Zenas Biopharma Inc Aktie

Good morning, everyone. Welcome to the Zenas Biopharma Conference Call. [Operator Instructions] Be advised that this call is being recorded at the company's request, and a replay will be available in the Investors section of the company's website following the call.

I'll now turn the call over to Jennifer Fox, Chief Business Officer and Chief Financial Officer of Zenas. Jennifer, you may begin.

Thank you, operator, and thank you all for joining us to discuss the top line results of our registrational Phase III INDIGO trial for obexelimab for the treatment of immunoglobulin G4-related disease or IgG4-RD. Before we begin, I would like to remind you of the disclaimer outlined on Slide #2.

During today's presentation, including during the question-and-answer portion of the call, we will be making certain forward-looking statements. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. Forward-looking statements speak only as of the date of this call and involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

These risks are described more fully under the heading Risk Factors as well as elsewhere in our company filings made with the Securities and Exchange Commission, including our quarterly report on Form 10-Q for the third quarter and our subsequent SEC filings. You are cautioned not to place any undue reliance on these forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements.

We will begin today's call with prepared remarks from Lonnie Moulder, our CEO; and Lisa von Moltke, our Head of Research and Development and Chief Medical Officer. For the Q&A portion of today's call, we will be joined by Joe Farmer, our President and Chief Operating Officer.

I'll now hand the call over to Lonnie.

Thank you, Jen. Before I continue, personally, I'd like to thank the investigators and patients who participated in the INDIGO study. I'd also like to thank the many Zenas employees who helped make today's announcement possible as well as our partners at Bristol-Myers Squibb.

We are pleased to share the successful results of the INDIGO trial, in which obexelimab significantly reduced the risk of IgG4-RD flare compared to placebo, meeting the primary endpoint and all 4 key secondary endpoints with high statistical significance. And as we will further discuss, obexelimab exceeded our expectations regarding tolerability and safety.

Obexelimab has now been evaluated in 8 clinical trials and its compelling safety and tolerability profile has been established in close to 400 subjects. Prior to INDIGO, obexelimab demonstrated significant clinical activity in 3 Phase II trials for relevant inflammatory diseases, a Phase II IgG4-RD study where obexelimab provided a greater than 90% remission rate, the Phase II MoonStone study with a 95% reduction in new GAD-enhancing T1 lesions and a Phase IIa SLE study where an effect size of 35% was observed in the ITT population receiving adequate drug exposure.

These 3 clinical trials and now INDIGO supports obexelimab's unique inhibitory mechanism to broadly impact the course of B-cell-driven autoimmune diseases. To summarize the INDIGO results, the trial met its primary endpoint, achieving a highly statistically significant reduction in risk of IgG4-RD disease flare compared to placebo. Indigo also met all 4 key secondary endpoints compared to placebo through week 52.

And as you will hear, demonstrated a compelling safety and tolerability profile. Indigo further confirms the potential of obexelimab's differentiated inhibitory mechanism to be a first-in-class therapy and the only at-home subcutaneously administered treatment for IgG4-RD. The obexelimab 56% risk reduction is an impressive result relative to the overall I&I clinical landscape.

And although the hazard ratio is higher in the range of expectations, this clinical activity and the compelling safety and tolerability profile, along with convenient at-home administration could well position obexelimab as a preferred first-line treatment of IgG4-RD. We look forward to submitting our BLA to the U.S. Food and Drug Administration in the second quarter and a marketing authorization application to the European Medicines Agency in the second half of this year.

Lisa will take us through the data from the INDIGO trial in more detail. But first, I would like to provide some background information on this devastating disease. IgG4-RD is a chronic fibro inflammatory disease that can affect virtually all organ systems. IgG4-RD patients can present with a single organ involved, but ultimately determined to have several impacted organs and existing organ damage. This is an insidious disease that does not remit on its own.

If not treated, it leads to substantial organ damage and fibrosis, which can eventually result in organ failure. It's critical to both prevent flares and to manage underlying inflammation that may not meet flare criteria, but still indicates disease activity requiring ongoing treatment. Glucocorticoids, while not approved, are commonly used to treat disease flares.

