Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) Alexion to Acquire Syntimmune Conference Call September 26, 2018 8:00 AM ET
Susan Altschuller - Vice President, Investor Relations
Ludwig Hantson - Chief Executive Officer
John Orloff - Head of R&D
Paul Clancy - Chief Financial Officer
Brian Goff - Chief Commercial Officer
Brad Canino - Leerink
Tessa - JP Morgan
Geoff Meacham - Barclays
Ben Burnett - Stifel
Ying Huang - Bank of America, Merrill Lynch
Kennen MacKay - RBC Capital Markets
Jason Jakoby - Goldman Sachs
Matthew Harrison - Morgan Stanley
Good morning, and welcome to the Alexion Pharmaceuticals, Incorporated Conference Call to discuss Alexion’s Acquisitio of Syntimmune. Today’s call is being recorded.
For opening remarks and introductions, I would now like to turn the call over to Susan Altschuller, Vice President, Investor Relations. Please go ahead, ma'am.
Thank you, Nicole. Good morning. And thank you for joining us on today’s call to discuss Alexion’s acquisition of Syntimmune. Today’s call will be led by Ludwig Hantson, our CEO. Ludwig will be joined by John Orloff, our Head of R&D; and Paul Clancy, our Chief Financial Officer; Brian Goff, our Chief Commercial Officer will also be available for Q&A. I will note that Paul and Ludwig are taking the call remotely. You can access the webcast slides that will be presented on this call by going to the Events section of our Investor Relations page on our website.
Before we begin, I would like to point out that we will be making forward-looking statements, and these statements involve certain risks and uncertainties that could cause our actual results to differ materially. Please take a look at the risk factors discussed in our SEC filings for additional details. These forward-looking statements apply only as of today, and we undertake no duty to update any of the statements after the call, except as required by law.
Thank you. Ludwig?
Thank you, Susan. We’re glad to have more good news to share with you this week. We continue to build our pipeline with today’s announcement that we have entered into an agreement to acquire Syntimmune, the clinical stage by the company developing antibody therapeutics targeting the FcRn receptor. We believe this new and innovative class of therapies holds great promise for treating IgG-mediated diseases. We’re excited to help shape the FcRn landscape.
With the acquisition, we will bring in SYNT001, an anti FcRn antibody with demonstrated proof of mechanism in early stage clinical studies. We believe SYNT001 provides a great opportunity to advance our mission of serving patients with rare diseases.
On Slide 6, you can see a range of IgG-mediated autoimmune diseases that could be treated by targeting FcRn. We see potential for broad application across a number of indications with SYNT001. We have already decided to move forward in warm autoimmune hemolytic anemia, and are evaluating with additional rare diseases we will target for SYNT001 development.
WAIHA a rare hemolytic autoimmune disorder affects approximately 65,000 patients across the U.S. and the EU5. The disease is characterized by profound and potentially life-threatening anemia and other acute complications, and there are currently no proof therapies. SYNT001 is the first, and at present the only anti-FcRn assets in clinical developments for WAIHA. We expect data from the ongoing Phase 1b/2a study in 2019, and plan to initiate a digital program following its completion.
In addition, we plan to initiate a second pivotal program in an undisclosed indication next year. We view the FcRn state as having tremendous opportunity, and are very excited to expand the portfolio with SYNT001. Given our strong development and commercialization capabilities, we’re uniquely positioned to lead in WAIHA as well as additional rare IgG-mediated diseases.
I will now turn the call over to John to provide more details on FcRn and the promise of SYNT001. John?
Thanks, Ludwig. Let me start on Slide 8 with an overview of FcRn, which plays a key role in multiple autoimmune diseases. FcRn is a protein that binds all IgG subclasses. It is a crucial mediator of the inflammatory response to IgG antigen immune complexes, and is involved in regulating IgG turnover. Disrupting the IgG FcRn interaction increases the clearance of IgG, which is believed to reduce levels of pathogenic autoantibodies.
SYNT001 is a humanized IgG4 monoclonal antibody that inhibits the interaction of FcRn with IgG and IgG immune complexes. It binds FcRn and blocks FcRn mediated recycling of IgG leading to rapid reductions in IgG autoantibodies. It does this without destroying immune cells or impacting other types of immunoglobulin.
