Conference Transcript - APGE 2026-06-03

Akash Jawari, Analyst — Jefferies

My name is Akash Jawari. I head our pharma and biotech research efforts at Jefferies. I have the pleasure of hosting the Apigee management team. Michael, why don't I hand it off to you to give some introductory remarks, and then we'll get started with Q&A.

Speaker 2

Also, thank you for the exceptionally bright light. I know. It's very nice. I will stay awake. No, thank you all for coming. Thank you for the opportunity. So at Apigee, we're developing a Zoomy local part. is our lead program for type 2 inflammatory diseases. So we recently released data from our phase 2B showing with four dosing days during induction, we get to very competitive efficacy in atopic dermatitis. And then earlier this year, we showed that over three to six months, with every three to six month dosing, after that we can not only maintain efficacy in patients, but also lead to improved responses over time. We're very excited about this, as we and many physicians that we speak with feel that this could be the next exciting launch and frontline atopic dermatitis. We also announced plans for asthma and EOE, eosinophilic esophagitis. So we believe we have full pipeline and product potential for Zumi, launching later this decade and a mega blockbuster in the works. We're kicking off phase three later this year. We're fortunate to have also announced that in addition to our robust balance sheet, we did a $1.3 billion financing with Blackstone collaboration, which gives us cash through launch and even commercialization and profitability. So headed into phase three without a financing overhang and a very exciting drug on our hand. And then, you know, co-formulations of fixed-dose combinations, including oxford ligand and T-slip coming behind that, which could expand patient populations and further raise the bar on efficacy. So very exciting time for us. And yeah, excited to dig in?

Akash Jawari, Analyst — Jefferies

Understood. You know, we should maybe start with kind of that Blackstone partnership because, again, I do think it's quite unique to have that type of an announcement concurrent with a data release and then also for an asset which is still in clinical development. So, and Jane, I'd love to get your perspective. We've seen deals that, you know, have been done with this kind of royalty-private equity partnership in the past, but one of the things your team has been insistent about is there is unique attributes about this deal that investors may not be paying enough attention to. Can you highlight what are the big takeaways in terms of why this deal is actually different than what we've seen historically?

Speaker 2

Yeah, please, Shane.

Jane Pritchett Henderson, CFO

Yeah, first of all, largest pre-phase three deal. It does reflect the conviction that Blackstone has in Zumi. And as we were negotiating the transaction with them, three things were important to us to optimize the deal. One was quantum of capital, making sure we had access to capital that would take us not only through commercialization, but also profitability. And that quantum of capital also means we have no need for equity. The other piece was cost of capital, so negotiating royalty rates, negotiating rates that would go down with sales as well as having the flexibility of how much capital to take down and third the strategic optionality creatively working with Blackstone to have a strategic if appropriate in the future be able to buy down the royalty to a very low single-digit royalty rate so those three pieces in addition to features that were also unique so there's no onerous governance features here there is again quite a bit of conviction from the team

Akash Jawari, Analyst — Jefferies

not only in Zuni but in the track record and execution so all in all as you add up all of those features and now going into phase three with no financing overhang it was almost a no-brainer for us to do this deal now understood and i i know uh obviously blackstone was here they can go over their kind of deal assumptions but i think when we've talked to people in the field uh usually you'll use kind of a 20 irr um you'll think about time to break even not 12 years maybe let's say um you know five seven years and when you let's say use some of those inputs uh the implied kind of valuation and peak sales opportunity for Zumi is in that kind of like $7 million plus range. I know, obviously, they're not here to speak, but is that ballpark kind of the right way to think about that? And when you think about the discussions, was it primarily on first-line atopic dermatitis or how much of it was the broader opportunity?

Speaker 2

Yeah, so, you know, they really, you know, not to speak for them, but I think typically, right, what is underwritten is kind of the drug that's in phase 3 or late-stage development and the indication it's in. So I think it really speaks to the fact that, right, they quickly, along with us, were able to kind of look at our data, speak to physicians, and get conviction that zooming in atopic derm would be the frontline drug, you know, in kind of that $10 billion-plus ballpark. Expansions, combinations, or additional value beyond that, which, given how it's structured, right, similarly to RevMed, actually, right, the better the drug does, doesn't mean royalties actually cap out after kind of that $8 billion mark, just very similar to REVMED. So even as kind of the drug adds on value, the blended rate effectively goes down, which And yeah, I think to your point, last week, my favorite question always from equity investors is, why didn't your stock go up more on good data? But I think that there was a lot of, oh, well, this must take strategic optionality off the table right now. but I think people were missing that. RedMed also went down when they announced their deal and I think they're up quite a bit since then.

