Hello, everyone. Thank you for joining us in the room and online at TD Cowen's 45th Annual Healthcare Conference. I'm Joe Thome, one of the biotech analysts here on the team at TD Cowen. It's my pleasure to have with me today the team from AnaptysBio. For the fireside chat, we have President and CEO Dan Faga. Dan, thank you so much for joining us today. Obviously, you started the year off strong with some good, impressive Rosnilimab RA data. Maybe before we dig deeper into the program, just a high-level overview of kind of where the company is as it stands and what investors should expect over the next year here. Perfect. Thanks for having me, Joe. Appreciate being here. Hello, everyone. AnaptysBio is focused on the discovery and development of antibodies targeting or modulating immune cells that are driving disease. Patients with autoimmune disorders have overactive immune cells, and that's what we're looking to hit from the top of the cascade. We have three development stage programs right now. As you just mentioned, we had really differentiated data in arthritis with our lead program, our PD-1 depletor antagonist called Rosnilimab. We'll get into that. We have a second trial that's ongoing in ulcerative colitis that'll read out initial results in Q4 of this year. Our second program is a CD122 antagonist. That's in phase I, and we're going to do an R&D event later on in the year to talk about the IL-15 and CD122 pathways and differentiation. We're moving into our first disease in phase I B. That'll happen this year as well. Our third program is a BDCA2 modulator just entering phase one initiation more or less imminently this quarter. We have $420 million of cash coming into the year. We're well funded out through year-end 2027. We're backed by an additional royalty stream via a financial collaboration with GSK. It's based on two programs, Jemperli, which is a commercial stage PD-1 antagonist. It's been on the market for a few years, rapid uptake in royalties that we're receiving from them. Then a second program, Cobolimab, which is in phase three in combination with Jemperli. That backstops the cash position and the ability to future draw down on those royalties if it's necessary post-de-risking over the course of this year into 2026. A lot going on in the company. Yeah, perfect. Maybe, obviously, we'll start with RA and Rosnilimab, but in February, you did report top-line data from the phase two. The study hit the primary endpoint and showed stat-sig on some key secondaries, including ACR 50 and 70, and achieved your target product profile even ahead of expectations. Maybe if you want to hit some of the high points, what's maybe been you think should resonate the most with investors? Then we'll get into some of the questions. Yeah, so I think maybe four or five quick points, and I will get into some detail on them. We hit stats. The drug works. It's differentiated. We have sustained data that's best in disease after six months, safe, tolerable profile, particularly relative to placebo, but stepping back across other programs that are approved in this disease. The translational data supports these results. A significant difference between the patients responding on drug to those on placebo. We see that at various time points, both at the top of the cascade, targeting the T cells, as well as down through the biomarker CRP. The market is huge. There's 500,000 patients cycling off of TNFs that switch across classes of biologics. There's a need for a new mechanism here where a first-in-class, best-in-class PD-1 program with once-monthly dosing. There is a lot to unpack there around the efficacy, safety, and translational data. Those are, I think, the key highlights. We hit on every single aspect that we wanted to out of the gate. This was initial data, so the trial is still ongoing. What is compelling about this is at 14 weeks, the efficacy we hit low disease activity in almost 70% of patients across doses. That was 220 patients out of the 318 that touched rosnilimab in this trial. It is a very large, robust study. About half of them were already at week 28 by the time we read out, so north of six months. That is the last treatment assessment. We are really quite proud of that data. I think there is potential for further upside from here. That is, I think, a summary just on one outcome. What's important to the treaters is do patients feel better into three months? If so, continue treatment to drive towards that low disease activity. We're seeing best-in-disease numbers at week 14, when the comparison says usually at month six. In the data outside of the low disease activity, you were seeing ACR 50 and 70 rates that were basically best-in-class ahead of the peers in terms of timing. The one thing that obviously we've gotten a lot of questions on is the difference between week 12 and week 14. You do see a deepening of response, which is great with the drug as you move two more weeks, which is not surprising as you're on therapy. This does seem to be a sticking point for investors. What's maybe the misunderstanding here? Can you just walk us through that so that everyone's on the same page? Yeah. So again, 