Zenas Biopharma Inc Stock

Good morning, and welcome to the Zenas BioPharma R&D Event. [Operator Instructions] Please be advised that this call is being recorded, and a replay along with the presentation slides will be available on the Investors section of the company's website following the event.

I'll now turn the call over to Abby Gray, Director of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Before we begin, I'd like to remind you that today's presentation contains forward-looking statements, including statements regarding the potential approval and commercial launch of obexelimab in IgG4-RD, our clinical development plans, the timing of potential clinical readouts and regulatory filings for obexelimab and ZB021 and our expectations for the market opportunities ahead of us.

These statements involve risks and uncertainties that could cause actual results to differ materially from what we discuss today. I would encourage you to review the full disclaimer on the slide, along with the risk factors described in our most recent annual report and quarterly report filed with the SEC for a complete discussion of those risks.

I will now turn the call over to Lonnie Moulder, our Founder and CEO.

Thank you, Abby, and thank you all for joining us for today's R&D event, which follows the obexelimab IgG4-related disease commercial event we held last month. Today, we will focus on obexelimab, our investigational bifunctional monoclonal antibody targeting CD19 and FcγRIIb and its potential opportunity in systemic lupus erythematosus or SLE, and on ZB021, our novel potentially best-in-class oral IL-17AA/AF inhibitor. In addition to the clinical relevance of these programs, we will also review some of the underlying science and provide context in advance of the clinical data we expect to report from both programs later this quarter.

I'll start by briefly discussing the overall Zenas pipeline and provide context for the SLE opportunity. Haley Laken, our Chief Scientific Officer, will describe the biomarker work associated with the Phase IIb SunStone SLE trial. Lisa von Moltke, our Head of R&D and Chief Medical Officer, will walk you through the SunStone SLE trial and outline what we intend to report. Haley will then present ZB021, our oral IL-17 inhibitor.

We are also very pleased to have with us Dr. Joseph Merola, a Board-certified dermatologist and rheumatologist, President of the Rheumatologic Dermatology Society and a member of the Medical and Scientific Board of the Lupus Foundation of America. Dr. Merola will share his perspective on IL-17 as a target for the treatment of multiple diseases and the relevance of oral therapy. We will then take your questions before closing.

As I mentioned, we discussed IgG4-RD, obexelimab and our launch preparations in September, and we encourage you to access that event on our website for a detailed review of our commercialization plans. While we are very focused on launch preparation and execution as we approach the May PDUFA date, we also feel it's important to highlight how we are well positioned across our rheumatology and neuroimmune pipeline, which spans multiple indications with recognized regulatory paths to approval and significant commercial potential.

We are expecting top line Phase II results from the SunStone study of obexelimab in SLE and pharmacokinetic safety and tolerability data for ZB021, our oral IL-17 inhibitor later this quarter. Both of these data sets will inform us as we determine our program strategies and our capital allocation decisions in the near to medium term.

The SunStone trial is structured to provide us with information to design a Phase III registration program in SLE. And for ZB021, achievement of target exposure levels with once-daily dosing, along with a favorable safety and tolerability profile, provides us with what we need to rapidly advance a potential blockbuster franchise.

At Zenas, we are building rheumatology and neuroimmunology franchises. Priority #1, of course, is an approval and successful launch of obexelimab for IgG4-RD. The BLA is under review by the FDA with a PDUFA date of May 27. And we also recently submitted the obexelimab IgG4-RD marketing authorization application to the EMA. We will further discuss the SunStone Phase IIa SLE trial today. We previously reported the highly successful Phase II MoonStone trial of obexelimab in relapsing multiple sclerosis.

In progressive MS, we are advancing 2 large Phase III global programs with orelabrutinib, a potentially best-in-class BTK inhibitor: PriMroSe for PPMS and Monarch for naSPMS. ZB021, our oral IL-17 inhibitor, which we will also review today, is rapidly advancing in the Phase I SAD and MAD program with clinical data expected this quarter.

Our 2 earlier programs include ZB022, a brain-penetrant TYK2 inhibitor that fits into our neuroimmune franchise and ZB014, an extended half-life molecule targeting CD19 and FcγRIIb, with preclinical data indicating potential once-monthly dosing. We expect clinical data for both ZB022 and ZB014 in 2027.

So over the remainder of this year and into 2027, important development milestones include the SunStone SLE and ZB021 clinical data this quarter, the obexelimab IgG4-RD PDUFA date in May and initial clinical data from ZB022 and ZB014 in 2027.

Beginning with obexelimab, on September 29, we hosted our IgG4-RD investor event with Dr. Guy Katz from Mass General, who walked through the unmet need and the Phase III INDIGO results. Since then, data were presented at the international IgG4-RD symposium.

First, data from the ongoing INDIGO open-label extension, or OLE. Remember, the randomized controlled portion of INDIGO was 12 months. Previously, we released 6-month data from the OLE. These data from the OLE included the 12-month probability of remaining flare-free, which was 0.93 based upon investigator and adjudication committee flares requiring rescue therapy, and 0.87 based upon investigator-determined flares requiring rescue therapy.

Additionally, glucocorticoid-associated toxicity results were presented. obexelimab significantly reduced cumulative glucocorticoid toxicity versus control at week 52. The difference in the glucocorticoid toxicity index cumulative worsening score was minus 11.4 with a p-value of 0.021.

Finally, the vaccine study is where patients at select INDIGO clinical sites paused their obexelimab treatment are administered a flu vaccine, a COVID vaccine or both, wait 2 weeks, have titers measured that would indicate sero immunity and then restart obexelimab. Vaccination during the treatment-free window resulted in sero immunity to influenza in 6 of 7 participants or 86% and sero immunity to COVID-19 in 4 of 4 participants or 100%. We intend to add to this initial data set throughout the current flu season.

Looking ahead, we will be at the American College of Rheumatology conference in November, where in addition to the vaccine data and GC toxicity data, the OLE data was accepted for poster presentation as a late breaker.

Turning to orelabrutinib, a BTK inhibitor for progressive MS. As mentioned, we have 2 global Phase III studies ongoing, PriMroSe in PPMS and Monarch in naSPMS. There is significant need for new effective therapies for progressive MS, and we are pleased to see how the BTKi category is evolving.

Tolebrutinib is now approved in Europe for nrSPMS. Fenebrutinib succeeded in a Phase III PPMS study and the NDA is now under review. Remibrutinib succeeded in a Phase III RRMS program and a Phase III SPMS study is underway.

Having just returned from the combined ACTRIMS and ECTRIMS meeting, MSToronto, KOLs and the broader MS community are very enthusiastic about the potential for BTK inhibitors to advance the management of patients living with progressive MS, and they recognize there are important differences across this class of agents. We believe the pharmacologic properties of orelabrutinib make it well suited as an investigational agent for progressive MS.

First of all, the kinase scan data demonstrate it is a very selective molecule. It also has desirable pharmacokinetic profile and a low variability and once-daily administration. Though central compartment inflammation and the role of macrophages, microglia and B cells are critical to this disease pathogenesis, brain penetration and potency at central targets are critically important. Orelabrutinib stands out with the greatest brain penetration IC90 ratio within the class.

We also have very compelling clinical data in hand from the completed orelabrutinib global Phase II RRMS trial, not only strong week 12 and week 24 results, but 96 weeks of follow-up data, including disability progression and NfL data. No other BTK inhibitor is advancing in both naSPMS and PPMS.

I'll now turn to obexelimab in SLE. SLE is a chronic autoimmune disease with unpredictable flares impacting joints, the skin, kidneys and other vital organs, resulting in progressive organ damage. You can see the common manifestations on the slide is that it is a heterogeneous disease and the driver of the disease varies across SLE patients. More than 80% of SLE patients are women who are diagnosed in their 30s and are patients facing decades of treatment.

A significant opportunity remains for safe and effective therapies for long-term disease management. An underlying pathology is B-cell dysfunction, which results in the production of autoantibodies towards cellular and nuclear components. B-cell therapies have been proven effective in clinical trials, so we know B-cells are an important target.

We evaluated and learned from prior SLE studies, including the previously reported obexelimab Phase IIa study and incorporated learnings from these trials into the SunStone trial. These include confirmatory central screening for patient enrollment, utilizing the latest guidelines for glucocorticoid tapering and biomarker identification to potentially select for patients who are more responsive to a B-cell targeted approach.

The SLE market in the U.S. consists of approximately 250,000 diagnosed cases. Excluding lupus nephritis, this is approximately 175,000 patients with approximately 125,000 of those having moderate to severe SLE.

Two biologics are approved for SLE today, and they generated approximately $2.5 billion in U.S. revenue in 2025. A minority of eligible patients are receiving a biologic, and we believe growth will be driven by the approval of improved therapies.

With an estimated 125,000 addressable SLE patients in the U.S. alone, the overall market opportunity could exceed $8 billion. And illustratively, if 30% of this population is defined with our biomarker approach, which Haley will discuss, a focused market of over 35,000 patients could exist.

With that, I'll now hand the call over to Haley, our Chief Scientific Officer, who will provide more context to the biomarker under development within the SunStone trial. Haley?

Thanks, Lonnie. Before Lisa walks you through the SunStone trial design, I want to spend a few minutes of background on predictive biomarkers in lupus, which will be a part of the SunStone analysis.

Lupus is a complex disease with clinical and biological heterogeneity that can create challenges for drug development. Patients with different underlying biology are often grouped together because they present with similar clinical manifestations.

For more than 15 years, researchers have used whole blood transcriptomics to characterize and understand disease heterogeneity. This work has identified groups of transcripts that change together and can be used to create signatures to classify patients by their biology rather than by symptoms alone.

Published work shows that these molecular subgroups track with disease activity, clinical features and response to treatment. This establishes a foundation to ask which patients are most likely to benefit from a B-cell-directed therapy like obexelimab. I'll walk you through the evolution of the predictive biomarker approach for obexelimab.

In the Phase IIa trial conducted by Xencor, a post-hoc analysis of gene expression data identified candidate predictive biomarkers. A representative biomarker from that trial is shown on the left. At week 32, in the intention-to-treat population, 17% of patients maintained improvement compared with placebo. That increased to 52% in the biomarker-positive population. This was a post-hoc analysis, so we treat it as hypothesis generating.

That brings us to SunStone where we are including an exploratory analysis of a novel predictive biomarker identified from the previous trial. We will include analysis of both BICLA and SRI-4 versus placebo in the biomarker-positive population.

As our biomarker work continues to be focused on gene signatures where each patient will be assigned a score, our analysis will also include an evaluation of the cutoff of that score for impact on the efficacy endpoints and population frequency. If the data are supportive, we could move to clinical validation of the biomarker in a Phase III trial. We would potentially enroll prospectively based on the biomarker as optimized using the data from SunStone.

This work offers 2 potential paths forward: a biomarker-only approach or a hierarchical analysis where we are able to consider both a biomarker selected as well as a broader group of patients in the outcome.

I'll hand it over now to Lisa, our Head of R&D and Chief Medical Officer, to walk us through the SunStone trial.

Thank you, and good morning, everyone. As previously discussed, we plan to release the top line data from the SunStone trial later this quarter. SunStone was designed to do 2 things: confirm obexelimab's activity in patients with active moderate to severe SLE and evaluate the association of prespecified baseline biomarkers with response. It also builds on what we learned from a previous Phase IIa trial.

SunStone is a randomized, double-blinded and placebo-controlled trial. We enrolled patients with active SLE defined by a BILAG score of Grade A or Grade B activity in at least 1 organ system and a SLEDAI score of at least 6. Patients were randomized 1:1 to receive either obexelimab or placebo given weekly for 24 weeks with approximately 95 patients enrolled in each arm.

The primary endpoint is reduction of SLE disease activity at week 24 measured by BICLA, the BILAG-based composite lupus assessment. We'll also report SLE responder index, or SRI-4 at week 24. Both endpoints will be assessed in the broader population and in the biomarker-positive population.

The trial is powered to detect a difference of about 20% between obexelimab and placebo, tested at an alpha of 0.10, and it assumes a placebo response rate of 30%. Compared with the earlier SLE study, there were a number of changes. The trial is larger and uses subcutaneous dosing to improve pharmacokinetics. The trial also uses an adjudication committee to assess both trial eligibility and outcomes, which history tells us is critical for lupus trial conduct.

This slide illustrates the populations we will be examining. The outer circle is all 190 randomized patients and is the basis for our defined safety population. We'll also look at BICLA and SRI-4 for this group, but this will not be our primary endpoint.

Inside it are 2 analysis populations. The first is the mITT population of 160 patients. We will look at both BICLA, our primary endpoint, and SRI-4 in this population. These 160 patients allow us to focus on the study objectives without known confounders or incomplete information.

23 of the 190 randomized patients were enrolled in China. Unfortunately, because of challenges with the processing and use of genetic information, the biomarker analysis could not be done there. Additionally, patients were excluded who had proteinuria at baseline that could not be adequately characterized as coming from active lupus as opposed to renal fibrosis. Many had a history of lupus nephritis.