Akash Jawari, Analyst — Jefferies

I think maybe to that point, again, that perception that, hey, you did this royalty financing, ergo the strategic value has changed in one meaningful way or not. Talk to me about, and we've seen precedence of this in the past, when you can go into strategic discussions, both with external partners or something more broad, having the ability to say, look, we don't have dilution risk versus previously we did. How does that change your, I think, bargaining position?

Speaker 2

Yeah, you know, I think hard to comment too much aside from, you know, you always want to be in a position of strength, not weakness in any sort of discussion. And I think that we've set ourselves up quite well to have a clear independent path to launch this drug. if that's the optimal path before us. Of course, our goal is to get this to as many patients as possible. Someone with a lower cost of capital that can do our combo development and maybe even other expansions in a more accelerated fashion than us could do that, right? Kind of $2.6 billion on the balance sheet is sufficient for a lot, but there is still more that could be done with our collection of assets. We are a public company with a responsibility to shareholders, So, right, we'll act in those interests, but I think we're set up quite well now for the future in a variety of paths.

Akash Jawari, Analyst — Jefferies

And then maybe lastly, and this is more of a niche question, but one attribute is there is kind of a 180-day clause with that agreement you had with Blackstone that I don't think is well understood by investors.

Jane Pritchett Henderson, CFO

Can you talk a bit about what that is and then why that was put into the agreement? now we looked at various timelines and of course leading into phase three deals are often done leading up to phase three or post phase three data so it was important to us to also have a favorable term around the next 180 days recognizing one money that went in from blackstone and the appropriate return to them but then of course over time on as more tranches came in what a strategic could do on the buy-down option. So it was very favorable to us to have the overall clause, but within particular this first 180-day time period.

Akash Jawari, Analyst — Jefferies

And that is of signing the agreement?

Jane Pritchett Henderson, CFO

Correct, from signing of the agreement.

Akash Jawari, Analyst — Jefferies

Understood. Now, Jeff, I want to get you into this discussion and thinking about really, and this is one of the things your team has been insistent on, is ZUMI is a first-line atopic dermatitis drug. And, you know, can you hit on really SkyRizzy, what happened there, and why they were able to get such broad uptake relatively quickly in a very competitive market? And again, you have unique kind of insight on this. What is the difference between, let's say, a drug which is 75% adherent at year one versus one that's 95% adherent when you think about payer economics?

Jeff, Other

Yeah, thanks for the question, Akash. I think first, when you look at SkyRizzy's launch, right, they launched into, I would say, a much more competitive market of plaque psoriasis from a biologic perspective versus what we'll be launching into in AD. I think if you look at efficacy, you could argue that it's fairly similar to the IL-17s, And really, when you look at that launch curve, and it's not just the launch curve, but it's also the extended success that they've had. It's really about meeting patients and physicians where they needed support in their disease state, which is that extended dose option. So even with similar efficacy, similar safety, but every three-month dose, you've seen that quick uptake. I think your question is really important around, you know, compliance and persistency. So, for example, if you look at Dupixent, Dupixent in the first year has about a 73% persistency rate. By the end of the second year, about half of the patients discontinue versus comparing that to an extended dose option like Skyrisi and plaque psoriasis, that first year is 95% persistency rate. That matters for a number of reasons. I think first and foremost, it matters because the product is going to do what it's meant to do if it's taken appropriately. So you're going to have less office visits, less polypharmacy or additional products like topicals added on, but you're also going to have less switching and switching matters from a payer perspective, because every time a patient switches, that patient then goes back into another product in induction, which is the first year, which is the most costly. So payers really do care about keeping patients on product. And I think lastly, for the first line, Zumi Locobart is the perfect first line product. If you look in AD right now, yes, Stupixent has first-line access, meaning just after topicals, but so does Nemluvio, so does Ebglis, so does Adbri. We absolutely expect first-line access, and if you look at first-line access following topicals, a patient is much more likely to move to a product like Zumi-Lokobart that has four dosing days in induction versus nine for others, and then just two to four dosing days throughout the year in maintenance. they're much more likely to start on Zoomy than a product that's dosed every two weeks like Dupixin.

Akash Jawari, Analyst — Jefferies

Understood. Now, Carl, a question kind of for you, and I think one of the things that I've sensed with your team is when you're thinking about the development of your portfolio across the board, you've been very prudent about answering the scientific question, right? And not necessarily saying, you know what, we've seen the signal, we've done some subgroup analysis, here's what we hope it's like no here's our trust and it seems like you're behaving very much like a pharma company if they were running this program this is what they would be doing I think that also matters as we think about your respiratory development program and really my question is because you've got different agencies of the FDA that approve depicts it when you think about you know skin conditions versus pulmonary conditions or even more broadly, now that you have data in AD, what indications do you unlock where you can say, I feel pretty comfortable that in phase three, I can take this exact Zumi dose into another indication? And why that may not actually be the case in, let's say, asthma or COPD and why you really want to run dose-finding trials?