424 patient study, three active arms versus placebo. All three arms hit stats on the DAS-28- CRP change from baseline and on ACR 20 at week 12. The placebo-controlled trial through week 12, standard. Regulatory endpoint is ACR 20 at 12 weeks. We've heard to do this again in phase III. Patients show up at their week 14 visit, get assessed. They do their assessments. The physician assessor does their that happens. Every patient on Rosnilimab gets drug. They go home. If they hit low disease activity, they get notified that they are in low disease activity. Their next visit, they will continue on treatment through month six. Or they were notified that you did not hit low disease activity. You're moving to follow-up. You'll come back. You will not be getting treatment, but you will get further assessments for an additional 10 weeks. If you're on placebo, you did not get after your assessments at week 14, you did not get placebo injection. That was a requirement from the FDA. We cannot continue delivering placebo after the 12th week. There is inherently some bias that while the patients and the physician assessor should not have known a patient was on placebo, somewhere in the site they were notified because they were not beginning drug that day. Week 12, placebo-controlled, no bias. Week 14, potentially some bias. It's hard for me to sit there and say it's not. When you step back from this, I just want to put this all in perspective. Eli Lilly with ParasolMab, their PD-1 agonist, their phase II A data that delivered at the time best-in-disease output at week 14, there was not a focus on this. There was an acceptance that, wow, that data is exceptional. We have the exact same trial design. Instead of 100 patients with IV formulation, we did a subcutaneous administration with 424 patients. Our data is more robust. And our absolute numbers at week 14 are meaningfully higher. Our CDA LDA was 69%, rounding to 70%. The high dose for Lilly was 55%. I just want to go back to the sustainability because even with the potential for bias at week 14, if you look at head-to-head active comparator studies at month six, so JAK, Rinvoq versus Orencia, where every patient knows it's open label, every patient in West Sans, every patient knows they're on a drug, our data at week 14 is better than them at month six on the JAKs. We're better than Lilly at week 14 with the same trial design. Lilly's data, and this is really important as we think about what happens with Lilly's phase IIB study over time. Lilly's data, that 55% LDA response rate at week 14, that degrades to 35% at week 24. Off drug degrades to 22% at week 36. We're at 69%, and we're stable with half the patients at week 28. Not only in the three-month period, we have a better outcome than Lilly did with a more potent drug. We have a very different outcome at month six if you compare these data head-to-head. We're really excited about the relative profile and the same design. Long answer to a trial design that I would say is not what the phase three would look like. You'd see a treat through from month three to six. You'd have peak response. Another handicap is another way to look at this. Patients who did not hit low disease activity at week 14, as I mentioned earlier, they come back for follow-up. They're out of the study. We were separating from placebo from week eight, accelerating in week 10, accelerating in week 12, accelerating in week 14. We don't think you hit peak response at week 14. There's no reason to believe that. We think the response rates would have gotten higher over time if those non-responders were able to stay in the study. As we move to Q2, we're going to package a lot of information. It's a pretty big catalyst for this program and this disease. In Q2, we're going to have not only the week 28 data for the full 220 patients that stayed on treatment. We will see that patient set out through week 38, so 12 weeks off drug. Let me say this a different way. You shouldn't assume it's going to be 100% stable, but we do have long PD here in the translational data, and we do think that there will be a reasonable number of patients that will stay in response off drug. The second point is those non-responders, we will collect efficacy data in a situation where those patients know they're not getting treatment anymore when they come back around week 18. They'll come back. They know they're not getting treatment. They're going to be motivated to get anything else. If we get more responses there, that would have stacked on top of the week 14 data if we were able to run the trial out. This data in our eyes can only get better if we were to run this study again in phase three, which would be of similar size and less than three active doses. We are really excited about what we could pull together here in the Q2 update that could support not only the data you saw more robustly, but further room for upside. Perfect. Now that the data has been out there for a little bit of time, we did touch on the results on our rheumatology panel this morning, and the physician indicated that it surpassed his expectations for the readout, and he would use it. What have you been