At the time of study design, no renal biopsy was required, making it difficult to differentiate active lupus renal disease, which can potentially respond to treatment from those with renal fibrosis and scarring, which would not be expected to respond. There were also 2 patients who were excluded who discontinued within 10 days of starting treatment for a documented administrative reason such as relocating away from the study site.

The second population of note is the biomarker population of 177 patients. This exploratory analysis is based on what was learned from the prior Phase IIa trial as described by Haley. Both BICLA, the primary endpoint, and SRI-4 will be reported.

On endpoints, as described, we'll report both BICLA and SRI-4 and then decide which is best to potentially carry into Phase III. BICLA was designed to be more sensitive to improvements. So we'll look closely at how it performs.

The biomarker population expands our potential for success in Phase II and gives us an additional path forward in Phase III. As Haley previously mentioned, a Phase III design could allow for an overall and/or a biomarker population and either BICLA or SRI-4 as the primary endpoint.

The purpose of SunStone is to deeply understand obexelimab's activity in SLE and determine our potential path forward for Phase III and for the future development of obexelimab in SLE. We look forward to sharing the top line data later this quarter.

Now I will turn the presentation back over to Haley to discuss ZB021, our oral IL-17AA/AF inhibitor.

Thanks, Lisa. Before I move specifically into ZB021, I want to remind you a few key points around the biology of IL-17 and its critical role in inflammatory diseases of both the skin and joints.

IL-17 is a family of cytokines made by cells, including Th17 cells and innate-like lymphocytes. The 2 forms most relevant here are IL-17A and IL-17F, which assemble as AA and FF homodimers and as the AF heterodimer. All of these signals through the IL-17 receptor complex on cells such as keratinocytes and synoviocytes.

This triggers release of chemokines and other pro-inflammatory mediators that recruit neutrophils and other immune cells. While IL-23 sits upstream and helps sustain Th17 cells, IL-17 is also made independent of IL-23. In a healthy setting, this pathway is important for defense against fungal and bacterial pathogens.

When it is dysregulated, it drives chronic inflammation and IL-17 has been shown to play a central role in the pathogenesis of plaque psoriasis, psoriatic arthritis, axial spondyloarthritis and hidradenitis suppurativa.

The clinical benefit of approved IL-17 antibodies in these diseases has validated IL-17 as a target. That is why we see an opportunity to bring an oral option to patients, which is the focus of the ZB021 program.

To characterize the potency of ZB021, we stimulated normal human keratinocytes with Th17 cell supernatant from 3 human donors and measured inhibition of IL-8 production. Th17 cell supernatants contain both IL-17AA and IL-17AF in variable amounts based on the donor. In this assay, ZB021 had an IC50 of 1.5 nanomolar and an IC90 of 6.8 nanomolar. This measurement of potency will be an important factor for human dose selection.

To obtain further insight into the mechanism of inhibition by ZB021, we crystallized IL-17AA with ZB021. When IL-17AA is not bound to its receptor, IL-17RA, the IL-17AA homodimer has an open flexible pocket. This pocket closes when IL-17 binds to IL-17 RA and signaling is triggered through the receptor. ZB021 binds in that central pocket and holds it open. This prevents the cytokine from binding to the receptor, resulting in the absence of IL-17-based signaling.

Structural modeling predicts that ZB021 binds IL-17AF in the same central pocket at that dimer interface with the same binding mode as for IL-17AA. Collectively, this demonstrates that ZB021 is an allosteric inhibitor of IL-17AA and AF.

ZB021 has been tested in a rat collagen-induced arthritis model as a representative in vivo model of inflammation. Compared with vehicle, ZB021 showed a dose-dependent reduction in clinical score. At 10 milligrams per kilogram once daily, activity was comparable to a rat cross-reactive anti-IL-17 biologic. The photos on the right offer another way to observe the benefit of ZB021.

We have previously demonstrated that ZB021 has high oral bioavailability, about 80% in nonhuman primates. More recently, we conducted a tissue distribution study in mini pigs. In this study, we observed ZB021 concentrations similar to or exceeding plasma concentration when we looked at skin, joints and entheses, key tissues in IL-17-mediated disease.

Across preclinical models, ZB021 combines both high oral bioavailability and high tissue penetration. These data highlight some of the properties of ZB021 supporting potential differentiation among IL-17 targeting therapeutics. Modalities targeting IL-17 include antibodies, antibody fragments, peptides and small molecules.

Size has been hypothesized to be an important factor for tissue penetration across the biologics, but in general, only a fraction of the drug found in circulation can be tested in -- can be detected in tissues.

For example, skin concentrations of monoclonal antibodies are detected at 20% to 30% of the levels found in circulation. A small molecule such as ZB021 is 250x smaller than a monoclonal antibody. The data I just shared from mini pigs with ZB021 suggests the potential to achieve similar concentrations in circulation and in disease-relevant tissues where the drug can importantly inhibit the cytokine locally.

Moving to clinical development. The Phase I program for ZB021 is being conducted in healthy volunteers. The study has a single ascending dose portion, followed by a multiple ascending dose portion with once-daily dosing for 7 days. Each dose cohort has 8 participants, 6 on active drug and 2 on placebo.

The primary objective of this study is safety and tolerability of single and multiple oral doses of ZB021. Secondary objectives include characterization of pharmacokinetics and a comparison of safety, tolerability and PK under fed and fasted conditions.

During this Phase I study, we are exploring the maximum clinically safe dose. These data inform the dose levels selected for a proof-of-concept study in patients, evaluating efficacy and pharmacodynamic biomarkers. Dose selection for the proof-of-concept study in patients will be important.

We believe the target is to safely and consistently achieve drug concentrations above the IC90 in disease-relevant tissues measured as the average concentration or C average with once-daily dosing. The data reviewed today, along with the Phase I data we will share later this year, will inform the final details of the proof-of-concept study. Beyond this study, we continue to be enthusiastic about the broad opportunity for an effective oral IL-17 inhibitor.

Next, we will move to the fireside chat. I'm joined now by Dr. Joseph Merola. Dr. Merola sees patients in both dermatology and rheumatology, which makes him a great person to talk to about the different opportunities for an IL-17-targeting therapy.

Dr. Merola, thanks for joining us today.

Thanks, Haley. Very happy to be here.

Great. Let's start with your clinical practice. Talk a little bit more about your patients with both cutaneous and joint disease. Where does IL-17 inhibition fit into your practice today? And where do patients still have an unmet need?

Yes, that's a great question. I mean I'll start maybe with a little background in my practice. So I am, as you said, uniquely boarded in dermatology, rheumatology and internal medicine. So there's about 3 of us I know about at least in North America. So it's a unique place to sit, I will say. And my practice is largely around psoriatic disease, my research area of interest and focus is also in psoriatic disease.

So I see patients really at that interface, both with skin and joint involvement. And it's not hyperbole for me to say that I really find IL-17 inhibition, both IL-17AA, IL-17AF and that family to be the ideal mechanism for psoriatic disease, especially among the patients who have psoriatic arthritis.

And I have no doubt that we'll get into this in more detail, but to say that it's some of our fastest, deepest skin clearance, and it is also treating patients across all of the domains of disease in the framework that we talk about with the GRAPPA research group, for example, where it covers axial disease, entheseal disease, skin, nail, et cetera, across the board with some of the fastest and highest efficacy across those domains that we've had in our arsenal.

When you think about different options for patients, maybe you can frame that a little bit in the context of where are the biggest unmet medical needs for these patients? And then how does that impact your choice of therapy?

Yes, it's a great question. And I think as most folks know, the large majority of these patients have substantial skin disease. And we also know that the way it's been framed historically with moderate to severe skin is probably not appropriate for how impactful it is on patients' lives. And so we know that patients want to be clear with regard to skin, and this is one of the mechanisms that really pushes the envelope for patients.

So because of these mechanisms and interventions, we've been able to really move the needle on the cutaneous side of disease and move to discussions of things like remission because of these mechanisms. I would say one of the bigger unmet needs still remains in musculoskeletal disease where psoriatic arthritis thresholds for efficacy have hit a bit of a ceiling. I think there's still a gap there. We know we fix a lot of patients, psoriatic arthritis, but they often continue to have pain, stiffness, fatigue, they have other comorbidities relevant to that. And so the musculoskeletal domain of disease certainly remains more challenging.

And so, to me, that's an area that remains a particular unmet need. I think apropos to our discussion, we are seeing some innovation as well in convenience and in patient preference with everything from longer-acting injections to more oral therapies coming in the space. And I think that's something that really is meaningful for patients where they feel they have more options, they feel they have more control over their disease and their life because they have so many great options.

And so I think a little bit to bring that together, skin, we've come a long way because of these newer modalities and focus on this access pathogenesis, but we still have some way to go in joint disease in the current era.

Great. As we're then talking about potential options for oral therapies for patients, are you looking for efficacy generally in the range of biologics? And how does maybe the specific disease play into that?

Right. That's a great question. I mean we've gotten spoiled certainly on the cutaneous side of the camp, where we have very, very high efficacy. And I do think patients want to be clear, although, at the same time, I think there's some -- it can be a bit more forgiving if it combines a route of administration or other convenience that patients are looking for. So I do think that, in general, patients are looking for clear or almost clear skin. I think with regard to joints, they obviously want to be feeling and moving better, of course.

But then when you come down to the question of injectable versus oral, I talk to these patients every week, I'm counseling patients often either in the decision around their first drug that they're considering systemically. And I will tell you that many patients would prefer an oral option upfront when they're new to systemic. And they also -- there's some perceived safety, whether real or imagined, and I might actually say it's more imagined, but it is often the conversation that we have in the room that patients feel that oral therapies have more perceived safety. They feel that the drug is on and off faster if they have an infection or they have an issue or a side effect, for example.

So for that population, oral is, I think, an upfront option. For those who have been self-injecting for many years, it's more mixed, and there are some who would like the convenience of an oral for travel, for many reasons, not having to deal with the same kind of home delivery and all of those things, and some who are very comfortable with injections and so they would not want to shift from that. They see the efficacy and convenience. So again, I think it's nice to be able to have options and meet patients where they are with their preferences.

Great. Thank you. Let's shift a little bit to talk about biology. ZB021, Zenas' IL-17 inhibitor blocks IL-17AA and IL-17AF. What is the role of IL-17FF in IL-17-driven disease? And do we know if this is different depending on the disease itself?

No, this is a great question. And this is something that's really come to the forefront because we've had some opportunity to take a deeper dive into the biology. And I think the field is a little bit even still working this out. So I don't want to make overclaims. But maybe worth a step back. So IL-17 it's not a single molecule. We know that there's a family of IL-17, IL-17 A through F. And we know that the AF in particular, seem to be highly relevant to both skin and joint disease.

To get in the weeds, the A and F molecules can form homodimers of AA, heterodimers of AF or homodimers of FF. And so some of the highest efficacy that we've seen going, I'd say, bench to bedside is that our AF inhibitors have shown some of the highest efficacy in skin, and I would argue, in multiple of the domains of disease across the musculoskeletal disease spectrum as well for psoriatic arthritis.

And again, we've known that neutralizing IL-17A has been effective in use for years. But that rubber meets the road moment of how does this translate clinically, I think, came when we saw what it meant to also neutralize IL-17F with, again, showing some of the highest skin clearance rates that we've seen and treatment value across that psoriatic disease spectrum.

That said, we don't really have a head-to-head study per se, either mechanistic or clinical, showing the complete head-to-head value to that end, especially when it comes to looking at joint disease, for example. So certainly, it seems to be a key player, especially in the skin disease. But certainly, the rationale for blocking both is, I think, more than there at this point.

As we know, cytokines themselves as a family are very dynamic molecules that fluctuate considerably over time. And although I know you're not a pharmacologist, I'm curious from a clinical standpoint, what does adequate IL-17 inhibition look like to you, given all the considerations that you've already covered?

It's a good question. I'm going to be a minimalist for the -- to answer this because I have enough pharmacology background to be dangerous, right, as they say. But for me, what matters at the end of the day is probably not the levels per se, although I will comment on some of the translational work that's been done; it's the fact that patients are completely clear.

I mean I think the rubber meets the road for me is what does the patient look like. We can block all the cytokine in the world if the patient is still active and unhappy. We haven't accomplished our goal. And here, when we see good control of IL-17AF, for example, clinically, it translates to deep treatment goals, deep efficacy with very favorable safety tolerability profiles. So that to me is the rubber meets the road moment.

That said, there have been some translational studies looking at so-called molecular remission and molecular scar. And these newer mechanisms, IL-23 inhibition, IL-17A,17AF do show very robust impact, not just clinically, but then looking a little bit molecularly, we see suppression of the key cytokines and see the key pathogenic factors when we look at skin biopsy expression profiling. So I think there's -- it's more than theoretical in terms of what these mechanisms are doing in psoriatic disease.

And when we're thinking about drug concentration itself for an IL-17 inhibitor, beyond what we're measuring in the blood, what are the important tissues that an IL-17-targeting drug needs to reach?

Yes. So this is a great question, too. And I have to say one of the reasons I get a little excited -- and although this is theoretical, I will go on record, excited about small molecules in this space is the idea that perhaps not only are we getting into synovium in places where we know that psoriatic arthritis exists, but the pathogenesis of psoriatic arthritis has been largely anchored over the years in the concept of entheseal inflammation and enthesitis. This is true both at peripheral joints as well as the axial spine.