Moving to Slide 9. SYNT001 is currently being evaluated in a Phase 1b/2a study in patients with pemphigus vulgaris, or PV, or pemphigus foliaceus, or PF. Syntimmune presented preliminary data from the first cohort of this study in May of 2018. These interim results demonstrated proof-of-concept showing rapid and consistent reductions in each IgG subtype in total IgG and in circulating immune complex levels. Cohort 1 evaluating low dose 001 administrative as 10 milligram per kilogram weekly IV infusion for 5 weeks in 7 patients, and demonstrated a 59% total reduction in IgG levels by day 30 and a mean 50% reduction in CIC levels by day 33. Additional dose ranging is ongoing in successive cohorts. We also plan to investigate reduced dosing frequencies to provide more convenient options for patients.
Safety data from PV, PF, Cohort 1 is shown on Slide 10. SYNT001 was well tolerated in patients with all treatment related to adverse events characterized as mild or moderate. There were no study drug discontinuations, interruptions or dose reductions, and there were no treatment-related serious adverse events.
The most common adverse event was headache, which appears to be a common adverse event across the anti-FcRn class. However, all headaches observed in this cohort were Grade 1 or 2. Based on this targeted mechanism of action and demonstrated proof-of-concept, SYNT001 has the potential to exert a rapid therapeutic effect across a range of autoimmune diseases.
Moving to Slide 11. We’d like to highlight WAIHA is one example of SYNT001's potential to improve the treatment of rare IgG mediated disease. WAIHA is a rare autoimmune disorder characterized by pathogenic IgG antibodies that react with and cause the premature destruction of red blood cells at normal body temperature. The disease is often characterized by profound and potentially life-threatening anemia, and other acute complications, including severe and life-threatening hemolysis, severe weakness, fatigue, heart failure and enlargement of the liver and spleen. There are currently no approved therapies for WAIHA. So there is a significant need for new treatments that are well tolerated and offer effective disease control.
Slide 12 illustrates the current treatment paradigm where there is potential for SYNT001 to transform care. Corticosteroids are often used as first-line therapy, a chronic usage associated with significant tolerability and safety issues. Immuno-suppressants are also used off-label, but have a slow onset of action leaving the disease uncontrolled from months and can have severe side effects.
More burdensome treatments, including splenectomy and IVIg are reserved for laddered line use. Despite these options, approximately 1/3rd of patients continue to have active disease. SYNT001 has shown potential to reduce pathogenic IgG is responsible for WAIHA and offers rapid onset, as well as improved dosing, convenience and safety profile. As such, SYNT001 could significantly improve the treatment of WAIHA and has the potential to be the first approved therapy for this disease.
Following successful completion of the Phase 1b/2a trial, we planned to move directly into a pivotal study for WAIHA. We also believe there is great potential for SYNT001 beyond WAIHA and plan to initiate a second pivotal trial, an undisclosed indication next year. Additional development plans and other rare diseases will follow, and we look forward to updating you as our development plans progress.
With that, I'll now turn the call over to Paul to review the financials of the deal. Paul?
Thanks, John. Slide 14 outlines the terms by which we've agreed to acquire Syntimmune and the expected financial impact. At closing, Alexion will acquire Syntimmune for an upfront payment of $400 million. Under the terms of the agreement, Syntimmune has the potential to receive additional milestone dependent payments of up to $800 million. The acquisition is subject to customary closing conditions, including approval from relevant regulatory agencies. Assuming these conditions are satisfied, we expect the deal to close in the fourth quarter of this year.
The acquisition refinanced through cash on hand, and ongoing expenses for SYNT001 are included in our forecast with the funds earmarked for business development. This acquisition is an excellent step in building our clinical stage pipeline and fits well with our strategy and our approach to disciplined capital allocation. We'll continue to focus on growing our pipeline, and we will retain financial capacity to do so.
I'll turn the call back to Ludwig for closing remarks.
Thank you, Paul. As we have said throughout the year, we remain focused on our five key objectives. One of which is we're building our pipeline. This acquisition part is diversified portfolio and has the potential to create long term shareholder value. We're very excited to enter the FcRn state that we believe that SYNT001 has the potential to meaningfully improve the treatment of patients with rare IgG-mediated diseases.
With that, we will now open the line for questions. Operator?
Thank you. We will now turn to the question-and-answer portion of our call. [Operator Instructions] Our first question comes from the line of Geoffrey Porges of Leerink. Your line is now open.
Hi. This is Brad Canino for Geoff. Thanks for taking our questions. Could you just discuss the duration of safety that has been observed for the anti-FcRn class to date? And then, could you talk about what duration of treatment or treatment schedules do you expect for anti-FcRn in chronic autoimmune diseases that often lifelong disorders? Thanks.