Carl Dambkowski

Yeah, so great question, and thanks for I'll touch on multiple things here. So, you know, one, I think that just in terms of our process overall, I think we always start with a blank slate. So I think while some of the things we're doing might look traditional, meaning we do dose range finding, we've done that in AD, we want to do that in other indications, I think that we're always trying to start with the question of how to optimize our path forward, and that includes two things. timelines is obviously part of that, but also getting to the right dose to maximize efficacy is part of that. I think that probably no one would be happy with us if we shaved six months off our timeline, but took forward a subpar drug, right? And so we always want to think about that as well, too. And when we've looked at that, we've always seen that doing a dose optimization study and then doing a single dose in phase three is actually timeline advantage, as well as has that benefit of giving us the ability to maximize efficacy. I think we've seen that with the Part B data here in AD, that had we kind of just jumped into phase threes, we would have done one or two things, right? Gone with a dose that was not friendly in terms of injection burden and not benefiting patients and potentially leading to things we didn't want, right? with more injections, less differentiation for competition, or we would have underdosed it and not tapped into this additional efficacy that we're seeing in AD, right, with, you know, 65% EZ75 over 40% placebo-adjusted and both EZ90 and IgA01, 40 mid-40s for top-line data and mid-30s for placebo-adjusted. Like, I'm happy we didn't miss out on those things overall. So that would be my first point. So we always are looking at what's the best path, and, you know, we want to make sure we're advantaging timelines but not disadvantaging efficacy. And then on the second point, how we think about it a little, to your point, we're doing a variety of indications across a variety of divisions of the FDA. And really what we've seen historically is that they want to see dose ranging within that therapeutic area because different endpoints, different trajectories for patients means that the same dose may or may not hold across this. For derm, I think we know where we are right now in terms of the optimized dose, and that unlocks additional derm indications for us where we wouldn't plan on repeating dose range finding. So that could be things like PN, BP, CSU, right, which are now open there. How those fall and what is important to us, I think, you know, Jeff can probably answer more in terms of what kind of our descending list is based on, you know, potential value for Zoomy long term and unmet need overall. And then second, we think about the same thing for different TA. So rest would be our next one. We want to do proper dose range finding with asthma before opening up to other indications. Once we get that dose there, that'll open us up for things like COPD, potentially allergic rhinitis like Lebre is doing right now, potentially for chronic rhinosinocytes with nasal polyps, and then similar for GI too. So we're kind of thinking about that in each of from maximizing the efficacy by therapeutic area and then expanding to potentially multiple implications where we won't repeat that dose range finding.

Akash Jawari, Analyst — Jefferies

Right, understood. And I think maybe to that point, just to kind of set expectations on the recipe side, because obviously in parallel, you're moving the T-slip. If I were to think, okay, there's a potential biomarker agnostic or at least 150 cutoff in asthma and COPD, when does that combo get announced for Apogee? I mean, the realistic expectation is that's probably going to be a 2028 event where you're going to get enough data in-house to feel comfortable about your doses of those two targets and then moving that forward. Is that the right expectation?

Carl Dambkowski

Yeah, I think we will announce plans for the combination later this year. Exact timing of that start obviously won't be this year since we'll just be announcing plans. Whether that's 27 or 28, I think more to come on that. I think before we do, you know, we think we'll have optionality to do more proof of concept trials where we might not need the optimized dose, right? You can think about how we moved forward with 279 in terms of the properties there where we didn't have our optimized dose yet, but we still felt comfortable moving into the combination trial that would tell us whether it would be beneficial or not. So I think we could think of that before we do the, quote, the big 2Bs, et cetera, right? We would want to know what's happening with the monotherapy, at least for the backbone agent, which we see Zumi as the backbone agent here.

Akash Jawari, Analyst — Jefferies

Maybe hitting on 279, I don't want to spend too much time, but it does seem like the bar is going to be high for your team internally to move that forward. And so I think probably investor expectations are appropriately low, but I just want to make sure we have that well defined, which is, you know, what do you want to see from week 16 to 24 and what endpoints in order to justify moving forward with that in a, you know, phase three trial?