And one of the questions for many years has been if we get and we're able to get small molecule penetration of entheseal tissue, of axial tissue, might we see enhanced efficacy beyond even where monoclonals get. And for a while, we were also excited about nanobodies to that end because we said, well, this is a smaller construct, maybe it's going to get in or penetrate tissue differently. But the truth is those are largely anchored to albumin and large proteins as well.

So I am intrigued by the theoretical framework that a small molecule might concentrate better in target tissues and have meaningful impact. I think one of the other gaps in our world is also areas like palmoplantar psoriasis, for example. And that's another place where there's been some theoretical suggestion that maybe smaller molecules might penetrate deeper into tissue and have impact where we've struggled with more difficult-to-treat disease.

Great. I think this is an aspect that's really exciting to me, too, and that's making the start of our clinical journey very exciting with a lot of anticipation. Shifting to clinical development, novel IL-17 inhibitors have quite commonly been studied first in patients with psoriasis. What do you think about psoriatic arthritis as an indication for early clinical development of an oral IL-17 inhibitor?

Yes. I mean, for me, and again, hope this sounds as unbiased and honest as I can share. I actually think that's really the place for these drugs to be looking, both in psoriatic arthritis and I would argue, axial disease as well. We've come a long way, again, on the psoriasis journey. We have many options. It's still useful to have an oral option and increasingly so for psoriasis.

But the truth is, again, the bigger unmet need in my mind remains psoriatic arthritis for some of the reasons we've already mentioned. There's still a ceiling effect. There's still an unmet need. There's a lot of patients cycling between drugs and mechanisms over years. And for me, again, we've now seen that this is a mechanism at the forefront of PsA. We have some newer data from studies like BE BOLD looking at how IL-17AF versus IL-23, for example, adds additional value in terms of time to response, depth of response when looking at joint-specific endpoints, for example.

And so I do think that this is a mechanism highly facing PsA and axSpA and axial PsA. And I think that's been shown time and time again. And it brings the added value, of course, of treating the main comorbidity of disease, which is psoriasis, incredibly well. But when I look out to my patients and I look at unmet need, there's no question for me that it's in the PsA arena and that the other piece that I think is crucial is understanding now this burgeoning field of axial disease because there is traditional axSpA, and we're seeing increasingly data facing the concept of axial PsA.

There's some new classification criteria coming to that end as well that's going to help define -- increasingly define the field of axial PsA. We've seen more and more interest in that area. And I believe it still remains an unmet need. In fact, I would argue that there's a large number of patients who still remain undiagnosed with PsA and even more undiagnosed with axial disease. And as we, again, have more light kind of shining in that area, I think we'll uncover that there are a larger number of patients than we imagined and that they would benefit from these targeted interventions.

Great. So to wrap up, Dr. Merola, maybe bringing this back to the patient perspective, if an effective oral IL-17 inhibitor existed, what would that mean for your patients?

Yes. I think, again, for us, there are -- it is a go-to mechanism. So assuming that we saw the right efficacy, the right safety-tolerability balance, this is for me -- IL-17 is a first-line therapy for PsA. Period. I'd like to see that bear out in guidelines over time. I think that's the experience of myself and many of my colleagues in this area of the field for all the reasons that have been mentioned.

I think the idea of having an oral option for patients would be welcomed. I mean patients really -- in PsO, we have a number of effective oral options now. We don't have that same level of efficacy and targeted opportunity in PsA at the moment. And so I think the idea that we would have this sort of convenience oral opportunity for patients, I think would be very much welcomed.

And I think the other place, again, where it would primarily be considered, I would hope, is in that first-line position where patients are new to a systemic looking for therapy for their PsA/PsO. And as mentioned earlier, I think it's -- there's a certain perceived safety and convenience to a daily option oral that patients are enthusiastic about, and it makes the conversation in the office quite easy for patients.

The other thing I would just say is I think often patients assume that they are more sick somehow if they're getting injections. They equate that with more severe disease underlying. And somehow this also makes them -- sometimes feels a little bit less scary for those who are new to systemic. And then again, it may open some convenience opportunities for patients who are already on a systemic therapy and maybe want to switch, although I'm not sure if that's as compelling for that category of patients.

So overall, very enthusiastic about the idea of having an oral therapy that makes life easier for patients without compromising efficacy or safety.

Great. Dr. Merola, thanks so much for sharing your perspective with us today. I'll now turn the presentation back over to Lonnie.

Thank you, Haley, and thank you, Dr. Merola, for joining us and sharing your insights regarding IL-17.

I hope today provided a clear picture of the opportunity for obexelimab in SLE, the science behind the SunStone biomarker and the potential we see in ZB021 as an oral IL-17 inhibitor. We covered a lot today, and we have some time for questions, although Dr. Merola has a commitment to see patients now. We're happy to open up the line for questions. Operator?

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

This is Fiona on for Roger. My question is mostly on the SLE upcoming SunStone data. How should we think about the trade-off between this large -- a potentially larger effect in a smaller biomarker-positive population versus a smaller effect in a broader population? I guess what's the delta that could help you decide the path forward?

Fiona, thanks for your question. If I understand it correctly, you're asking about how we think about and trade-off the outcome of the trial, specifically maybe the effect size in the overall population compared to the biomarker-positive population and then make a decision of how we go forward. Is that what you're asking?

Correct.

Yes. So I think -- and I'll let Haley and Lisa jump in here. But at a high level, I think you heard that there are options, of course, and we could incorporate a biomarker strategy within an overall population. And you've all seen that in oncology studies and how one goes about doing that with a hierarchical analysis.

I think what's critical is the data we receive and how substantially different the effect size is from the overall compared to the biomarker population. And then in addition, the biomarker population, exactly how large is that, what is the percentage in this study that we believe will be representative of the overall lupus population, but what percentage of the patients will be biomarker positive.

And in the slide I presented to outline the market opportunity, we picked about a 30% size population that's biomarker positive. And that's based on the early work from the Phase IIa study that Xencor had conducted. Since that time, a lot more work has been done, and I'll let Haley talk a little bit about how we can somewhat toggle to determine what would be the optimal way to bring a biomarker-positive population forward, trading off the percentage of patients that represents and the effect size.

Thanks, Lonnie. As I mentioned earlier, the gene expression-based biomarker then results in a score, and there's a continuum of scoring that we'll essentially be able to look at. And in optimizing the cutoff score for the biomarker, we will be able to really optimize that for the best place where we're seeing the most efficacy and then look at how that changes the size of the population.

And so I think as Lonnie was referring to as toggling, we'll be able to look along that continuum for that relationship between efficacy and population frequency of the biomarker.

And just one final comment on that. I think everyone recognizes this is early proof of concept. The biomarker would then -- once it's established at the cutoff that Haley was referring to, the biomarker would then be validated within a Phase III trial if we move in that direction.

Our next question comes from the line of [ Johnny Phan ] with Evercore ISI.

It's Johnny on for Cory. One question here on the potential Phase III in lupus. Can you give us a little more detail on the difference in design, especially the size? Do you guys go with the [indiscernible] biomarker population? And then I do have one question on the IL-17. Like can you kind of give a little more color on how a small molecule could be differentiated like from emerging peptidic approaches?

Thanks, Johnny. Two questions here. On the SLE study, I think if we look out in the field, we can see what the size is typically for these trials and how people power them to achieve a certain successful p-value on an effect size and the effect sizes have varied in classically designed studies with either BICLA or SRI-4 from the mid-high teens up to the low 20%. So the overall size -- are you asking how big a single trial would be? Is that really the question, Johnny?

Yes, versus whether you decide to go forward with all the broader [indiscernible] versus just the biomarker.

It's maybe premature. But Lisa, do you have some commentary around that?

No. I mean I think just the obvious that if you are going for a bigger effect size that you see that allows you to reduce your numbers. But as we have noted, we don't necessarily have to choose one over the other. And so then you need to figure in your hierarchical steps once you've decided which one you choose first.

So I think you could start with the idea of a classical side if you were doing your general population first, but that's not the only option if you decided to target a bigger delta.

Stay tuned.

Yes. Stay tuned.

So on the IL-17 question, Johnny. Haley, did you capture the question? Or should we have Johnny repeat it?

I think that -- just repeating how I understood the question that it was about differentiation for ZB021.

Yes, versus approaches like peptides.

Sorry, versus which approaches?

Like emerging peptide approaches in the space.

Yes, certainly, certainly. So in the -- as I talked about in my portion of the presentation, as we go to molecular sizes that are smaller than, I would say, the traditional biologics, we would anticipate some advantages to tissue penetration, and that may be also applicable to some of the peptide therapeutics, oral peptide therapeutics that are in development.

I think though, on the flip side, on the oral peptide therapeutics, some challenges with oral bioavailability that is not certainly, from our hypothesis, what we see as a major challenge for ZB021.

And so we think still for ZB021, we're really combining the totality of high oral bioavailability and that tissue penetration for once-daily dosing. And so it's certainly in the IL-17 space, both the data for ZB021 as well as peptides in that space are still very early, but do think that the small molecule approach still offers some advantages in the way it's going to distribute in the body.

Our next question comes from the line of Martin Fan with Wedbush Securities.

Congratulations on the progress. We had a question on the IL-17 oral. So Dr. Merola mentioned a perception among patients about improved safety for orals. We were wondering, in your conversations with other KOLs, have they mentioned the ability to rapidly discontinue treatment as a real factor for safety?

Yes. I think a few of us can chime in here. We do hear that. And I think everyone is hearing that a bit because of the ultra-long-acting monoclonal antibodies that are now advancing into the clinic, which I think are going to be substantial products and important for patients. At the same time, that's one concern that is expressed from time to time is once it's on board, that's it. If there's an issue, you have a problem.

And I think for us, we're ultra-aware that going back to obexelimab in IgG4-RD, we hear this all the time when the conversation comes up between utilizing a depleting antibody and utilizing obexelimab for the disease where, as an inhibitor, it can be turned off. And that's one of the points that's emphasized quite a bit. Now in the IgG4-RD population, of course, approaching 50% are 65 and older and a lot of comorbidities. But I would suspect in diseases we might target ZB021, there will also be populations where there's a greater concern for safety and not being able to turn it off as a switch. Is that getting at your question, Martin?

Yes. That was exactly what we were asking for in comparison to the injectables, especially the long half [indiscernible].

Our next question comes from the line of Yatin Suneja with Guggenheim.

Just maybe a couple of questions for me. First one is on the IL-17 front. Could you talk about, at least for this upcoming readout, what exactly are you planning to disclose? I understand you've talked about bioavailability. Is there a good number for that? Are there any PD assessments that can be done that sort of give us more comfort that you are blocking it the way it is designed, at least in humans?

And then on the SLE front, maybe one more question. I think it's been asked, but I want to ask it again. Could you talk about the placebo response for a shorter study versus a longer study, right? You have a 24-week endpoint. Just maybe help us understand, is there any nuance around that? And then what is success here? Just that statistically significant on the overall is successful? Or is there a particular delta you're aiming for, whether it's overall or the biomarker at which?

Haley, the IL-17 question that Yatin had, and thank you, Yatin, what we plan to report out relative to the SAD and MAD study?

Yes. Thank you for the question. I would go back to where we talked about the primary and secondary objectives of the study, so safety, tolerability and -- primary objective, and then characterization of pharmacokinetics as secondary objective and say that, that's where we will focus our study results going forward.

So clearly, the safety of the drug and the tolerability are important. We're confirming it's once daily, so that, we know. And it's really that, as presented on the slide, the C average seems to be really important here. And I don't know if you want to comment on that more, Haley, but that C average and then relating that to the IC90 is important. And could you also comment on our view on biomarkers [indiscernible] in this setting?

Yes, yes. I think the C average concept is quite important here and maybe a bit different from how we often think of drugs where we might be targeting a certain C trough at the end of a dosing interval. But because of the way that we know cytokines are very -- are molecules that fluctuate quite a lot from day-to-day or even hour-to-hour, especially in these inflammatory-mediated diseases.

And so really focusing on the average concentration of drug and then targeting that average concentration to be above the IC90, I think data from IL-17 inhibition in general as well as other IL-23 inhibition and TYK2 inhibition all really indicate the same direction that C average is the critical exposure measure for efficacy. And so in this case, as Lonnie mentioned, we will focus on putting into context the data with respect to the C average and its relationship to the IC90.

For biomarkers in healthy volunteers, there's really -- there's not much to see actually with respect to IL-17 that you can measure in circulation in healthy individuals. And so biomarkers will be more of a focus on for the pharmacodynamic side of things once we are in patient population.

Lisa, can you comment on the SunStone SLE trial? I believe Yatin was asking whether there's any nuance or anything we should be talking about regarding our endpoint being at 24 weeks and what we know about the pattern of placebo response after that point in time. And I think there was a second part asking about the expected delta that I'll first just comment on that, as Lisa said, the trial was sized for a 20% difference and effective therapies are from the high teens to the low 20s. So I think I'll just frame it in that manner. And then the biomarker effect size, we would hope is greater, and we'll see what it will be shortly. Lisa?

