives us a distinct advantage as we think about moving and derisking Phase IIb.

Great. And obviously, celiac disease is just the tip of the iceberg here with AMB033. If you can maybe talk to EoE, the opportunity there and then sort of what we can expect next from that program?

Yes. So we're excited about the second trial. It's just initiating EoE right now. We'll have data in 2027, a 50-patient trial, 1:1 randomization. And we're looking at, again, 2 distinct endpoints that we are powered for, which are also the co-primary endpoints in Phase IIb, Phase III trials in this disease. There is a histology look. It's really actually measuring a cell type that gets infiltrated in this disease called eosinophils. We're looking to target the inflammatory pathways and block eosinophils from being recruited into the inflammatory environment.

The second is our PRO. This one is called DSQ. We're powered to assess statistical significance versus placebo on both of those endpoints. EoE is -- it's different than celiac in that we're going to be able to show in this trial that we're targeting Th2 CD4 cells as well as ILC2s. And the reason I bring this up, that's one side of the inflammatory cascade. This is the side that Dupixent targets, which is the only approved therapeutic in EoE. We've shown preclinically through an aspergillus eosinophil-induced model, the reduction or prevention of Th2 proliferation and ILC2 increases.

We've shown this on the cell types as well as other biomarkers that you would tend to see. What's important about that is just by targeting that pathway as well as CD8s, we are upstream from those eosinophils and we're preventing their increase. We don't target them directly. And I think that's one of the key differences and one of the key differences with Dupixent, which is the only other drug that's shown to be effective in this disease is that drugs that have targeted eosinophils directly downstream or other proxies of that, you might be able to prevent eosinophil influx, but you're not actually treating the inflammatory pathways of the disease. So there has been failure in this space, but we're taking a very different approach by hitting the Th2-ILC2 side as well as the CD8 side. There is proof of concept here.

So Novartis IL-15, the precursor company that they acquired Calypso, did run a small EoE Phase Ib, again, just targeting CD8 cells, again, not eosinophils upstream. In that study, they showed a prevention of eosinophil recruitment and a reduction or prevention of symptoms getting worse by treating that disease. So there's a proof-of-concept surrogate in humans from treating that just that one side of the pathway. We're doing both with a CD122 antagonist. The opportunity here is Dupixent is only effective or modestly effective in 60% plus of patients.

The other 30% plus, you do see an increase in IL-15. So we actually think we can have a potential solution here for all patients, and we will be recruiting patients who are both Dupixent experienced and Dupixent naive. So excited about the other opportunity here, different than celiac. And if we're successful, it will open up the pathway to many other diseases. This landscape has across the competitors I've already mentioned, there are folks focused in atopic dermatitis, vitiligo, alopecia. Teva is talking about EoE as well as a potential additional indication. So a number of places that folks already are playing plus expansion opportunities for us or maybe others in the future. A lot of data coming out across the landscape over the next 12 months in celiac disease and the other diseases I mentioned.

Got it. Yes. And then actually, to that point, I guess we'll see because the [indiscernible] is in the details, but we -- one of the competitors is vitiligo data this half and alopecia data sometime in 2026. Does failure read through in those specific indications recruit ANB033 mechanisms given sort of the differentiation there? Or do they still see sort of a viable opportunity because of what you've seen preclinically for those other indications?

Yes. Look I mentioned very specifically, there's human proof of concept that's positive in celiac disease. I think these are all different diseases. We are not running a trial in vitiligo. We're going to wait and watch and look at the results. I think there's a very good thesis for targeting CD8 cells that are present in the setting of vitiligo. It could be a great target for just an IL-15 that doesn't have the power of blocking IL-2 as well and the IL-15 signaling have multiple different types of cells. So we're looking at those results, obviously. Vitiligo is a potential third, fourth, fifth indication for us. And if we see success in the field, once we get our own data in the two diseases that we're focused on, then there's a big opportunity to expand in other Phase II diseases, and it could include markets like vitiligo.

Got it. And I think you've sort of in the past mentioned sort of diseases like type 1 diabetes as well as a potential opportunity. Just quickly the rationale there, just sort of given the size of that opportunity relative to, I guess, the other indications that could certainly be attractive.

Yes. So we haven't -- we have not said publicly that it's a disease that we're looking at. Explicitly, it's one of the target diseases that is rational given the influx of CD8 cells and the impact it makes on these [ FLT-producing ] cells in the disease. So I think it's another thing that we will be assessing through the course of this year into next year. But I'm not going to get into more details. I don't want to sit here and speculate right now on which diseases we will be pursuing, but there are multiple options for us for third, fourth and fifth. And I mentioned different capital needs for the company. The $200 million that brings us in the back half of 2028, that does include expansion to at least a third or fourth indication beyond moving celiac and EoE into Phase II.

Got it. Great. And then sort of back to the royalty business for a couple of questions. Obviously, Jemperli, significant grower for that business. Vanda could come online with their royalty stream by the end of the year. Are there other revenue opportunities that you see or consider that could be sort of valuable for shareholders from that business?

Yes. So specifically, the business model here, and you could tell what the de minimis infrastructure we're looking to put is to protect and return the value from the royalties we already have from the Anaptys platform. We're not looking to expand with other drugs. That said, Jemperli is growing in the mid-teens quarter-over-quarter off that $1.4 billion run rate. GSK has guided to far north of GBP 2 billion, which is $2.7 billion. We believe that, that's achievable as early as 2029, which results in very close to $400 million of royalties given the royalty stack here goes from 8% to 12% to 20% to 25% through all those tiers under that target number set by GSK.

And it's important to note that GSK is on record from now multiple years ago and has repeated over time, just success in endometrial cancer, which is where they're currently approved with an overall survival data package that's differentiated from KEYTRUDA, which does not have overall survival data. And the second indication is rectal cancer, which they have announced later this year. There will be pivotal results available as a proxy for that. In Phase II, they showed a 100% ORR, which is unprecedented. So we're excited to have high expectations there. Those 2 diseases alone GSK has said we'd get to those peak sales numbers of $2.7 billion. We should also see data on the primary completion in a Phase II trial in MMRP colon cancer is scheduled to be this year. There's 2 additional pivotal trials going on, DMMR colon where there's Phase II proof of concept and head and neck cancer, where there's proxy read-throughs from KEYTRUDA.

What's interesting here and you think about the growth over time is we have at least a decade to go of composition of matter in the U.S., then a year later in Europe and 2037 in Japan. So there's a lot of IP left with the program. GSK on a monotherapy basis is competing in spaces where KEYTRUDA doesn't have data or is not being developed. So we feel very well protected here when you look over the horizon relative to what's going to be going on with the KEYTRUDA franchise with Merck. So I think in the short term, there will be -- there will continue to be a lot of growth for monotherapy development. But in the mid- to long term, there's a huge, huge opportunity. It's just this year, it's gone from the 20th largest drug in the company. This year, it's projected by consensus to be the sixth largest. Consensus has really shown to be laggard here, backwards looking about 1/3 of the analysts are showing negative growth this quarter. So it's not a good proxy for value, but it does give a good reference point of just how important this drug is to GSK's overall business.

It's the largest oncology program in the company, but it's the fastest-growing drug, over $1 billion of sales times 3. So really important to the future, I think GSK's franchise, which gives us a lot of confidence here to anchor the royalty business around the Jemperli royalty. And like I mentioned earlier, Vanda has a PDUFA on December 12, looking for approval in GPP, generalized pustular psoriasis. It's best-in-class IL-36 receptor antagonist. So we should exit this year with 2 commercial stage royalties. Exciting.

Great. So we're up on our time. Dan, thank you so much for your time this morning, and thank you for our listeners, and we'll be back for our next session. Thank you.

All right. Thanks, everyone.

Welcome, everyone, to the 44th Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I am one of the senior biotech analysts here at JPMorgan. I'm joined by my squad, Rati Pinhe, Priyanka Grover and Joy Shao. Our next presenting company is AnaptysBio and presenting on behalf of the company, we have CEO, Dan Faga. Dan?

Hello, everyone. Thank you for having me join today, Anupam. These are our forward-looking statements. This is going to be a transformational year for Anaptys. In September, we announced -- September 2025, we announced the intention to separate into 2 businesses through the course of this year, and that is likely to happen in the second quarter at this point. The 2 businesses are generically referred to as Biopharma Co and Royalty Management Co at this time.

Biopharma Co will be anchored by 3 clinical assets. The operating business will be driven through ANB033. We are enrolling patients in the celiac trial in Phase Ib, and we announced into this weekend that we are initiating a second trial in Phase Ib in EoE. Rosnilimab is a pathogenic depleter or depleter of pathogenic T cells. We had positive Phase IIb results in our arthritis trial in 2025. And over the next 6 months, we'll be exploring how to move forward through Phase III, including securing strategic or financial capital to run the Phase III, and we have an end of Phase II meeting with the FDA over the next quarter. ANB033 is in ongoing Phase Ia studies.

The royalty management company will have 2 core assets, rights to royalties from Jemperli sold by GSK and the rights to royalties from imsidolimab, which our partner, Vanda, recently filed the BLA in a disease called GPP that we expect approval later in this year.

The company today coming into this year has $310 million of cash, which should suffice moving forward in the biopharma business through the events of the trials I just outlined and then as well as leaving behind sufficient capital in the royalty management business to operate over the next couple of years until we pay down an outstanding obligation to Sagard and that company would become cash flow positive.

So I'll spend a few minutes talking through the royalty business first, and then we'll transition into the biopharma operations. The value proposition for the royalty management company would be to protect and return the value of the Jemperli and imsidolimab royalties to shareholders. We intend to run a capital-efficient business with de minimis operating structure. This company would remain as the parent company that is Anaptys today pre the separation.

So starting with Jemperli on the left-hand side of the page. The sales for this drug inflected in 2025. In the third quarter alone, there was $300 million -- over $300 million of revenue, principally driven by the U.S. launch in frontline endometrial cancer for this PD-1 antagonist. They have consistently at GSK over the last 4 quarters shown high-teen percent growth. They received approval in Europe in frontline endometrial in the beginning half -- in the beginning of last year. And through the course of this year, we expect to see uptake in OUS sales given reimbursement.

There's a number of catalysts as well that I'll run through on the next slide, but the royalties that we receive from GSK are significant. It initiates at an 8% royalty tier every year up to $1 billion of revenue, advances through a 12% tier, a 20% tier and at $2.5 billion of annual revenue, we will receive 25% royalties from GSK.

At the guidance that GSK has historically provided of GBP 2 billion, which is about $2.7 billion of peak sales for Jemperli on monotherapy indications alone, we received $390 million of royalties at that peak sales value. The royalties have composition of matter in the U.S. through 2035 and in Europe in 2038 or '36, and we have room for patent extensions from there.

We do have nonrecourse debt through Sagard that I referenced earlier. At the end of 2025, we anticipate that we'll have liabilities paid down of $250 million of $600 million, and we anticipate that the full nonrecourse debt will be paid off by Q2 of 2027.

There is substantial ongoing investment by GSK to expand indications, particularly monotherapy indications that will read out over the next 1 to 3 years.

For imsidolimab, this is a drug that we also discovered and developed in-house at Anaptys over the last number of years. We out-licensed this drug to Vanda in the beginning of 2025. Through the course of this past year, they stood up the BLA filing. It was submitted in December and announced. We do anticipate additional filings in Europe and Japan later this year, but I'll leave that -- the details there for Vanda to guide into. We have a 10% flat royalty. We have sales milestones as well as regulatory milestones from this collaboration, and we do expect approval in the U.S. this calendar year.

This is a slide that just highlights a lot of detail, the ongoing catalysts and mainly the trials that GSK is ongoing right now in monotherapy development for Jemperli. Two highlights. For this calendar year, the AZUR-1 trial in locally advanced rectal cancer for dMMR. There's Phase II proof-of-concept data that already exists, 100% complete response rate in over 40 patients. The pivotal trial will read out this year. The company, GSK did receive a National Priority Review Voucher this past year that entitles them to a 3-month review cycle upon submission of the sBLA. So we do anticipate that this year.

The second trial that we do expect primary completion would be in Phase II in MMRp colon cancer. So this is a proof-of-concept study. And from beyond this, you would expect a Phase III advancement.

The point of this page is while there's a lot of growth right now in endometrial cancer, there's indications that are going to read out this year in 2027 and 2028 to further expand the monotherapy development.

To try to drive this home on just how large this royalty can be, this page is reflecting peak sales forecast for Jemperli. The green line on the top of the page represents the GBP 2 billion, of which the prior CEO of GSK last quarter said will be far north of this GBP 2 billion threshold of $2.7 billion. There's a number of blue lines on this page that represent consensus forecast from GSK analysts. The dotted blue line was where they were a year ago, peaking at less than $1.5 billion.

Through the course of last year and given this inflection, I really think the attention now being focused on by the Street for this asset, as of November of 2025, peak sales forecasts were $2.2 billion, still shy of where GSK has been guiding over time, but we see that gap colliding through the course of the rest of this year with the current trends. $1.4 billion in 2026 is the current sell-side consensus. We anticipate year-end 2025 sales to already be on a run rate that reflects that number. So I think these forecasts are already dated, and there's a lot of upside from here in what we're seeing just in endometrial cancer and the ongoing launch.

Jemperli is competing against KEYTRUDA, but KEYTRUDA does not have overall survival data in endometrial cancer. And GSK has taken a strategy with the monotherapy development in some of these other diseases like rectal cancer where KEYTRUDA is not approved. So they've had taken a smart strategy in a lot of women's cancers where they're going to be able to compete in spaces where they have differentiated data and/or places where KEYTRUDA doesn't play.

The other lines on this page are reflecting the Sagard paydown. The orange line is a 10% quarter-over-quarter growth rate. That's conservative relative to what they've been doing recently. But if you just follow that orange line through, Sagard will be paid down by Q1 of 2027 -- or Q2 of 2027. So a lot of upside from here on how we view this individual royalty playing out.

So with that, I'll transition and spend the rest of this discussion on the biopharma business. And primarily focusing my remarks on ANB033, given the initiation of the celiac trial and the announcement into this weekend that we'll be pursuing a second indication in EoE.

So ANB033 is a CD122 antagonist. It blocks the signaling of both IL-15 and IL-2. We believe that we have potency differentiation from the binding epitope that we target as well as the affinity of this molecule that shows functional differentiation from other CD122s in the space. The cell types that we target that express CD122, certain subtypes of CD8 cells, CD4 T cells and then very specifically pathogenic immune cells in diseases like celiac disease, IELs express CD122 in EoE, ILC2s, very relevant immune cell in that disease, densely express CD122.

There's broad therapeutic potential for CD122 antagonists across both GI, dermatological indications and other areas. There are a number of competitors, both with IL-15 cytokine blockers as well as another CD122 antagonist. There will be a lot of data -- clinical data in the space just this year in diseases like vitiligo through some of the competition, in celiac disease from Teva and Forte as well as our own data in celiac disease in Q4.

Novartis and Teva both have IL-15 blockers. They're committed to not only what's on this page, but also into additional indications. They've each said they're going to expand to 2 additional indications this year. So there's a lot happening in the space right now in the earlier days of generating proof of concept and also additional catalysts that will end up presenting themselves in 2027.

We finished our Phase Ia study in healthy volunteers, demonstrated a favorable safety and tolerability profile. The study was run in both IV and subcutaneous forms, 2 to 3 half-life in both administrations, full receptor occupancy for north of 30 days off of 1 dose and no other observations of note.

Interestingly here, when we look in the periphery, we hit hard the target cells that we need to go then target in disease. On the top row, we're looking at the CD122 expressing CD8 and NK cells, both in IV and subcutaneous administration off of a single dose. The bottom row is focused on overall cell counts of the same cell types.

You could see in the top right is we are fully eliminating all the NK cells that express CD122. Importantly, that is not all the NK cells in healthy individual. We do about 1/3 of NK cells totally, not express CD122, which is sufficient to sustain immune competency. So we haven't seen any safety issues, like I mentioned earlier, with this type of profile.

I think importantly, we hard hit the CD8 T cells as well as explained in this data. But on the bottom left, there's a negligible impact in CD8s overall. So this is going to have positive implications in disease. We saw similar results with CD4 cells. And importantly, we did not see any impact in total peripheral Tregs.

First, in celiac disease. This is a potential blockbuster market where there are no approved therapeutics today. Over 1 million patients alone in the U.S. have diagnosis confirmed with celiac disease and 0.25 million patients in the United States are nonresponsive to a gluten-free diet. So that's the market opportunity.

Payers understand the severity of this disease. They view this as another arm in the IBD portfolio of where disease is in a similar call point. So high disease burden, we believe there's going to be large price points. It's about $5 billion-plus market alone, just targeting that 0.25 million patients who are nonresponsive to gluten-free diets.

So the biological rationale. There's 2 pathways of autoimmunity that we see driving the inflammation in celiac disease. On the left-hand side of the page, patient ingests gluten. It could be trace amounts of gluten, which downstream gets picked up by an APC, present the engines presented and instigates the T cell cycle with CD4 Th1 cells. It upregulates IL-2 and interferon gamma, you see IL-15 secretion and in come IELs, which further perpetuate the autoimmune cycle.

As I explained earlier, CD122 targeting antagonists would impact directly the CD4 cells in this disease as well as the IELs. So we're hitting both sides of the pathology of the inflammation in this disease.

In the purple box in the top right-hand corner, there is proof of concept in this space with the other IL-15s and CD122 programs, where they've shown reduction of IELs in gluten challenge studies as well as prevention of villous atrophy as shown in lamina propria from both the CD4 and the IEL inflammation.