A little difficult to hear. But, I think, the first part of the question related to the safety profile, it's certainly early stages in development across the class. But so far, the class related effect on headache has been seen with all agents thus far. With the exception of one of the competitive agents, all of them have been mild to moderate was SYNT001. The headaches that we described in the first cohort in the PV trial were mild to moderate, and typically occurred with the first infusion and thereafter were attenuated. No other safety issues have been really identified so far in development.
And then with regards to dosing, I think, our plans right now are to look at IV dosing first. We're looking at what we've done so far as weekly dosing IV. We'll be looking to extend that dosing interval through additional cohorts in Phase 1b/2a with PV as well as WAIHA. And then we will be considering also pursuing a subcutaneous formulation.
I think, the question was duration of treatment for the closing chronic treatment.
So, it really will depend on the disease, but we view this and in safety profile and the advantages that will provide patients the ease-of-use to support chronic therapy. Typically, in WAIHA, this is a disease that rarely remits on its own and requires chronic therapy. And in some of the other indications, we're pursuing would also likely be chronic therapy.
And, John, the exposure with SYNT001 is about the months?
Yes. So far, the data that's been reported across the class has really been 4 to 5 weeks as far.
Thank you. And our next question comes from line of Anupam Rama of JP Morgan. Your line is now open.
Hi. This is Tessa on for Anupam this morning. Congratulations on the announcement. One from us here, and what attracted you to the FcRn mechanism given the number of development approaches in the clinic, including complement? And what are your views on the potential advantages and disadvantages of the approach? Thanks so much guys.
Go ahead Ludwig.
Yes. What I was going to say is we've been looking at this stage for a while. And we came to the conclusion that this is a great opportunity, and this is an opportunity where Alexion cannot afford to miss such. It's a class of drugs that could potentially transform the Ig treatment landscape over the next years. And, as you know, IVIg is widely used in autoimmune disorders. So we're really excited about this opportunity. And the way that we look at this is that this is a pipeline opportunity in a product. And for us, at this point, as we said, WAIHA is our lead indication. But, of course, we're planning to go beyond that. And as we said, we will disclose a second potential pivotal program next year. Go ahead, John.
Yes. I would just add that, I think, we look at this synergistically with our complement franchise. This opens the door to a large number of autoimmune diseases, mainly which do activate complement. But the target patient populations, while there may be overlapping in some areas, are distinct in terms of where we would introduce the therapy in the patient journey higher upstream. I think one of the other advantages of the FcRn approach relative to IVIg, which is certainly has provided proof-of-concept and mechanism for this approach since IVIg does operate in part, at least through the FcRn receptor, is that IVIg administration is burdensome for patients and long infusions, large volumes, and there are supply issues as well as safety concerns. So we think there is a distinct advantage of the FcRn approach as well as over other therapies that would be considered immunosuppressants that knock down B cells and plasma cells and are associated with risks and infection and some more serious risks like PML.
Thank you. Our next question comes from the line of Geoff Meacham of Barclays. Your line is now open.
Hi, guys, thanks for the question and great job of the pipeline rebuild. Just have a few on WAIHA. So previously you guys have looked at higher mortality rate diseases. It doesn't seem like this is as comparable. Maybe just give us a little bit more context for disease ideology and progression? And what types of endpoints you would expect in the registration study looking forward. Thank you.
Yes. So, I’ll take the first part of this, and maybe ask Brian to step in as well. So this is a heterogeneous disease and expands the spectrum of low grade anemia just below the line are being symptomatic to the life-threatening anemia congestive heart failure. So it’s quite a broad spectrum, and it can occur almost at any age typically in 50s and 60s, but it can't occur in adolescents and in young adults. So, I think, I’ve touched on earlier that course of therapy generally is initially recorded corticosteroids. But corticosteroids are fraught with side effects with chronics use. And some patients aren’t able to taper down to a dose that we actually minimize those side effects. So then they have -- currently, the options are to go splenectomy, which is also associated with its own significant morbidity and mortality as well as risk of infection, rituximab or other ISTs, which also have their own side effects. So, I think, this represents a new opportunity for patients to treat them when they have chronic symptomatic disease. Brian, do you want to add?