Yes. I think when we think about placebo response and length of trial, it's really hard to disentangle that from the other factors that we know affect the placebo response. And those are the disease activity level and severity, whether or not there's a forced steroid taper in there or anything else that makes it easier for a patient to fail. And then obviously, that pulls them out of the trial and out of the responder list.

So I think those are the factors that we look at when we're thinking about evaluating or expecting a placebo response.

And on the 24 weeks, if you go back and look at all the trials, there really isn't a reason in a Phase IIb trial like this to go beyond 24 weeks. People have, but the separation between active drugs and control doesn't vary much between a 24-week, 36-week or even greater. And we spend a lot of time thinking about that and talking to the people in the field, and that's why we landed on 24 weeks.

[Operator Instructions] Our next question comes from the line of Chris Yu with Morgan Stanley.

I have a 2-part question for ZB021. A competitor in oral IL-17 chose to go into psoriasis first to avoid ambiguity around the clinical data. So what are the factors that would go into your consideration for choosing the right [ POC ] disease? And then, let's say, if you choose a rheumatology condition, for example, is there any risk that the clinical data might be a little bit more difficult to interpret?

Chris, thanks for the question. Let me just make a comment and then turn it over to Haley. We are building a neuroimmune franchise and a rheumatology franchise. So strategically, where we prefer to take ZB021 is in a variety of rheumatologic conditions. And I think Dr. Merola highlighted just why that would make a lot of sense with an IL-17 agent and specifically an oral agent, small molecule.

So that's where we're headed. And we haven't made a final decision. As you said, many people will do psoriasis and then it's something you can look at all the benchmarks because there's so many and you can line it up and you can decide, well, is this going to be a competitive agent in psoriasis. Well, we're not moving forward in Phase III in psoriasis at this time. It's not going to be one of our first indications.

So if we're going after a rheumatologic indication for registration, why wouldn't we spend our capital to evaluate dose levels in the disease that we're ultimately pursuing and to advance the program more rapidly by conducting a Phase II-like study in that specific disease? So that's really the trade-off. Would it be nice to have psoriasis data along the way? Yes. But does that really send us down a path that doesn't lead to where we're ultimately going in a registration study, which could come along rather quickly in a rheumatologic disease? So that's strategically how I think about it.

I don't know, Haley, if you want to add to that from other aspects.

I think I would second all of your comments about the rheumatologic indications being our long-term destination and looking in that direction for proof of concept to really think about the most streamlined path for development makes a lot of sense. We go back to our conversation with Dr. Merola and really think about the validation of IL-17 and his comments that it is a go-to mechanism in certain rheumatologic conditions like psoriatic arthritis as an example, where you would also potentially have the opportunity to then look both simultaneously at the joint disease as well as the skin.

And this is also a place where we hear a lot from KOLs, some questions about, again, whether monoclonal antibodies are efficiently penetrating into some of these critical structures such as DMPCs, for example, where you really need to be inhibiting the cytokine at that local site of action. And that really gives us additional excitement in the rheumatology direction to really think about the opportunity to have ZB021 penetrate these fine structures that are quite important to the symptoms that are still a bit unaddressed in the rheumatology indications with IL-17-targeting antibodies.

Our next question comes from the line of Yigal Nochomovitz with Citigroup.

This is Joohwan Kim on for Yigal. Maybe just one quick one, a clarification, apologies if I missed this. But when you're looking at the SunStone results and disclosure, are you going to be looking at how efficacy looks like across the multiple biomarker score ranges and potential different cutoffs or primarily focusing on the cutoffs that you might be using for future Phase III?

Haley?

Sure. We will be looking at multiple cutoffs. Our goal in doing that would ultimately be to select an optimized score or cutoff, however you want to refer to it, for then potential incorporation into the Phase III study. But in SunStone, we will be looking at multiple cutoffs.

Our next question comes from the line of [ Jason Lu ] with Wolfe Research LLC.

I'm taking this for Andy Chen. Just a quick question on ZB021. Are you guys thinking of any sort of head-to-head comparisons to maybe biologics IL-17 in any future trials just to kind of firmly establish a definitive benefit of tissue penetration in any sort of efficacy way?

Thanks, Jason. Haley, do you have a comment on that?

Yes. I would say that I think that we should be able to focus really on clinical endpoints and the key clinical endpoints that Dr. Merola discussed and really looking at the efficacy of ZB021 in addressing remaining unmet medical needs to really give us a view on penetration into those tissues like the MDCs, for example, where we wouldn't be able to look there directly at those tissues. But I think our strong clinical signal specifically in those areas would really be a big win for ZB021.

I would now like to hand the conference back over to Lonnie Moulder for closing remarks.

Thank you, operator. Well, let me close with what's coming. We will be at ACR from November 6 to the 11, where obexelimab OLE and vaccine data will be shared with a broad rheumatology audience. And of course, later this quarter, we will have the SunStone Phase II SLE top line results with both the biomarker population and the overall population. And we'll have the SAD and MAD data from the ongoing ZB021 Phase I study reported, which it sounds to me like a lot of people are quite interested in.

The obexelimab IgG4-RD regulatory applications are now under review by both U.S. and Europe with a May '27 PDUFA date. And if approved, we expect to launch several weeks later within the second quarter.

It's a really exciting time for Zenas, and we appreciate your interest and support. Have a good day.

This concludes today's conference. Thank you for your participation. You may now disconnect.

Good morning, and welcome to the Zenas BioPharma Obexelimab IgG4-RD Investor Event. [Operator Instructions] Please be advised this call is being recorded, and a replay along with the presentation slides will be available on the Investors section of the company's website following the event. I will now turn the call over to Abby Gray, Director of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Before we begin, I'd like to remind you that today's presentation contains forward-looking statements, including statements regarding the potential approval and commercial launch of obexelimab in IgG4-RD, the timing of our regulatory submissions and clinical readouts and our expectations for the market opportunity ahead of us.

These statements involve risks and uncertainties that could cause actual results to differ materially from what we discuss today. I would encourage you to review the full disclaimer on this slide, along with the risk factors described in our most recent annual report and quarterly reports filed with the SEC for a complete discussion of those risks. I will now turn the call over to Lonnie Moulder, our Founder and CEO.

Thank you, Abby. Abby joined us a few weeks ago as our Director of Investor Relations, and I know she looks forward to meeting and interacting with all of you. Thank you all for joining us for our obexelimab IgG4-related disease investor event today. We'll walk through the unmet need within the current IgG4-RD treatment landscape, the commercial opportunity ahead of us and how we are preparing to execute what we believe could be a transformational launch both for patients living with this disease and [indiscernible].

We're also very pleased to have with us Dr. Guy Katz from the Division of Rheumatology, Inflammation and Immunity at [ Massachusetts ] General Hospital, who will share his perspective on IgG4-RD and the unmet patient needs, along with the INDIGO study results. Joe Farmer, our President and Chief Operating Officer, will then walk us through the market opportunity and our launch readiness in detail. We will then open up the line for questions.

While we are laser-focused on executing a successful obexelimab commercial launch, if approved, we feel that it is important to highlight how we are well positioned regarding our overall Rheumatology and neuroimmune pipeline, which spans multiple indications with recognized regulatory paths to approval and significant commercial potential. Of note, we are expecting top line Phase 2 results from the SunStone study of obexelimab in SLE and pharmacokinetic safety and tolerability data for ZB021, our Oral IL-17AA/AF inhibitor, both in the fourth quarter of this year.

While we are very excited about the opportunities across our broader pipeline, our focus today is on IgG4-RD and the upcoming anticipated launch of obexelimab. We hope you will join us for a deeper dive into the SunStone SLE study and our IL-17 inhibitor, ZB021 at our R&D event later in October. Zenas leadership and our overall team are deeply experienced across all aspects of drug development and commercialization. We are not a team learning what a drug launch looks like in real time, rather a team that has seen where launches go right and importantly, where they may quietly go wrong. We believe we have a validated launch playbook and are ready to execute.

Before we get into the specifics of our launch planning, I want to spend a moment on what makes a successful rare disease launch. In our experience, the disciplined execution of a strong launch plan is what sets the company and a launch up for success. We built our plan around 5 interconnected components. First, recognize and refer sooner, shortening the path to diagnosis instead of waiting for IgG4-RD patients to find their own way to a specialist. Second, find every diagnosed patient through data-driven identification, not guesswork. Third, earn physician conviction with evidence that is genuinely differentiated, not just differently marketed.

Next, remove access friction. So a written or input prescription can actually become a filled one. And finally, the link most companies underinvest in provides support that extends beyond the prescription because a patient who starts therapy and quietly stops it months later isn't a launch success. This connected continuum is what can turn a good drug into a successful launch.

We believe IgG4-RD represents a substantial market, assuming approximately 50% of the currently diagnosed and managed patients are addressable and the benchmark price of the approved therapy for this indication we estimate the U.S. market opportunity approaches $4 billion. We and others estimate there are 30,000 to 40,000 prevalent IgG4-RD cases in the U.S. today. Our analysis of claims data indicates approximately 25,000 patients are currently diagnosed and managed. Of this population, we estimate that the flare frequency and/or the potential consequences of flares results in approximately 12,500 patients eligible for ongoing maintenance therapy, and that's the core of today's addressable opportunity.

It is expected that diagnosis rates, awareness and referral patterns will keep improving with the availability of approved therapies. We believe obexelimab can be positioned as the preferred first-line therapy for the majority of IgG4-RD patients, and this is supported by 4 key areas of potential differentiation. Efficacy and safety data that stand on their own, a mechanism that is genuinely different, the reversibility and flexibility to potentially pause around vaccination or intercurrent illness, which a B-cell depleting therapy cannot offer and the convenience of at-home weekly dosing.

That combination is why in our market research, approximately 2/3 of treating physicians told us they're extremely likely to prescribe obexelimab and 1/2 indicating they would prescribe it first line, and that is before any marketing or sales promotion.

At launch, there will be 2 clear prescribing paths. The first is active flares, newly diagnosed patients presenting with a flare and previously diagnosed patients who are not currently receiving treatment and are flaring again. Both are moments when a physician is actively making a treatment decision. The second is active treatment where patients are currently receiving a biologic and cycling back to their physician prior to scheduling their 6-month infusion. Each of those visits is a moment where a physician will have the opportunity to introduce a new drug to patients, and we believe our profile gives them a compelling reason to potentially implement a switch.

That is the difference between hoping for adoption and intentionally impacting it. With that, I'll now turn the call over to Dr. Katz, who is not only an expert in this disease, but manages numerous patients living with IgG4-RD. Thank you, Dr. Katz, for joining us this morning and sharing your thoughts with investors on IgG4-RD and the unmet patient needs along with the INDIGO study results.

Thank you very much, Lonnie. It's such a pleasure to be able to speak with you all today about IgG4-related disease. What we'll do is we'll discuss some overall concept about how IgG4-related disease presents, how the diagnosis is made and some key areas of unmet need. And then we'll spend some time talking about the specifics of the INDIGO trial and the results. First, let's start with a -- and next slide, please. First, let's start with a definition of the disease.

So IgG4-related disease is a systemic chronic and progressive immune-mediated disease. We think of it as a fibroinflammatory disease, meaning that there is a component of inflammation and the component of fibrosis or scar tissue deposition that results from the inflammation. And this is a disease that can affect nearly any organ in the body. There are a few important exceptions, but almost every organ can be affected. It's a chronic disease. The vast majority of patients will have active disease if they're not undergoing treatment. And after they undergo treatment, the vast majority of patients will eventually relapse after treatment is discontinued.

And this is a disease that leads to very frequent irreversible fibrosis, organ damage and is even associated with increased mortality. Some of the specific features that I would mention about it, it's typically multi-organ. The majority of patients have more than 1 organ involved, and some patients can have 5, 6, 7, 8 or even more organs than that. It is a relapsing disease, as we discussed. Most patients will have a relapse at some point after they come off treatment and some patients might even relapse on treatment. And very importantly, there's a really substantial subclinical component to this disease, which we'll discuss in more detail soon.

One of the ways that we come to the diagnosis is through histopathology. So biopsy is an important element of the diagnosis in many patients, not all patients. And on this slide, you see the typical histopathologic features that we associated with IgG4-related disease, which are a dense infiltration with lymphocytes and plasma cells. Most of those plasma cells or at least many of them staining positive for IgG4. We see very frequent fibrosis or scar tissue. And in IgG4-related disease, it's very often in the typical storiform pattern.

And obliterative phlebitis is the third typical hallmark histologic feature that we see where there's inflammation of the veins within the tissue that's severe enough that it obliterates the lumen or the inside portion of the vein. We often see elevated serum IgG4 concentration, which is part of the reason that the disease is called what it is. And imaging is an important part of how we make the diagnosis because we see very typical either enlargement or masses in the expected distribution depending on the organs that are resolved by the disease.