There's been a lot of failure historically in celiac. These drugs that have not worked have really targeted the antigen, the gluten in various time lines from ingestion through APC presentation.

The IL-15s and the CD122s are the first drug classes that are targeting the inflammatory pathways and the CD122 class is the only ones of those 2. They're targeting both sides of the inflammatory pathways. In addition to a lot of in vitro data showing on-target activity of cell types like IELs, we ran a mouse model of mice with celiac disease. And what you're seeing on this page is the results of the histology from that study. On the left is sham. So what you're seeing is villi that are fully functioning. In the middle was isotype control, where we added gluten, and you're seeing the atrophy of the villi with the white space that's on the page. On the right, the same gluten challenge, but in addition to ANB033, which is preventing that deterioration.

So when we talk about the histology of the disease, what you're really looking at is atrophy of the villi and then that's measured in a ratio, the villi height to the crypt depth ratio. So this is the histological endpoint that draft FDA guidance is looking for, for approval in this disease.

The same data presented in that ratio on the right-hand side, the sham at 2.5 with no impact. If you look on the right-hand column, again, no impact when you're giving gluten with the protection of the drug. But with isotype, you see a reduction in that ratio.

In addition, we saw exactly what you want to see with prevention of expansion of IELs when you're on drug as well as prevention of an increase in CD4 T cells in lamina propria.

Patients present in the real world, not just with histological damage, but also with symptoms. And there's a range of that presentation. Most Phase Ib studies for drugs that are targeting this disease, you're running these gluten challenge studies in well-controlled patients that do not have histological damage where you can then administer gluten to see the destruction and the inflammation in the villi. You're also treating patients who are well controlled in that they are not experiencing symptoms.

What we are also doing, and I'll get into the trial design in more detail, is we're looking at those patients in the gluten challenge, but we're also running in a second cohort, patients who have damage, who have a Vh:Cd ratio less than 2 and have atrophy of the villi.

The target population in a commercial setting, as I showed earlier, are going to be patients who have inflammatory damage to villi with a range of symptoms overall. So in our Phase Ib, we're looking at 3 different types of patient populations, one of them much more on point with where we would end up going in a Phase IIb and in Phase III trials for a commercial label.

So this is our trial in a typical design format. We're going to be enrolling 60 patients overall across the 2 cohorts, 30 in each. It is a placebo-controlled trial, 1:1 randomization in the gluten challenge shown in Cohort 1, 30 patients. We'll be administering drug or placebo at baseline, week 2 and week 4 subcutaneously. Then at week 4, you start daily 14 days of gluten. And at week 6, you then do a scope, you look at the endoscopy and you're looking for placebo patients who have gotten worse, just like we saw in the mouse model relative to drug patients who are preventing that damage.

Cohort 2, Vh:Cd less than 2.0 already have that damage. Similarly, baseline, week 2, week 4 subcutaneous dosing versus placebo, then we wait. We wait until week 12 to do the scope, and we're looking to see if we've induced healing relative to placebo. Expectations here, we should have statistically significant differentiation versus placebo in Cohort 1, and we're looking for numerical benefit relative to placebo in Cohort 2 towards that healing.

We'll also be looking at the PRO, CDSD, which is the second co-primary endpoint that we would anticipate in a Phase II or Phase III trial for approval. That's been validated and aligned to with the FDA.

Second disease, EoE, we announced in this weekend we'll be initiating a trial later this quarter. The market here is large and growing. We estimate that in 2025 based on claims data, DUPIXENT which is the only approved drug in this disease, will sell about $2 billion just in EoE alone in a market that's approximately 5 billion patients large right now. And as DUPI has been approved over the last 3 years, diagnosis is growing in this disease. Again, DUPI is the only approved drug. It's a once-weekly administered biologic.

So another cartoon of how the biology of the disease works. On the right, there is one side of the inflammatory pathway that targets CD8 cells, which we target directly with the CD122 antagonist. Up to 30% of patients who are nonrespondent on DUPI show an increase in CD8s and IL-15 production.

On the left-hand side of the page is where DUPI is working in this disease. An alarmin instigates EoE, CD4 cells are activated again. ILC2s are recruited as an innate cell expressing IL-13, IL-5, which instigates and pulls through eosinophils. By targeting both paths of the biology here, we should be able to treat patients who would be or would not be responsive on DUPIXENT.

There has been failure here as well in this disease. There have been a number of mechanisms that target eosinophils directly. They've been depleted them. There's a failure last year in a trial with the mast cell driving target, which impacted mast cells in the disease. The core principle here is you need the upstream of the eosinophils to have an impact on the direct inflammation.

And like I said earlier, we think we're doing both what DUPIXENT does well and what they don't do well across the spectrum of patients that present with this disease.

I'm going to walk through this mouse model in a second, but there is proof of concept with another IL-15 that by just targeting the CD8s, you see a reduction downstream of eosinophils. That was shown by Calypso, which Novartis acquired a couple of years ago.

What we're showing in this page is really important data in aspergillus-induced eosinophil model. In blue is ANB033. In the top left and bottom left, you're looking at the prevention of the eosinophil recruitment relative to isotype in black. You can see other mechanisms on this page, much less impact. Importantly, we are also preventing that increase in ILC2 as shown in the bottom middle panel relative to isotype.

Very quickly on rosnilimab. Best-in-disease data from a 424-patient robust Phase IIb trial that was executed last year. These data were presented at ACR in the fall by Dr. Paul Emery. The medical community has celebrated this data. It's the first positive trial in RA in many, many years with a new biologic class. More importantly than showing statistically significance on all doses on ACR20 and DAS28 is over time, we saw deepening of responses in terms of low disease activity being achieved as well as remissions through 6 months and then off drug at 9 months. This drug was tolerable and safe across the board in this large study as well as in other trials that have been run by rosnilimab.

This is a huge market, $20 billion market in the United States after TNF failure, $5 billion to $10 billion market in third and fourth line. So what we're doing right now is we're assessing a path forward for rosnilimab. We're looking to fund through either strategic collaboration, strategic financing or other asset sources of capital to advance through a Phase III program in arthritis. We have an end of Phase II meeting by the end of Q1, which will help define the size and the scope of the Phase III program is as well as the cost to run the trial. And the expectations here as a base case are that this program would separate out with us into the biopharma business. But at some point in the future, we do need a strategic partner to commercialize it. So we're going to look to solve some of that over the next 6 to 9 months.

So in summary, the biopharma business is catalysts across the board with the movement forward in rosnilimab, ANB033 in celiac disease and EoE in terms of data in Q4 and celiac across both cohorts. EoE is getting going, and we'll have data in 2027. There will be a lot of data as well as in the space, the IL-15s and CD122s this year.

ANB101, I don't have time to get into too much right now. The Phase Ia is ongoing. It's a BDCA2 modulator. There's competitive data from Biogen that will read out in the back half of the year, a couple of Phase II trials in SLE. We have a more potent version of that molecule with longer half-life with broader depletion profile, plasmacytoid dendritic cells, which is the target cell for that molecule.

And with that, I'll take some questions.

Thank you, Dan. I'll ask the first couple of questions, but to the extent there are any questions in the audience, feel free to raise your hand, and I can call on you.

Dan, the slides said the split between Biopharma Co and Royalty Co as early as 2Q, but you were pretty definitive in your statement in your comments that it would be in 2Q.

We're targeting to have this happen by 2Q. So since we've announced the separation September today, there's a lot of background work in the financial audit to break down the company, review processes with the SEC. It's not definitive that's Q2, but we do believe we'll be through that regulatory process to be ready to spin and separate in the second quarter.

The business decisions that still needs to happen, are we definitively putting rosnilimab into the biopharma business or not. We're not going to artificially try to get a financing done ahead of that, but we do have an opportunity to potentially do so and leave some of the economics behind in the royalty business. The second decision that has to happen is how we're going to capitalize each of the businesses with some subset of $310 million we have coming into the year.

Okay. And so there is a scenario where rosnilimab then goes completely to Royalty Co or stays at Biopharma Co. It depends on the timing of it.

But the base case to set expectations would be Biopharma Co.

Biopharma Co.

But for clarity there, we will not be using royalty proceeds or the cash on the balance sheet today to fund the Phase III program.

Can you walk us through some of the push-pull levers in this litigation that you have with your partner, GSK, on Jemperli and some time lines we should consider? And to the extent that this ongoing process with GSK might impact the timing of your split or not?

Yes. So just the last part of that question. The separation of the biopharma company is not impeded by Jemperli or anything related to Jemperli, which would include the litigation. The biopharma business will be completely independent of what's going on with Jemperli.

From background on Anupam's question as it relates to litigation with GSK, last summer, through normal course of business with GSK, we're notified that GSK had governed a pivotal trial with one of their ADCs developed with both Jemperli as well as KEYTRUDA. We view that to be in breach of the contract that we have with GSK on how they are able to develop drugs in the PD-1 sphere.

Through the working teams, we're not able to get to resolution. The contract defines a dispute resolution process. There's a letter that's in the public domain that we sent to GSK on October 7 as defined by that process to the Head of R&D at GSK saying that we are in dispute with this trial, amongst other trials that we've now discovered that they've been running with other PD-1 programs.

While we're negotiating in good faith, we were surprised that GSK did preemptively file litigation with us on November 20. We were ready for that situation, even though we weren't expecting it to happen.

We did file a counterclaim, which really outlined the rationale for 3 material breaches of our contract. One being that TESARO was either induced or encouraged by GSK to not file the exclusivity obligations that they're obligated to by developing only dostarlimab as the only PD-1 at the company. The second is with material disclosure obligations that they were deficient in. And the third is a breach of the optimum commercial return that the contract defines that TESARO is obligated to follow in development relative to the rest of the portfolio and any other PD-1.

So we have a number of different claims there. The trial date has a fuse on it. It's scheduled for July 14 and 17. This is not going to go on forever. We have also filed a motion to dismiss on the initial claim that GSK is alleging, which is that we have repudiated our contract, which means we're walking away from our obligation, which is really to collect royalty checks and receive information.

So as a matter of law, our motion to dismiss is saying that, that repudiation is not possible since we're engaging in a process to either find resolution and/or continuing on with the duties of collecting those royalties and interacting in a joint review committee.

So there's a few things happening. But at the end of the day, if GSK is found to be in material breach on one of these claims, the contract is very clear. There's a reversion right of Jemperli back to Anaptys.

Who is the driving force behind the separation? And what's the rationale behind the separation?

The question is, who is the driving force behind the separation? And what is the rationale for the separation?

So the royalty business and biopharma business principally are going to have very different business strategies, one being a cash consumption to develop and discover further drugs. Royalty management business, which we have a very low cost of capital and a very low-cost base, we think will trade at a very different level over time than if we keep these entities combined. That's the rationale for separation. It's different business strategies and different investment philosophies.

So who's driving this? So there's a mispricing assumption here that these assets are mispriced as an example.

We were trading at $15 a share the day before we announced the separation, and we were up 50% the day we announced it. And I think the clarity that we're going to protect and return the future equity growth and ultimately in the long-term yield of that royalty relative to investing into earlier-stage riskier assets, there was a difference in views on investors that look at each of those assets. So the separation inherently has created value and the arbitrage there is really discount rate difference of both entities.

Additional questions from the audience?

So maybe just also a clarification question on rosnilimab in RA and the update that you're going to be providing. So it's basically you're looking for a partnership? Or are there other ways to finance a Phase III?

Yes. I mean there's a number of examples. There's actually one just over the weekend that's relevant in the IL-15 space with Royalty Pharma giving to Teva capital just to go develop a drug within the portfolio. There's no restrictions on a biotech company having the same asset type of financing.

At the end of the day, we are going to need to support commercializing in arthritis. I've been saying this consistently for almost 4 years now. And so we're at one of those crossroads that we're going to move forward in arthritis. We're looking for a shared way to develop the capital. Ultimately, we're going to need support in the longer term. That could be strategic capital. That could be a strategic partnership. That could be asset financing or a combination of these things. And we're open to a lot of options, and we're focused on a return of equity to move the drug forward.

You -- maybe just switching gears a little bit to 033 in celiac disease. You guys -- you walked through the trial design here. Maybe you can walk us through how much data we're going to get in that initial release.

We're going to learn a lot here in the first half about the mechanism and things like that. But as of today, when you talk to KOLs, what would be like a win scenario that could get you excited to move to the next phase?

Yes. So while there's no therapies approved for celiac disease today, there is draft guidance of the types of endpoints you ultimately to have to show for approval. And those endpoints exist in the trials that we're running in both cohorts.

So while there's different time points at which we're looking at the scopes for either prevention of villous atrophy or healing of the villi, we are going to end up presenting Vh:Cd ratio and histology. We are going to show the translational data, importantly, reductions of IELs. We should also be looking at biomarkers. We'll be looking at interferon gamma. We'll be looking at the impact on IL-15.

And then as it relates to the PROs, we are going to be assessing and using one of the PROs that the FDA has described and has validated. It's called the Celiac Disease Symptom Diary. It's a daily score of -- on both severity and frequency of the typical acute symptoms you see within celiac. So that composite information on the efficacy side in both different cohorts is what we'll end up presenting.

Questions from the audience? I've got one final one. You disclosed EoE as another indication for 033. You walked us through the market potential in the slides as well as a little bit of preclinical data. How did EoE come to beat out some of your whiteboard of other indications beyond the couple of things that you've discussed here?

Yes. Thanks for the question. So in celiac disease, let me kind of start there, there's proof of concept through IL-15s and other CD122s, but there's a direct impact on multiple paths of inflammation that I was trying to stress.

On the CD8 side, IELs are principally made up of CD8 cells. We're hitting that directly. On the CD4 side, it's a Th1 thesis of targeting Th1 CD4 cells. We're also able to look through our trial design at dosing through a month, but then looking at endpoints at month 3 to look at a longer-term PD effect of this drug. So we're looking at both the immunology based on the biology as well as a real understanding of the dosing profile and potential over time.

And just as a counterpoint there, Teva is already talking about quarterly dosing with their IL-15. So there is long-lasting PD that we're all seeing preclinically and for us as well in our Phase I study that we're trying to prove out here with different designs.

In EoE, we're exploring importantly, a type of disease that I don't think you could fully target with an IL-15 that shows the power of blocking both IL-15 and IL-2 signaling on different immune cell types. So in EoE, there's also a CD8 side of the equation, and Calypso has already shown that by targeting the CD8s in EoE, you are reducing downstream eosinophils. There's proof-of-concept data out there from 2024 that exists.

Importantly, and this is why I walked you through the ILC2 data, ILC2s as well as Th2 CD4s that DUPI is specifically targeting, you're not going to be able to hit those cells and have an interaction there with an IL-15 blocker. With CD122, you can. So if we're able to show an outcome here in EoE where we think there's a huge market, you only have DUPI and we're able to target where DUPI is successful and where we think DUPI failures aren't. We're getting the full spectrum of where this disease is presenting in the upstream pathways of inflammation.

If you see positive outcomes there, there are a number of other diseases where ILC2s are important drivers of disease where you can then take this beyond just EoE, where you're in a world that IL-15s also can't chase you.

So said a whole another way, if an IL-15 is successful, we believe you could go use a CD122 and potentially better. But there's also other diseases like EoE, where I don't think IL-15s can play. So we're very intentionally selecting diseases here. We could showcase the breadth of where a CD122 could be effective.

All right. Thank you, Dan.

All right. Thank you. Appreciate everyone's time.

Thank you for standing by, and welcome to the ANB033 CD122 Antagonist Virtual Investor Event. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Daniel Faga, President, Chief Executive Officer and Director of AnaptysBio. Please go ahead.

Good afternoon, and thanks for joining. We're excited today to focus on ANB033, a potential best-in-class CD122 antagonist that represents its own pipeline and product for the treatment of autoimmune inflammatory diseases.

This presentation contains forward-looking statements. As we recently announced, in 2026, we intend to separate our biopharma operations from our substantial royalty assets. This separation is designed to maximize value by creating 2 independent publicly traded companies, each with different business objectives and opportunities. Much like Anaptys does today, the company we are generically referring to as biopharmaco, we'll continue to develop and potentially commercialize our 3 clinical stage programs.

Each of our assets target pathogenic cells that are significantly elevated in autoimmune diseases but are only present in lower trace amounts in healthy tissue. Our antibodies are designed to potently eliminate or modulate these specific disease-driving cells. ANB033 was discovered by our team at Anaptys and is anticipated to be an important part of biopharmaco asset base. We have initiated a Phase Ib trial in celiac disease and expect to initiate a trial in the second indication in 2026.

We believe targeting CD122 has a strong biologic rationale. For background, IL-15 and IL-2 signaling pathways are central regulators of immune cell activation and function. High levels of these cytokines drive proliferation and survival of immune cells, resulting in disease pathology. These specific immune cells express our target of interest CD122 which is the shared receptor subunit through which IL-15 and IL-2 signal.

We believe this approach to inhibiting signaling of both cytokines will deliver a greater therapeutic impact, positioning a CD122 antagonist as an attractive target for drug development. ANB033 was designed with an optimized binding epitope and affinity to CD122, which potently inhibits both IL-15 and IL-2 signaling. We believe these differences contribute to ANB033's best-in-class profile. Martin will review preclinical and comparative pharmacology data to support this view later in the presentation.

Targeting CD122 has broad therapeutic potential, including in GI, dermatology and other therapeutic areas. The IL-15 pathway is being explored in clinical development by multiple global pharmaceutical companies. Novartis through its 2024 acquisition of Calypso, generated clinical proof of concept in both celiac disease and EoE.