hearing from KOLs since the data has been out there? I'm sure you've talked to several. What's sort of their initial feedback? Yeah, across our medical team, and I've had the opportunity to speak with a number of these KOLs myself in this circumstance, some people are excited. Sadly, the bar was really low for a new class of biologics here. These patients, 500,000 in the U.S., they're cycling between two, three, four lines of biologics. They're taking rituximab as salvage therapy. Patients are staying on drug eight months plus as a median. The tolerability of this drug really matters in the physician's eyes. It was clean. I think we're already getting commentary from KOLs of, well, not only was this great as a monotherapy, think about what you can do in combination over time with the drug. We're getting pushed further. I think the second key point, and I mentioned the efficacy, people are attracted to these absolute response rates. I said it a little bit earlier, but I'll repeat it. From a physician's perspective, the absolute low disease activity and ultimately remissions is what they're looking for in the treatment paradigm. Hitting stats on ACR 20 is a regulatory threshold. People won't use ACR 20, 50 in practice. It's, do you feel better and are you hitting LDA? That's what's attractive here with these physicians. The third is a novel mechanism. It's something different, very differentiated than what they're using, and you can slot this right in across various lines of therapy. I think overall, they're excited that there's a new treatment option. People are looking forward to a phase III. Can you talk a little bit about safety overall? The safety profile in the phase II looked compelling. Obviously, in the field, because of some of the actions with Lilly, I think there are some questions just on what they were seeing in long term. I think when people see PD-1, they think about the other side of things, and you treat it for cancer, which seemingly is a theoretical risk. Is it just that? Is it theoretical? Kind of what do we know around that, and what do you think about the safety profile overall? Sure. I'll hit on all those different points. What we saw in the phase II, again, 424 patients placebo-controlled through that first three-month period was a pretty benign profile. No differentiation from placebo on infections. No malignancy, of course. No MACE. No severe infections. We outlined and footnoted every single SAE, of which there were very few, and none were related to treatment or deemed related to treatment. We're really happy about this. It's consistent with what we've seen in previous phase II and phase I studies. From what we've seen from Eli Lilly so far in their phase II A, again, it was a benign profile there. There's been nothing to date in literature or in the medical setting that has shown an issue with this approach. Stepping back, the comorbidities in this disease are unfortunate. There's multipliers of MACE, multipliers of malignancy, multipliers of infection. All the patients in our trial and all RA trials are on background methotrexate, approximately half are on a stable dose of steroids. That inherently alone, just because of background meds, should drive infection generally. You see that. Let's look at the commercial landscape. Obviously, Rinvoq, but the TNFs, Humira, the IL-6s, rituximab, they're all black boxes. That's the commercial landscape right now. The profile that we're seeing so far is not that. We're really pleased with this. Beyond three months so far, it's a similar profile. I mean, we have to get to the end of the study. There's six months. Like I said earlier, we have a more potent drug than Lilly, but it's on target. We're showing differentiated efficacy. What the Lilly executives have commented is that the benefit-risk ratio wasn't there in their phase II B study. It's hard to say exactly what that means, but we already know that the benefit is not what we're showing, and they're losing response over time. That alone makes for a bad benefit-risk ratio. The second thing is because of background methotrexate and comorbidities, there's going to be events in these trials. Any trial of RA, you're going to see events over time. There's a 50-week study. We should expect to see some events. To date, we've seen nothing going on in our study in a controlled setting. We're quite pleased with the tolerability profile overall. I'll make one other more general point. The only other immune cell modulator that's out there on the market is abatacept. The difference with abatacept and the PD-1 is abatacept is blocking the ability to activate T cells. That's been on the commercial market for a decade. No malignancy risk there. They're blocking activation. All we're doing is depleting out highly expressed PD-1-positive T cells. They exist in a hyperactive state in disease that you wouldn't find in a healthy control. That physiological PD-1, the physiological role is to modulate and regulate normal immune homeostasis. That's the role of PD-1. That's not procarcinogenic to deplete out hyperactive immune cells. If anything, we're returning you back to normal immune homeostasis. We're