So as I mentioned before, this is typically a multi-organ disease and almost every organ in the body can be affected. The figure on -- I'm sorry, next slide. The figure on the left side of the screen demonstrates the multi-organ potential of the disease. And you can see that there are certain organs that happen particularly commonly and the most common manifestations are enlargement of the lacrimal glands, which are the tear glands, which are on the side of the eyes as well as the major salivary glands, the submandibular glands, which are just under the jaw and the parotid glands, which are just behind the jaw.

And when these are involved, typically, they present as painless and symmetric enlargement of the gland. Very often, patients don't even realize that they're enlarged. And this is one of the few manifestations that even during active disease, when it's asymptomatic, the propensity for damage is not particularly concerning. There can be an increased risk of dry eyes and dry mouth. But with the exception of those, just about every other manifestation of the disease with or without symptoms has the potential for really significant and meaningful damage that can happen to the patients over time.

After the glands, the next most common organ that's involved in the disease is the pancreas and the pancreas, by far, is the most commonly damaged organ in the disease. When it presents, it can present either with enlargement of the pancreas or occasionally can present with a pancreatic mass. So it's not uncommon for these patients to be misdiagnosed as having pancreatic cancer, unfortunately, before they come to a correct diagnosis of IgG4-related disease.

And once they have the diagnosis, it's actually very common for the pancreas to fail as a result of the inflammation from the disease with about half of patients developing exocrine pancreatic insufficiency where the pancreas is not able to produce enough digestive enzymes to digest -- to allow the patient to digest the food that they eat or to also about half develop diabetes, which is a result of the pancreas function of producing insulin being compromised by the disease.

And the last manifestation that I'll mention is one of the most common and typical manifestations of the disease is retroperitoneal fibrosis. And you can see a picture of that on the bottom right of the screen here, where there's this soft tissue that encases the aorta in the retroperitoneum, which is the posterior aspect of the abdomen. And that is often asymptomatic until it leads to compression of structures in the area. And the most common complication of that is when it obstructs the ureters, which are the tubes that feed urine from the kidney into the bladder. And it's very common to see backup of urine into the kidneys, which can actually be a medical emergency when that occurs.

This slide shows that there is -- there are manifestations that can be seen in many other organs, and this is not a comprehensive list by any means. So it's important to recognize that the potential for damage in this disease is really substantial. Next slide.

Another aspect that really can contribute to the very frequent damage that we see is that this is a very frequently subclinical or asymptomatic disease. And at its surface, that sounds like a good thing. It sounds great that patients don't have to suffer when they have active disease. And of course, that's true. But the flip side of that is that when patients don't have symptoms, they're very often ill but don't realize it. And this is an important differentiator between IgG4-related disease and many other autoimmune diseases where typically when patients have active disease, they know that they're ill, even if they don't know what the diagnosis is and can't necessarily say that maybe they have inflammatory arthritis or interstitial lung disease, but they know they don't feel well.

The same isn't always true in IgG4-related disease, where patients can have even severely active disease and have little to no symptoms. But that activity is still causing progressive damage to the organs even if the patients don't feel it at the time, which is why we see such a large burden of damage, irreversible damage to organs, even very often the first time we meet a patient before they even have their initial diagnosis. And this schematic shows that over time, very early on, there may or may not be symptom onset while there is ongoing active disease. And then by the time there's -- the patients come to a diagnosis, they very often had active disease. And it's not uncommon for me to meet patients when we, in hindsight, are able to recognize that they likely have evidence of active disease for several years or even over a decade. Next slide.

We don't know the true prevalence and incidence of this disease with 100% certainty, and that's for several reasons. One is there is still under recognition on the part of providers where many providers are not recognizing the typical manifestations of this disease and not coming to the right diagnosis. And two, it's not until recently that we had an ICD-10 code for IgG4-related disease. So claims-based analysis really only cover the past couple of years, and we don't have anything from prior to that.

The data that we do have, which I think most of us agree likely underestimate the true prevalence and incidence of the disease, if anything, indicate that the prevalence is about 5 per 100,000 in the United States and about incidence of about 1.4 per 100,000 patient years in the United States. In Japan, the prevalence is perhaps a little bit higher. But again, it's a little bit hard to know with 100% certainty. And I do suspect that at least the United States numbers are likely an underreport from underdiagnosis and from many patients who are sick but don't have the right diagnosis. Next slide.

The pathophysiology of IgG4-related disease is something that we've learned a lot over the past 1.5 decades or so since the disease was first named and we started really paying attention to the immunology of the disease. And I won't go through this slide in excruciating detail, but I'll summarize it as such. So as is the case with most autoimmune diseases, we suspect that there is some antigen that leads to activation of a naive B cell. Once that naive B cell is activated, it then communicates with the T cell.

And that relationship between the B cell and T cell leads to downstream immunologic effects that range from activating plasmablasts and plasma cells, which are ultimately the cells that produce the IgG4 that we're measuring in serum. There's activation of CD4-positive cytotoxic T cells. And there's kind of downstream effects on fibroblasts and myofibroblasts as well as macrophages, all of which lead to the prominent fibrosis that we see. So it's a combination of T cells, B cells and macrophages and myofibroblast that ultimately lead to the tissue damage and the fibrosis that we see in the disease. But it all really begins with that interaction between the activated B cell and the Tfh2 cell, which is why targeting B cells seems to be such an effective means of controlling the disease and why the B cells have been such a prominent target as a therapeutic target. Next slide.

Making the diagnosis of IgG4-related disease is notoriously challenging. There is no single diagnostic test for IgG4-related disease, and there is no single specialist that is kind of routinely known to be the person to make the diagnosis. Many people think of serum IgG4 or IgG4 staining in tissue as the diagnostic test for IgG4-related disease. But unfortunately, both of those are nonspecific. They can be seen in other diseases. And particularly, serum IgG4 can be normal in up to about 20% of patients with IgG4-related disease. So this is part of the reason that there is under diagnosis is that particularly patients with normal serum IgG4 concentrations don't come to a diagnosis because people interpret a normal serum IgG4 as concrete evidence that they don't have IgG4-related disease, which is simply not true.

So as is the case with many other systemic autoimmune diseases, the diagnosis of IgG4-related disease really comes down to the clinician. The clinician needs to incorporate information from the patient's symptoms, the physical exam findings, the serologies with serum IgG4 concentration and other lab abnormalities that are associated with the disease, what radiologic features are present. We typically get imaging of the chest, abdomen and pelvis in everyone that we're working up for IgG4-related disease because so much of it can be asymptomatic. And of course, whenever we can, we incorporate biopsy results or histopathology into the diagnostic process.

And the most important elements of the diagnosis are, one, to identify the features that are consistent with the diagnosis, but just as importantly is to identify the features that are not consistent with the diagnosis because there is substantial overlap between the way IgG4-related disease presents and the way malignancies and infections and other autoimmune diseases present. So it's incredibly important for the clinician to recognize how complex the whole presentation can be. And that's part of the reason that it has been challenging to get many of the patients to the right diagnosis.

So it is a challenge. But fortunately, I think there is increasing interest in not only the rheumatology community, but in the gastroenterology community and various other specialties. And I do think anecdotally that there's increasing awareness of this diagnostic process and that more people are working to get patients to the right diagnosis. Next slide.

So the burden of IgG4-related disease is quite substantial. I think we've talked a little bit about the clinical burden already. So patients with IgG4-related disease are at increased risk for mortality compared to matched controls in the general population. And they very often have more comorbidities like hypertension, other cardiovascular morbidities, diabetes, malignancy and coronary artery disease. And we certainly discussed the damage that can happen in the disease as a result of long-standing inflammation in organs, but there's additional damage that can happen because of the diagnostic and therapeutic process.

It's very common for patients to have organ resections, including major abdominal surgeries to remove portions of the pancreas because of presumptive diagnoses of cancer prior to getting to the right diagnosis of IgG4-related disease. So earlier diagnosis has the potential to limit a really substantial amount of damage or earlier diagnosis and, of course, treatment. There's also a significant treatment burden where over 85% of patients received glucocorticoids as part of their treatment strategy. And there is a very well documented and very well-recognized toxicity associated with glucocorticoids, something that many patients with IgG4-related disease end up burdened with.

And it's probably more common for that to happen in IgG4-related disease than many other autoimmune diseases because it is a disease that tends to favor older adults. And because of the frequent -- excuse me, endocrine insufficiency of the pancreas, these are patients who are already predisposed to getting diabetes, which is one of the most common toxicities associated with glucocorticoids. So these are patients that are really at high risk for treatment-related burden, and they really do experience that.

And of course, because of the relapse rate, where 30% relapses in 6 months. And if you extend that out to 3 years, it's about 90% of patients will relapse. So these are patients who end up being exposed to a really significant amount of treatment, and they really need steroid-sparing options. There is data that show that IgG4-related disease impairs the quality of life of patients and has a significant psychological effect as well. And we also have good data that shows that IgG4-related disease is associated with increased health care utilization with increased use of emergency rooms and hospitalizations as well as direct and indirect costs associated with the disease. Next slide.

So where we currently stand is we have a lot of unmet needs in IgG4-related disease. I'm pleased to say that we've made great strides over the past really 2.5 decades since the disease was first recognized, but we still have a significant need for earlier recognition of the disease. We need better education among providers of various different specialties and among patients who might have manifestations of the disease and not know it because we need to reduce diagnostic delays and be able to initiate treatment before damage accrues.

We need better diagnostic markers, again, to facilitate earlier and more accurate diagnosis. Serum IgG4 is currently the best biomarker that we have in the disease, which is pretty unacceptable considering 20% of patients will have a normal serum IgG4 concentration. We need longer-term data with prospective data -- prospective studies and registries to understand the epidemiology on a deeper level to understand the relationship between disease activity and organ damage, how much of the fibrosis that we see is reversible and more patient-centered outcomes. And of course, we need safer and more convenient therapies. We're very lucky to have therapies available to us. But as we'll discuss more over the next several slides, there is definitely an unmet need for having options that improve the safety profile and the convenience of the treatment. Next slide.

And with that, we can now move on to discussing the INDIGO trial results themselves. So this was a paper that was published in the New England Journal. And next slide here are the disclosures associated with all of the authors in -- on the INDIGO trial. Importantly, obexelimab is investigational and has not been approved by any regulatory authority for the treatment of IgG4-related disease. Next slide.

So a bit of background before we talk about obexelimab specifically. As we talked about, IgG4-related disease is a chronic progressive fibroinflammatory condition that can impact single or multiple organs and is characterized by recurrent flares that lead to organ damage. Glucocorticoids are used as the initial therapy for rapid disease control in the majority of patients, but patients almost invariably relapse and/or develop toxicity. Currently, the only FDA-approved approach for treating this disease is B-cell depletion, which is used for inducing and maintaining remission. But this approach has significant risks and limitations, both in convenience and in real-world applications. Next slide.

And here are some of those risks that are important to talk about. And this is the reason that it's really important that we have more options because the reality is B-cell depletion is remarkably effective in IgG4-related disease. We've known that for over a decade since the first large study of rituximab was published. However, there are significant downsides to be aware of with B-cell depletion, and these are things that I think rheumatologists in particular, are very familiar with. So the way B-cell depletion works is after administration, B cells are depleted, meaning they're unmeasurable in blood, for around 6 to 12 months, it varies significantly from person to person.

And during that time, it is irreversible, meaning that if a patient gets an infection or has a really significant need for a vaccine, like, for example, if there's a pandemic and we need the patient to be vaccinated, there's no way to bring those B cells back until they just come back on their own, and that can take a really long time. So that's important to recognize. On top of that, with long-term continuous B-cell depletion, meaning scheduled infusions every several months, typically every 6 months for most patients. When that's done, it's very effective in controlling the disease.

But over time, the longer someone is on B-cell depletion, it leads to progressive reduction in the total IgG, the total antibodies that we measure in the blood, which translates into over time, it leads to cumulatively increasing risk of infection. So unlike many other immunosuppressive agents where as long as someone is on it, they're immunosuppressed, but essentially to the same extent, with B-cell depletion, the longer they're on it, the more it suppresses their immune system and the higher the risk of infection. And that's important in and of itself, but it's also important because occasionally, those effects that it has on IgG are actually irreversible and sometimes patients end up requiring lifelong replacement of immunoglobulins with IVIg, which is an added burden to patients, and that's also reduce the risk of infection.

On the other hand, many of us treat with B-cell depletion using an on-demand approach where we treat for a short period of time, the disease goes into remission and then we wait essentially for the disease to relapse before treating again with the intention of limiting the amount of cumulative exposure that the patient gets with respect to B-cell depletion. And the challenge with that is that it requires patients to have to go through relapses, which is challenging for quality of life and for the psychological effect of kind of waiting to have a relapse of their disease. And there's also the potential that by allowing patients to have multiple relapses, we're increasing the risk of damage over time. So both the on-demand and the continuous approaches have really significant drawbacks there.

And then, of course, B-cell depleting agents are also administered as intravenous infusions, which the patient has to come to the infusion center, spend several hours there. It's less convenient. And just in terms of logistics, that often leads to a pretty substantial delay in treatment because we have to coordinate with the infusion center and there has to be availability and with insurance coverage and everything. It's not uncommon for it to take 2 months or so between the time that we decide to treat with B-cell depletion and when they actually get the medication through the vein. Next slide, which brings us to obexelimab and where obexelimab differs.

