Thank you guys for joining us. It's a pleasure to have the management team and an old friend join us, AnaptysBio. Different role, but great to host my— Is this our first fireside chat, or maybe we did it last year? At Anaptys, it's our first. Okay, excellent. Well, great to see you here. I know there's tons of things to talk about, Dan. I know there's several things on top of your mind, and I feel like you're taking a bit of a portfolio approach to immunology, but why don't you lay out for us what's on top of your mind? What are the programs, where you're getting more interested in? There's some evolving data in the large pharma as well, and we'll go from there. Perfect. Yeah, there's a lot going on here, so welcome. Nice to see you all here today. So I'm Dan Faga. I I run Anaptys. I've been with the company for 18 months, and we are focused on the development of immune cell modulators for the development of systemic heterogeneous inflammatory disorders. This lends itself to really massive opportunities here, big diseases. We're focused in arthritis, ulcerative colitis, atopic dermatitis with our drugs. And we're developing checkpoint agonists that are in the development stage. And when you really level set what's happening here and where I think the markets are moving, big pharma, Lilly, Gilead, J&J, Sanofi, are all moving towards top-down approaches to treat inflammatory disorders, not unlike where oncology was 10-15 years ago. We're targeting, though, specifically the small subset of immune cells that are driving disease pathogenesis in these diseases. I think that's the differentiator here, and ties full circle back to the ability to treat heterogeneous diseases. So we have two checkpoint agonists in clinical development, and when... I'll I'll rewind for a second here. 18 months ago, when I came in, we reshuffled the company around. The big question we had was, are our programs differentiated from big pharma, or we wouldn't be spending the capital that we're deploying into these programs right now? And the answer is they are. We spent nine to 12 months on understanding the differentiation and proving that out in vitro and in vivo. And so now we're some degree behind a year or so from companies like Eli Lilly in arthritis, but we're first in class developing our PD-1 agonist in colitis, and we are in a bit of a race where the markets are moving, I think, in atopic dermatitis with our BTLA agonist. So we have three pretty big phase II trials up and running this year across those three subtherapeutic areas. We're building out our preclinical portfolio. We're gonna put two new programs into clinical development next year. We have over $400 million of cash to end the year and three years of runway. Excellent. Well, maybe let's start with the PD-1 agonism, and maybe just to orient everyone, this is not the same as the Keytruda and the Opdivo PD-1. This is the opposite of that PD-1 axis. So Lilly had an interesting paper earlier this year. They got a lot of attention for their New England Journal of Medicine publication as well. And I want to start to get more specific, but maybe could you start by reminding us, what's the PD-1? How strongly are they hitting the target between their 300 mg versus 700 mg dose, and how is that different for your program? Yeah. So it's harder to decipher between their two doses at this point, but what you're referring to, Umar, is, Lilly ran a proof of concept phase IIa study in arthritis. There's over 100 patients, and they presented that at ACR in 2022, and it was later published in New England Journal of Medicine, this summer. And what we saw there across both doses were four things: at very high dose, 700 mg IV, monthly over six months, the drug looks safe and tolerable right out of the gate. So that's important given the mechanism of action. I think hypothetical concerns, at least to date, well understood, but hypothetical to date. Number two, regardless of the dose level, they saw a consistent response between biologic-naive and biologic-experienced patients, and that's never been done in this disease. You usually see a 20%-30% decline in response rates when you look at things like commercially relevant ACR 50s and 75s. Right. The consistency was important. Number three was just the degree of absolute response we saw at three months in. 57% of patients hit ACR50, and to give a sense of the comparisons there, biologics, pick your class, it doesn't matter, are ±20% response rate to ACR50. ACR70, they had 30% response rates. You're usually in the single digits, so we're looking at 3x responses. So to some degree, that's unbelievable, but leaves a lot of room to give. And then those were sustained over six months. What happens in this disease across these classes is you see a lot of cycling because the responses at three months decline over time. Got it. So, Dan, I guess maybe I was... As I was going through the data, I noticed the DAS28, the disease activity score endpoint. They looked very good, biologics, prior biologics, no prior biologics. But when we got into the ACR20, ACR50, and ACR70, the data was a little more mixed for them, as it relates to the lower