Forte recently reported positive Phase Ib data with its CD122 antagonist in celiac disease. And within the derm space, there are ongoing trials in vitiligo by Teva as well as by Incyte, who is developing a first-generation CD122 antagonist. ANB033's mechanism targets multiple pathogenic drivers of inflammation in celiac. Celiac patients have an immune response to gluten, which rapidly induces IL-2. Inhibiting this signal reduces CD4-positive memory T cell inflammatory activity.

In parallel, inhibiting both IL-15 and IL-2, and IEL should contribute to restoring barrier integrity. There is compelling justification for developing a therapy for celiac, which is a high disease burden. The only preventative measure is a gluten-free diet, which is highly restrictive and poorly tolerated many patients. More than 50% of patients suffer from anemia or fatigue. There are approximately 2 million celiac patients in the U.S. and the diagnosed nonresponsive celiac population is projected to exceed 250,000 by the early 2030s.

However, what would otherwise be a $4 billion to $5 billion U.S. market does not have any approved therapies. As I highlighted, there are many additional diseases where ANB033 may be an effective treatment option. We're internally exploring a few of them and are committed to initiating an additional proof-of-concept study in 2026.

One on billing assessment is [ EOE ], other autoimmune disease treated by many of the same gastroenterologists as in Celiac. Unmet need here is also high and treatment options for this disease are limited. Today, we will share some initial perspectives on the biologic rationale and preclinical data we've generated in EoE. During our call, Dr. Martin Dahl, Anaptys' SVP of Research will dive into the biologic rationale for targeting CD122 and preclinical data with ANB033 in celiac and EoE.

Discussing ANB033 Phase Ia clinical results will be our Vice President of Clinical Development and lead physician in our celiac trial, Dr. [ John Quan ] and Phase Ib trial design for celiac will be our CMO, Dr. Paul Lizzul. We're also excited to be joined by Dr. Joe Murray, Professor at the Mayo Clinic College of Medicine in Rochester, Minnesota, who will share his clinical expertise in celiac disease. Now I'll turn it over to Martin.

Thanks, Dan. CD122 also referred to of the IL-2 receptor beta subunit, is part of the shared receptor for IL-15 and IL-2. These pathways are integral to the regulation and activation of immune cells, particularly subsets of cytotoxic CD8 T cells, CD4 Th1 and Th2 cells and NK cells. This regulated signaling by these cytokines contributes to the survival or persistence of these cell types as well as their proliferation and inflammatory responses, which can result in autoimmune and inflammatory diseases, including celiac.

Intraepithelial lymphocytes or IELs consists primarily of cytotoxic CD8 T cells and a minority of NK cells. These are highly patrogenic cells expressing CD122 that are prevalent in the gut in celiac. ILC2 cells are innate immune cells to secrete large amounts of type 2 cytokines, primarily IL-5 and IL-13. ANB033 binds to an optimized epitope with high affinity leads to a differentiated inhibition of both IL-15 and IL-2 signaling.

The binding epitope of ANB033 was mapped. And as you can see on the left, sits squarely within the IL-15 and IL-2 binding footprints. In the middle of the slide, we used an in vitro cell-based STAT5 Reporter assay to show ANB033's potent effect of inhibiting the signaling of IL-15 and IL-2, particularly within the range we expect to achieve in the tissue as shown in the gray boxes, giving us flexibility to treat various diseases.

On the right, we show ANB033 potently inhibit the proliferation of primary immune cells from human PBMCs, ENK, cytotoxic CD8 T and memory CD4 T cells, which express the high affinity to IL-2 receptor. Notably, ANB033 the proliferation of T regs. This effect is different than on memory CD4 T cells since Tregs expressed very high levels of CD25, which binds enough IL-2; to allow them to maintain their proliferation, survival and express [ FOX P3]. An aggressive GVHD model in human IL-15 expressing transgenic mice to support the engraftment of human T and NK cells shows the in vivo activity of ANB033. This model progressed very quickly as isotype control treated animals died within a median survival of only 14 days. ANB033 in blue demonstrated a significant improvement in survival, particularly after the last dose compared to other treatments. Correlated on the right, ANB033-treated mice lost less body weight compared to isotype control or other treatments.

On Day 17, where there was ongoing inflammation, we measure gene expression from purified human cells. ANB033 was the only treatment that significantly reduced expression of numerous [ granzyme ] family genes which mediate the killing properties of T and NK cells.

We also evaluated ANB033 in a 13-week cynomolgus monkey GLP tox study with weekly dosing in an 8-week recovery period. Shown here are the 10 and 100 mg per kg dose cohorts. On the top left, ANB033 induced a rapid reduction of CD122-positive cytotoxic CD8 T cells. In the overall CD8 T cells on the bottom left, it was a more modest impact. This reduction lasted the duration of the dosing period and began to return towards baseline during the recovery period.

In the 10 mg per kg dose, which is most similar to the dose range anticipated for human trials. On the top right, we also observed the expected reduction of CD122 positive NK cells. For awareness, CD122 is highly expressed by virtually all NK cells in cynos. This is specifically not the case in humans. We also observed a return towards baseline in the recovery period for NK cells in the 10 mg per kg dosed animals.

Throughout the tox study, ANB033 was safe and well tolerated. There were no drug-related toxicities and specifically no viral infections. The NOAEL provides a tenfold safety margin over our dosing used in the celiac Phase Ib trial. Now we'll look at single cell RNA sequencing data from human celiac intestinal biopsies.

The graph on the left shows in blue the dense expression of CD122 by infiltrating CD8 and CD4 T cells and NK cells in the immune compartment of human celiac tissue. Importantly, CD122 positive cells are increased in celiac tissue by 50% to 150% compared to [indiscernible]. Depicted is the extensive expression of IL-15 by structural cells such as epithelial cells.

On the right, you can see similar dense expression of interferon gamma in Granzyme B. These data highlight the critical role of CD122 positive cells and IL-15 expression in the pathogenesis of celiac. This illustration shows Celiac biology with gluten captured and presented by ABCs to CD4 T cells. This causes a cascade of immune activation. The purple box highlights how ANB033's blocking of IL-15 signaling prevents the inflammatory effects of IL-15 on IELs, reducing the downstream mediators of tissue damage by inhibiting the accumulation and killing activity of CD122 positive IELs.

Importantly, ANB033 will also impact this bigger area, which is shown in the green box, modulating specific upstream immune pathways in response to gluten and individuals with celiac. This stops the disease at its source by reducing CD4 T cell derived interferon gamma and IL-2 signaling that would otherwise drive and amplify mucosal damage and by reducing downstream B-cell mediated antibody responses, including anti-gliadin and anti-tissue transglutaminase antibody production, which are real-world clinical measures for celiac.

Apart from the impact on inflammation, these cytokines are correlated with the GI and flu-like symptoms associated with glutamin ingestion. ANB033's dual inhibition of IL-15 and IL-2 signaling makes it an ideal therapeutic candidate for broadly addressing the underlying inflammatory mechanism driving mucosal damage in celiac. Many global pharmaceutical companies have or had celiac programs in development. However, none of these mechanisms target both IELs and CD4 T cells.

There are a number of active programs, specifically targeting only the IL-15 cytokine, targeting the downstream mediators of celiac in the purple box, which have been shown to effect IEL survival. However, most other drugs are non-cell targeting mechanisms that attempt to impact gluten processing or presentation as depicted in the red and orange boxes. Dr. Murray will speak further about other mechanisms that are being considered for celiac treatment. We believe the CD122 antagonist targeting both the key upstream pathogenic drivers and the downstream mediators of Celiac will deliver meaningful therapeutic efficacy.

In a mouse model of celiac that's been well characterized in literature, we tested an ANB033 surrogate antibody that binds to mouse-CD122 on a similar epitope and with a similar high affinity to ANB033 in humans. Shown here are H&E stains from the intestines of each treatment group, including no gluten, sham shall and normal histology and then isotype control and ANB033 each challenged with gluten. The stains clearly show the mucosal damage caused by gluten and prevention of the damage in the mice treatment with ANB033 that's comparable to the no gluten channel and strikingly different from the injury observed in the isotype plus gluten challenge.

From the same study, you can see how we measure these findings by assessing villus height and crypts depth using VHCD ratio and established endpoint in celiac. In the figure on the left, in healthy tissue, villus height is high relative to crypt depth, which is low. In contrast, in celiac data or in celiac tissue, we observed the destruction of villus with reduced height and extended crypt depth. On the right, the results from our celiac mouse model demonstrate that ANB033 significantly prevents reduction of the VHCD ratio as compared to isotope control.

This improvement highlights the potential of ANB033 to prevent tissue damage and the possibility to restore normal intestinal architecture in celiac patients. To demonstrate the cellular impact, we assess the epithelial layer and the lamina propria of the small intestine using flow cytometry. On the left, in response to gluten ANB033 prevents an increase in CD8 IELs and specifically prevents an increase in the subset of CD8 granzyme B expressing IELs.

On the right, ANB033 similarly prevents the increase of CD4 cd4 interferon gamma positive T cells compared to [indiscernible] control treated mice. Overall, ANB033 in reducing pathogenic immune cells in both upstream and downstream pathways mitigated inflammation and tissue damage in celiac. Separately, we stimulated celiac patient-derived PBMCs with both IL-15 and IL-2, to assess the potency of ANB033 on the inhibition of proliferation. ANB033 shown in blue demonstrates very significant inhibition of proliferation both on cytotoxic CD8 as well as CD4 Th1/Th2 cells that even expressed the high affinity receptor.

This inhibition was observed in concentrations we expect to achieve in the tissue in disease patients. As shown on the bottom, we've also stimulated these celiac patient-derived PBMCs with anti-CD3 and anti-CD28 to activate all of the T cells. ANB033 also significantly reduced granzyme B secretion and reduced interferon gamma secretion.

Now Dan highlighted the broad potential utility of a CD122 antagonist across a wide range of diseases in GI, derm and other therapeutic areas. We're actively assessing a few potential additional indications with the intent to advance one additional proof-of-concept trial in 2026. One disease we're assessing that may be another strong match for ANB033 MOA is EoE chronic immune-mediated disease characterized by inflammation and damage of the esophagus.

Let's look again at single-cell RNA seq data, like we did in celiac. Here, we can view the various immune cells and expression patterns of cytokines in EoE tissue biopsy samples. The graphs on the left shows in blue the dense expression of CD122 by infiltrating cells and human EoE tissue. Notably, there's a prominent population of cytotoxic CDT and NK cells relative to the number of CD4 T cells and ILC2s.

Depicted in red is the extensive expression of IL-15. On the top right is the CD4 and ILC2 pathway and the expression of IL-13 and IL-5, 2 hallmark cytokines of EoE. In the lower right is the CD8 and NK cell pathway and the expression of interferon gamma and Granzyme B. I want to point out that there are 2 pathways here, a CD4 ILC2 and a CD8 NK pathway the importance of the CD8 NK pathway has really only recently been appreciated.

Many of the same CD122 expressing cell types that facilitate the inflammation in celiac are also present in EoE is partially driven by alarmin activated dendritic cells, CD4 Th2 T cells and ILC2 with prominent expression of Th2 cytokines such as IL-5 and IL-13. This pathway is targeted by dupilumab and approved therapy for EoE. We refer to this as the CD4 and ILC2 pathway shown in the green box.

Notably, we will show you data that ANB033 directly targets and reduces the activity of both of these cell types, including ILC-2. However, second inflammatory pathway, which we refer to as the CD8 NK cell pathway is not directly targeted by dupilumab, as shown in the purple box, which consists of highly activated CD8 T cells, NK cells and prominent interferon gamma secretion and granzyme B.

Targeting this pathway is likely to improve symptoms of EoE by reducing inflammation, particularly in patients who are not responsive to dupilimab. Both of these pathways are upstream and work together to cost downstream fibrosis and tissue remodeling as well as other nondriving inflammation, such as the observed hallmark eosinophil recruitment and mast cell activation. This slide highlights the limitations of existing or failed therapies.

Dupilimab has proven efficacy but does not address the full spectrum of immune pathways involved in Eoe as a result, 20% to 30% of patients do not respond to treatment and additional patients could respond more optimally also given the fact that we could address the CD8 and NK cell-driven inflammation. As shown in the purple boxes, Novartis' anti-I1-15 antibody showed both eosinophil remission and a preliminary signal of symptomatic improvement in a small Phase Ib study, reinforcing the hypothesis that IL-15 is a key disease driver, which would not be targeted by dupilumab.

This is despite anti IL-15 is not impacting IL-2 signaling directly, which drives both the CD4-ILC2 and CD8 NK cell pathways, pathways that contribute to mucosal damage and the ANB033 would target. Because of this, the collective impact of targeting CD122 may be more effective than dupilumab or anti-IL-15 5 alone. Recent data from failed trials have also shown that targeting mast cells and eosinophils directly does not improve patient-reported outcomes, confirming downstream biologies are not drivers of EoE.

To get an optimal outcome, we hypothesized you'd have to target both upstream and immune cell mediated inflammation pathways, which ANB033 can address. To look at the effect of ANB033 on a CD4 and ILC2 pathway, on the top half of this slide, we assess human PBMCs stimulated with anti-CD3 and anti-CD28 to activate all the Th2 T cells. On the bottom, we purified ILC2 for human whole blood and activated them with IL-2. In both assays, ANB033 potently inhibited secretion of both ILT-5 and IL-13, demonstrating its ability to the cells that represents the key MOA of dupilumab. We also use the T cell activation assay to look at the effect of ANB033 on the CD8 NK cell pathway.

Human PBMCs stimulated with anti-CD3 and anti-CD28 activated all of the CD4 Th1 T cells and CD8 T cells. MBIO33, again, potently inhibited secretion of both interferon gamma and Granzyme B, demonstrating its ability to target the cells that are also key drivers of inflammation in the EoE. Finally, we stated the effect of ANB033 in a mouse model of aspergillos-induced eosinophilia. Eosinophilia is quantified from histology images, and as shown on the left, ANB033 reduced eosinophil infiltration in the esophagus as well as the lung.

Histology images on the right show eosinophil infiltration in the lungs, and you can readily see the reduced eosinophil infiltration in the ANB033 treated group. These data are important because CD122 is not expressed on eosinophils. The reduced eosinophilia seen in this model is a result of ANB033 targeting the upstream immune cells responsible for the subsequent increase in eosinophils. These data validate the concept that by targeting CD122 on the upstream immune cells, we may effectively reduce eosinophilia in EoE.

Now let's switch our focus to clinical data, and I'll turn it over to john.

Thank you, Martin. Let's review the initial data from our Phase I trial in healthy volunteers. All 10 cohorts, including 4 SAD intravenous, 3 SAD subcutaneous and 3 MAD subcutaneous cohorts have completed dosing. Each cohort had 6 healthy volunteers receiving drug and 2 receiving placebo for a total of 80 overall participants treated with either ANB033 or placebo. For the higher SAD doses and all MAD doses, we are following participants for up to approximately 7 months after last dose.

To-date, ANB033 has demonstrated an overall favorable safety profile and is well tolerated. There have been no SAEs, no severe adverse events and no discontinuations. All adverse events were mild to moderate with no signs of viral reactivation and with no unexpected lab abnormalities.

Subcutaneous dosing of ANB033 has a 2- to 3-week half-life and full receptor occupancy maintained for more than 30 days. A dose response was observed on relevant PD biomarkers, and we modeled the Phase Ib dose in our celiac trial to achieve greater than IC90 on CD8 T cell subsets in the target GI tissue. Importantly, no overall reductions were observed on regulatory T cell counts in the peripheral blood. In this slide, we conducted further analyses and assessed the impact of a single intravenous or subcutaneous dose of ANB033 on CD8 T cells and NK cells.

These doses represent maximal impact and PD of the dose we are taking forward in our Phase Ib trial, demonstrating that ANB033 potently hits these pathogenic drivers of celiac disease. On the left, we see a positive effect with both these modes of administration with a 70% to 75% reduction in CD122 expressing CD8 T cells. However, this did not result in a meaningful reduction in overall CD8 T cells.

On the right, we effectively eliminate all CD123-expressing NK cells. In humans, not all NK cells express CD122. As expected, the overall NK cell count remains well above the levels needed to maintain immune competency. The impact of ANB033 on NK cells and its safety profile is consistent with what has been seen in other anti-IL-15s and anti-PD-1 22 trials. As an example, Teva's anti IL-15 demonstrated a similar reduction in overall NK cells.

Note on the left, while our data only extend to Day 85, subcutaneous dosing of ANB033 shows a trend towards recovery of NK cells within 3 months. While on the right, when you look at Teva's presuming dosing for later-stage trials in blue, Teva's recovered at 50% NK cells has seen up to 1 year after dosing. Regardless, their asset with recovery at baseline at 18 months was associated with no safety segments.

Now it is my great pleasure to introduce Dr. Joe Murray. He is a leading expert in celiac disease. Co-Founder and former President of the North American Society for Study of celiac disease and contributor to the 2013 guidelines and 2019 ACA practice update on celiac diagnosis and monitoring. We appreciate his participation today to discuss celiac drug development.

John , thank you for that kind introduction. Celiac diseaes affects 1% of the population. It's a permanent intolerance to gluten that results in inflammation, destruction of the villi, crypt hyperplasia and proliferation of intraepithelial lymphocytes shown here on the right-hand side. The treatment of a gluten-free diet is not particularly acceptable to patients. Patients find a burdensome and have demonstrated an increasing dissatisfaction with it as a treatment.