So obexelimab is a humanized bifunctional monoclonal antibody, meaning that it has -- it's a single antibody that has 2 functions. It binds both to CD19, which is a marker on B cells. And it also binds to the Fc gamma RIIb receptor, which is -- which initiates an inhibitory signaling pathway. So the way this works is it targets B cells, but rather than killing them, it does not induce cytotoxicity or cell killing. Rather than killing them, what it does is it inhibits them. It leads to B cells to stop functioning with the idea there that hopefully, it would be less immunosuppressive, but also it would be reversible. And we do know that when obexelimab is stopped, the B cells do kind of bounce back fairly quickly. And that's a major differentiator from obexelimab in B-cell depletion. Next slide.

Here's the study design of the INDIGO trial. This is a fairly standard and straightforward study. And it was the second global double-blind, randomized, placebo-controlled Phase 3 trial conducted in IgG4-related disease and the largest one to date. The trial required all patients to fulfill ACR/EULAR classification criteria and have active disease requiring treatment with glucocorticoids. During screening, they were treated with 20 to 60 milligrams of glucocorticoids and then from day 1, they were on 20 milligrams of prednisone that was tapered over 8 weeks in a prespecified taper that was the same for both obexelimab and placebo. Patients were randomized 1:1 to receive either obexelimab 250-milligram subcutaneous injections weekly or placebo injections weekly. And they were followed in the randomized controlled period for 52 weeks, at which point they had the option to roll over to the open-label extension where they would receive obexelimab for up to 3 years open label. Next slide.

The endpoints of the INDIGO trial, the primary endpoint was time to first IgG4-related disease flare requiring initiation of rescue therapy. And this needed to be in the opinion of the investigator and confirmed by a blinded adjudication committee. The key secondary endpoints were time to first investigator determined flare requiring initiation of rescue therapy, which did not include the adjudication committee. The second was number of investigator and adjudication committee determined flares requiring initiation of rescue therapy. Third was the proportion of patients who achieved complete remission at week 52. And fourth was the cumulative dose of glucocorticoid rescue therapy through week 52. Next slide.

Flares were assessed fairly systematically in this trial. So there were flare criteria that were developed specifically for this trial by an international panel of experts, and there were organ-specific definitions that allowed for detection of subclinical and asymptomatic disease activity, which would count as flares in specific instances, depending on the organ involved. The assessment of flares was comprehensive and included symptoms, physical exam findings, laboratory markers, imaging findings and the criteria were tailored to every specific organ involved.

At each visit, investigators evaluated patients were flared. And very importantly, this was the first trial to date that blinded investigators to serum IgG4 concentrations, which I think was an important element of this trial design because we know that any treatment that targets B cells is going to have effects on the immunoglobulins, including IgG4. So it would be expected to see a reduction in IgG4 in patients who were being treated with the drug. And being blinded to that, I think, was really helpful in standardizing the assessment and making sure that the flares were truly flares and not simply reflecting serum IgG4 concentrations. And all flare determinations, as I mentioned before, were reviewed through a blinded independent adjudication committee with a majority vote. And this approach was intended to ensure really consistent and rigorous assessment of disease activity across the study. Next slide.

This is the largest clinical trial in IgG4-related disease to date. 194 patients were enrolled from 15 countries in North America, South America, Europe and Asia. And you can see here that there was a really broad representation across the globe. Next slide.

This is the trial disposition. This is what happened to the patients who were screened and enrolled. So 287 patients were screened, of whom 194 were randomized to obexelimab or placebo, 97 patients in each arm. And just under 90% completed the 52-week follow-up period in each arm. Next slide.

This demonstrates the baseline demographics of the patients enrolled in INDIGO. And this is fairly consistent with most of the literature that we have in this disease. There was an Asian predominance, which is not surprising considering there is a really strong representation of Asian investigators who are actively involved in this disease. The average age was just under 60, and there was a male predominance. These data are all quite consistent with the published literature with respect to IgG4-related disease. Next slide.

And here are the clinical characteristics of the patients enrolled in the trial. So around 2/3 of patients had recurrent disease as opposed to newly diagnosed. And I would say that, that's a higher percentage than the previous trial that was published that had a larger percentage of newly diagnosed patients. The majority of patients -- vast majority of patients have multiple organs involved with around 60% having between 2 and 4 organs involved. And consistent with what we know about the disease, the most commonly affected organs were the salivary glands, the lacrimal glands, the pancreas and lymph nodes are also very commonly involved. The disease duration at the time of enrollment was around 2.5 to 3 years on average and 11% or 12% of patients had prior exposure to rituximab. Next slide.

And here's the top line results. This is the primary endpoint, and I think it's a very clearly positive trial, as you can see from the Kaplan-Meier curve on the right of the screen. 73.2% of patients receiving obexelimab remained flare-free through the 52-week follow-up period. And the hazard ratio for flare was 0.443 with a 95% confidence interval ranging from 0.277 to 0.711. So this was a strongly positive result. Next slide.

All of the key secondary endpoints were also met. So the time to first investigator-determined flare was 26.8% in the obexelimab arm and almost double that in the placebo arm. The annualized rate of adjudicated flares requiring rescue therapy was again just about half in the obexelimab compared to placebo. Patients achieving complete remission were also more frequent in the obexelimab arm of 37% compared to around 20% in the placebo arm. And very importantly, the glucocorticoid exposure was substantially different between the 2 groups. And this is something that I would say rheumatologists in particular, are really paying attention to because especially over the past 5 to 10 years, there has been really significant interest in limiting glucocorticoids because of the really substantial toxicity that they're associated with. And we'll go over that in a little bit more on the next slide.

Here's a little bit more about the glucocorticoid toxicity and the effects that obexelimab had on that. The glucocorticoid toxicity index is a validated index that measures the amount of glucocorticoid toxicity experienced by patients that looks at many different domains that are associated with glucocorticoid toxicity, ranging from body mass index, glucose tolerance, blood pressure, lipid metabolism, whether the patients had infections or if they had really specific manifestations of toxicity like glucocorticoid myopathy, skin toxicity or neuropsychiatric effects.

And the component of the GTI, the glucocorticoid toxicity index that's shown here is the cumulative worsening score, which the way this is designed is it's a cumulative score, so it can only increase over time. So you can't have a negative score with a cumulative worsening score. And here, you can see that the placebo arm had substantially more glucocorticoid toxicity with respect to the cumulative worsening score, whether you look at a cutoff of 20 points or 30 points that was seen. Next slide.

This slide shows the effect of obexelimab on serum IgG4 concentrations. As I mentioned before, serum IgG4 is probably our best biomarker for disease activity in this disease. And consistent with the overall top line results, we saw that serum IgG4 concentrations were suppressed after the initial glucocorticoid taper that was done as part of the initial trial design. And those levels remained stable while the patients were on obexelimab as opposed to the placebo arm, where you can see that as soon as the glucocorticoids were discontinued, the serum IgG4 concentrations began to rise again. Next slide.

Similarly, B cells were reduced in both treatments. We know that glucocorticoids reduced the total burden of B cells in blood and in tissue. And in the obexelimab arm, the B cells were lowered compared to placebo, but very importantly, they actually remained above the lower limit of normal. So again, another kind of differentiator between B-cell inhibition and B-cell depletion, where with B-cell depletion, we really expect the B cells to be essentially undetectable as long as the drug is still on the system. Next slide.

In regard to adverse events, I would say that this is quite reassuring. So almost all patients had at least 1 adverse event. In both obexelimab and the placebo arm, but serious adverse events were numerically less common in the obexelimab arm. And Grade 3 or more adverse events were also numerically less common with 11% in the obexelimab arm and 24% in the placebo arm. Injection site reactions were grade 2 or above were uncommon. So only 2% in the obexelimab arm and 1% in the placebo arm. There were 3 malignancies in the obexelimab arm and 0 in the placebo arm, but all 3 malignancies were deemed unrelated by the investigator.

Next slide.

In conclusion, obexelimab significantly reduced the risk of IgG4-related disease flare compared to placebo through week 52. There was reduced cumulative glucocorticoid rescue use and it was associated with less glucocorticoid toxicity worsening compared to placebo. Obexelimab was generally well tolerated with no new safety signals. And overall, INDIGO demonstrated that B-cell inhibition through CD19 Fc gamma RIIb co-engagement may present a novel subcutaneous treatment approach for the management of IgG4-related disease. Next slide. This is the manuscript for INDIGO that was published in the New England Journal of Medicine. And I'll hand it back to Lonnie to discuss the next part.

Thank you, Dr. Katz, for that comprehensive review, and we appreciate you staying with us for the upcoming Q&A session. I'll now hand the call over to Joe Farmer, our President and COO, who will take you through the IgG4-RD opportunity and our commercial launch plans in detail.

Thank you, Lonnie. I want to start by framing the size of the opportunity in front of us and then walk through how we're preparing to capture it. As Lonnie alluded to earlier, we estimate that the current diagnosed and treated population in IgG4-RD is about 25,000 patients in the U.S. Of that 25,000 approximately, we expect a payer mix of roughly 60% commercial, 30% Medicare Part D and 10% Medicaid. Coverage requirements vary by insurance carriers, and we're preparing for those differences.

For commercially insured patients, we're preparing to help physician offices navigate prior authorization and step therapy requirements. For Medicare Part D, we're building support for coverage exceptions and appeals. And for Medicaid, we're planning for differences in coverage requirements across states. Across all 3, our focus remains the same, helping patients seamlessly onboard and access treatment, which will be discussed later.

Taken together, as Lonnie described earlier, assuming half of the currently diagnosed and managed patients are eligible for treatment and assuming the pricing of the FDA-approved therapy in this indication as a benchmark, we estimate that the IgG4-RD represents a very substantial U.S. market opportunity approaching $4 billion.

It's worth pausing on what we've already seen in this market. The first approved biologic in IgG4-RD received FDA approval in April of 2025, and its launch trajectory is giving us a clear and encouraging signal about how this market is evolving. As of August, we estimate approximately 1,200 unique patients have been treated with the approved biologic prescribed by more than 950 unique physicians, a significant number of whom have prescribed more than once. The commercial infrastructure behind this drug has scaled accordingly as we believe the field-based team supporting it has grown from approximately 35 at launch to over 50 today.

The currently approved biologic is priced at approximately $150,000 gross per IV infusion or $450,000 annually for new patients and $300,000 annually thereafter. Noting that new patients received 2 infusions 2 weeks apart and then an additional infusion every 6 months thereafter for the approved label. What this all tells us is that the diagnosed IgG4-RD patients are out there. Their treating physicians are amenable to biologic therapy, and this market is actively growing. This is exactly the environment we want to be launching into.

Let's turn to the current treatment landscape and why we believe there's still a significant unmet need. IgG4-RD is a progressive chronic disease that requires chronic therapy. That's the critical starting point. In a survey we conducted of 102 physicians, 94% agreed that IgG4-RD is a disease that requires proactive maintenance treatment. However, currently available therapies have significant limitations that may make sustained chronic treatment impractical and difficult. Most patients have received a glucocorticoid at some point in their disease journey because they're effective in treating flares. However, chronic steroid use comes with significant health issues and toxicity.

Similarly, current B-cell targeting antibodies, which are depleters, 1 approved and 1 off label, have been utilized by a smaller percentage of patients and while often effective, come with long-term risks and challenges, including increased risk of serious infection and an inability to receive necessary vaccinations. Older DMARDs tend to be less effective, have toxicities and therefore, are used by an even smaller percentage of patients.

Because the majority of patients are at a higher risk for toxicity, 40% are 65 or older, more than 30% have comorbidities and are at greater risk from infections and 20% are less than 50 years old and facing decades of treatment. Therefore, B-cell depletion and chronic steroid use may not be well suited for long-term disease management for these patients. We believe that what patients need and want is a convenient and effective therapy for chronic use, an agent that supports safe long-term disease management without the trade-offs of currently available therapies. That's the gap obexelimab is designed to fill and it's a thread running through all we'll share with you today.

To validate that belief, we went directly to the physicians who treat this disease and the patients who live with it every day. We surveyed 80 U.S.-based IgG4-RD treating physicians with the majority of physicians being rheumatologists, immunologists or gastroenterologists, hepatologists. Practice setting was well balanced between community and academic, and these physicians managed approximately 18 IgG4-RD patients on average over the past year, with more than 80% of those patients currently receiving drug therapy.

We presented obexelimab to them, he identified as [ product X ], along with the INDIGO study data and asked about future expected prescribing patterns, assuming that product X was commercially available, and the results were quite compelling. The majority of physicians strongly agree that there's value in B-cell inhibition relative to depletion with almost all of the remaining neither agreeing nor disagreeing. And we think the second group can be impacted for our education efforts. On the likelihood to prescribe, almost 2/3 told us they are extremely likely to prescribe obexelimab and when asked how they allocate their biologic use across obexelimab and the approved and unapproved B-cell depleters, they assigned obexelimab a 47% share, consistent with what we've seen in prior rounds of market research.