Yes. Geoff, this is Brian. I’ll just build on that and say that despite all of those potential options none of which are approved by the way. About a third of the patients continue with active disease. So, what we would think about is the more severe form of WAIHA as the target population in, and if you breakdown the 65,000 total patients that we see in North America and the EU5, and you take a third of that, that’s still is the largest population that we would be addressing with the new Alexion portfolio. So the way we look at it, of course, is that FcRn has potential broad applicability across the range of other diseases, but in this case Syntimmune, SYNT001 is in a leading position in WAIHA. And, of course, is a strong strategic fit with a rare hematology portfolio and expertise.
And to come back to the clinical development program, one reason why we’re putting WAIHA first as a first mover is there significant opportunity here given that there is unmet need, no approved therapies. And we believe the endpoint is also supportive of an expedited clinical development, a regulatory pathway, where we can look at relapse or response to therapy defined by reduction in hemoglobin. And so we think that there is opportunity for an expedited regulatory approval pathway for the first approved therapy in this disease.
Thank you. Our next question comes from the line of Paul Matteis of Stifel. Your line is now open.
Hi. Thank you for taking our questions. This is Ben Burnett on for Paul Matteis. So, I guess, first question I had was, I guess, when we look at anti-FcRns, the one thing that sticks out to us is the base off of different antibody backbones. Can you speak to the importance of how -- I guess, speech to the importance of this? And how the IgG4 scaffold, which is what I believe is what SYNT001 is based on? How that might be differentiated from the IgG1 competitors? And then the second question, we also just wanted to ask about how the -- just the anti-FcRn mechanism stacks up against other mechanisms and pemphigus such as anti-CD20 and BCK? Thank you.
Okay. So the first question with regard to the scaffold. First of all, all of the anti-FcRn therapy so far described the anti-drug antibodies, and yet none of them had described neutralizing antibodies. So there’s no attenuation of the IgG reduction. As a company, Alexion, we’ve had considerable experience with the IgG4 scaffold, which is the basis for our marketed product, Soliris, as well as our product in development, 1210. And one of the reasons, we chose IgG4 is because it’s inherent lack of effective function and lack of activation and complement. And I would also add that Soliris is one of the least immunogenic marketed proteins out there with 11 years in marketed experience in the single-digits. So we’re very confident about the IgG4 scaffold.
With regard to PV, I think, we’ll have to wait and see what the data shows. We do know that it’s an IgG mediated disease. And we have shown reductions in IgG in the first cohort, and we’ll take a look at what the clinical data show. We are using the PV study as a proof-of-concept and proof-of-mechanism and a stepping stone to our development programs. Our plans are to proceed with WAIHA as our lead indication in Phase 3 next year. And we’ll be going right from our Phase 1b/2a study in WAIHA, which we’ll read out in the first half of 2019 into a Phase 3 program. We also plan to start another Phase 3 study in a different indication that we haven’t disclosed yet in 2019. And we’re evaluating other possibilities received more broadly into other autoimmune diseases. So the PV study is really just for us a basis to establish proof-of-concept.
Thank you. Our next question comes from the line of Ying Huang of Bank of America, Merrill Lynch. Your line is now open.
First, can you just give us a little bit compared contrast with the argenx approach for this mix of action? Whether you planning to draw for the indications they are testing? And then secondly, given the upfront costs and also your balance sheet, how much more appetite do you still have for further BD on this? Thank you.
So what we do know is that argenx is proceeding with Phase 3 study in MG, myasthenia gravis. And they also have planned studies in PV as well as ITP with some recent data that shared. I think with regard to differentiation, all of these products have those dependent reductions in IgG, I think, SYNT001 has shown so far the fastest major in terms of reducing IgG at 5 days. And it becomes down to how you develop the product. And we’re very confident about our ability to develop products in rare disease base as well as the commercialized?
And then, Ying, this is Paul. I’ll just kind of take the second part of your question on financial capacity. As you know, we ended the second quarter with $1.6 billion of cash in the balance sheet. And so this acquisition will take that down a little bit, although importantly, we’re additionally focused on cash flow generation. So I think we'll re-buildup that cash balance in relatively short order. More broadly, this is -- as Ludwig had pointed out, this is part and parcel to the business plan that we have laid out with one of the key objectives of rebuilding the pipeline. And I would say that Wilson transaction, earlier, this year, this transaction are great examples of pulling through in executing on that plan. And we intend to continue to rebuild the pipeline looking for transformative therapies and terrible rare diseases. And we'll do that in a disciplined way as we've always intended to do.
Thank you. Our next question comes from the line of Kennen MacKay of RBC Capital Markets. Your line is now open.