There are significant consequences of chronic active disease, GI symptoms, malnutrition, reduced quality of life and consequences like osteoporosis are increased risk of malignancy. Regardless of the gluten-free-diet, perhaps as many as 50% of patients continue to suffer from things such as anemia and or fatigue. Recent work has expanded our knowledge base of the cellular environment that occurs in the chronic inflammation of celiac disease.

It's occurring in response to gluten. The gluten is incompletely broken down by human digestion. These peptides are taken up across the epithelium. They're deamidated in a way that makes them more antigenic by an enzyme called transglutaminase and then those peptides are presented in the context of HLA molecule to CD4 T cells that are specifically responsive to gluten in patients with celiac disease.

And this then drives a downstream inflammation. We know that even in treated patients, there's immune scarring that involves both epithelium, stromal cells as well as these immune cells. We know in treated patients exposed to gluten, there is a rapid rise in IL-2 that happens within 2 hours of exposure. Stressed epithelial cells express the key cytokine of IL-15 characteristic, but not unique to celiac disease injury.

Key other rules of IL-15 include inhibition of regulatory T cells, expansion of T cells, especially the intraepithelial lymphocytes as well as expansion and activation of NK cells. Some mechanisms that have been tried in celiac disease for potential treatments, many of which have reached clinical developments have focused on a whole series of these steps that we know are involved in pathogenesis. Attempts to generally modified wheat have not been successful, digesting wheat before it's turned into food or when it's in food, not also successful.

Enzymes that can digest gluten within the gut have been tried in clinical trials, and we talked about one of those when we talk to clinical trial design. Other approaches like probiotics, binders have found either to be not tolerated or not effective. Regulators of permeability have been in clinical trials and inhibitors of tissue transutamidase have also been in clinical trials.

And we will come back to the last example here of a tolerogenic agent called [ Nexfax ] that we will discuss later in trial design. There is a rationale in targeting both CD8 and CD4 T cells to try to broadly impact celiac disease inflammation. Two key cytokines are IL-15 and IL-2 both of these drive pathogenic immune cell expansion and inflammatory effects. IL-15 is an inflammatory cytokine expressed by stressed epithelial cells, including and especially in celiac disease. It supports T cell and NK cell homeostasis expansion, binds intracellularly, it's expressed together with its IL-15 with its IL-15 receptor on the cell surface and many cell types, including epithelial cells, stromal cells and ABCs.

The expression in celiac disease occurs or increased in the villi, in the crypts and in the lamina propria. In addition, IL-2 stimulates CD4 T effector memory cell activation and proliferation as well as their production of interferon gamma, which we know was key to the injury that occurs in celiac diseased and also drives IL-15 expression. The role of interleukin 2, which is produced by CD4 T cells has been well identified in the last 5 years in response to acute gluten exposure, a single exposure to gluten in a patient with healed celiac disease produces IL-2 and symptoms within 2 to 4 hours.

IL-2 elevation is a key marker for the central role of the CD4 T cells. This elevation is not observed in healthy controls nor is observed when there is a sham gluten or in patients with so-called non-celiac insensitivity and this occurs quickly. This also occurs in response to gluten peptide exposures. This is a result that trial I mentioned about tolerance using an agent called [ NexFax ] made up of 3 peptides thought to be all derived from various parts of gluten administered intradermally.

In the run-in phase, patients were given an oral gluten challenge and showed a significant rise in IL-2 along with the occurrence in some of symptoms. This did not occur after treatment with sham but it did, unfortunately, for this agent, occur when they were rechallenged with gluten again, it was no different than the placebo. But again, a key marker for the response to gluten in patients with treated disease.

IL-15 is a key driver of intraepithelial lymphocyte expansion. Mouse models overexpressing the IL-15 or alpha receptor in epithelium results in an increase in intraepithelial lymphocyte expression. Most models for celiac disease that incorporate expression of IL-15 in villi or lamina propria or both, along with DQA, the human HLA type -- so one of the human HLA types associated with celiac disease risk recapitulate gluten-driven inflammation and increase in IELs shown here on the right.

How do we target these cells effectively. CD122 is a shared receptor through which both IL-15 and IL-2 signal. It's expressed on a range of immune cells, CD8, CD4, T cells as well as NK cells, inhibiting IL-15 and IL-2 signaling inhibits subsets of these cell reducing inflammation tissue destruction and targeting CD4 T cells, in particular has the potential of reducing inflammation that downstream immune response is ultimately decreasing celiac disease consequences.

What have we learned from clinical trial design? Lataglutinase, it's mechanism of action is digesting gluten was shown to have effects in protecting the intestine from gluten-induced damage as well as protecting from symptoms. However, when that was translated to a much larger study focusing on symptomatic-treated patients, it failed to show benefit compared to placebo. So what are the key considerations for a Phase Ib trial design?

Yes, we need to include the traditional Phase Ib gluten challenge design in patients with controlled symptoms and limited or no mucosal damage. But if we're thinking about the Phase IIb or Phase III trials that are going to focus on symptomatic celiac disease, patients, we must learn from what has happened with trials such as the latiglutenase that worked for a challenge in that population of patients doing well, but did not translate into success in that much larger group of symptomatic-treated patients.

For immunologic mechanisms of action that effectively treat inflammation, if we can show that in a Phase Ib trial that mucosal healing can result that this would provide a robust foundation for clinical development in later trials. What have regulators thought about celiac disease? The FDA has demonstrated a high level of enthusiasm in recognizing the need for additional treatments beyond gluten free diet for celiac disease. They've had significant public engagement with the conferences they've organized on outcome measures, their participation and advocacy meetings, they have articulated that in this key target population that they expect an agent to prevent symptoms of gluten exposure as well as improvement of histologic injury, which will comprise 2 co-primary endpoints for a registrational trial.

They also will require the inclusion criteria that patients have active disease and that is causing their symptoms. Thank you for your attention. And now we will hear more exciting information from Paul in the next presentation.

Thank you, Dr. Murray. In a typical gluten challenge study, celiac patients are controlled symptomatically on a gluten-free diet. They entered the study with a range of histology including high villus height to crypt depth ratios above 3 to worsening levels of mucosal damage characterized by VHCD ratios down to a level of 2. The insights gained with gluten challenge studies have been valuable in providing a clear indication that a drug can prevent the onset or worsening of gluten induced injury.

However, this differs from the entry criteria and anticipated target population in Phase IIb and Phase III trials. The goal of these later-stage trials is to examine if a drug can promote mucosal healing in the setting of preexisting mucosal damage. We saw this difference as an opportunity to improve how Phase Ib trials are conducted to potentially provide a better prediction of success in Phase IIb.

We have designed our Phase Ib study to assess not only patients with baseline VHCD greater than 2, but to also include a cohort of patients with VHCD ratio less than 2 to further assess if ANB-033 will promote mucosal healing. Our global placebo-controlled multicenter Phase Ib trial in celiac will enroll patients in Western EU, Australia and New Zealand. The 2 distinct cohorts will enroll 30 patients each, randomized 1:1 between ANB033 subcutaneous dose and placebo for a total of 60 patients in the study.

The key inclusion/exclusion criteria distinguishing which patients are eligible for each distinct cohort is tied to the baseline VHCD ratio. Patients in Cohort 1 will have a VHCD of greater than or equal to 2 and will undergo a gluten challenge to assess prevention of further mucosal damage. While patients in Cohort #2 will have a VHCD of less than 2 to assess the ability to healed mucosal damage in symptom control patients.

As this is still a Phase I study, key assessments also include safety and tolerability in celiac patients as well as PK and immunogenicity. The efficacy endpoints in the celiac trial assess ANB033 impact on both histology and symptoms. We expect to report data of ANB033 versus placebo on the change from baseline in the 2 common histologic measures, VHCD ratio and IEL count as well as on qualitative assessments of celiac related symptoms.

For example, we will measure the celiac disease symptom diary or CDSD, which is a validated patient reported outcome measure. In the CDSD, patients track frequency and severity of key celiac symptoms, including abdominal pain, bloating, diarrhea and nausea, a daily diary to help gauge a change in their symptoms over time.

Now let's review each of the 2 cohorts individually. Cohort 1 is a standard gluten challenge study that will enroll symptomatically well-controlled celiac patients with minimal evidence of mucosal damage or the VHCD ratio of greater than or equal to 2. We aim to enroll a good distribution of patients with histology scores distributed across the range from 2 to 3, looking to assess prevention of further mucosal damage from the administration of gluten in patients who do not have normal histology.

These patients undergo initial endoscopy and then receive a dose of either placebo or ANB033, starting at baseline then at week 2 and week 4 for a total of 3 doses. It will then begin a 2-week gluten challenge through week 6. The gluten facilitates a controlled induction of mucosal injury by administering a 6-gram daily dose of a study provided gluten cookie for each of 14 days. An endoscopy with biopsies will then be conducted at week 6 to evaluate any mucosal damage caused by gluten exposure on placebo as well as assess if there was a prevention of injury in the ANB033 patients.

Cohort 2 will enroll symptomatically controlled celiac patients who display persistent evidence of mucosal injury and have a VHCD ratio of less than 2. They will not be enrolled in the cohort 1 gluten challenge because the mucosal injury is already too significant to administer for further gluten. These patients have histology consistent with patients who are nonresponsive to a gluten free diet in the real world. These patients will also undergo an initial endoscopy and then receive a dose of either placebo or ANB033 at baseline, then at week 2 and week 4 for a total of 3 doses.

However, after the final dose at Week 4, these participants do not receive the gluten cookie challenge. They will instead be followed for an additional 8 weeks and will undergo their second endoscopy at Week 12 instead of at Week 6 as a cohort 1 as this will allow for a longer duration of mucosal healing after the last ANB033 dose.

The model target tissue exposure is sustained above the IC90 at least through this week 12 endoscopic assessment, demonstrating preliminary evidence of mucosal healing in a more histologically abnormal population, provides additional complementary and supportive data to the results in the Cohort 1 challenge. While our Cohort 2 trial design is innovative, there is a chance that patients will need to be treated for more than 4 weeks and/or need additional time beyond 12 weeks to see meaningful mucosal healing.

Positive results in either Cohort 1 or Cohort 2 with support progression into Phase II trials in nonresponsive symptomatic patients. We look forward to reporting the Phase Ib data by the year-end of 2026. And now let me hand the call back over to Dan.

Thanks, Paul. We'll close by briefly reviewing the substantial commercial opportunity in each of the diseases discussed today. Celiac disease affects over 2 million Americans. We will initially target patients nonresponsive to gluten-free diet projected by the early 2030s to be 0.25 million patients in the U.S.

Our conversations with physicians suggest they are seeking therapeutic options that address both the clinical symptoms and the underlying pathology, while payers understand the need for treatment and anticipate standard biologic pricing. Similar to IBD, growing physician and patient awareness as well as the availability of approved therapies are expected to meaningfully increase today's 30% diagnosis rate.

With high unmet need, a large patient base seeking treatment anticipated reimbursement support. ANB033 represents a strong commercial opportunity for treating celiac disease in a market projected to surpass $4 billion. Further, initial approvals from patients nonresponsive to a gluten-free diet could expand the opportunity in the broader celiac population.

Potential additional population of patients who are technically responsive to the gluten free diets find strict lifestyle modifications challenging. As well, in addition, as evidence continues to emerge that early tissue damage can be mitigated, newly diagnosed patients seeking to prevent gut damage may be potential candidates for treatment in the future.

Similarly, we see significant opportunity in the EoE market, which has grown notably over the past 3 years and is expected to continue growing as disease awareness increases. Treatment options here remain limited. Half of patients do not respond to first-line treatment of proton pump inhibitors or steroids. And for those who are biologic eligible, approximately 20% to 30% did not respond to dupilumab, the only approved advanced therapy in EoE. Dupilumab, despite its weekly administration in this disease, is anticipated to sell an estimated $2 billion in 2025 in EoE alone.

Even with only 50% of biologic-eligible patients expected to be treated by 2030, the U.S. biologic market is expected to grow to approximately $5 billion at this time. As Martin demonstrated, ANB033's distinct mechanism targets both dupi sensitive and insensitive pathways, potentially making this an attractive market to pursue for development in both first- and second-line advanced therapy.

As I stated earlier, in addition to the potential advancement of rosnilimab into UC or RA, we expect ANB033 to play an increasingly large role in our portfolio as we generate patient data in Phase Ib studies. We plan to share top line data from our Celiac trial in the second half of 2026 and also planned next year to initiate a Phase Ib trial in a second disease. Special thanks to Dr. Murray for joining us today. and our team at Anaptys for their dedication to advancing innovative immunology therapeutics. Martin, Paul, John, Dr. Murray and I will be available for Q&A. I'll now turn it over to the operator.

[Operator Instructions] Our first question comes from the line of Yatin Suneja, please go ahead, from Guggenheim.

A couple of questions for me. So first one is on the [ NK cells ], nice data on different subsets. Could you just talk about the relevance of total NK. I mean if we do -- should we compare the NK cell data to see the potency of the molecule? Or is that -- or could that be used as a biomarker. So that's one. If you can then -- second question is also comment on the bioavailability between subcu and IV. And then the final question is for Dr. Murray, if you could comment on how would we adopt a treatment like this in its practice and who do you think is an ideal candidate for this treatment?

Thanks, Yatin. Maybe we'll start with the question of Dr. Murray, just thinking about program at celiac. Dr. Murray?

That's an excellent question. So as a gastroenterologist, who treats patients with celiac disease, the only thing I have to offer them is a gluten-free diet. I have no drugs. On the other hand, if I treat patients with EoE, for example, or I treat patients with IBD, I've got a whole armamentarium of drugs, especially in the IBD field for which I can choose.

The availability of treatment drives our interest in treating patients. And I believe that if we had a treatment such as ANB033, a subcutaneous drug administered intermittently. This fits right within the paradigm that gastroenterologists are very comfortable with treating patients with chronic inflammatory disorders with drugs that address their inflammation.

And I think it would fit very well into that practice. I also think it will drive their interest in the disease and greatly expand the awareness of the disease, the detection of the disease, but most importantly, enhance the management of the disease. The ideal type of patient, I would say, for this type of approach would be patients who have active disease with symptoms and inflammation despite doing their best on a gluten-free diet and that probably makes up at least 30% of the patients with celiac disease.

So it doesn't mean there aren't other groups beyond that, that would also be potentially candidates for a comprehensive management of celiac disease or something that could provide comprehensive management. But that's in a nutshell where I would see this. It would be a game changer the management of celiac disease, but well within the capabilities of community gastroenterologists and all those who treat say, for example, IBD or similarly even EoE now where we use biologics fairly frequently, including in my practice.

All right. And then on the NK cells, we provided data both in [ CNO ] tox studies as well as in our Phase Ia. I would just say that we've been talking about this for a while. NK cells are particularly sensitive to the inhibition of IL-15, and you don't need to be the most potent drug whether you're an anti-IL 15 or CD122, to really see full coverage of reductions of the NK cells or specifically the CD122 expressing cells.

But I would just caution you on, I think this is also going to be true when you're looking at the effect of the various T cell subtypes or the ILs over time to just make sure that you're looking at either CD122 expressing of that cell type or the overall cell type. As you saw in the [ sino ] tox work, where effectively all NK cells or CD122 expressing. We bring those down to 100%. And then in humans, you see pretty much equivalent coverage of the CD122 expressing, which result in somewhere in the 70% ,80% of overall NK cells, we think this is pretty consistent really across the entire landscape and not the area of differentiation when it comes down to it.

And our next question comes from the line of Joseph Thome from TD Securities.

Maybe one for Dr. Murray and one for the company. Dr. Murray, do your patients present with the same type of symptoms. I know nausea, bloating, diarrhea were indicated. But I guess, is there a typical disease course, particularly for your patients that may be are refractory to gluten-limited diet? And then for the company, can you talk a little bit again about what you're looking for, for success. Do you want to have success in both Cohort 1 and 2 to move forward? It sounded like maybe you would look at either, but then you also brought up the lataglutinase example, which was kind of looked to be helpful in preventing gluten-induced injury, but not in healing established disease. So kind of just looking to better understand kind of what you're looking for there to move it forward.

Dr. murray, why don't you kick off? And if you wouldn't mind, feel free to give your opinions on the second question as well, and then we'll add on to you.

So the typical patient that I see with nonresponsive celiac disease, the most common symptoms related to abdominal symptoms, abdominal pain, bloating, nausea, of course, would go along with that. And then there is a significant subgroup who have diarrhea as part of their symptomatology. But that's still a minority of those patients, but it is an important symptom for those patients.

Fatigue and headaches, of course, are 2 other symptoms that are also quite common in celiac disease. A little bit harder sometimes to capture. There are a whole variety of other symptoms that patients complain of. But it's really captured within that group of abdominal symptoms. The symptoms very tremendously from day to day. They can be nonexistent on Monday and severe in another day.

So a measurement device like the CDFD more recent version of the 2.1 version captures both severity and frequency of these key symptoms to really assess where they're at. So that's a fairly typical group. And those are patients who are, I would say, intermittently miserable because of their symptoms or quality life is impacted. And the second question, I forgot.

Just thinking through the different cohorts in our Phase Ib trial, what you'd expect to see as a result, that would excite you.

Oh, okay. So when I think of this Phase Ib design with these 2 cohorts, One, it takes advantage of patients who typically would be excluded by their beginning biopsy showing too much damage. So it keeps them in. That's great as an investigator. I love to see that. It also identifies a group of patients, which we think are quite common. That is people who have fairly minimal symptoms, but still have inflammation.