While they are initially effective, long-term treatment can often result in various complications and comorbidities and most patients treated with glucocorticoids relapse within 12 months of discontinuing treatment. Multiple clinical trials have confirmed the role of B cells in the pathogenesis of IgG4-RD and targeting B cells has proven effective. We and others estimate the currently diagnosed prevalence of this disease is in the range of 20,000 patients with the total prevalence, including undiagnosed patients estimated to be as high as 40,000 in the U.S. alone.

Several studies indicate a similar global prevalence. Many of you may be familiar with this molecule and its unique mechanism of action. It combines the binding of 2 markers on B cells, one being CD19, which is broadly expressed across B-cell lineage. The other is Fc gamma RIIb, also known as CD32B. This clever design of the antibody to be an inhibitor is unlike the anti-CD20 and anti-CD19 B-cell depleting antibodies, and we believe may provide certain advantages, which we will discuss.

Leveraging this biology, obexelimab is highly potent in decreasing B-cell function, which includes antibody production, cytokine production, proliferation and differentiation and the processing of antigens for T cell presentation.

I'll now turn the call over to Lisa to take us through the INDIGO study design and data in more detail. Lisa?

Thank you, Lonnie. As Lonnie discussed, the Phase III INDIGO trial met the primary endpoint and all 4 key secondary endpoints with high statistical significance. INDIGO's Phase III trial design was developed in alignment with regulatory authorities worldwide. Patients entered the study while in flare and the central committee confirmed the diagnosis and flare status.

They were then treated with steroids to induce remission. Once remission was confirmed centrally, patients were randomized 1:1 with 97 patients assigned to the obexelimab arm and 97 assigned to the placebo arm. Steroids were tapered per protocol over 8 weeks in both arms and patients were then monitored for flare over 52 weeks. Importantly, Indigo now represents the largest IgG4-RD clinical trial ever conducted.

Now Slide 10 shows the Indigo baseline patient characteristics. The mean age was 59 with a male predominance as expected. 66.5% of patients had recurrent disease and 33.5% were newly diagnosed. 93% of patients had 2 or more organs involved. 21% of patients were from North America, 24% from Europe, 28% from Japan, 23% from other Asian countries and 4% from Latin America.

While there were slight differences in enrollment within some regions, overall baseline patient characteristics were well balanced across both arms in INDIGO and the overall demographics are typical of what would be expected for a Phase III trial in IgG4-RD. The primary endpoint was time to first IgG4-RD flare that required initiation of rescue therapy as determined by the investigator and the adjudication committee from randomization to week 52, and this was met with high statistical significance.

In INDIGO, obexelimab reduced the risk of IgG4-RD flare by 56% compared to placebo with a hazard ratio of 0.443 and a p-value of 0.0005. 27% of patients in the obexelimab arm experienced IgG4-RD flares compared to 55% of patients in the placebo arm. Furthermore, obexelimab achieved all 4 key secondary endpoints in INDIGO. These endpoints included time to first investigator-determined flare requiring initiation of rescue therapy, the number of investigator-determined flares requiring initiation of rescue therapy, the proportion of patients achieving complete remission and cumulative use of IgG4-RD glucocorticoid rescue therapy.

All endpoints were evaluated through week 52 of the randomized controlled portion of the trial. Additionally, over 70% of patients in the obexilimab arm were protected from flare. To preserve our ability to publish the full data set from Indigo in a top-tier medical journal and out of respect for the investigators and their entitlement to authorship, we are not disclosing any additional details on these key secondary endpoints at this time.

We plan to publish the full data set from Indigo, including additional details on key secondary and other endpoints. Obexilimab was well tolerated with a safety profile consistent with that observed in previously completed clinical trials. When compared to the placebo arm, incidences of serious adverse events were lower in the obexilimab arm and overall rates of infections were also lower in the obexilimab arm as were specifically rates of Grade 3 infections, related upper respiratory tract infections, rates of COVID-19 and urinary tract infections.

Injection site reactions were similar across both arms. Given this compelling safety and tolerability profile, obexilimab could have an important role in the long-term management of IgG4-RD.

I will now turn the call back to Lonnie to take us through the remaining slides. Lonnie?