not eliminating all activated T cells. The Orencia comp is interesting. They're preventing all activation, and they're not driving any safety issues. I think that there's a lot of ways to hit this in terms of the data that's actually out there, what's in literature, the commercial landscape, and then the comorbidities of this disease that we are offering a profile that is much better than standard of care for these patients. Perfect. You alluded to the Q2 data a couple of times so far, but maybe just to drive it home and set expectations, what characteristics based on the trial design do you think will have sort of a ceiling effect between week 14 and week 28? Which characteristics of the data package do you think could improve between week 14 and week 28? Kind of what are you looking for? On the safety side, we're looking for something that's stable. At this point in the study, what you're referring to, Joe, is between month three and month six. Again, there's no placebo anymore. So any events would be on drug. You're looking for something that's stable to date without any more control. On the efficacy side, like I said earlier, looking for stability of the responders after six months. We'll see about off-drug durability after month or week 38, so something like eight or nine months. The expectation shouldn't be everything is stable, but we'll see how well the drug holds three months off of treatment. Third, that gets packaged in here is, did non-responders continue to improve, some percentage of them? Fourth, translationally, we've shown a teaser, I would say, on what's happening with the PD-1 high T cells in the periphery. Downstream with CRP reductions, we'll be able to look at other immunophenotyping in the synovium. We have a number of biopsies, as well as cytokine activity or reductions, both in the synovium and in the periphery. It is going to be a really rich update that gets packaged together that not only bodes well for longer-term responses in RA, but continues in our eyes to de-risk UC in terms of cytokine activity and whatnot that's relevant in parallel diseases. Perfect. We're definitely going to jump to UC in a second. Maybe what are the next regulatory steps following the 28-week data? When do you approach the FDA about sort of an end of phase two meeting and kind of align on next steps for the program? Yeah. We're in a pretty luxurious position right now with the second trial going on in ulcerative colitis. We're also assessing not just two active doses of placebo monthly and every other week, but we're looking at in that trial six-month data where it's a treat-through paradigm. Unlike in RA where we had to push out the non-responders for low disease activity at week 14, in UC, everyone gets treated through month six. Responders at month six on the modified Mayo score continue on through one year. We're going to build up a safety database for a year, stability of results for one year. The reason I'm going into this right now is what we see there can play into how we think about dose and trial design in the maintenance time frame in RA as well, just with more data. There is going to be really a combination of pieces that we probably want to take to FDA in the end of phase two B meeting. Now, fortunately for us, again, it is all happening around the same time into the end of this year. We have to make some decisions on when do we go have those discussions with the regulators and how much do we want UC to play into and what we learn in the UC into the RA design or not. This is still ongoing. Like I said earlier, the RA trial, there are still patients on drug. We have to get to these full results first, and we will make some of those decisions. Perfect. Maybe moving on to ulcerative colitis, the study outcome was pulled a little bit earlier into the fourth quarter of this year. It sounds like enrollment is going well. Maybe can you just talk a little bit about the pace of the study? Honestly, it seems like drugs that do work in RA tend to also maybe see some activity in ulcerative colitis. I guess how much is the RA data de-risking for ulcerative colitis? Yeah. It was one of the major things we were looking for as an outcome. Secondary thing we were looking for in the outcome of the RA trial was this translational data. Background in ulcerative colitis, similar to RA, there's a two- to three-fold increase of activated T cells in the blood than you would see in healthy controls. We showed a scatter plot in translational data that regardless of the range of where you're starting with PD-1 high T cells in the blood, they're all getting reduced greater than 90%. Doesn't matter where you start. That's important in UC because you're seeing the same effect there. If anything, there's literature, patient data that shows a correlation of reduction of those TPH cells, peripheral helper T cells that are de facto PD-1 high, a reduction of those in the periphery correlated with clinical remission. As a comp in terms of other mechanisms, Entyvio, all that drug does is block the trafficking of these TPH cells from the blood into the lamina propria, into the site of inflammation. That is all it does, and