dose, in particular. Higher dose, it was better. Could you maybe remind us why we would see that discrepancy, or is it just because it's week 12, and you don't necessarily see that kick in so fast on the ACRs? Yeah. So you're, you're referring to a difference between what they saw at week 12 and week 14. And so then mechanistically, what we saw in the cytokine reductions over time, they actually had a pretty important abstract at ACR this year, where they're showing IL-6 reductions over time declining, and at week 12, those are still shooting down pretty dramatically at that point. It's hard to explain what's going on in the first month or so- I see ... in these response rates, but there was separation in these curves, at the higher dose. I think it's probably a good thing that they're seeing that. But I think the judgment here is, week 12 was still separating from placebo. Week 14, they started to see distinction across all the criteria of ACR. It's joint counts, tender, swelling, and then the three of the five other criteria are generally around these assessment composites. But the important thing there is if you go through the supplementals of New England Journal of Medicine, all the information's there. So at week 14 and at week 24, there's a consistency, same number of patients hitting all the same metrics. That's what I mean by the stability of the data.... and there's a historical look at 12 weeks, but the data's still improving. I think that's what's important here. The primary endpoint was week 12? Can you remind me? Primary is week 12, which is where- Okay -the journal is centered, but all the information that has mattered to investors, and I really think bigger picture. Whether it worked or not. Lilly, is this working? Are they seeing continued improvement, and is it sustained? And that's why Lilly is so excited about these drugs. Got it. Yeah. No, no, that makes sense. Okay, so that's interesting. So it's with longer follow-up, the data seems to deepen, is basically the sense. And- It's sustained. It's sustained. How are you guys? Oh, so past week 12, there were no dose, and it was continuing to deepen. Is that how it was? Right. So what they did was they had-- Well, no, no, they continued dosing through six months- Okay ... monthly. Excellent. I guess, how are you thinking about sort of the lessons from that into and how are you incorporating that into your clinical design? Yeah, so we kind of dove into data, but just some context of why these drugs are working. There's three mechanisms of action with PD-1 agonists, or at least the way we're describing our PD-1 agonist, is depletion of TPH cells, PD-1 high expressing TPH cells, very small subset of cells that are very much upstream, that drive B cell maturation, ultimately autoantibody production. We are looking to deplete that very small set of cells. PD-1 high expressing T effector cells, deplete those out. Those are driving all the cytokine activity, and then agonize the remaining PD-1 expressing cells. But it's a very narrow window of cells that are doing this. So when you look at these three mechanism of actions, it really drives how we think about diseases that we're focused on in RA, and you see in the biology of these diseases. So I think some of these statistics matter here. If you're thinking about 3% or 5%, they're PD-1 high expressing in a healthy person, and less than 20% that are just activated PD-1 expressing cells, that's how we all are today. If you have rheumatoid arthritis, moderate to severe rheumatoid arthritis, in your joints, greater than 80% of the T cells are PD-1 expressing, so massive upregulation at the site of inflammation and in the periphery. Similar trend with, Right ... AC. AC. So when we think about how we're developing our drug, yeah, Lilly has proof of concept data. We're going pretty big into RA, and we believe it's differentiated, which I want to come back to here, but we're running a 420 patient trial across three active dose arms and placebo. Primary endpoint's week 12. That's the way the division, kind of, forces this here. Right. We have a look at week 14, and we'll be dosing out through six months as well. Kind of big picture, we're also going to be looking at about 50%/50% naive and experienced patients. Got it. Okay, 50%... Okay, so let me just get that down. 50% naive and experienced, and the primary endpoint is, is what again? It's the change in DAS28-CRP, but what matters here is the ACR50 and 70, and so we are well overpowered for DAS28 change. We're actually on the secondary in ACR50. We're powered for that as well. Do we know Lilly data on ACR fifties and seventies broken out by naïve versus experienced? No. They didn't. I didn't see that, but I know they showed that on DAS28. Right. I'm assuming that there has to be a correlation. DAS28-CRP are two of the big components of ACR, and- Okay ... so the other criteria here was in order to continue on dose after three months, and we have the same thing. So you look at, you dose through three months, you look at week 14, and to continue on drug, you have to have remission, which is CI less than or equal to 10, which is highly correlated to ACR 50. Okay, got it. Excellent, excellent. So, and how many patients again, in this trial that you guys are running? 