Thank you, Lisa. With INDIGO results now in hand, the potential differentiation for obexilimab for the treatment of IgG4-RD includes a unique inhibitory mechanism that may provide a first-line option for physicians who want to avoid long-term B-cell depletion for their patients and the consequences associated with infections and inability to mount a vaccine response.

Convenient at-home subcutaneous dosing, which aligns with typical practice in the rheumatology community and is preferred by patients, unlike B-cell depleting antibodies, which require infusion center access and are associated with risks of infusion-related reactions and the need for premedication. Lastly, High-priced infused therapies often result in substantial upfront cost for payers and patients may be burdened with higher co-payments as a medical benefit under Medicare Part B.

In contrast, at home, self-administered therapies such as obexilimab have the potential for more modest monthly cost for payers and lower out-of-pocket cost for patients under the Medicare Part D pharmacy benefit. We're looking forward to potentially providing patients, physicians and payers with this unique treatment option. As a reminder, IgG4-RD represents a significant commercial opportunity.

We estimate the total prevalence to be in the 30,000 to 40,000 range in both the U.S. and in Europe. About 20,000 patients are currently diagnosed and medically managed in the U.S. alone. Over half of the diagnosed patients experience frequent flares and would be candidates for ongoing maintenance therapy. When you apply current market pricing in this field, that translates to a market opportunity of approximately $3 billion in the U.S. and $2 billion in Europe.

We believe obexilimab's differentiated profile will position us well to capture a meaningful share of that opportunity. It is also recognized that IgG4-RD is currently underdiagnosed and with the potential approval of obexilimab, we and others will be positioned to grow the market by increasing disease recognition, awareness, diagnosis and treatment. We believe IgG4-RD represents a significant revenue opportunity for obexilimab in this disease alone, but we also view obexilimab as a potential franchise molecule for Zenas.

We are on track to report 24-week data from our MoonStone RMS trial this quarter. In addition, we expect to share top line results and biomarker data from our Phase II SunStone SLE trial in the fourth quarter. To wrap up, 2025 was a transformational year for Zenas. And now with the INDIGO results, we look to carry that momentum into 2026 and beyond.

As you can see, we anticipate multiple potentially value-creating milestones over the next several years. Our recently expanded pipeline includes orelabrutinib, a highly selective, potent CNS penetrant and potentially best-in-class BTK inhibitor, which is currently in a Phase III trial for PPMS. We also plan to commence a Phase III study of orelabrutinib in nonactive SPMS patients this quarter.

In terms of our earlier pipeline, we plan to advance our exciting oral IL-17 inhibitor, ZB021 into the clinic this year with patient data expected in 2027. Our brain-penetrant TYK2 inhibitor, ZB022, is also expected to enter the clinic later this year. We aspire to leverage our team's experience and strong track record and our global development and commercialization capabilities to potentially launch 3 franchise molecules across 5 indications in 3 therapeutic areas, including rheumatology, multiple sclerosis and dermatology, each representing significant commercial opportunities over the next 5 years.

With a strong foundation in place, we are well positioned as we work toward realizing our vision of becoming a leading global, fully integrated commercial stage autoimmune-focused company. Before we open up the call for questions, once again, I'd like to thank the investigators and patients who participated in the INDIGO study and the many Zenas employees who helped make today's announcement possible. Operator, please go ahead.

[Operator Instructions] Our first question comes from Roger Song with Jefferies.

So 2 questions from us. So one is understanding the -- a lot of the differentiations for obexelimab compared to UPLIZNA in terms of mechanism and then et cetera. But with this hazard ratio primary endpoint, how should we think about the efficacy part? What has been your -- what have you hearing from your adviser in terms of the efficacy threshold, they want to be using [ APEXXY ] in the first line?

And then a quick follow-up question. In terms of secondary endpoint, understanding you're not disclosing the details, how should we think about the data compared to UPLIZNA, particularly around the complete remission seems to have room to be better.

Thank you, Roger, and thank you for the questions. To begin with the differentiation, and you also highlighted the hazard ratio as something for us to comment on in any discussions we've had with our advisers and key opinion leaders, and we've had many over the weekend since we've received the data.