So that second cohort provides an opportunity to show benefit or impact of this approach targeting CD122 with regard to that ongoing persistent inflammation. And if we see that type of benefit, that really helps increase the likelihood of success when we target that population, which the FDA have said have to have not only symptoms, but evidence of inflammation to be included in those later Phase IIb registrational trials.

The other part, of course, it is absolutely important that this agent or agents like this can prevent the impact of gluten. And that's, I suppose, what's exciting for me is that the fact that the CD4 effector memory cells can be impacted by these treatments. Those are cells that are long resident within patients with celiac disease, even though they've been avoiding gluten for a long time, they get exposed to gluten and they get a very immediate response.

We want to see that also. I want to see that also blocked and I expect that we should see that blocked with this type of approach targeting these particular cells in celiac disease. Both of them happen, and that's a would be an amazing result to see both. I won't say amazing, isn't surprising, but it would be a very strong result to see both of those happen.

So I expect we should see signals, both for the protection of injury in the patients with gluten challenge as well as improvement of patients who've got [ inflammation as entry ].

Yes. It's Paul, I think Dr. Murray, I think you said it very well. I don't think I have much more to add and I would agree that we would hope to see signals in both of those cohorts. And I think we're quite pleased that we'll have the opportunity to study both the gluten challenge as well as those who are not undergoing gluten challenge and already have preexisting injury to see if we can detect at least initial healing in that first.

And our next question comes from the line of Alex Thompson from Stifel.

I think the first 1 on 033 specifically, is there any residual effector function here with the depletion of the relevant cell type space exclusively on this removal of the proliferative survival pathway like with the pure IL-15 targeting.

And then in terms of the Phase Ib doses, how confident are you in the PD translation to patients here and that you'll see the relevant effects on these cell types after these 3 doses?

Alex, do you mind just repeating the first question? I'll make sure we address it the right way.

Yes. So is there any residual effector function with 033 in terms of cell killing of the CD122 positive cells? Or is this just purely blocking the survival pathway here like the IL-15s.

Yes. Thanks for the question. ANB033 was designed for high potency, it's is a nondepleting antibody.

And our next question comes from the line of Yasmeen Rahimi from Piper Sandler

Thank you for the excellent presentation and very thorough. I guess, first question is to Dr. Murray. Given the size of the 2 cohort 1 and cohort 2, do you think it's sufficient to get a definitive answer to establish sort of efficacy? And can you also think -- help us understand when we take this data from a small cohort study to then towards a registrational path. What that translation look like? Of course, these are 2 tough questions, and we've not seen the treatment effects, but would love to kind of help us understand the importance of these 2 cohort 1 and cohort 2 design and it's later translation to a larger Phase III design study that could gain approvability.

Terrific question. And as I think about the size, these are small cohorts. It is a Phase Ib trial. So it will be the first time patients with celiac disease will be seeing this agent. So by the very nature, it's going to have to be a small cohort. So you cannot be absolutely definitive. Now of course, one would expect with a potent agent to see a very strong signal. So if we take that cohort 1, the challenge of 6 grams a day for this 2 weeks really should push the response and a potent agent with the type of dual, I would say, at least dual approach of CD4 cells as well as CD8 cells, we should be able to see protection of the -- from inflammation within intestine.

There's going to be some heterogeneity. There's always some variability between patients. But by and large, I think there's a good chance that we would see a clear signal. The second cohort, again, it's a small cohort, they're small numbers. And there is, of course, an issue with this that you can have on the placebo side, you may have what's called the Hawthorne effect for patients coming into a trial do an even better job avoiding gluten. Now they will probably be patients who've been on a gluten-free diet for at least a year and probably much longer.

And many of these studies patients have been on gluten-free diet for 5 years. So they may already be fairly stable. So a potent effect on inflammation may well give us at least a trend to support that. Results from that second cohort, if it indicates the possibility of benefit in terms of inflammation what that then informs us is that when we think about, say, sample size for a Phase II study that's focusing on these nonresponsive celiac patients who have inflammation, we may be able to reduce maybe the total numbers required. There are other strategies to deal with the Hawthorne effect that are appropriate for a Phase II and maybe even a Phase III trial, such as doing simulated gluten exposures, for example.

But I think both of these cohorts, even though they're small, they have the potential for providing us with a fairly solid foundation upon which to design those much larger Phase II studies that will be focused on this high-need population of nonresponsive inflamed patients.

Thanks, Dr. Murray, I'll just maybe add on a little bit. So we do have about 15 subjects in each cohort in each of the 2, so 30 subjects cohort. So there is an adequate number to see a signal to detect that, and we are 80% powered to see the mean change from baseline in the VHCD ratio. And this is pretty standard for a Phase I trial size. So I would say we're comfortable with where we're going and looking forward to the results over time.

And our next question comes from the line of Andy Chan from Wolfe Research.

So on Slide 29, you say that you have more than -- you have -- you're modeling IC90 in CD8 T cells, but you don't mention anything about ILCs or NK or CD4s. Just it's out to me because you have -- you see -- on the next slide, you seem to have greater impact on NK cells. Just curious if you have also modeled IC90 for the other immune cell types. And on a related note, because you're you're seeing full receptor occupancy in healthy volunteers, but we should have much higher immune infiltration in disease tissue.

Do you know receptor occupancy on different types of CD-122 plus immune cells in patient tissue.

Martin, why don't you just walk through a little bit of differences to how we look at the various immune cells and how we target each of them.

Yes. Thanks. It's a pretty complicated question. Let me level it up a little bit. We designed ANB033 with potency in mind. And this is within the mindset that -- the cell types we're targeting each have a different sensitivity to the cytokines IL-15 and IL-2, and has a different sensitivity to ANB033 inhibition. Let me start with the NK cells. These are particularly sensitive to IL-15 inhibition. And so as Dan said earlier, it doesn't take a lot of inhibition here to decrease the NK cells almost entirely.

Yes, we modeled the IC90 off of this, but it's so easily achieved. We don't believe the NK-cell are the primary mediators of disease in celiac or in EoE. We spent most of our time modeling for the CD8 T cell biology. So CD8 T cells which are very similar to the IELs and we're interested in Celiac signal through the intermediate affinity receptor. And you need a pretty high potency antagonist to target these to the IC90 that we're planning for.

In particular, the IC90 in the tissue that you're interested in the small intestine for celiac. We also looked pretty closely at memory CD4 T cells. These signal through the intermediate and the high affinity receptor for IL-2, and you need a very potent CD122 antagonist to inhibit these very potently, particularly, again, in the tissue. We believe, as we showed in some of our biology slides that the CD4 T cells are going to be some of the root cause of the disease, and we want to target those.

We also spoke briefly about T-regs T-regs expressed the high-affinity receptor, but they're very unique and they expressed also very high levels of CD25, which allows them to capture IL-2. And so they are particularly resistant to CD122 antagonism. Getting back to your question, we spent most of this focus modeling the IC90 for CD8 T cells because we believe that's the primary effector cell that we want to hit in celiac in the IEL compartment.

But we also believe CD4 T cells are very important, and we do believe we'll have a strong on-target engagement there.

And I'll just add 1 more point. We mentioned we saw a dose response in the Phase Ia. We're showing you representative doses that hit the MAX impact across the CD8 and the NK cell. So we had enough data here between the sino tox work and the Phase Ia to do the right modeling to at least in our eyes, I believe we're going to get enough antibody into those compartments in the gut. And that's another important part. When we get there, we've just shown you that we're going.

And our next question comes from the line of Anupam Rama from JPMorgan.

This is Priyanka on for Anupam. Just a quick question from us. what characteristics of biological responses would you point to as the most important to say there is mucosal healing in Celiac clinical trial. Would it mostly be the VHCD ratio change from baseline? Or is this more about the totality of data?

Dr. Murray, do you want to give some...

Yes, I'll have a go at that one. So I think for most trials that will include histology, we've kind of relied on the VHCD as the primary measure of villus mucosal health. Now of course, that's a very crude measure. But it is reproducible and there's a reasonable degree of precision, and we know how the mucosa deals in terms of a challenge, the response to a challenge. So that would still be the primary one. intraepithelial lymphocytes density, is also quite measurable and also has got reasonably good inter-observer [ variablity ] precision is good on that also.

So that's a good secondary one. There are, of course, lots of other inflammatory markers you're going to be breaking out cell types, et cetera. But really, the histologic, I think for virtually all studies thus far, they've taken the villus height, crypt depth and the intraepithelial lymphocyte as primary and secondary measures for the mucosal Health as it were. We're also collecting symptoms, there will also be symptoms with the [ CDSD ]. So it would be great to see a signal of protection from gluten-induced symptoms in cohort 1. There's probably not going to be much of a signal to see in cohort 2 in terms of symptom improvement because of the way they're recruited to begin with.

And just to add on to that, it's very standard and we would be doing this as well in terms of reporting out VHCD, the change of VHCD versus placebo as well as a change in the IEL. So those are standard. I think you see in every trial where be reporting those across both cohorts.

And our next question comes from the line of Martin Fan from Wedbush.

I have 2 questions here. One for Dr. Murray. What percentage of celiac patients would you say have comorbidities? And do you think this could be a reason to choose immunomodulator over celiac specific approaches such as tolerization or barrier modulators. And then to the Anaptys team, curious about what would be the trigger to initiate development in EoE and when we might expect to hear any confirmation on development plans for the second indication.

Okay. This is -- I'll take the first 1 with regard to comorbidities. Probably somewhere in the range of 10% -- 10% to 15% of patients with celiac disease have comorbidities that might impact. For example, we see a proportion of patients who also have microscopic colitis, an inflammatory condition of the colon that there is no, I mean, really approved therapy for. So I had a potent anti-inflammatory that targets [indiscernible] lymphocytes, cytotoxic T cells, CD4 cells, I'd certainly be very encouraged to consider it. We also do see some overlap with EoE, which is also of interest to the program.

And then why not use something that could hit both. So those will be very specific areas. But by and large, the other comorbidities are things. Typically, there are consequences of celiac disease. There is a small proportion of patients who have, say, IgA deficiency, that's probably no more than 2% or 3% of celiac patients.

I don't see any reason why that would not be a good population to use an approach like this in. And other consequences like osteoporosis or the risk for malignancy is certainly there that we know chronic inflammation can increase the risk of malignancy, especially in older patients. So something that focuses and suppresses inflammation, I would say, would probably be a good thing in patients where we might be thinking of ultimately a risk of untreated chronic inflammation long term. So is that what you were getting at?

Yes, definitely. And then also curious about other approaches for celiac disease, the ones that are specific such as gluten tolarization or barrier modulators. Do you think these comorbidities might give rationale for choosing an immune modulators such as...

Yes, that's an excellent point. I'm not sure that we -- we have become sophisticated enough in the field to actually consider that because we haven't actually got therapies. But I know in other diseases like IBD, we frequently modify our choice of approach dependent on comorbid disorders. When I think about the question you've asked in terms of choices, if I have a chronic inflammatory disorder that's mucosally based for example, the colitis that I mentioned, definitely I'm going to -- I would tend to use or choose an anti-inflammatory, something that's directly targeting inflammation as opposed to something that's, for example, breaking down gluten, for example, or tolerization.

We know that in the context of the particular comorbidity of microscopic colitis in the celiac. The microscopic colitis does not respond to a gluten-free diet usually. So doing something that just blocks the effects of gluten is probably not going to help that comorbid condition.

But yes, this is a little further down the pipe post probably post registration.

Yes. I'll just add to some of this and answer your second question. I think as we think about targeting celiac disease and treating inflammation, just like in a lot of other autoimmune diseases, you want to target the inflammation to see disease modification, same rationale here. Dr. Murrahy did a nice job of really highlighting a lot of the broader GI diseases that we have listed on some of our slides today.

You're asking about EoE specifically and some of the triggers, and we laid out a case, we clearly don't work here in EoE in terms of the biology and some of the modeling. But there's also work that exists in other diseases. We didn't have time today get into all the term disorders. There's others working currently or actively in the space of the IL-15 path or the CD122 blockade. In terms of EoE specifically, we're assessing how do you run an efficient Phase Ib design, one that similar as in celiac, one where you can show benefit on both histology in terms of eos reductions as well as symptomatic improvement. So the exact same approach we're taking in the celiac disease and can you show data in the Phase Ib trial that adequately derisks the Phase 2, we're doing something different here would give us more of an evidence-based approach that would derisk celiac in Phase II. We're looking at this for the same way in EoE.

We've seen mechanisms that reduce eos, but don't actually impact symptoms. So it's the same idea. So we're assessing here right now. There's other choices, and we'll make a decision in 2026 in terms of EoE or or some of these other diseases. We're also watching this space, and we are going to see data in the space in some of these other diseases that could impact what the second indication will be.

And our next question comes from the line of David Risinger from Leerink.

Congrats on the progress. This is Edward speaking on behalf of David Risinger. So 2 questions, please. So in terms of the onset of action, how should we think about 033 against other IL-15 targeting agents? And should we expect targeting CD-122 to translate into deeper or more durable responses down the line in celiac disease in other indications? And second question is, could you please comment on Phase II celiac disease trial? What are the key considerations you highlight ahead of the company disclosing data next year?

address the first one, Martin.

I can briefly take the first part. So the anti-IL-15s are going to target the IL compartment in Celiac in that box that we had on the diagram. The CD122 antagonist is going to also do that, but it's going to antagonize IL-2 signaling as well. So that benefit on top of the IL-15 gives you the ability to also reach the CD4 T cells from the biology that that unlocks very important to addressing the root cause of gluten sensitive disease in celiac.

I would just say that you can see from the Phase Ia data, at least in the periphery, we're seeing very rapid response. This is also off of SAD, so single dose that has long PD. So I'm not sure you can be faster than what we're seeing in terms of the impact of all the cell types that we're discussing. I'll leave it to others to comment on competitive data and time lines and catalysts.

And our next question comes from the line of Emily Bodnar from H.C. Wainright.

I was curious if you could comment about the dosing you're planning to use in the Phase Ib. It looks like you're potentially using a single dose. So any commentary on your confidence in that dose being effective? And then if you're planning to use the same dose for both cohorts or if it might make sense to use higher dose in the more severe patients

Yes. Thanks for the question. So we are using the same dose across cohort 1 and cohort 2 as we walk through, the patients will receive 3 specific doses in each cohort at baseline at week 2 to week 4. We did, as we described earlier in the Q&A session, we've done the modeling, I think we need to do and feel confident that we are administering enough drug to have the appropriate amount of antibody get into the gut into the tissue, we should be able to see the effect we're looking for some of the biological level.

So when you're going with 1 dose, you take the approach where you're not going to miss on being too low. I think that's all we're going to comment in terms of the specific dose at this time.

And our next question comes from the line of Derek Archila from Wells Fargo.

The first 1 is for Dr. Murray. I just want to be clear. So when you say a patient is not responding to a gluten-free diet, are you basically saying that they continue to have active inflammation in absence of gluten or is it because of symptoms due to the mucosal damage. I just didn't know if it meant that they were just not compliant? Or is it actually just irreversible damage?

And then 1 for the company just in terms of what we should expect, I guess, from like a placebo response on histology and PRO measures for the types of patients that we're seeing evaluating Cohort 1 and Cohort 2?

So I'll address the question -- excellent question on how we kind of think about those patients with nonresponsive disease or what's also been termed active celiac disease despite people doing their best on the gluten free diet. Gluten free diet is just not a great treatment. It is extremely burdensome. One study, which looked at kind of comparative burdens of care suggest that celiac disease has the same burden of care as end-stage kidney failure, which is really pretty bad, and that's because the entire burden of care is on the patient.

So it's a hard burden to carry. And in our modern living, there is gluten everywhere. So we assume that most patients with celiac disease are getting some gluten in their system and that gluten can cause both ongoing symptoms and inflammation. The FDA has made it clear in their draft guidance and in discussions, public discussions that they really want to see this treatment for an effective treatment for this population, that is people who have got ongoing symptoms related to their celiac disease and inflammation determinable by biopsy.

And that both of those things have to be improved for them to consider a therapy effective, which is -- and I think when we think about it, there are some patients who are doing symptomatically very well, but who still have significant damage. And then there are patients who have very bad symptoms that are very intermittent but are triggered by gluten exposure. And as we've discussed earlier, even patients who are healed get gluten, they get the significant production of IL-2, they get symptoms that happens within hours.

And something that could retard that effect or it could prevent or reduce those numbers of CD4 positive effector memory cells and block that IL-2 effect could be a game changer in terms of helping patients with those types of symptoms also. So there are other cohorts of patients beyond that, but that's really, I think, the most important needed population that needs treatment.

Dr. Murray, just in terms of that second question that was asked regarding placebo and the impact, maybe you can give some perspective on how we're administering the 6 grams of gluten, is that enough? What you expect to see there and maybe relative to other studies.

So 6 grams is a substantial amount of gluten. For a celiac patients in their normal lives to face that, that's a lot of gluten. That's not a little gluten. It will produce some symptoms. With a careful management of those patients in expert centers, we can quote patients through those couple of weeks of gluten challenge. Usually, the symptoms are worse for the first and second dose.

It is a good enough dose to overcome any behavioral change that may occur due to participation of the diet more than enough to drive both system generation related to gluten as well as changes of inflammation that are measurable with quantitative histology. Placebo patients, of course, there are placebo patients, we have to support them. So recognizing them that they're going to get symptoms at patient populations are very motivated. The celiac population are very motivated. They are very enthusiastic for participation in studies. They often see it not only as a service to themselves, but as a service to their family members who may have celiac disease.