420. 420. Dose levels? Three active arms. So we have run a trial in alopecia. There was no PD-1 positive T cells at the site of inflammation there, but we learned a lot. The silver lining is 400 mg monthly. We are at multifold higher dose than that in our arthritis trial, in our colitis trials. Oh, and the doses have not been broken out there? No, we're doing every other week and monthly across the three active, but we have not broken out the doses. Okay, so just to be clear, three doses, and each dose is monthly or every other? There's a mix of monthly and every other week. Every other week. Technically, six active arms. No, no, it's three. One or more. Oh, I see. Yeah. I see. We just haven't broken it down. How important is it to make sure it's a single shot subQ, and is it subQ in the trial? They're subQ. So Lilly's 2a was IV. Their 2b, that has now concluded enrollment in 500 patients, is subQ, and our trial is subQ. Okay, when is that Lilly readout? Because I feel like that's also going to be very relevant to, We have two big catalysts next year. One of them is going to be Lilly's data themselves. It clearly will read through to what we're doing. They've guided 2024 to read out their phase IIb trial. Their trial was enrolled fully into September, and so you could start just doing math from there. I mean, Q1, they'll be sitting on the primary endpoint in- This is again, week 14, primary endpoint... week 12, primary endpoint? Yeah. Okay. But they only- They didn't incorporate a longer follow-up? -twenty twenty-four. They didn't incorporate- I don't— They've guided 2024 results, but they haven't said, is it going to be on the primary, or is it going to be on six months? Oh, no, my point is the week 12 versus week 14 issue. They didn't put that into their primary endpoint to reflect that? I believe it's week 12. It is week 12 again. Okay. Wow. Okay. This is. It's kind of the way of doing business with the Rheum division, I think. Okay, Resolution 1 trial, that's the one you're referring to. Mm-hmm. Yeah. So this is, again. Oh, it's ACR 20 on week 12 this time. Oh, yeah, versus DAS28 on a continuous variable, that might be true, yeah. Okay. The primary endpoint is still three months. But everyone's going to be looking at 50 and 70, ACR- Do we think they pushed the dose? We believe that they're in a subQ dose that represents, at their higher end, 700 mg IV dosing, so it'll likely be higher than that subQ. Okay, got it. You said the week 12 is being used by Lilly because that's the endpoint that FDA- That's historically used over time. But Umar, this is no different than a lot of diseases we're looking at. So in colitis, it's three-month induction, and then how does that trend over a year, 52 weeks across all these classes? In atopic dermatitis, it's very similar. You look at three weeks, but some classes, like OX40 ligands, which another immune cell modulator, doesn't do what agonists do- Right. It's a good comp. That data continues to get better over time there as well. There's a reason for that. I guess, so are you using week 12 as well then? In RA? Yeah. Yes. How should we balance the Lilly observations at week 12 in their prior data with the fact that as much as data clearly got very good beyond week 12 in Lilly's prior study, neither Lilly nor you are using that in your primary endpoint? The primary endpoint for us is DAS28 reductions over time or placebo work. Right, at the time point. Oh, on the DAS- What is going to matter for the investment thesis here, and ultimately the patients at the end- Got it ... Are you getting ACR50 and 70- Got it - over time. The maintenance trial work as well. Hitting the week 12 on that- If we can't hit the primary endpoint, you don't have a drug. Right. Right? Right, right. That's not what's commercially relevant. One of the criticisms in this space when we announced we were moving here, particularly as a smaller company, is well, that's a crowded field. Well, it's crowded if you're competing on DAS28 reductions on week 12 and ACR20, none of which are relevant to where we're trying to be in this space. And the whole kind of leveling this up a little bit, taking a top-down approach to treating these diseases that are heterogeneous is why there's efficacy ceilings here, and there's not in diseases like psoriasis, is to break through those ceilings over time, which you're not going to get to- Right ... potentially just in three months on the commercial metrics that matter here, and are relevant to patients at the end of the day. I'm surprised Lilly would use. use. Like, I recall on ACR20, week 12, week 14, it was not so hot for them, and they would use that as a primary endpoint. I feel like they're almost creating an opening. Because DAS28 seemed a lot more reliable for them into the week 12 endpoint, I felt. For the phase, the earlier phase II studies, even for us for phase II, the continuous barrel makes a lot of sense for us to assess over time. Right. It's unlikely that you're going to miss placebo-adjusted responses ACR20. It's just how much