And it's really interesting because it's consistent with what we've always heard from them that the drug they would expect to be effective and have a better tolerability and safety profile due to not inhibiting or not depleting B cells, that is. So when they saw the hazard ratio and the p-value, the 56% risk reduction, the 70% protection from patients and then having a lower infection rate in the obexelimab arm numerically across multiple subgroups of infections and similar injection site reactions, they were very enthusiastic.

It's what they had expected to see generally. They were just excited that the drug, of course, achieved success in a Phase III trial. I mean that's a big event. And they know in rheumatology, having an effect size close to 60% is -- that's like landmark in most diseases. Of course, everyone understands what the HR or hazard ratio is with the competitive product.

But they see this as a highly effective drug and provides a variety of attributes that make it ideal for first line. And they described it in several ways. First of all, about 40% of patients are 65 and older. And 2 of them just stated, why would we deplete B cells in older patients? That's a large percentage of the population. It's just not a thing to do it. You don't have to do it. It's a conversation with the patients. This is what we can do for you.

And it's the flu season right now. And as the investigators have always mentioned to us, one of the possibilities that's really exciting for them is to be able to pause when it's time to vaccinate. And then finally, as we've discussed before, it's just easier for patients to take an at-home subcutaneous drug. So with a 56% risk reduction, 70% of patients protected from flare, the vast majority of patients are going to get significant benefit from a drug that has this safety profile and this ease of administration.

And they reiterated that to us. One, I'd say one of the KOLs said, I predicted a 60% risk reduction, which was interesting. So that's where the KOLs are. That's where we're landing. Disappointed that the hazard ratio doesn't hit a number that many people were hoping for. But this is absolutely a successful study and a compelling drug for all the reasons we've discussed and the reasons that KOLs and investigators are excited about it.

As far as the secondary endpoints, I would say, of course, the p-values as listed on the slide, tell you that these are compelling results. You pointed out -- or you asked specifically about complete remission. And remember, complete remission is really flare free and then having no disease activity beyond that. So with the flare number that we have that drives the hazard ratio, that obviously also drives the complete remission number.

So don't anticipate a complete remission number that would be an upside surprise. It's going to be consistent in some ways because it's so highly correlated to the overall flare number. Does that make sense?

Our next question comes from Cory Kasimov with Evercore.

I guess 2 for me as well. So first of all, can you speak to how B-cell counts tracked with infection rates in the study? And then secondly, just any additional detail you can provide on cumulative glucocorticoid use?

Yes. On the B-cell tracking, there's a variety of other data sets to be analyzed. These are the top line results. We don't have all assays and biomarkers evaluated Cory. And in the coming weeks, we'll have that. And then ultimately, it will be part of publications, et cetera.

But we do know what the numbers are on infections and overall infections lower and just as Lisa had said, the key infections that most people point to in this field upper respiratory tract infections lower, of course, COVID-19 rate was lower. And then because of the competitive product having a high UTI rate, some of the investigators are looking at that and the UTI rate was also lower. These are numerically lower.

I think when you see all the data laid out at some point, it basically is about the same as placebo, although numerically lower on what I just described. And importantly, the Grade 3 infection rate. So no correlation to B cell count at this point.

Got it. And on the glucocorticoid use?

Yes, the glucocorticoid use, that will be part of the follow-up publications presentations, as Lisa said, not to jeopardize any of that. But in the slide deck, you can see that last bullet point and the p-value associated with that, which is highly, highly significant. So as expected, it's a really good outcome, a significant difference.

And then we look forward to analyzing the glucocorticoid toxicity index, which is a further down secondary endpoint. That type of thing will be in our hands, and that will be part of future publications and discussions.

Our next question comes from Yigal Nochomovitz with Citigroup.

So just with regard to your KOL conversations over the weekend, and I know I recognize you just got the data, how is everyone thinking about the overall value proposition with respect to the hazard ratio, but also the 4 stat sig secondaries? And did the KOLs just know that they were stat sig?

Or did they see the actual numbers? I know you're not disclosing them, but did they see the numbers to help them sort of contextualize the overall value proposition with all the information at hand?