Speaker 2

Yeah. So for 279, it's our IL-13 oxford ligand fixed dose combo. Currently we run head-to-head versus DUPI, about 86 patient trial, randomized one-to-one. You know, we've always said that the better that Zumi performs in atopic derm the higher the bar for that combo so versus right when we talk to docs you know a 10 point Delta is what they want to see so I think that would imply a 15 to 20 point Delta versus Dupi in that study to get us a conviction that um we should allocate additional capital and if it does that it'll be profound efficacy and very exciting for the field and then it could be the second line drug of choice right we're currently that there's only jacks, and this would, I mean, a jack-like profile without all the safety liabilities. Obviously, a high bar, but, you know, we'd be excited to hit that and allocate capital, and, you know, we'll nod if it doesn't hit that.

Akash Jawari, Analyst — Jefferies

Okay. Understood. And I think maybe just stepping back and thinking about RESPE, you know, and obviously, I think, like, if OX40 didn't have some of the safety issues, I think that would have been, this would also be a different discussion too. But when we think about the chances that Apogee is going to move forward with a combination approach in REST-B, you know, looking at the data you've seen so far, Carl, what's your base case assumption that it really, you will need kind of that T-slip, L13 combination to get a biomarker agnostic kind of label? Or is the take maybe, that shouldn't be the base case. It's possible, but we don't have enough evidence right now to really suggest that.

Carl Dambkowski

Yeah, I mean, I think we're still trying to learn more about the combination, but what I'd say is, is for Zumilocobart monotherapy and rest, we really, especially in asthma and potentially eventually COPD, we really expect that to be an enriched population for, you know, T2-ness. And I'll use EOs, you know, greater than 150 as a marker of T2-ness. We think that's really important in terms of having a monotherapy program there and designing that trial to be successful. I think contrast that with our belief in what the combination could do. So Zumi plus APG333, which is our extended half-life T-slip. And there we think that the benefit is, you know, potentially across the whole population, but the true unmet need in asthma right now is that less than 150 EOS population. While tezapelumab works there, It definitely does not work as well as it does in eosinophils greater than 150. And we have seen data from both Dupy and Libri that there is some signal in that less than 150 EOs. It's even weaker than T-slip, but that's the area that we see the highest unmet need and the potential for the combination to broaden the patient population from what we want to do with Zumi alone.

Akash Jawari, Analyst — Jefferies

When you think about designing that kind of phase two for both the AL-13 and then kind of the T-slip, I think one of the things that stood out to me is a lot of the farmers that ran those trials, those phase two's failed, right? Because they went for more than they could chew or they just weren't appropriately powered. And I think both of those are kind of interesting questions. So, A, when we think about enriching for T2-ness with the AL-13, I'm thinking 150 and then maybe a certain amount that had prior exacerbations. Is that the right way to think about how that phase two study would go? And then when we think about your T-slip, what's the right subgroup? I mean, you're probably going to want some data in the less than 150, right? So how do you think about designing that trial as well?

Carl Dambkowski

Yeah, so great question. I think the history, especially of IL-13 and asthma, is one of being maybe overly seduced by a broad and ill-defined patient population, which we've seen happen not just in asthma. We've seen that happen in many other disease areas, too. Our eventual goal for Zumi is, you know, to be similar there in terms of efficacy and labeling for DUPI. which eventually they did a couple different varieties of studies, but eventually was essentially EO's 150 or greater, right? The label itself just says eosinophilic subtype, and every drug that has that on their label has used slightly different cutoffs, too. So there's maybe some flexibility in what the cutoff means, but that would be the goal there. For the combination, I think how we think about that is we want data across the entire spectrum, but really to see a signal in the subpopulation of EO0 to 150, too. So in terms of eventual trial design, we would want to make sure we're testing it across the whole population, maybe with a little more of a focus on EO0 to 150. I'd say I think that will be an easier population to enroll because they have less available therapies for them, too. So we'll probably naturally, if you open up to, you know, a EOS agnostic trial, you probably just will skew towards that patient population in general based on availability of treatments.

Akash Jawari, Analyst — Jefferies

And when we think about, and this is Elanique, Carl, and Jane's help here, size of those trials, like could the T-slip study be materially bigger than the AL-13 because you're enrolling a broader population? And what are really timelines for that, you know, those phase two studies getting enrolled and then ultimate announcement?

Carl Dambkowski

Yeah, so for the combination, I think that what we'll want is making sure we have enough data in the subpopulations. And I would say that broadly, again, is EO is less than 150, EO is greater than 150. So per arm, it might be a little larger than just one that was, you know, enriching for a certain subtype. I don't know if, Jane, you want to comment on anything else?