is it going to matter? Right. Makes sense. But like I said, we are also powered for ACR50, one of our secondaries. Okay. because we think it's important. And how does the timing- I can't imagine that their math doesn't work out similarly when you're looking at 500 patients. The timing of readouts, when is yours and when is theirs? It's a little bit of gaming when they're going to present. They've publicly announced 2024. Okay. We've guided to mid-2025. We're about a year behind them. That is mid-2025. Okay, got it. Excellent. And to my knowledge, nothing on safety really stood out, so it looks like it's tracking pretty clean. In the class so far, it looks like placebo, and it's numerically better, which doesn't, you know, make any sense. But it's whether it's PD-1, BTLA, our drugs, Lilly's drugs, J&J drugs, to date, there's been nothing in the class that suggests these aren't tolerable- Got it - programs. Got it. Excellent. Can we talk, can we spend a couple seconds on BTLA and talk about some of the observations on some of the other BTLA programs as well? Yeah. The difference between the BTLA program and the PD-1 program, they're all targeting T cells, activated T cells. PD-1 specifically targets T cells and is depleter. BTLA hits more, immune cells because it's present on dendritic cells and B cells, and we don't want that to be a depleter. It's much broader, exposed. What this does is provide opportunities. We have a non-depleting agonist across a number of types of immune cells. We're specifically bringing this into atopic dermatitis. And what's interesting about atopic dermatitis is, in inflamed skin, there's an upregulation of dendritic cells that are active in this disease that we're directly targeting. So what you need to believe here in atopic dermatitis, this is where all the KOLs are, and this is where Sanofi is as well with their OX40 ligand, which is a good comp for us right now, is that this is not a Th2 only driven disease. And there's a reason there's efficacy ceiling with DUPI of less than half the patients hitting EASI 75s. Right. Because Th1, Th17, Th22 are all drivers of this disease as well. Th2 is important. We're hitting all those with these agonists. And so where then, where this ultimately goes is, we have a 160-patient trial that's six months into the enrollment. We'll have data before the end of 2024 in both a DUPI-naive and DUPI-experienced population. Oh, interesting. And when you say DUPI-naive, that's the same trial or separate? Same trial. Okay. Yeah. So less than half the patients will have IL-13 or DUPI experience. And we're doing this because similar to what we just talked about in RA, we should see approximately a consistency response. If you would have worked on DUPI, you should still get benefit. And this is where the OX40 ligand data that Sanofi just presented, EADV is important to us, because they do some of what we do with the BTLA agonist, not all. And the differences here are we are agonizing the immune cell. What OX40 ligand is doing is blocking the co-stim between the DCs and, and the T cells. They don't hit Th1 as hard as we will see, but they did show that 50, 40, 50% reductions in Th2 pathway, in IL-13 reductions, gave DUPI-like responses, which are reducing IL-13, 70, 80, 90%. They also had reductions in IL-17, IL-22. So this is important, it proves the thesis out. We should also have similar reductions in Th1 pathways, which they're not seeing, and we are modulating dendritic cells. This is really important. What we're seeing with the modulation of dendritic cells is an inducement of Treg expansion. Right. You're not going to have that with the OX40 ligands. So while it's not the best comp on an absolute basis, when you look at the Nektar Lilly drug, or the prior Lilly drug, that's an IL-2 mutant, pegylated IL-2, they showed 2x-3x Treg expansion. So almost DUPI-like response rates, but the patients who responded off drug six months were stable. You come off DUPI, you come off a JAK, you're right back to baseline in three months. So what we're doing with the BTLA agonist is what the OX40 ligand is doing, plus what you would see with a Treg expander, plus we're hitting a Th1 pathway. Got it. So we have pretty big aspirations that we can be at least DUPI-like in the second line of therapy, which is a huge market here in AD, and that's the base case TV. There's clearly upsides to that. Got it. Excellent. I know we're approaching time, but maybe just as we start to wrap it up, so, this readout on the BTLA side, remind me the timing again. That'll be next year, before the end of next year. Got it. So then... Okay, so the next, so the re- The two mega catalysts for us- Right ... is, can Lilly recapitulate the phase IIa results in RA and phase IIb in 500 patients, or anywhere near it? Yeah. Because the data was almost unbelievable at week 14, how good it was. The second is proof of concept for us in atopic dermatitis with our BTLA agonist. Got it. Excellent. Well, listen, good luck into everything. Great seeing you. Thank you very much. Yeah, great seeing you as well. Look forward to being in touch. Appreciate you having me here. Take care, Dan. Thank you.