Thank you, Yigal. I'll start with the final question. Yes, they saw an in-depth because -- many of them will be involved with the manuscript writing for publication, and they'll be seeing even more data. So it was a robust data set of all of the details around the primary, the secondary, much deeper information on specifics on all of the baseline characteristics that are amazingly balanced.

It was an extremely well-executed trial, and that was their comment when looking at all of the characteristics. And then, of course, a detailed review of the adverse event profile that goes much deeper and will fully be disclosed and is all consistent with the key points that we highlighted that were most important to them. So yes, they did see a much more robust data set and they're familiar with it and feel really good about it.

Was there another part of your question, Yigal?

Yes. Just sort of any further commentary just on the overall value proposition, taking everything into account at this point? And then my other question was, have you seen the actual Kaplan-Meier curves for the hazard ratio?

And is there anything of note in there with respect to speed or degree of separation, potentially differences by region that are worth noting or that will come later?

That will come later, but we, of course, do have the curves and the KOLs saw those curves. And there's -- as one would expect, with a 56% risk reduction, there's great separation in the curves and nothing that stands out that's unique or causes pause or questions. So the curves are straightforward. And the overall value proposition for them goes back to fundamentally what the product profile is.

They have choices to make along with their patients as to how to manage their disease. And it's a conversation with the patient and this inhibitory approach that has, based on the trial results, a much lower potential for infections and other clinical sequelae that can be associated with B-cell depletion and allows for the patient to take it at home fits really, really well with how a patient's journey goes with IgG4-RD.

And that was paramount. And they didn't pause on the hazard ratio. I mean it's in their mind, over 70% of the patients were protected and it's a 56% risk reduction. That's stellar for a Phase III study. Now of course, there's UPLIZNA, but UPLIZNA is available now, and it's a depleting antibody. It's the only thing available. But if they have an option, they overall prefer an inhibitory approach for all the reasons we've described.

And I think there'll be an opportunity, of course, to hear from KOLs at medical meetings, and I'm sure you and others will make contact with them, and they'll reinforce that -- those same points. We heard it over and over again.

Our next question comes from Yatin Suneja with Guggenheim.

Congrats on the data. Just a question on a similar line of questioning on the B cell count reduction. Did you -- can you just talk about the exposure? What did you see? Or were you able to look at the serum IgG4 reduction across the patient population and variability?

And then I think one of the issues that we see with UPLIZNA is there is definitely clustering of events closer to the end of -- or beginning of the next cycle. Could you just talk about how consistent were the data across the duration of 1 year?

Yatin, additional analyses associated with a variety of assays for biomarkers, for IgG4 levels, for B cell counts, all that stuff will be coming in. The teams continue to crunch all that. So that will be available. The other question was?

It's around the clustering of your...

The curves Yes, anything unique in the curves. As you would expect, patients are on a steroid taper for the first 8 weeks. So they're on drug and steroid or on placebo and steroid. So there aren't a lot of events during that time period.

And then once they're off of steroid, that's when the events start occurring. -- in the next month or 2. And then for the obexelimab arm, they kind of level off then sporadically, there's event. In the placebo arm, it just drops more dramatically after the steroid taper, and that's when the separation begins to occur. And you'll see that when it's published.

Our next question comes from Judah Frommer with Morgan Stanley.

I guess maybe just do you have a sense based on your preliminary conversations with payers, how the hazard ratio balanced with the safety profile could factor into sequencing of treatment in IgG4-RD? And then just second on the milestones with Royalty Pharma. Can you clarify what the conversation will be about the second milestone and how this update could potentially affect subsequent IgG4 milestones?

Thanks, Judah. On the payer question, obviously, there's a there's a number of variables as to how a product is positioned with the payers. So one, as you brought up, there's the efficacy, a hazard ratio consideration. There's then the overall trade-off risk benefit of side effects and tolerability. And then there's, of course, the cost consideration.

Just having the data in hand, it's now providing us the opportunity to go out and have the right conversations with payers, which frequently actually starts with the CMO and important members of their staff where our medical affairs group will actually lay all the data out, and that includes efficacy, safety, and that's under confidentiality. And then as we get closer to the product launching, that's when you start having your pricing and price concession or discount and rebate kind of discussions and where it fits in a hierarchy.