Jane Pritchett Henderson, CFO

When we think about a cost for a phase two global trial, it would be about $250,000 per patient. And as Carl said, you know, we were expecting that that trial size would be larger. It could be up to about 50 percent larger, but more to come as we disclose the plans for that combo the second half of this year.

Akash Jawari, Analyst — Jefferies

Okay. Understood. that now, Michael, maybe adding to you, I mean, there's a lot of moving parts here and you have multiple phase three studies that you're initiating. And then on top of that, there's a very in-depth program that you have to do to develop Zumi and your other programs into these respiratory indications. Do you feel like you're hitting a rate limiting step in terms of the size of your organization of actually making sure all these things are done in time with the appropriate integrity, but then also making sure you're moving, you know, with this speed, because, again, we talked about this yesterday, there is at least an investor expectation that, you know, our friends at Regenera and Sanipi do ultimately move forward with an aisle 13 that will be competing with your program, right?

Speaker 2

So how do you balance getting it right versus, you know, making sure you're moving quickly Yeah, you know, I think we're fortunate that we have a lot of, you know, highly NPV um uh positive positive um things that we can do in front of us i mean no priorities atopic durham um approval and you know for zoomy followed by the expansions and you know i think we're we're quite well resourced um not only on the capital front but also on the people front um to do that right we've been the nice thing about kind of the program is that we've always had strong belief that you know we know aisle 13 works it should be quite safe it should be quite effective So it's been less of a, you know, not a, you know, will we get to phase three? It's when will we get there? So we've always kind of invested at risk, right? I think, you know, be it on the people front, the CMC front, you know, the CRO front. So I think that we're moving, we wake up and go to sleep worried about how we get approved in that indication as quickly as possible. And then with separate teams that we've also built now, how we get approved in asthma and EOE. So I think, right, it is important that we build kind of parallel efforts to go after these so that we don't lose focus. You know, I think other companies that are, you know, talking about entering the space, I am confident that we care much more deeply and are much more focused on this than they are because they have many more things that they're working on. this is all that we do. Beyond that, for combos, I think that IL-13 T-slip, that comes after the prioritization on Zumi monotherapy efforts.

Akash Jawari, Analyst — Jefferies

I think your answer was quite nuanced, and I think it's important, because even when you introduce Apigee now, you say, we're a company that is developing Zumi and type 2 indications. And I feel like there is this kind of divergence of the de-risking that you have in the story in atopic dermatitis, and the size of that market, and then the long-term development you're going to have in these other indications. And I feel like that also plays into kind of how both the companies view strategically. So I'll give you an interesting question, and I've asked this to Cam at Spire, too, which was your peer, Mark, and where he was with Prometheus, where he had a compelling phase two data set, and it didn't wait until phase three. to look at strategic optionality because there was a sense like, hey, Target's exciting enough. Maybe it's biomarker driven. Maybe it's not. But we've de-risked something big earlier than we've traditionally seen. And we've seen that across the board with Pharma where the deals are getting bigger and they're earlier stage because there does seem to be an increased appetite. Do you feel like you have a similar kind of framework investors saw with Prometheus with Apogee here where, again, there's been maybe quicker de-risking of a substantial part of the story than a traditional biotech?

Speaker 2

Yeah, you know, I think obviously we're biased, right? We all kind of love what we work on. I think, you know, the Blackstone deal, you know, shows that, right, especially without any kind of debt-like obligations, as Jane alluded to, right, very high degree of belief from us and others that this is going to be a very large drug by the end of this decade launching. And that's pretty rare for biotechs. And we've seen that kind of biotechs like that, right, obviously, you know, Mark did quite well and found a great partner that could accelerate advancement across a number of indications. Or they go into phase three and they launch a drug and they start to reach escape velocity and, right, they quickly accrue value. So I think either are really great options ahead of us, and we're set up well to get this drug to a lot of patients, which is the most important thing.

Akash Jawari, Analyst — Jefferies

Maybe just lastly, when we think about really this broader M&A environment, and this is something we've heard. I mean, I had Robert from Cytokinetics. We've heard this even on, you know, you talk to Gilead, and they say this is a unique M&A environment where there are, you know, discussions are more productive, they move faster, and the sets of companies that you can have discussions with are just, it's different. I know, obviously, there's limited disclosure you can give here, but what do you feel like is unique about this environment and also maybe this FTC that investors aren't appreciating?

Speaker 2

Yeah, you know, I think it's hard to comment too much, except that there are very few kind of independent biotechs that are phase three with, you know, drugs that are consensus going to be, you know, 5, 10 billion plus. Many of those were, you know, have been taken off the board or they are at a valuation range that makes it hard, but, you know, a very different range than where we are right now. understood we're out of time but i really do appreciate the conversation and thanks so much