In addition, the -- you want people to also stick with not only the study but stick with the gluten challenge and AnaptysBio laid out a very careful plan for counting the wrappers, to, giving them a solid food -- real food article that contains a measured amount of gluten, not a slurry of basically gluten powder mixed with something, maybe something to disguise it. But rather by using something that mimics real food which then mimics the type of exposure that somebody would normally get with gluten within the digestive system, measuring gluten peptides as a way of determining, verifying the patient actually took their gluten and letting them know ahead of time that you're doing that messaging with the patients, contacting the patients on a regular basis operationally will help keep people encourage, keep them in the study and keep following the protocol.

So I think with all of those measures, high likelihood of successful conduct of this study.

And I'll just add to that. In cohort 2, as we mentioned, certainly, the -- those patients have substantial amount of damage given that their VHCD ratio is less than 2. And you're really looking for healing in that population over the course of that time period in the 12 weeks, and you're not going to really expect to see much happening in the placebo subjects in that setting.

And those patients will, of course, know probably, they'll know that they have got damaged. And they'll be very motivated to remain in the study and see if they improve. And I have to say, as an investigator, I really hate to screen fail somebody because they've already done a run-in phase by the time they get to you're getting their biopsy. They get very disappointed. And I'm disappointed. And I think this novel design of keeping those people in as cohort 2 otherwise would have failed as a late screen failure with the attendant expense, et cetera, that occurs

with that, I think is a very good positive from a trial conduct perspective.

And our final question for today comes from the line of Etzer Darout from Barclays.

I guess my question -- for my question, Dr. Murry couldn't comment on this as well. But just wondered if you've had conversations with clinicians on the chronic usage of ANB033 versus episodic dosing in celiac disease? And does the Phase Ib results start to maybe answer that question.

I will confess that our -- the thinking at least in celiac disease has evolved from a therapeutic perspective. I go back only 15 years and most gastroenterologists, even most people in the celiac space, will really not be thinking about chronic therapies for celiac disease beyond the gluten-free diet. It took our patients to really inform us about how life was not so hunky-dory with they're living with what we thought was a great treatment.

As we as doctors thought was a great treatment as a gluten-free diet, it really wasn't. So there is an appreciation that these patients have a chronic inflammatory disorder with substantial symptoms the treatment we're currently giving them is not effective, particularly effective [indiscernible] and it's associated with the significant burden. And so there is an appreciation that we need a chronic management plan.

Now whether that management plan incorporates daily therapies, weekly therapies, monthly therapies, it does really evolve around the notion that we need to have chronic management. It's not likely to be a once and done or a sharp shock treatment will then reset people that's unlikely because we do know in celiac disease that the memory for gluten, the immune memory for gluten is very deep indeed. That's why these effector memory cells, the CD4 positive memory effector cells that respond to gluten are in a particularly attractive target to deplete and disable as it were because there where that memory resides.

So for that reason, at least when I speak with most of my colleagues, we were thinking about chronic management. My prediction is that if we get a treatment that is potent and that suppresses inflammation and protects people from symptoms of their disease that this will be treated much more like what I call IBD 3, a third inflammatory bowel disease That we'd be thinking of it as a chronic inflammatory disorder that requires management, not that dissimilar from other inflammatory disorders.

I'll just add to finish up. In the Phase Ib trial, these are obviously shorter course trials. They're not meant to imply doses you're done for life, right? It's not that. I think we are taking advantage here in cohort 2 as we look at 3 doses through week 4 and then doing endoscopy through week 12. That we are relying on the complete data we have to date, where we do have longer-term PD effects of the target cells of interest, specifically the CD-8s and CD-4s. So we are going to get an assessment there of 4 weeks of treatment and at week 12, some initial basis of healing. This will all inform Phase II trials, which will be longer course treatments over a longer time horizon, 6 months plus 6 months to a year.

Thank you. This does conclude the question-and-answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.

Good day. Thank you for standing by. Welcome to the Anaptys conference call. [Operator Instructions] Please note that today's conference may be recorded.

I will now hand the conference over to your speaker host, Dan Faga, President and CEO of Anaptys. Please go ahead, sir.

Good afternoon and thank you for joining us today. We are excited to discuss today the further evolution of Anaptys with our intention to separate our biopharma operations from our substantial royalty assets. This separation is designed to maximize value by creating 2 companies each with different business objectives and opportunities.

After my prepared remarks, our CFO, Dennis Mulroy and I will be available to take your questions. This presentation contains forward-looking statements. Please refer to our SEC filings for further details.

For the past 20 years, Anaptys has been known for generating best-in-class antibodies. Jemperli and imsidolimab are 2 previous successes discovered by Anaptys. Both are realizing value through our financial collaborations as well as have positively impacted patient lives.

Jemperli's commercial uptake over the last 12 months, combined with its anticipated future growth is nothing but impressive. This results in an outsized tiered royalty stack payable from GSK that flows through to Anaptys. We are equally excited about Anaptys' proprietary development stage portfolio of immune cell modulating antibodies, including rosnilimab, ANB033 and ANB101. Anaptys is also well capitalized today with approximately $300 million in cash as of the end of Q2 2025 and cash runway through year-end 2027.

Our intention is to separate Anaptys into 2 independent publicly traded companies. For simplicity, we are referencing generic names for these 2 companies, Royalty Management Co and Biopharma Co.

Royalty Management Co, upon completion of the separation, will manage the future royalties and milestones from assets tied to our financial collaborations with GSK and Vanda. This company's focus will be to protect and return the value generated by these assets back to its shareholders. It's expected that minimal infrastructure and staff will be required to manage this company. We also anticipate Anaptys' NOL carryforwards and tax credits will remain tied to this business.

Much like Anaptys does today, Biopharma Co will continue to develop and potentially commercialize its high potential programs focused on autoimmune and inflammatory diseases. We plan to launch Biopharma Co with a new name and with adequate capital to fund operations for at least 2 years through significant value-driving events.

Stepping back, since March, we have repurchased approximately 10% of outstanding shares in Anaptys. This reflects our conviction that at current trading levels, Anaptys' stock is significantly undervalued relative to our royalty assets alone to say nothing of the value of our biopharma portfolio in cash.

As we approach the point at which additional investment may be needed to advance rosnilimab into pivotal studies, we believe a number of alternatives to further finance our development stage portfolio exists, both prior to and after the separation into 2 companies. That said, we feel it's important to provide clarity now regarding our future intentions for the royalties.

I want to repeat that we are committed to protecting and returning the value of the Jemperli royalties to our shareholders regardless of any potential capital needed in the future to advance the development of rosnilimab, ANB033 or ANB101. Overall, we believe each of the 2 companies' different business models will enable investors to align their investment philosophies and portfolio allocation with the strategic opportunities and financial objectives of each company.

Jemperli has emerged as a blockbuster drug with the potential to impact hundreds of thousands of patients by treating multiple types of solid tumors, including women's cancers. Data suggests Jemperli is best-in-class when compared head-to-head versus KEYTRUDA as evidenced by its meaningfully greater response rates and overall survival data in the Phase II PERLA study in frontline non-small cell lung cancer.

Jemperli plus chemo is also the only immuno-oncology regimen to show statistically significant and clinically meaningful overall survival data in all comers with first-line endometrial cancer. Jemperli was approved in this indication last summer in the U.S. and in January of this year in Europe. As a result, over the past year, total revenues have inflected. Jemperli sold $262 million in Q2 2025 alone, nearly doubling from the prior year Q2. Jemperli remains on the steep part of its growth trajectory.

For the past 2 years and as recently as 2 weeks ago, GSK has reiterated the guidance of peak Jemperli sales from monotherapy indications alone of more than GBP 2 billion. This implies greater than $2.7 billion.

And GSK's Wall Street analysts are playing catch-up. A year ago, Wall Street consensus peak sales were only $1.3 billion. Consensus now stands at $1.9 billion, which is still 30% below GSK's guidance. We anticipate consensus will continue to track upwards as GSK reports future growth from further market penetration in endometrial cancer as well as potential indication expansion.

For an example of indication expansion opportunities, Jemperli demonstrated impressive data in the intent-to-cure setting in a proof-of-concept study showing 100% complete response in dMMR rectal cancer. GSK's pivotal trials in this indication is fully enrolled with top line data expected in the second half of 2026.

Overall, Jemperli development is ongoing in 3 monotherapy registrational studies as well as in selected Phase II studies across different additional indications. GSK is also in or planning Phase I/II trials of Jemperli in combinations, including with EDCs from within their portfolio. So now let's transition to how this impacts Anaptys and Royalty Management Co.

Our royalty tiers from GSK began at 8% for the first $1 billion of Jemperli revenues. These quickly ramped to a peak of 25% on all Jemperli revenues over $2.5 billion in the calendar year. To provide an example of the magnitude of these potential royalties to Anaptys, in a year that GSK sells $2.7 billion of Jemperli, which is GSK's guidance for monotherapy indications, the royalties payable for that year will be $390 million to Anaptys.

Currently, Anaptys' receivables from Jemperli are payable to a group called Sagard as a result of prior capped royalty deals. This obligation will terminate once Sagard has received an aggregate payback of $600 million.

Anaptys is estimating that Sagard will have accrued approximately $250 million in royalties and milestones through the end of this year, 2025. The current and conservative Wall Street analyst consensus implies Sagard will be paid down by Q2 of 2028. Alternatively, assuming Jemperli only achieves 10% quarter-over-quarter growth moving forward, the Sagard paydown will be accelerated to be as soon as mid-2027. This is realistic given Jemperli's current revenue growth last quarter was a strong 19% and the quarter prior was 16%. With composition of matter IP out through 2036, there is tremendous residual value post-Sagard paydown of the Jemperli royalties to Anaptys.

Additionally, under our financial collaboration on imsidolimab with Vanda, we are eligible to receive up to $35 million for future regulatory and sales milestones in addition to a flat 10% royalty on global net sales. Vanda has guided to a BLA submission for the treatment of GPP later this calendar year.

Now we'll move on to Biopharma Co. Operationally, this will look similar to Anaptys today. Our programs all target pathogenic cells that are significantly elevated in autoimmune diseases but are only present in lower trace amounts in healthy tissue. Each of our programs is designed to potently eliminate or modulate these specific disease-driving cells.

I'll first highlight our Phase I development stage pipeline. ANB033 is a potentially best-in-class CD122 antagonist with optimized dual IL-15 and IL-2 signaling inhibition. We have initiated a Phase Ib trial for ANB033 in celiac disease, and we anticipate initiating a trial in a second indication in 2026. We are hosting an investor event focused on this specific program on Tuesday, October 14.

We're also developing ANB101, a potentially best-in-class BDCA2 modulator that targets plasmacytoid dendritic cells. Since earlier this year, we are moving through a SAD/MAD dose escalation Phase Ia study in healthy volunteers. Combined with rosnilimab, we have several significant upcoming catalysts and believe our robust pipeline and antibody R&D capabilities will position Biopharma Co for long-term success.

Regarding rosnilimab, it is a selective and potent depleter of pathogenic T cells. This year, we reported positive Phase IIb data in rheumatoid arthritis. Importantly, there is a favorable safety and tolerability profile with no treatment-related SAEs and no malignancies reported in the 318 rosnilimab-treated patients. Additionally, we observed JAK-like efficacy over 6 months and durable responses that last at least 12 to 14 weeks off drug for this 9-month study.

In addition, we have fully enrolled a Phase II trial in ulcerative colitis. We are focused on developing a differentiated therapeutic for this disease that is tolerable and drives deep and stable remissions over the 1-year treatment period in the study. Initial data through the first 12 weeks is upcoming this November or December. We plan to follow up in 2026 with longer-term data, initially with at least all patients through 6 months of treatment.

As the initially enrolled patients in the UC trial have just begun to reach the 1-year mark, I want to emphasize our blinded surveillance continues to suggest a favorable safety and tolerability profile that is consistent with prior rosnilimab trials.

As we've previously disclosed, we are assessing multiple strategic paths forward for rosnilimab. One, we could execute a potential global partnership to help advance development in all indications, including RA and UC; or two, we could independently advance in one Phase III indication. We stated for a long time that we prioritize advancing ulcerative colitis, assuming we achieve our 6-month TPP. Options also exist to advance in RA independently. However, before we progress along that path, we are prudently awaiting the readout of these Phase II results in ulcerative colitis. Importantly, the outcome and timing of the strategic assessment for rosnilimab could impact how the economic value is allocated between Royalty Management Co and Biopharma Co.

Here are a final few points before we go into Q&A. We anticipate completing the separation by year-end 2026. While it may be as early as the first half of '26, we are allowing flexibility, for example, to assess and make an optimal strategic decision for rosnilimab. Additionally, while the separation is anticipated to be a taxable event, we are very focused on minimizing the overall taxes for this transaction. Specific details and decisions regarding tax structure as well as the Board composition, leadership and financial operations of both companies will be disclosed at a later time in 2026.

In conclusion, I want to emphasize the potential transformative nature of the journey we are embarking on. The separation of Anaptys into 2 independent entities is a bold step forward toward unlocking strong, sustainable growth and maximizing the value recognized across the 2 sets of assets, the royalties and the biopharma development portfolio. We are confident this will create significant value for our shareholders while continuing our long history of innovation.

Now I'll hand it over to the operator for Dennis and I to take a few questions. Thank you.

[Operator Instructions] Our first question coming from the line of Anupam Rama with JPMorgan.

Just wondering if you could provide a little more color on why this is the right time to announce this strategy, given you'll have the 3-month UC data here in the next several weeks. And by the time you get to the separation in 2026, you'll have a much better understanding of the totality of the TTP (sic) [ TPP ] for rosnilimab in UC. I think you made a comment that some of the UC data could impact how the funds flow between Royalty Co and then Biopharma Co.

Yes. Thanks for the question, Anupam, and a really good one. We're always proactively and objectively assessing our strategic options in the business overall. And as I just walked through, it's been clear over the last year that the value of the royalties for Jemperli have substantially increased. And we've also put the second relationship in with Vanda. And these are very tangible assets today. They're commercial, near commercial stage royalties.

And at this point, I think it's clear. We're also stating very directly that we intend to protect the value of these royalties, and we're looking to maximize the value overall the 2 sets of assets. So once you've made this decision, there's no point -- there's no reason to delay announcing our intention.

But to your question, this decision is independent of any clinical data moving forward. It's independent of development milestones or any advancement across the portfolio overall. So I think that's a key point here. No matter what happens with rosnilimab in colitis moving forward, moving forward in RA, a partnership, the rosnilimab strategic outcomes are going to pass one way or another. But the value of the royalties and the value of the rest of the portfolio are specifically going to be different entities moving forward, and we think that's going to set both entities up for maximizing value overall.

And as we play through rosnilimab, I think there will be a choice here on how to allocate the economic value. One of the reasons we are announcing this will happen by year-end of 2026 is to allow us the time to work through how we're advancing rosnilimab.

Our next question is coming from the line of Yatin Suneja with Guggenheim.

Can you hear me?

Yes.

Thank you so much for the details. I appreciate that. And I actually like the split, as you know, done the analysis on the royalties. So that's pretty good. So two questions for me. One would be, what would be the size of capital that would be required for this Royalty Co? And then the one question that we generally received when we did the analysis on the royalties and then how the split would work is the impact of biosimilar on the PD-1. I would love to hear from you how are you looking at that and how are you addressing those questions?

Thanks for the questions. So first, you're asking about the capital required for the Royalty Management Co. It's too early to begin to get into the specifics, but the overall needs of the Royalty Management Co would be pretty minimal. It doesn't require a huge team to run a public company. And the idea here is it would be a slim profile. It would be separate, obviously, from Anaptys. But also, I think what's important is the cash that would ultimately come into Royalty Management Co tangibly from Jemperli, is not far away either once you get out through some period of time in 2026, plus or minus within a year, even the company will be generating direct cash. So we think you need a very de minimis amount of capital to operationalize this business, particularly when you're just thinking about a time frame that you need to cover between day 1 and the direct proceeds of capital coming into the company once Sagard is paid down.

You asked the second question around biosimilars with, I think, KEYTRUDA. I think overall, I don't want to speak for Merck. How they're thinking about KEYTRUDA over time is pretty important in the business. They recently had an approval of a subcutaneous form of KEYTRUDA, where they've announced publicly that pricing will be at parity. I think that's kind of a smaller point. We are realizing here that Jemperli is focused in areas where KEYTRUDA isn't or doesn't have the same quality of data. So endometrial cancer, Jemperli is the only drug that has overall survival in endometrial cancer, which is obviously one of the bigger value drivers moving forward.

I think overall, when you look at the combination of the superiority of Jemperli as an asset and the continuity of the business overall at Merck that we feel we're in a pretty good position here with Jemperli moving forward through the life cycle of its IP. And then finally, we are in the early part of a sales curve that is a combination, as you know, between volume and price. And I think there's going to be a lot of volume growth here moving forward.

Lastly, and this is even as recently as KEYTRUDA subcutaneous was approved a few weeks ago, GSK is also out there very focused talking about the ability to exceed their guidance of the USD 2.7 billion at peak sales and knowing all this information overall. And we do have some confidence in how they're leaning into that. So I think the totality here is we feel pretty good about the next 10 years of Jemperli growth.

Our next question coming from the line of Joseph Thome with TD Cowen.