you are getting a response. We are doing that clearly from the RA data. S1Ps, they block the efflux of these same exact PD-1 high TPH cells from the lymph nodes into the inflammatory tissue. We already know that we should drive some level of response. Now, what drives differentiated response? What do we need to see in the UC study? The lamina propria is the lining in the gut that is inflamed in this disease. More than 40% of the T cells there are PD-1 activated. We are dosing enough where we should also see antibody engaging with these T cells, whether they are TPH, PD-1 high cells, or T effector cells in the LP. We'll have synovium biopsies from the RA study. We'll see what's going on there through engagement, both for the depletion and agonism of the PD-1 program. That should translate into what we should see happening in the lamina propria. That is more to come. The translational data is already giving us some hints on why we should have more confidence that we'll have responses in UC. If anything, we had JAK-like efficacy in RA. To your point, a lot of drugs that work in one work in the other. We are JAK-like. The bar is a lot lower. We have to be bio-like in UC. This is a growth market with now multiple classes of biologics emerging. You're going to see class switching over time. Very similar dynamics to what we've seen in RA over the last 10-20 years is emerging in UC. The reason this is important is patients historically would take one drug and then go to surgery. That's not going to happen in the same way in the future. It's already starting to not happen. It is a growth biologic market where we could sit right in the middle of second line plus therapy with something that looks like P19s or into where the TOAs are emerging with another novel class where they're the only player. There is a lot going on in the space of de-risking from the RA trial and why I'm excited that that clinical profile would have a very attractive profile in ulcerative colitis if it could be reproduced. Perfectly. Maybe two things on the trial design itself. Are the dose levels and kind of frequency similar to what you studied in RA? Then second, when you think about the type of patients enrolled, are they allowed to be on background therapy? Kind of how severe are they going to be in terms of treatment experience? Yeah. It is two active arms versus placebo. The two active arms, one is once monthly and one is every other week. A little bit similar to RA. You have to adjust for the fact that moving antibody in through the gut is harder. You need more drug than synovium. We have made those adjustments. We have a high dose and a moderate dose in that trial or in our trial. Like I mentioned earlier, at week 12, placebo non-responders cross over to high dose. Placebo responders stay on drug. It is completely blinded. It is a blinded controlled study out through month six. Responders there in the modified Mayo score stay on through one year. Second part of your question? Was just in terms of the prior treatment experience. How severe are these patients? We're targeting 60% naive, 40% bio experience, and that could be up to three lines of prior therapy. We're going to have a broad range. It really could be any drug, whether that's commercial or investigational, that are in the trial in terms of prior therapies. Historically, the company has indicated that if both of these indications are successful, which would be great, that these phase III programs for all of these would be a little bit large. You'd probably have to make a decision on whether to go it alone or kind of increase in partnership activity for one of the indications. How will you make that decision, and is that still your base case? Yeah. Look, it's a good problem to have to have a couple of different large market programs that can advance to phase three through differentiated profiles. Ulcerative colitis in phase III is something that we can go execute on, but importantly, we could commercialize ourselves in the United States given the growth dynamics I walked through. That's a big part of the thinking of why UC makes a lot of sense for us to continue on independently. We're also very focused on a return on equity to investors. Financially speaking, two phase III programs, not trials, but programs which are three to five trials each, there's a capital expenditure. Operationally, two therapeutic areas doing that, building up development and medical team is a different type of burden for a company of our size. Third, in RA, at least in second, third line, you're not commercializing that yourself in the United States. You need contracting support. There are a lot of reasons why UC would be preferential to RA if we had to pick one. It does not stop there, though. We now have proof of concept in GI and rheumatological diseases. There are a number of other places we can go and develop in phase II already off the RA results, but also off of results in an IBD indication. There is plenty of other direction we could also expand into. We do not need to do it all ourselves, though. If the ROE makes sense to move everything forward with a partner and sharing economics versus