In terms of when physicians would envision prescribing obexelimab, the majority told us they use it first line or immediately following GCs or other immunosuppressants. And importantly, when asked what they do with the patient flares while receiving obexelimab as that they continue the patient on obexelimab and add GCs rather than switch therapies entirely. That's a strong signal of physician confidence in obexelimab if approved, once patients are established on it.

Finally, a large percentage of physicians expressed a preference for weekly subcutaneous dosing over infusion every 6 months, with the majority not having a strong preference. This is not a market like you sometimes see in oncology, for example, where buy-and-bill may provide financial incentives that drive IV usage. Importantly, this data also shows that the physicians will defer to the preferences of their patients. To that point, in a separate smaller study of 20 IgG4-RD patients, 75% said they prefer a subcutaneous at-home administration with most of the remainder neutral. Although it's a small sample, it supports what we're hearing from physicians and patients that weekly SubQ is preferred over IV treatment.

With that research as our foundation, let me walk through how we're positioning obexelimab and where we believe it fits into the patient journey. We believe obexelimab offers a genuinely new approach to long-term disease management in IgG4-RD and that its unique profile positions it as the preferred first-line therapy for the majority of patients. The obexelimab differentiation comes down to 4 key elements: first, long-term disease control without compromising safety; second, the mechanism, inhibition, not depletion.

Obexelimab is designed to potently inhibit B cells through co-engagement of CD19 and Fc gamma RIIb, while importantly, B cells not dropping below the lower limit of normal. That leads directly into the third element, reversibility. We expect that obexelimab may provide physicians a real-world tool to pause therapy for a short period of time to assist in the management of infections or to administer vaccinations, something depleting therapy [ cannot ] offer. We look forward to sharing additional data with you on the vaccination substudy in the near future. Finally, at-home SubQ administration would eliminate the need for an infusion center, which as our research just showed, is largely preferred by patients and providers. We plan to leverage these 4 elements of obexelimab's drug profile to position it as the preferred first-line therapy for the majority of IgG4-RD patients.

Our launch will target 3 patient groups, patients in active flare, patients considering a treatment change and patients in ongoing chronic management. Patients in active flare would include newly diagnosed patients as well as previously diagnosed patients who aren't currently on therapy but are experiencing new flare. Patients being actively treated include patients currently on an approved or unapproved biologic who see their physician prior to their 6-month infusion and who the physician can then decide to switch based upon the obexelimab profile we just reviewed.

So all this comes together into 3 strategic imperatives for our launch. Our first imperative is to make proactive chronic disease management standard of care, shifting physician mindset away from simply treating flares as they occur and building conviction that earlier longer-term treatment is appropriate for more patients that are receiving it today. Second, differentiate clearly. We will make clear that inhibition as compared with depletion is an important clinically relevant distinction for physicians, anchored in sustained disease control, reversibility and patient safety. Third, execute with discipline. This means, among other things, build the conditions for fast, seamless uptake of obexelimab for patients, providers and payers.

These strategic imperatives lead directly into our launch preparations, which include building the right customer engagement model. Our field model is built around targeted HCP and account concentration and centers of excellence, along with understanding referral dynamics and community practice coverage. We're executing our engagement strategy accordingly to ensure we have all the key relationships and understand all of these referral dynamics ahead of launch. We will also ensure that we prioritize the right customers. Rheumatology remains our primary specialty focus with GIs also targeted at high-volume centers and referral networks.

Let's now turn to how we're building out the commercial organization to execute against our strategic imperatives, starting with market access. We've built a coordinated cross-functional model designed to deliver comprehensive education and support at every HCP touch point. Our sales team, which will include 45 territory sales representatives plus 5 regional business directors, will deliver the necessary clinical and product resources to help physicians understand how and when to appropriately use obexelimab.

Our market access team, including field reimbursement managers, will support HCPs and patients in navigating access and reimbursement, ensuring smooth patient onboarding and working to minimize barriers between a prescription being written and a patient starting treatment. We also have a strategic engagement team who execute our commercial KOL strategy and build trust and relationships that inform how we go to market. We will also have a team of immunology nurse educators who will provide in-depth peer-to-peer disease state and treatment education to HCPs. Together, these teams create the surround sound that will provide HCPs with the education, access support and trusted relationships they need to confidently bring obexelimab to their patients.

We've done the work to map the full patient access journey, and we've turned those learnings into core operating principles and a comprehensive patient support model. Critical to the success of the launch is ensuring that once a prescription is written, providers and patients have a seamless experience, and we have developed a model that delivers on that. The model clearly defines responsibilities while delivering 1 coordinated patient experience. Once a patient is identified and a prescription is written, they either enter through our patient HUB or directly to 1 of our 2 Specialty Pharmacies.

From there, we handle benefits verification and prior authorization support and affordability triage, which will include QuickStart, Bridge, Copay and Patient Assistance Support Programs. Obexelimab is then dispensed to the patient through our limited Specialty Pharmacy network. The goal is simple. Patients and providers should experience 1 Zenas model that allows the patient to seamlessly start and stay on therapy.

To make this a bit more concrete, here's an illustrative pathway. Whether the prescription comes through our patient HUB or directly through a Specialty Pharmacy, the model will support coverage, affordability, treatment initiation and ongoing refills. We're also planning for where things can go wrong. Take a common scenario, missing coverage documentation causes a delay. In our model, an assigned owner identifies the missing information and then the HUB, Specialty Pharmacy and our field reimbursement manager coordinate the response with the office and the office and patient receive a clear next step that keeps the prescription moving forward, including potentially through 1 of the support programs that I mentioned a moment ago.

We've selected our access partners with complementary strengths in mind. So patients and providers experience 1 coordinated Zenas model no matter which partner they touch. RareMed will serve as our HUB managing co-pay support, our Patient Assistance Program, QuickStart, Bridge and free-drug programs. For Specialty Pharmacy services, we partner with Biologics by McKesson for its scale and launch expertise and Orsini for its personalized rare disease-focused support. The expectation is that these partners work together as one Zenas support model that provides exceptional services for patients and providers.

Let's now move to how we're deploying our field team in support of this opportunity. We've identified approximately 7,100 health care providers to prioritize at launch, organized into 4 tiers that correlate with known or presumed IgG4-RD patient volume under their care. Biologic use and physician specialty helped to further refine and assist with the targeting to determine our field sales team deployment. It's important to note that the physicians within these 4 tiers account for over 70% of all currently treated IgG4-RD patients, reinforcing the strength of our HCP targeting strategy.

Having established our priority targeted HCPs, of which rheumatologists represent the largest number, we then moved to enhance our overall coverage by identifying the accounts, offices or clinics where these patients are actually treated. This account level focus allows us to effectively target and cover over 90% of all currently known IgG4-RD patients, with the top 100 accounts representing 65% of the treated patient opportunity. This targeting effort along with industry workload assumptions, resulted in the sizing of an optimal field force of 45 sales reps deployed across 5 regions to effectively cover the market.

So to bring it all together, we have an experienced team ready to execute a proven launch playbook and we will be launch ready ahead of our May PDUFA date. We believe we're very well positioned, appropriately resourced, and well funded to capitalize on this very substantial opportunity for obexelimab in IgG4-RD. With that, I'll hand it back to Lonnie for closing remarks.

Thank you, Joe. I hope today provided a clear picture of the unmet need in IgG4-RD, the differentiated profile we believe obexelimab offers, and the discipline behind our launch preparations. We're excited about what's ahead, both for patients living with this disease, and for Zenas as we prepare to become a true commercial stage company. With that, we're happy to open the line for questions. Operator?

[Operator Instructions] Our first question comes from Cory Kasimov with Evercore ISI.

I guess I want to ask Dr. Katz, who I appreciate you staying on for Q&A, what are the key factors that are going to drive your future treatment choices between obexe and UPLIZNA? What would make you choose one product versus another for a particular patient? And when you put a patient on obexe, how do you think about the potential treatment duration? I know this can be variable, but in a case where a patient's able to achieve low disease burden, how long might you keep a patient on therapy?

Thanks, Cory. Dr. Katz?

Yes. So there were 2 elements to that question. One is deciding between obexe and B-cell depletion and the other is about duration of treatment with obexe. So for the first portion of the question, I think the overall sense in the rheumatology world is that B-cell depleting agents are really phenomenal and we know that in IgG4-related disease, they work just about 100% of the time, which is really nice to have an option that we know is going to work.

But I mentioned earlier the downside of B-cell depletion and why we worry about them. And in many other diseases, we really consider B-cell depletion to be one of the last resorts after we've exhausted other options. So I would think of obexelimab as, in many patients with IgG4-related disease, a very appropriate first-line option for all of the reasons that we talked about in terms of the reversibility of it, the convenience, the fact that it is hopefully associated with a lower risk of infection.

Of course, it's still too early to say that we'll need longer-term data to say that with confidence, but I think the early data support that.

And so in most patients, I see that as a good first-line option. The exceptions to that would be patients with potentially the most horribly severe disease, patients in whom I'm worried any degree of active disease could be devastating. But the reality is that those patients are few and far between in IgG4-related disease because it's such an indolent and slow disease, it is something that we generally have the benefit of time to try options to see what works.

So I see this as being potentially first line for a large proportion of the patients that I see. As for the duration, that's another important differentiator between obexelimab and B-cell depletion. With B-cell depletion I worry very much about the cumulative immunosuppressive risk of long-term B-cell depletion. But I don't think we have that same concern with the obexelimab.

So I see myself using the obexelimab in most cases probably for at least -- at the very, very least a year, but probably more like 2 or 3 years, depending on severity and prior relapse history and things like that. And then eventually trying to stop and see what happens to the disease. But I think many patients would end up sort of declaring themselves as patients who continue to relapse and as long as they're doing well and tolerating the medication, I would kind of treat this the way that we do many other autoimmune diseases, where we continue it indefinitely until such time that something changes in the patient's medical history that changes the risk-benefit ratio of the treatment. So I do see us using obexelimab long-term much more routinely than what we're doing with B-cell depletion.

Our next question comes from Fiona Jia with Jefferies.

I have 2. So for Dr. Katz, maybe, what is the differential risk of prolonged B-cell depletion in IgG4-RD versus other diseases? For example, a lot of B-cell depleting agents were approved for RMS, which seems to be less of an issue. And just want a quick follow up, can you remind us when the vaccine data will be available and what are your expectations on the impact both on the regulatory perspective and commercial access?

Thanks, Fiona. Let me comment on the vaccine data. It is -- the initial data has been submitted as we described in a recent news release. It will be present as Dr. Katz well knows as the lead author at the IgG4-RD Symposium coming up in a number of weeks and then also at the ACR meeting. And there is not a regulatory intent with that data set. That was your second part of that question, Fiona. But I'll turn it over to Dr. Katz for the first part of the question relative to B-cell depletion risk unique to IgG4-RD.

Yes, so I think this is an important question as well. If I understand the question correctly, the question is about what are the effects of -- or the potential risks of long-term B-cell depletion in IgG4-related disease as opposed to other diseases in particular. The challenge is because IgG4-related disease is a rare disease and it's not until very recently that we started having large clinical trials in the disease, we have relatively little long-term data. And when we're talking about risks of B-cell depletion, we're talking about rare risks.

So rare risks in a rare disease become much more difficult to study. So we have many, open label and observational studies of rituximab and we have the MITIGATE trial of inebilizumab and that's everything that we have in terms of the data on B-cell depletion and IgG4-related disease. And we don't have data in large numbers on patients who were treated for many, many years, just because those data don't exist.

So a lot of what we do is we extrapolate from other diseases and we do know that the risks of B-cell depletion have been shown time and time again in every disease where they're studied. And that includes things like rheumatoid arthritis and ANCA associated vasculitis, where patients are very often treated with B-cell depletion for many years. And there is a very consistent effects that the longer someone is on B-cell depletion, the lower the IgG levels are and the higher the risk of infection. This is kind of well documented across several different diseases. And so that, I think has been pretty consistently shown, certainly in rituximab, which is the oldest B-cell depletion agent that we have, so the one that we have the most data on.

But the other B-cell depleting agents that have been introduced to the market have also shown a very similar trend where with long-term administration, at least the IgG levels go down. Not all studies has been able to show that, that is associated with an increased risk of infection. But again, we just need really high sample sizes and follow-up time to be able to demonstrate that in a study particularly a rare disease.

Our next question comes from Yatin Suneja with Guggenheim.

Maybe just a couple of usage questions for me for Dr. Katz. Dr. Katz, could you maybe talk about your current practice and your usage of CD20 and CD19. As you see newer patients, how are you prioritizing CD19 over CD20? And for patients who are on a CD20 who are stable, what is your plan? Are you going to switch them and if you switch them how should we think about a switch to a depleter versus an inhibitor?

Thanks, Yatin. Dr. Katz?

Yes, so I'm happy to share my practice. I think that there is some practice variability here. The way I see anti-CD19 and anti-CD20 agents is they're much more similar than they are different. There are some benefits of anti-CD19 compared to anti-CD20, in terms of convenience and differences in mechanism of action and things like that, but they are very similar and both of them are remarkably effective in just about every patient with IgG4-related disease.