Hey, thanks for taking the question and congrats on the acquisition this morning. Quick question on how you're thinking about the mechanism and potential synergies sort of within your complement by this pipeline. FcRn is the mechanism. There is obviously something that can be saturable. You'll never drop IgG levels below certain floor, whatever you argue that floor is. And that may mean it's not quite efficacious in some diseases as targeting complement. But maybe here you could end for very different price points that could get you into a much broader section of some specific markets via WAIHA or something else like MG. And I guess, specific to MG, wondering given proof of concepts from some agents here. If you're sort of thinking about that at all from a perspective that with the different price points you could really own this market with a very broadly used agent in relation to sort of restriction from payers as well as some earliest reserve for maybe much more severe patients. Is that something that's on the table at all or not really?
So with regard to the mechanism, I think, the data so far including with SYNT001 is that we can get up over 70% reduction in IgG. We've shown that in preclinical non-human primate experiments. Then, but basically the threshold of the lower level of IgG that you want to actually reduce to, and with regard to that an increased risk of infection when you get below -- well below the normal range, you get to contrast that with other approaches in terms of ISTs and what you do with knocking down B-cells and plasma cells. What we think that it can be very effective in a range of autoimmune diseases, including those that don't activate complement. So we think there is synergy with our complement approach. And the target patient populations even within an indication, let's say, like MG, maybe different and may allow us to expand further upstream in the patient journey.
I'll turn it over to Brian for …
Yes. I'll drill on that too. This is Brian, again. And say that MG is clearly an area for us to consider given the rationale and the data generated thus far. And as we've noted, at this time, we're not disclosing development plans for additional indications beyond WAIHA. But we are evaluating the whole range of opportunities. But speaking to MG as a space that we're very thrilled to be in, of course, we're quite pleased with the progress we're making with Soliris in MG as the first and only complement inhibitor. We're not only pleased with Soliris, but also our progress in launch which is still within the first year in the case of the U.S. And if we reflect on the size of the population in MG, we're talking about 60,000 to 80,000 patients in the U.S. alone. And as we've communicated on prior discussions, with Soliris, we target about 3,000 to 8,000 of those patients in the U.S. So these are -- for Soliris, generally out of option treatment cycling patients that are largely aligned with the regain pivotal Phase III study population. In the case of anti-FcRn, we would expect that use would be earlier, potentially less severe patients, and of course, we'll have to wait and see how the data plays out. But we believe that anti-FcRn could be complementary to Soliris given the unique mechanism of action of each approach.
Thank you. And our last question comes from the line of Terence Flynn of Goldman Sachs. Your line is now open.
Hey, this is Jason up for Terence. For the two ongoing trials, I think, both are open label, have you had access to all the efficacy and safety data thus far? And is there anything incremental just from the high level that you can share?
So we've shared the data from first cohort back in May. We're dosing additional cohorts in PV trial with higher dose. We're also proceeding with our Phase 1b/2a study in WAIHA. And we'll have those data in the first half of 2019 to share. We also have ongoing studies and healthy volunteers to look at extending the dosing interval that would support alternative dosing frequencies in the Phase III program.
Thank you. Our next question comes from the line of Matthew Harrison of Morgan Stanley. Your line is now open.
Good morning. Thanks for fitting me. And, I guess, I was just hoping you've touched on a couple things about what kind of study you're thinking of running for WAIHA in terms of endpoint. Can you maybe just help us think about size of this study? And approximately how long you think this can take to get to a pivotal readout? Is this a 2-year endeavor or a 3-year endeavor?
Yes. We are, at this point, not going to disclose details of the development plan. However, we have selected WAIHA as the lead indication as we think there is opportunity here for us to move rapidly with a reasonable number of patients across geographies, and look at 6-month endpoint for hemoglobin is the primary endpoint and proceed with regulatory findings thereafter. The other programs, again, we haven't disclosed. And we'll have more to share later this year, next year, sorry.
That was our last question. I'll now turn the call back over to Alexion's CEO, Ludwig Hantson, for closing remarks.
Yes. First of all, thanks everybody for calling in. And thanks to the Alexion's team and congrats. So really a great job. We're really excited about this opportunity. You know that this addressable market opportunity is high. We believe that SYNT001 could potentially transform the IgG landscape. And we will keep you posted. We will keep you updated on the program. So this was an awesome week for us as we said rebuilding our pipeline is a key priority for us. Thanks for calling in. And talk to you next time. Thanks, everybody.
This concludes today's call. You may now disconnect. Evening everyone have a great day.