in one major area on our own, we'll have that choice and we'll make the most value accretive choice over time relative to where else we're deploying capital in the earlier part of the portfolio, which is also quite attractive. I think the bottom line here is where, again, we're the only ones with clinical data that's independent. I think we're going to have the ability to call our shots in what we want to do. There are multiple attractive options sitting here today and where we can move forward. Perfect. One part of the business that you mentioned at the very beginning is the GSK royalty with Jemperli and some of the other agents that are in development. I think it would be helpful just to kind of lay that out. What is the deal structure and what is that worth to Anaptys as it stands right now based on GSK's kind of commentary about how Jemperli is going to move forward? Yeah, thanks. We've been talking a lot more about this in the last few months. The reason for that is a year ago, this royalty stream was not worth a lot on paper. We'd have monetized partial royalties in a capped transaction with a group called Sagard that has to get paid back. What's happened in the last nine months is GSK got approval in the United States in frontline endometrial, and it's really driving a lot of growth in the asset. They just recently, so it's not in the numbers yet that are in the public domain, received approval in Europe. They're running into a registrational trial in rectal disease, rectal cancer, where in phase one two, they showed a 100% response rate across 42 patients. In a monotherapy basis, there's room for upside here and growth. If you look at Wall Street Consensus, it's $1.3 billion in peak sales over the next six or seven years. GSK is guiding at $2.5 billion in peak sales in monotherapy indications. There's a big gap. If you only discount back Wall Street Consensus, it's worth more than our market cap today after the paydown of the non-recourse debt. I'm not saying this because everyone should go buy our stock just because of royalties. The importance here, it's a real value driver. Over time, when you think about what we were just talking about moving programs forward, while we have $420 million of cash coming in this year, which is three years of capital to continue developing out this portfolio, we have choices of when and how we non-dilutively continue to move forward our asset portfolio relative to taking equity dilution on the whole asset base, including this royalty stream. It's unique that we have this asset that's growing, and there's a lot more risk to the upside than downside given the GSK guidance. On top of that, there's a combination trial that's been ongoing for years. It's in combination of cobolimab, I mentioned earlier, discovered at AnaptysBio, which is a TIM-3 antagonist with Jemperli plus chemo versus Jemperli plus chemo versus chemo. It's in second line non-small cell lung cancer. Last patient in was November 2023. It's been 15, 16 months, and GSK's guidance is this first half, they'll read out overall survival data. That's a 750-patient trial registration enabling. That's a massive market double-stacked royalty. Potentially huge near-term catalyst, low likelihood of success potentially in second line lung, but a very big deal for us. Our royalties are 8% up to $1 billion, escalating very quickly to 25% on $2.5 billion of revenues and more. GSK is tracking on a run rate to do about $1 billion this year in revenue. We do get a $75 million payment when they hit $1 billion for the first time outside of prior monetizations. Like I just mentioned, that royalty gets very, very big for Jemperli. On top of that are the cobolimab royalties. It's a huge value stream for the company that we can rely on in the future, and we do not need to touch that this year at all until we further de-risk the portfolio given the cash position we already have at the balance sheet. Perfect. Maybe just in the last minute here, touching on the earlier pipeline, you have 033 and 101. I guess obviously do not have time to dive into the program specifically, but how are you thinking about just an overall indication selection? When will we kind of learn more about that? Yeah. The IL-15 CD122 pathway, CD122 dynamic receptor that blocks IL-15 and IL-2 on CD8 positive Temra cells as well as resident and memory T cells and a certain type of NK cells. Broad acting activity, number of choices where we go. The IL-15s and the CD122s that are ahead of us, and we have a more potent version of the CD122s that are out there, are in celiac disease, EOE, and vitiligo. That's where clinical data is being generated today. There's a lot of choice. We're in the phase one A, SAD/MAD escalation has been going on for a number of months. As we move into the phase one B, into the back half of the year, we will hold a robust R&D event talking about this pathway in more detail, the rationale for the disease that we're starting with for the phase one B across a number of options, and then differentiation versus competitors. That is upcoming. Perfect. Awesome. That we're at time. Thank you all for joining us, and thank you. Thank you, Joe.