Maybe the first one, just a little bit of a clarification because I know at the beginning of the call, you indicated funding to year-end '27, but that the biopharma company would have 2 years of runway kind of post the spin there. So are you anticipating any additional funds coming into the company? Or kind of how do we reconcile that? And I guess does the spin kind of -- obviously, both sides of the business, I think you would agree, are undervalued, and that's why you're doing this. But I guess does this action kind of reflect any recent change in the conviction of any of your specific biopharma programs, in particular, kind of -- any comments on that would be helpful.

Yes. I'll just start with the last question. I want to completely take this off the table. This announcement has nothing to do with our confidence in the portfolio, nothing to do with likely success in the UC trial. But we acknowledge that at some point in the future, particularly for rosnilimab, there will require additional investments to advance the program. There's many ways to think about how to capitalize that drug that are independent of this announcement of the separation. But what we're very clearly stating is that we're protecting the value of the royalties from future dilution. And so I think that's an important point to emphasize.

But how we move forward rosnilimab, we're going to have choice. And like we've mentioned, if you partner a drug, it will bring in capital. There's various ways to work with investors, other strategic parties or other types of alternative investors to further capitalize programs moving forward. And I actually think that this announcement, whether it's before or after a separation event, gives us more flexibility to capitalize rosnilimab as an independent asset.

We've said for a long time the guidance through year-end 2027 in cash does not include executing the Phase III trials for rosnilimab. That still remains to be the point. And we have plenty of capital to finish off the colitis trial to enable Phase III development for rosnilimab as well as fully invest in ANB033 in the initial indication of celiac and potentially additional indications over time. So we feel like we're in a very good capital position out of the gate. We're committed to 2 years of capital for that business, and we have alternatives for rosnilimab. Same we do today, but I just think this actually gives us more flexibility not less moving forward.

Our next question coming from the line of Andy Chen with Wolfe Research.

So I imagine if you're looking for a deal with another partner and that deal probably has to come to fruition before your intended separation and you have your intended separation by year-end 2026, does that mean you're confident that an attractive deal will be available by that time? And if you don't have a deal by then and then you separate, how would that affect the negotiation leverage for Biopharma Co at that time?

Yes. Thanks, Andy. So again, a clarification here. We're announcing that this will happen by year-end 2026. Now it's not practical just from a legal basis, what we have to do with the SEC, for example, to do this in 2025. So you're really talking about that 12-month window. And this could be as early as the first half of 2026. But we are allowing for flexibility to assess and make an optimal strategic decision on the path forward for rosnilimab. So I don't think we should be hedging do we do a transaction on rosnilimab with a partner before after a separation or even that's the best path forward, particularly given the separation where I think we're going to have a lot more flexibility on how to think about rosnilimab.

So rosnilimab is an option value. And like we said in the prepared remarks, if we do put a relationship in place in front of the actual separation, there could be an opportunity to work through how to allocate the economic value of the drug. But we could also, and this could be the optimal decision, get the separation behind us and then transact or move forward rosnilimab independently after the separation. I think we have -- all these options are on the table, and we'll be working through that.

So that kind of sits in the middle right now to work through. But what we're being very intentional about here is Jemperli and are going into one company, ANB033 and ANB101 are going to another. Rosnilimab, there's a bias to operate, obviously, into the Biopharma Co, but that could look different depending on the timing of how the advancement works and when we get the separation completed.

Our next question coming from the line of Alex Thompson with Stifel.

I guess on the relationship between Royalty Co and Biopharma Co, do you expect Biopharma Co to have any economic interest in Royalty Co? Or will this be a complete separation?

Thanks, Alex. So as it relates to Jemperli and imsidolimab, we think it will be a clean break and then all the nuance and flexibility around rosnilimab as stated.

And our next question coming from the line of Martin Fan with Wedbush Securities. Okay. Please queue up again if you have a question. Our next question in queue coming from the line of Yasmeen Rahimi with Piper Sandler.

Obviously, this does make quite sense because if you look at your market cap, you've not been getting full value for the royalitization nor have you gotten full credit for your pipeline, right? So obviously, splitting them up could bring 2 different shareholder bases and drive value.

I guess the question for you is, given that you are in discussion with partners, do you think the separation is just making it simpler for a transaction to occur with a potential partner? I'm just trying to figure out that if you didn't change anything, what the outcome would have been and whether this just makes those dialogue with strategics simpler in some way or some sort of form? Appreciate any color.

Yes. Thanks, Yas. So a couple of points. One, I'm not sure this announcement plays into when and how to transact on rosnilimab with parties any differently one way or the other. It's -- what we're saying here is the royalties are in one area, the majority of Biopharma Co is going in the other, and we can transact on rosnilimab at any time before or after. I think we have that flexibility. I do not think this is going to impact excitement around rosnilimab and the ability to partner.

A separate point is we are explicitly not announcing any sort of strategic alternative process of putting the asset up in a more formal way. I do think that we have a very viable path forward independently on rosnilimab. We have a huge event coming up with ulcerative colitis, not just the initial 12-month data, but the 6-month TPP and the follow-up 1-year data that we want to play through and really assess our options. So while I appreciate the question on partnering, it could be a lot more advantageous to at least, out of the gates, move forward here with one indication on rosnilimab without a partner. And I do think this gives that option a lot more flexibility.

Our next question coming from the line of Dave Risinger with Leerink Partners.

So I'm curious just to have you talk a little bit more, please, about I guess, two things. First, with respect to this type of transaction, are there any certain benchmark or representative types of publicly traded entities or exits of royalty companies that you would point us to, Dan?

And then second, I think you've addressed it, but is there any more color you can provide on the scenarios for how the economic value of rosnilimab may be allocated between the royalty company and the biopharma company?

Sure. Yes. What's unique here is the absolute size of Jemperli being embedded in a company that looks like Anaptys today. So while there have been other high-value royalty programs within companies, I think on a relative basis to where we are as in any of Anaptys, this is quite unique. And there aren't a lot of comps that exist for this type of a transaction over time.

So I think what we're doing is pretty unique, not just because of the overall value for Jemperli, which I think one of the other one of the other analysts mentioned earlier that is just dramatically undervalued as it sits in the company today, but also the strength and breadth of what we have in the R&D operations and how well capitalized we are. So I'm not going to point, I think, everyone to some alternative.

I think there's plenty of companies that exist that focus on royalties in one way or another. I think our initial vision out of the gate here is this entity for the Royalty Management Co is focused on protecting and returning the value of these assets and returning that back to shareholders. There's ultimately going to be choices of how to return that value over time. That will be decided and communicated as we get closer.

As it relates to the second question, Dave, I'm not sure I have much more to add. If there was a transaction done ahead of the separation, you'd have an economic relationship in place with another partner. And I think we'd have to assess what that looks like at the time. I think there's too many scenarios to try to walk through them all right now of what that could look like. But we would have some sort of an option to put some of the value in rosnilimab into the Royalty Management Co, but that's far from certain.

And like I said, whether we partner or not is kind of choice 1, whether we do it before or after the separation is part 2, and that will all come into play on how we think rosnilimab could ultimately be valued and put into different companies. But I think the baseline plan right now is, like I said, there's different choices, and we've got to work through the timing post the ulcerative colitis data.

Our next question coming from the line of Derek Archila with Wells Fargo.

Maybe just two. Can you highlight the potential tax impacts of the split and any of the minimization strategies you're taking? And then also what milestones can you reach for 033 and 101 within your expected cash runway for Biopharma Co?

I'll let Dennis answer the first part of the question. I'll come back and finish.

Yes. Thanks, Derek. We're very focused on minimizing the overall strategies of this transaction at both the corporate and shareholder level. Taxes are complex, and we're exploring timing and method of separation to minimize the potential tax effect, if any.

We'll provide more details when we get closer to the transaction being effective. But I think it's important, although we're focused on minimizing taxes, the bigger picture is the overall value creation from this transaction itself relative to where we are today or if we were to remain in the company's current structure.

Yes. And I'll just kind of echo the point on the net overall value creation. Like I mentioned on the prepared remarks, we've repurchased approximately 10% of the company today. We are still dramatically undervalued on either piece separately. When you separate these businesses, we do think this is going to create a lot of value for shareholders. There's various discount rates that are different for different types of companies and assets. The net value is the most important factor. And to Dennis' point, we'll update more in the future on how to best minimize tax, and there's going to be various strategies we can take.

Thank you. And that's all the time we have for our question-and-answer session. Ladies and gentlemen, that does conclude our conference for today. We thank you for your participation, and you may now disconnect.

All right. Good morning, and it's my pleasure to introduce Dan Faga, President and CEO of AnaptysBio as our next speaker. Dan, welcome. It's the first time for me to host you at the Goldman Sachs conference. So thank you for being here. Before we kick it off with the Q&A, I'm going to turn it to you for a quick opening remarks.

Perfect. Well, thanks for having me here today. It's my pleasure to be here. We have a lot going on in AnaptysBio. We just came off of a really exciting week with 6-month Phase IIb data in our arthritis trial for our lead program, rosnilimab. But bigger picture than that, our company is focused on developing antibodies that target overactive immune cells in autoimmune and inflammatory disease. We have 3 clinical stage programs in development, 2 that were homegrown from our research engine, one that we in-licensed in. Our lead is rosnilimab, like I just mentioned, it's a PD-1 depleter that targets PD-1 positive immune cells. And like I said, in arthritis, they're overactivated, 80% of your T cells are expressing PD-1 in the joints for RA. Really amazing data that we just presented. We'll get into that.

We have a second trial that's ongoing as well for rosnilimab in ulcerative colitis. We will read out initial data before the end of this year. Enrollment is going really well. We're on track to have that completed soon. We have 2 other drugs, CD122 antagonist called ANB033. We started the Phase Ia last October, and we'll do an R&D event later this year to get through more details and ANB101, which is a BDCA2 modulator. We had $383 million in cash coming out of the first quarter. We have access to a huge royalty stream from GSK and it is a -- they sell a drug called JEMPERLI, which is a PD-1 antagonist. It's selling quite well this year. There's a second drug, cobolimab, is a combination that GSK is running, a combination trial that reads out in the next few months in second-line lung cancer. So we're well capitalized. We have access to royalties, 3 clinical stage drugs. So a lot happening in the company, it's exciting.

Well, congratulations on your Phase IIb data that you guys have updated last week. Before we jump into the data, maybe tell us a little bit about the key priorities and the catalysts that investors should pay attention to moving forward from now on.

Yes. So we just announced the Phase IIb results in arthritis and it is in a 424-patient study. So a big study. We have the second study in colitis that I was referring to. It's a 132-patient study that's been ongoing for 1.5 years. The initial results, the top line results will read out in the fourth quarter of this year. So that's the next big catalyst on rosnilimab. Between now and then, I referenced a royalty read-through milestone for us from GSK. I'll give you more detail on that. It's a second-line lung cancer trial that's going to read out of doce versus doce plus JEMPERLI versus doce, JEMPERLI and cobolimab. And cobolimab is a TIM-3 antagonist.

So either way, whether it's the doublet or the triplet, there will be royalty inbound. And what's exciting here is that second-line lung cancer is a chemo market. It's a graveyard. But what we do know is 20%, 25% of patients are still responsive to PD-1s after they progress on KEYTRUDA. A lot of patients go back to KEYTRUDA. So this is a 750-patient Phase III trial. Last patient was November of 2023. So it's been quite some time. So I think this is a big sleeper catalyst for us, ultra-high risk but huge reward. So that's upcoming in the next couple of months. So those next 2 catalysts for the story in the back half of this year.

Okay. Got it. So why don't we jump into the data, the Phase IIb, the rheumatoid arthritis data. Why should investors be excited about it?

The arthritis is a market where there has not been a new mechanism of action approved since 2012, so quite some time. When we went into the development here 2, 3 years ago, we heard from a lot of folks, that's a crowded market. It's a mature market. Well, we enrolled the trial quickly, huge trial. It's -- in the end, it's actually not that crowded. There's almost nothing in Phase III development. You hear a lot about combinations in different autoimmune diseases. Well, in arthritis, there's been no combinations developed because they're all toxic and didn't give enough efficacy value over the monotherapies themselves. So what we just delivered was in about 3 months, 70% of patients who took rosnilimab across doses, achieved low disease activity, so controlled disease.

We were stat-sig at 3 months on the regulatory endpoints, but the higher order response rates of low disease activity and then even clinical remissions were compelling quickly, and then they were durable through 6 months. And then we showed off drug, at least through 8 weeks off drug, but in trending towards 3 months plus, you have off-drug response. So we have a once-month dose driving high disease activity right out of the gate that's stable. And then we have the potential for every Q8 week or better dosing in the long term. So it's a profile that together that if it can be repeated in Phase III is best in disease.

Yes. You guys showed a lot of data there. I think the primary endpoint was at DAS28 CRP.

Yes.

And then there's a lot of ACR20, 50, 70, CDAI and then a lot across many different time points. Looking just maybe like the totality of data, how do you think that compares to standard of care? And which one of these endpoints or time points that you want to highlight?

Right. Your drug has to work fast, has to work deep and it has to be durable, right? So I hit on a couple of these points. A standard Phase III regulatory endpoint versus a placebo control is ACR20. And what that means is you're 20% -- you feel 20% better symptomatically and clinically. It's a relatively low bar and we had over 80% of the patients hit ACR20, and that was stat sig. What's true in arthritis is early biologics TNF, and this has been around for decades. And so back then, these were the low bar outcomes that were measured. And so there's decades of history on them for comparison. So you have to be fast enough for patients to feel better.

But what clinicians and patients need is going out to 6 months in a year, the control of disease, remission of disease that's differentiated, but also stable. So this is also true for colitis, but 1/3 to half of patients ultimately lose response in the plus or minus 1-year time line on biologics. And what we're trying to do here is drive those deep responses that are durable. And so the reason we provided so much data is we're really hitting it from different standpoints is patients need to feel good, but then know they're going to have some very deep relief. And we're hitting it on all angles.

And how are you guys thinking about the Phase III going forward? What -- which endpoint would you use, time point?

Yes. So there's lots of ways to think about Phase III. Stepping back strategically for us, I've talked about this colitis trial that's ongoing as well. We have -- we're a first-in-class program at this point. Our competitors, which I think we'll probably talk about through this discussion, have fallen off for different reasons. Ultimately, they're not as potent. They're not hitting the target as hard. And we have very differentiated responses because we are potent and we are hitting the target hard. So I could dive into some of these things. But because we're in a first-in-class position and our mechanism of action here of PD-1 depletion is applicable to so many autoimmune diseases, there's choice for us how to move forward. In plus or minus 6 months, we're going to have a colitis readout. And so the reason I'm giving all this context is we have a couple of paths forward that we're assessing right now that we want to understand better before we commit to what the next steps are.

One is, should we put a partnership in place, whether that's around RA, UC or both, we will look for one partner to do everything with us. That's a choice when you're first-in-class with a novel mechanism in areas where there isn't a lot of novelty. The second choice here is we look at what we have in colitis and we decide should we move forward there on our own. And the growth dynamics in that market are very different than in RA if you want to be a second-line biologic player. They're more attractive in something like in ulcerative colitis, where you have branded drugs in the front line like a Skyrizi. In RA, frontline is generic biologics. And so the pathways are different.

We have a choice in RA to move forward, but we want to get to the colitis trial readout first and then decide where we're going to play. It's not practical for a biotech company like us to go in 2 big therapeutic areas on our own. So now the answer to your question, what would you do if you're in Phase III for RA? Like I said earlier, you got to be fast. ACR20 is a regulatory endpoint versus placebo. You can only have placebo controls for 3 months in this disease. It's unethical to keep patients on placebo beyond that given there's so much choice. But ultimately, what you're also going to be looking for these remissions or low disease activity. You have different ways to think about short-term placebo control, but then also longer-term active comparator trials where you might look at something like low disease activity to be differentiated.

I see. Got it. And then in the Phase IIb trial, you also had a mix of like biologic experience and also naive patients. Any differences in response across these 2 different populations for your 400 mg dose?

Yes. Thanks for bringing that up. So it was a 424-patient trial, and about 40% of the patients were experienced on a prior advanced therapy. So that could have been TNF JAKs, IL-6, ORENCIA, rituximab or a combination of all these things, we were allowing up to 2 modalities. So you could have had third line by class patients in as well. So 40% were second and third line. In all mechanisms, at least in RA, you see this in all these autoimmune diseases really, you do see a step down in efficacy between naive, advanced therapy and experienced advanced therapy. We did see some of that, but whether you look at our data for naive patients to advanced therapy, it looked JAK-like or better numerically or in experienced patients, it looked JAK-like or numerically better than specifically RINVOQ on all active comparator trials where there is a bias in their results where patients knew they were on drug, we've looked as good or better low disease activity in ACR50 and ACR70.

So the whole composite here looks differentiated. But yes, there is a slight lower bar once you move down therapy. And to get some perspective on this, for the advanced patients, 0.5 million patients get treated into the advanced therapies, 20%, 25% are cycling through 4 more classes to salvage, which is rituximab. That's a $2 billion market on its own. So there's a huge market in terms of the step down. And what happens here is patients need therapy. They lose remissions if they're lucky enough to get to them over the course of time. So a huge market opportunity, huge number of patients that move through these lines of therapy, but yes, the response rates are lower, which is what's so impressive with our data is there are relatively high response rates in those advanced treated patients.

So now thinking about the Phase III, will you also enroll a similar mix of biologic experience in patients with -- prior JAK patients? And is there like is there a target. In terms of the proportion of the patients who have biologic versus JAK or naive?