But if you think about the profile that we have here and the way the KOLs have guided us here is that why wouldn't this be a first choice if you have a patient that really has an issue, we'll go ahead and hit them with a B-cell depletion regimen. But other than that, safety and high efficacy, 56% risk reduction, 70% plus patients protected from flares and a substantially different potential infection risk for the patients.

And then for the payers, when we get to that conversation around economics, I think it's important to emphasize this. You do know the competitive product that involves 2 doses over 2 weeks is a $250,000 hit immediately. Our approach of at-home auto-injection is a monthly case pack. It's a monthly payment for the patient. And for the payer, for the competitive product, as you know, the first year involves even another dose.

So the total cost approach is $400,000. Here, we don't have that additional hit in the first year. So this pay-as-you-go, well tolerated, less risk of infections and what is a really highly effective drug, I think we can position that really well with the payers as a first-line therapy.

And then Judah, to address your question around the Royalty Pharma transaction. If you recall, it was a $300 million total deal. We received $75 million upfront. There was a condition that we could be eligible for a $75 million payment related to the Phase III data. We're currently not eligible for that milestone payment under the current agreement, but the company and Royalty Pharma are in active discussions about the milestone.

And as it relates to future payments, we're still eligible for the approval milestone, which would be another $75 million related to IgG4-RD and the additional approval milestone if we were to get approval in SLE.

Our next question comes from Martin Fan with Wedbush Securities.

Congratulations on the data. I was curious about the demographics for the patients. If you could comment on the percentage that received prior rituximab therapy. And also any commentary you could share on the subgroup or if that would be limited to an upcoming medical meeting as well?

Yes. Most of that will be for upcoming publication and presentation, Martin. I would say, though, on the prior rituximab use, it's pretty consistent with what we've seen in other trials, and it was almost identical. So it's something in the 10% to low teen percent is what one sees. And that's what was observed here if it's balanced, if that's helpful.

Our next question comes from Andy Chen with Wolfe Research.

This is Brandon on for Andy. We're trying to figure out why you underperformed UPLIZNA here. And specifically, is there any random swings in a few patients that may have caused underperformance?

Are there any other strong suggesting that this is just noise other than performance? And then finally, to wrap up, any reason to believe that this should read through to an underperformance in SLE when compared to other CD19, CD20 therapies?

Thanks for the question, Andy. On the -- as you described it as an underperformance -- and was there anything that we see in the data that could suggest it or is it more of a random outcome? It's really hard to say. We -- you all have seen many development programs and the outcomes from those programs. And obviously, if you take any one trial and you repeat it multiple times, you're going to have a range of outcomes.

We don't see anything in the data that leads to questions. But if you reflect upon our prior data sets, first of all, in the Phase II study, where the drug was used at both -- as both induction and maintenance over the 6-month period and only 1 patient flared with a remission rate of over 90%. And then we look at the MoonStone RMS Phase II results where there was a 95% reduction in new T1 GAD-enhancing lesions, which is really a top of the B-cell class benchmark.

And then with these results, you would anticipate that we would have a higher hazard ratio. And that's what everybody is wondering, like why is it where it is? Maybe if the study was repeated multiple times, there'd be a range of outcomes, and this is on the lower end. It's really -- you can't speculate. We know the drug is effective. We know what the p-value is, the risk reduction and the overall balance relative to safety and convenience for patients, and we think it's going to have a real role.

As it relates to SLE and a read-through, I think I'll go back and point once again to the almost 60% risk reduction. As opposed to comparing to the UPLIZNA study, just compare it in isolation or look at it in isolation, this is a highly active drug that had a 60% risk reduction in an inflammatory condition and a great tolerability and safety profile. If you just move that over to lupus, I would say that bodes well for the lupus outcome. So that's how we view it.

Thank you. I would now like to turn the call back over to Lonnie Moulder for any closing remarks.

Thank you, operator. Before we close, I just want to thank, again, the investigators and patients and all of the Zenas employees who made today's announcement possible. Thank you all, and look forward to updating you along the way.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.