Yes. So a couple of different questions there. Just back to our Phase IIb trial, I mentioned we had a mix. About 30% of patients did have prior JAK experience, which I think in itself is impressive when you're comparing to JAKs themselves that you're treating patients that whether with a JAK or without a JAK, the data was pretty much the same when you slice and dice. And the trial is big enough where you can start to look at these populations separately, and it's -- the numbers are big enough where you have some meaning there in these subpopulations. For Phase III, like I was alluding to, it really depends on are you looking to develop a drug that can be approved across all lines of therapy regardless where it's contracted and the formulary position is? Or are you looking to design a Phase III program where it's more focused in the third or fourth line.

So I think that's going to give you different answers on what endpoints you're looking at, at what time points and the way you're going to start your program, right? So we ran Phase IIb trial, but a program could be 1, 2, 3, 4 different trials together driving towards an approval on the label. I think those decisions still need to be made on what would be the right development strategy for Phase III, and that could be different depending on who does it. So in a big pharma's hands, if we're a partner, you might look at something different or you might look at multiple options. If it was just us going forward in RA, you might look at something that's more specific to third and fourth line.

And so I think a big decision for us is going to be, yes, you'll have a placebo-controlled trial for 3 months, and then there will be some long-term extension. But do we have an active comparator trial in there? What's the right active comparator? So it's a little too early to speak to some of those specifics. But like I said earlier, strategically for us, in the background, whether it's colitis, whether it's RA, it's the same drug stuff since there's scale that has to happen, there's planning for the exact questions you're talking through, depending on whose hands this is. But do we partner the drug now? Do we partner in a year? Do we move forward in UC? Do we move forward in RA? All these options are on the table. What we've said is partnering is rational at some point. And if the UC data looks compelling, that could be the first place that we would look to go on our own.

I see. And also the dose carrying forward to Phase III, have you put some thoughts around that? I think you guys tested 3 doses. The mid and the high dose look relatively similar. So how do you think about that?

Yes, that's a great feature. Just to walk through what the doses were, like you said, 3 active doses versus placebo. The low dose is 100 milligram monthly, the mid was 400-milligram monthly and the high was 600 milligram every other week. Coming into this, we were hoping that the once a month look like the every other week and that we would have a once-a-month profile, right? And so that's where we ended up. It's great that the mid and the high dose look that way. So we could see and say, all right, for Phase III planning, we know we have a once-month drug out of the gate, there's no loading. There is differentiation between that mid and low dose that were the 2 monthly doses. In the population you're asking about earlier, the experience -- biologic experience population, there was a distinct difference between the clinical efficacy endpoints, these high order response rates between low dose and mid-dose. And then that gets backed up from translational data, which I haven't spoken to yet.

But one of the -- 2 of the things that you can measure here that are easy are the PD-1 high expressing T cells, what happens to them when you hit them in the periphery and in the synovium. So in the blood and at the site of inflammation. The -- all doses did pretty good in the periphery. I mean there was a small dose response there, where you saw about 90% plus elimination of the PD-1 high expressing T cells. But in the synovium where you have to draw antibody into tissue, the mid and the high dose had 90-plus percent elimination of P1 high T cells. The low dose did not. They were not depleting out what the specific cells we're targeting that are driving disease activity. So we have a differentiation on why we think we're seeing deeper clinical responses between the mid and high dose versus the low in these harder-to-treat patients. And we think it's clear from the translational data. So between the 2, we do see a dose response there, and that was important.

Right, right. And then the placebo at ACR20 at week 12 was slightly lower than RINVOQ's. I think part of it was due to you guys saw a higher placebo effect at week 12, I think it was 50% in your trial versus like 34% in RINVOQ's Phase IIb in the biologic experienced patients. How do you plan to minimize or mitigate any placebo effect in Phase III?

So I'm glad you picked up on that because the Phase IIb trials for RINVOQ are long forgotten to some degree. And we were trying to stress how quick we are acting relative to RINVOQ. People think the JAKs are very quick acting, they are, so is rosnilimab. And what you saw in our trial in ACR20, again, the lower bar are people feeling just better. You saw separation from placebo for us starting at week 4 through 6 through 8, it grows and then into 10 and 12. We had an absolute high number. But in that first 1 to 2 months, we looked the same or better than the JAKs on a placebo-adjusted basis.

At week 10 to 12, and this has to do, I think, with a lot of what you're seeing in all RA trials, you do see a higher placebo rate start to come up over time, but the curves are very different on how you got there. J&J actually has put out a poster today on their PD-1 program, and they had higher placebo than us at week 12, and they were not stat sig, just showing -- highlighting the differences between potency of our drug and their drug. But coming back to the JAKs, a few percentage points on placebo-adjusted response in ACR20 isn't what's going to drive commercial uptake. You need to know your drug works, and we work fast.

We look like the JAKs on an absolute basis. Again, placebo, just for context, placebo is not placebo here. All patients are on background methotrexate in this trial. You are on an active product. So there is a different response. So the reason I'm walking you through this is we were stat sig at all doses. We did show differentiation. You need to see that in the Phase III trial. What I keep coming back to is, are you hitting low disease activity, a much, much higher bar than ACR20, that's going to drive the career utility. And you're probably looking at additional endpoints than just ACR20 in your Phase III as well to drive the commercial label.

Right. Got it. And how should we think about safety? This is a new class of drugs, the PD-1 depleter. What's sort of like the on-target class effect that do you believe it has? And then for the drug specifically, anything you want to point out and how that you think could play out in the longer term?

Yes. The -- for PD-1, which is receptor on activated T cells, the physiological role is immune homeostasis. It's immune control, right? And so in these autoimmune diseases, you're out of balance, right? These T cells are overreactive and in a healthy control, 15% of your T cells are PD-1 expressing or activated and maybe 3% or 4% are PD-1 high expressing. In the synovium of an RA patient, 80% plus are PD-1 expressing. A lot of them, the majority of them are PD-1 high activated. When you're depleting out 90% of those PD-1 high expressing T cells, you're in effect, it's very, very targeted only those cells. You're bringing control back to a homeostatic state.

So all we're really doing is bringing these patients to a -- in the tissue environment to what you would look like in a healthy control. So it's on target, you end up having broad downstream effects, and a lot of what's approved today is hitting various cytokine pathways and blocking them. JAKs hit all of them and more. We're very, very targeted in what we're doing. It sure has these downstream effects. So the reason I walked through that, it's a novel class, but we know very well how this mechanism works and that you're not going overboard in terms of depleting everything out where you aren't -- you don't have any activate T cells. And what we're also not doing is we're not blocking the activation of T cells. So the reason I just walked through that is there's a drug called ORENCIA, which is the only other immune cell modulator that's on the market.

It's been out for 20 years, sold by Bristol-Myers. And there is no link to any broad serious infections to malignancies or anything with that, and they're blocking activation. All we're doing is targeting the activated cells, which is why we're acting faster than a drug like ORENCIA, right? So what does this mean in terms of the actual data we've seen, the safety data we've seen? 424-patient trial, in the first 3 months where we were placebo-controlled, we looked like placebo. There is no imbalance of infection. Again, everyone's on background methotrexate, half the patients on steroids. So you're already immunosuppressed. So that's a big deal. No serious infections, no malignancy, no MACE.

And then when you look out over a 6-month period on an adjusted basis, 100 patient years, you continue to see no imbalance to what you see in placebo. Another way to think about this is tolerability of the drug. Less than 2% of patients dropped out of this trial due to AE. That's a very, very low number. So in the commercial landscape, I mentioned ORENCIA, the other immune modulator. It's the only one that doesn't have a black box. JAKs, HUMIRA, IL-6, rituximab blowing out your B cells driving infection, they're all black boxes. So that's the landscape. So not only are we confident with what we're seeing so far. I think on a relative basis, there's a huge headroom here compared to what's already commercially available. And so when we talk about best-in-disease profile, it's the speed and efficacy at deep depth of acting at 6 months, but it's also the safety and tolerability that all combined are a profile of what we think this market needs.

Right. In late last year, Lilly discontinued their PD-1 out of the Phase IIb due to, I think they said like overall benefit risk profile. Any -- the discontinuation, is there any negative readthrough? Or how are you guys looking at it forward?

It's -- I mean it's really a positive read-through for us. And we just saw this with J&J in their abstracts in a couple of weeks ago and the poster just posted overnight at UR over in Europe. Those drugs aren't as potent. So J&J's translational data they provided was limited, right? What they did show was PD-1 reductions in the periphery, and they show a 60% reduction. We're showing greater than 90% reduction, full coverage, right, of what we're trying to do. Their absolute efficacy at 3 months on these high order response rates like CI, LDA, low disease activity. We were better than them. And then over time, they saw a loss of response. This is in their Phase IIa study.

They saw a loss of response. And that's what's going to happen when you're taking out some of the T cells, you get a benefit, but then you have the rest of those T cells proliferate, it's still driving activity. So if your drug is not potent enough, you're not going to get a full response, and we're not surprised to see them lose efficacy over time. So when you look out 6 months, which is truly what matters commercially here, their response rates were 37% LDA. When you look at 6 months for us, we're closer to 60%. And that's in a trial that was handicapped where there's a gating factor where we can even see max response for both of these trials. We were almost twice as powerful as them out 6 months, we were stable. So we have a very, very different drug.

So when Lilly says we don't have the right benefit risk, well, it's pretty clear they don't have the right benefit over time to have a drug that will be competitive in a mature market. Johnson & Johnson, their safety profile look benign, just like Lilly's in Phase IIa and ours to date. They showed, again, just hit this morning, it looks like you're approximating a graph that doesn't have numbers. It looks like 50% to 60% elimination of PD-1 high T cells in the periphery. There's another poster that I'll drop tomorrow, but in the abstract, it showed about a 40% to 50% reduction in the synovium. We're at 90%. So these drugs just aren't potent enough. They're not driving the same depth of response and durability of response.

I see. Got it. And what's the overall aspiration for the drug. There's a lot of -- you can imagine there's a lot of different classes of different TNFs, T cell modulators, IL-1, 6, CD20s and the JAKs and so forth. What's the -- when you look at your target product profile, what's that aspiration of what you guys are trying to achieve?

Yes. Well, you just named a lot of drug classes that are approved in a lot of areas. And here's what's true about autoimmune disease, systemic autoimmune disease. You're going to have exacerbated or overreactive PD-1 high expressing T cells in that cycle, driving disease activity. So there's a large number of places we could play. We took 2 initial proof-of-concept bets, one in arthritis, where we literally already had some early proof of concept there. We're running this trial in ulcerative colitis. We're really excited about that as well. The lamina propria is the inflamed tissue in the gut, similar to synovium, half the cells there are overexpressed PD-1 positive T cells, right?

We know there's target in the tissue to go hit. But that's now rheumatology. We have IBD. There's other therapeutic areas that you can take this to. So what we announced with our Phase IIb update in arthritis last week was we're going to drive towards the UC data coming up. We're going to pick an area to move forward in Phase III. If ulcerative colitis hits the TPP, that's probably going to be the choice, but we do have an option RA as an alternative. And we did say we're going to be looking at additional indications in other diseases starting Phase IIs. There's this drug, the composition of matter here is out in the 2040s.

We have lots of time to develop the drug in a number of different areas. And there's always a race once you get out to market where clocks start to tick. But we have the time right now to sit and explore other worm diseases, other GI diseases and potentially beyond that. And like I said earlier, we're never going to be a Japanese or a European commercial player at Anaptys, right? Ultimately, we're going to find support. So that's a question of timing and return on equity. And when you have a first-in-class now and best-in-class drug with years ahead of you before any other PD-1 depleters move into clinical development, we could take advantage of that time we're going to move as fast as we can.

Okay. So you see data coming in Q4?

Yes.

So why are you so excited about UC and why you select that indication to go after, after RA? And what gives you confidence that you can penetrate the target tissue?

Yes. So a similar rationale, how the mechanism of action aligns to the disease pathology and disease biology here. I mentioned that the lamina propria has a lot of the PD-1 high expressing T cells. We have correlations between the reduction of those cells and clinical remission. So a drug like ENTYVIO and alpha-4-beta-7, what they're doing -- what that drug does is it blocks that receptor blocks activated T cells from penetrating from periphery into the tissue. It's the same cells. We're depleting those cells. So there's a correlation of the reduction of those PD-1 high T cells in the blood to clinical remissions in UC.

It's similar to how other mechanisms work. We have animal model data translationally from our arthritis trial. We showed in not just the reductions in the tissue and the blood of the PD-1 high cells, we saw on the gene expression panels reductions of T cell activation pathway, B-cell activation pathway as well as the production paths in TNF, IL-6 is what we showed, but the genes that code for IL-12RB, which codes for IL-12 as well as IL-23. So mechanisms that are known to work. So we're seeing translationally insights that also read through. Our trial is 132 patients. It's 2 active arms versus placebo. The highest dose in the colitis trial is higher than the high dose in the arthritis trial.

And we know that at the mid-dose, 400 milligrams monthly, we're getting 100% or close to an elimination of PD-1 high cells in the synovium. So part of this is just making sure you're dosing high enough to get antibody. It's harder to get into the gut than it is the synovium. But at that mid-dose, we already know we are 100% in the synovium. So when you scale for these things at a time, you adjust for the fact it's hard to get antibody into the gut tissue. So we feel comfortable that we'll have the antibody there, and we're excited about what we just saw in arthritis. We should have on-target activity that's potent enough.

I see. Got it. And again, UC is also very chronic just like RA. There's the IL-23s and oral small molecules and so forth. What's the bar for success when you think about your internal go and no-go decision?

Yes. I think there's a lot happening in development right now in UC, right? Whereas in RA, there's not. But the markets, the commercial markets, you see is lagging behind right now in terms of the breadth of biologics that are available for patients. And the growth in UC, I mean, in the next 4, 5, 6 years, it's going to be at least as big as the RA market in second line beyond therapy, we think. So Skyrizi is penetrating into frontline as a branded drug over HUMIRA, over biogeneric TNFs, over ENTYVIO, right? So you're seeing a change there. And the outcome for patients is ultimately surgery, which you want to avoid and cost a lot of money. So you have great pricing corridors through lines of therapy given surgery is a high-cost last resort alternative that you don't have in RA. So the growth dynamics are favorable for a new class of biologics. It's really the IL-23s, B19s. You have the TL1As emerging.

And then what, there's actually not a lot new. You're seeing me betters of all those classes. You're seeing orals, which will be less efficacious, but different administration. You're seeing half-life extension antibodies, but they're all different versions of the same thing, and you're seeing these mechanisms being combined. So it's actually lacking in novelty of different ways to treat patients and you see so we're really excited about that as an opportunity to play there. into a market where you're going to have class switching no different than you had in RA. And just for awareness, even the TL1As, they had great data at 3 months. You had 5 to 10 percentage points better on clinical response. When you get out to 52 weeks and you look at remission, they look no different than everything else. They start slightly higher, they come right back down. 1/3, 1/2 of patients on these biologic classes lose remission between 6 and 12 months.

That's an issue. And so if we can have a drug that looks like what we just showed in RA, where patients feel better over 3 months, and our primary endpoint here is change in MMS score versus placebo at 3 months. But if we can drive those deeper responses at 6 months, things like endoscopic remission that look like just other biologic classes. You only have to be better in this market because of the class switching that we're moving into. And then you're at least as stable as these other drugs, which are pretty low bar. That's already a profile with a new class that's going to hunt. And then there's upside to that at 6 months on remission, endoscopic remission. And if you could sustain those remissions over time. So we're excited based on what we saw in RA, if that translates for UC and the same type of a profile, that will be very different than the other classes that exist.

I see. Got it. We're almost out of time. I just want to squeeze in one more question before I turn it to you for final remarks. So besides like looking at your early pipeline, your 033 asset, so that space is heating up, right, that IL-15s, CD122. How do you think about that? And then how do you compare these programs? And then -- and what should we care about or look forward to?

Yes. So thanks for asking. ANB033 is a CD122 antagonist, and that is a dimeric receptor that blocks IL-15 and IL-2 on various immune cells that overexpress in disease, CD8-positive cytotoxic T cells, Temra cells, resident memory T cells, NK cells. So I agree with you. There's a lot of interesting activity with IL-15 antagonists or they're doing partial, right? They're only hitting IL-15. Teva has a program. Novartis Calypso has a program where they're in Phase IIs in celiac disease, vitiligo, alopecia. We'll see where Novartis plays. And I think they've alluded to, they'll come out soon with the breadth of their Phase IIs that they're looking to move into. The CD122, we think, is a more potent way to hit similar diseases. There's a couple out in the landscape.

Footprint, affinity, all these things are going to matter. We're going to have an R&D event in the back half of the year to walk through this mechanism in a lot more detail relative to IL -15s, show data that will report the differentiation from other CD122s that exist as well as reveal our initial Phase Ib indication, which we'll have already initiated by the time we end up having this event. So that's all to come. We're excited about it. We think there's a big opportunity. It's another one of these pipeline or product type opportunities where it's not just one Phase B that I think we'll end up moving forward in. So big opportunity there, the second story, and it's great to have different ways to invest in the company.

Yes. Very much looking forward to all these data coming out. And Dan, thank you so much for coming, and it's a pleasure to host you at the Goldman Sachs conference. And I'll turn it to you for final remarks.

Perfect. Well, now exciting days for us. We just showed some great data. We have other big readouts coming up. Like I said, we're well financed at this point in time. And then we have an additional value stream in these royalties that are coming in that you really think of the business a lot of different ways on value creation. So I really appreciate your time. Thanks for having me.