For me, when the anti-CD19 monoclonal antibody became FDA approved and was available, I started using that routinely for patients with newly diagnosed disease and in patients who I had previously treated with rituximab. I would discuss the benefits and risks of both options with the patients and kind of leave it up to them.

And some patients prefer to stick with what they already tried and knew worked in the past and other patients preferred to try the newer agent because of the differences in how they work. So to me, the decision of B-cell depletion versus B-cell inhibition comes to individual patient factors. In a patient with virtually every organ in their body being inflamed where I'm worried that something catastrophic is going to happen if I don't get them completely fully into remission yesterday, then those rare patients are patients that I would reach for B-cell depletion first before even considering other options.

But that is a small proportion of the overall patients that I see and I have referral bias, with the patients that I see, I do see probably the most severe patients that are out there. I get referrals from all over the country and sometimes from other countries as well. So even in my particularly severe patient population, it is a minority of patients who are so severely ill when I meet them that I would jump straight to B-cell depletion before considering other options.

Most other patients I would feel comfortable trying obexelimab first because of its favorable safety profile and convenience. And in patients who have had prior flares after treatment with B-cell depletion and who have demonstrated that they kind of need ongoing treatment, those would be patients that I would be very interested in switching from the chronic management with B-cell depletion to obexelimab, with the intention that hopefully we'd still be able to keep them in remission, but would be associated with less of the cumulative risk of infection over time.

Our next question comes from Judah Frommer with MS.

Maybe for Dr. Katz. Just curious on your take for the convenience argument here. Do you have a sense for whether patients would prefer that weekly at-home, kind of self-administration? And just maybe curious more from the company's perspective, I guess, how much are at-home administered injections like GLP-1s impacting the demand or maybe the receptivity for an administration route like this?

Good morning, Judah. Dr. Katz?

Yes, I'm happy to share my experience, which I will admit is more from other diseases than from IgG4-related disease because up until, well, hopefully soon, I've had no subcutaneous options to offer my patients with IgG4-related disease. But I also see general rheumatology patients. I see a lot of patients with rheumatoid arthritis and psoriatic arthritis, and I'm often having the conversation of when someone needs to start a biologic, whether they prefer a subcutaneous or an infusion.

And almost every patient prefers subcutaneous injections over infusions, at least initially. Rare patients prefer infusions because it's just kind of taking care of them -- taking care of for them, but those patients are quite rare. So I think Joe talked about some of the market research that was done, and I may have some things to add there, but my anecdotal experience reflects that, that most patients would prefer to be on an at-home weekly subcutaneous injection rather than having to go in for infusions.

And that's consistent with not only the market research, but just all the conversations we have with our current investigators and key opinion leaders. And just as you said, Judah, perhaps GLP-1s were a major shift in how people think about delivering their own medications. But clearly in rheumatology, it's quite standard that at-home sub-Q is the preferred.

Our next question comes from Yigal Nochomovitz with Citigroup.

I had a few for Dr. Katz as well, please. So the first one is, as you noted, the very severe patients are the small minority of the population. So I'm just curious, amongst your cohort, are there certain IgG4 patients where you're simply withholding the therapy given the potential for obexe to be available? Or is the current situation that everyone you see is either going to get rituximab or UPLIZNA today?

And then my second question, you referenced the biomarkers and the 20% of the patients will have a normal IgG4 biomarker, despite being classified as having the disease. I'm just curious if there's any new biomarker work that you're aware of that would maybe clarify that or make it more a better predictor. And then lastly, it was interesting that on the glucocorticoid tox, it's a very significant -- obviously, very significant, threefold decrease in the glucocorticoid usage for the obexe patients. But I noticed that the glucocorticoid toxicity index didn't fall by a factor of 3. It fell more by a factor of 50% or something like that. I'm just curious if you could comment on the discrepancy there, please.

Thanks, Yigal. I've noted the 3 questions, Dr. Katz, if you want me to go through those again or jump right in?

No, I'm happy to go through them. That's fine. Thank you, Lonnie.

Okay.

So I think the first question was about whether I would withhold treatment from patients who are currently active in anticipation of obexelimab becoming approved. If you ask me that question 2 or 3 weeks or even a month or 2 before I know that obexelimab is going to be commercially available, my answer may be different. Right now, I think it would be really unwise for myself or for anyone to withhold treatment from a patient with active IgG4-related disease because during the several months that it's going to be between now and when obexelimab will be approved, they could accumulate pretty significant organ damage even if they feel well.

So patients who are active now, I am treating with B-cell depletion for the most part. But I've already started having conversations about obexelimab with patients and they've expressed some interest. There are patients that I anticipate potentially treating with B-cell depletion now and then after obexelimab becomes available to have a conversation with them again then, but potentially started then either to treat a relapse or to prevent relapse at that point.

So those are conversations I've already started having with patients, and I've spoken with other IgG4-related disease experts who've been doing the same thing. I think a lot of patients are really excited about the opportunity to have a weekly injection rather than an infusion and one that has a potentially much better safety profile. So those are conversations that I've already started having with patients, but I don't think it would be right to withhold treatment from patients who have active disease this early on before obexelimab is going to be commercially available.

The second question was whether there are better biomarkers than serum IgG4 that are being explored, and yes, there are many researchers who are looking into biomarkers and trying to find better biomarkers. So far we haven't found anything that works better than serum IgG4, but there's a lot of work that's going into it. There are some promising contenders. I just think it's all too early for prime time. I think we need some more data, some more longitudinal data, larger sample sizes, but there's a lot of work happening in that, and hopefully we'll have some more options in the near future.

And then the last question, I hope I understood the question correctly, but it was about the glucocorticoid toxicity index, the GTI, and the question was why patients with the obexelimab also had an increase in the GTI. If I understood that correctly, I hope that's the case. The way that humans...

Maybe I can clarify.

Go ahead, Yigal.

Oh, sure. Thanks. No, I was sort of getting at was you had a very -- in the obexe patients you had a -- I think it was a threefold decrease in the glucocorticoid dose of total dose delivered but the glucocorticoid tox index didn't fall by that amount. It fell substantially, but not threefold. It was less. I just was curious about that.

I understand, yes. Thank you for clarifying. I don't think that there's any literature to suggest that the changes in cumulative worsening score change linearly with the cumulative glucocorticoid that someone's exposed to. So I don't think that that's unexpected. And the way I think of glucocorticoids is the more someone gets, the more toxicity they get, but you can't ever predict exactly how much toxicity one individual patient can get.

Someone can be on 60 milligrams of prednisone for 4 months and have no problems whatsoever, whereas someone else can be on 20 milligrams of prednisone for 2 weeks and have avascular necrosis and diabetes. So there is a certain amount of unpredictability there and I wouldn't really expect the cumulative worsening score to change linearly with the amount of glucocorticoid exposure, if that makes sense.

Yigal, the GTI data will be presented in a robust manner at the upcoming meetings I mentioned before, the IgG4-RD Symposium in Boston and then also at ACR. And also, I mentioned previously that the vaccine sub-study data will be available, and we're importantly looking forward to the OLE, the overall 12-month flare probability, as another data set that will be available. So a number of things for people to look out for in the coming month or 2. Next question.

Our next question comes from Matthew Caufield with H.C. Wainwright & Company.

So for Dr. Katz, does any of your experience with the UPLIZNA in the clinic provide insight into the possible ease of access for obexe, and if real-world pushback from payers could be cumbersome? Kind of just trying to get at any color on realistic access within the clinic.

The access opportunity with UPLIZNA is strong. Of course, Amgen has done a wonderful job of getting access, getting their product positioned. This isn't a disease that's managed to any substantial degree by payers, but I would ask Dr. Katz to comment as he's had some issues.

Yes, I will say my experience with getting an inebilizumab approved has been remarkably positive. It is pretty uncommon for me to run into a situation where I can't get it approved for a patient who I want to treat them with it. There have been occasional payers now, some payers who were previously saying that rituximab is experimental and that we can't use it because there aren't any clinical trials that support its use.

Now that we have an FDA approval for another medication that's more expensive than rituximab, some payers are requiring to fail rituximab before moving on to that. But that has been, at least for me, a pretty uncommon experience. The vast majority of patients that I have prescribed UPLIZNA were able to get it. And so yes, I've had a very positive experience with that in terms of how the insurance companies will respond to a second FDA-approved treatment. I think that's a little bit beyond my level of knowledge. Maybe Lonnie or Joe would be able to speak to that a little bit more.

Yes, just a comment, and Matt, you know this, everyone knows this, that the medical benefit is what covers rituximab and UPLIZNA, whereas obexelimab will be coming through the pharmacy benefit. But one comment on UPLIZNA, the last data we have in hand is just over 10% of all covered lives in the U.S. require a step-through of rituximab, so that means nearly 90% do not.

And that's not surprising in an orphan disease and with a drug that has randomized Phase III clinical data. And again, that would be the position we're in with the level of evidence and an FDA approval, if approved, and then of course, as I said, coming through the pharmacy benefit. Next question.

Our next question comes from Andy Chen with Wolfe Research.

One quick question for Dr. Katz. Could you talk about the evolving trend of diagnosis and any dynamic for this disease that's making diagnosis go up? And maybe how quickly is the diagnosis regrowing and if you could provide a quantitative estimate?

Dr. Katz, did you get that question?

I'm sorry, I had a little bit of a hard time getting the question.

Thank you, Andy. It was related to the trajectory in increasing diagnosis of the disease, what you're seeing there?

Yes, so this has been at least to me, fairly positive and I think is related to the fact that we now have Phase III randomized controlled trials that are being published on this disease. So more people are paying attention to it. I think there's more talks that I'm seeing and being a part of in at conferences like the American College of Rheumatology and EULAR. So I think there's increasing just kind of general interest in IgG4-related disease, at least in the rheumatology community, and I think in other specialties as well, from what I'm gathering.

I mean, I've spoken with various specialists in different areas and I think there's just more and more interest in IgG4-related disease in general. And with that comes more education. So I think more people are able to recognize the manifestations of the disease, do the appropriate workup, and get to the right diagnosis.

I do think our volume of referrals has been increasing over time pretty consistently over the past several years. And I think also a lot of people are managing patients without referring them to specialty centers like MGH. So my anecdotal experience, and I think the literature would support that there is increasing awareness and diagnosis of the disease.

Thank you, Dr. Katz. I really do appreciate your participation today and all of you who joined the call. We look forward to speaking with you at our upcoming R&D investor event and have a good day.

This concludes the program. You may now disconnect.

Welcome, everyone. Good afternoon. Thanks for being with us at this session of the Morgan Stanley Global Healthcare Conference. We're very excited to have Lonnie Moulder, CEO and Chairman of Zenas Bio with us. I'm Judah Frommer, one of the SMID biotech analysts here at Morgan Stanley. Let me just read a quick disclosure, and then we'll jump into it: for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures.

So with that out of the way, Lonnie, the company has evolved over the past year. Maybe we can start with a high-level overview of how the pipeline and the balance sheet have deepened since we saw you here last.

Yeah, so first of all, thank you for having us here. It's been a great day so far. This is #13 of 14 or 15 meetings we're having. And let me just make a comment on our disclosures. I would refer you to our SEC filings since we may be making some forward-looking statements here.

Of course, the company has progressed quite a bit over the last year as we deepened our pipeline. If we talk just financially first, because you mentioned that, over the last year we put in place a royalty financing with Royalty Pharma that helps us fund obexelimab and its launch. We executed on a PIPE transaction. We then followed it up with an equity offering and concurrent convertible note transaction, and a term loan with Pharmakon, and we do have an active ATM. We use that judiciously, and we had two opportunities this year where top mutual funds wanted to get a starter position, so we utilized the ATM twice that way. So we ended the second quarter with about $674 million in cash, and for us going forward, if our obexelimab for IgG4-RD is approved next year, we're eligible for $75 million more on the Royalty Pharma financing, and then we have the potential to tap into another $75 million on the Pharmakon term loan, and that would provide us cash through the second quarter of 2029. And of course, with what we have going on in our pipeline that I'll mention in just a moment, that positions us really well.

Priority #1, of course, for the company, now that we have a BLA under review with the FDA with a PDUFA date of late May, is preparing for the launch and then effectively launching obexelimab, if approved, for IgG4-related disease in the U.S. Along the way, we're progressing other programs. I'll highlight a few, and we'll get into this more, of course, our two large Phase III global programs in progressive MS for our BTK inhibitor, orelabrutinib. And then our newer molecule, ZB021, it's an oral IL-17 inhibitor that's in the clinic now. And in addition, we're expanding the obexelimab opportunity and have a lupus Phase IIb study reporting out at the end of this year.

Great, and we'll touch on all of it. So maybe just starting with obexelimab in IgG4-related disease. Maybe just set the stage for us a bit with unmet need here and the advantages that a B-cell inhibitor can offer versus a depleter. You've talked about the dosing profile, the ability to pause therapy, but maybe just highlight that unmet need and what you're trying to solve here.

If we back up and look at this disease, which is a newer disease. It was identified just about 20 years ago. And up until the recent approval, well, now just over 1 year, there were no approved drugs. A few drugs were put into randomized Phase III trials, but not by sponsors, typical sponsors; they were really Phase IV trials of older DMARDs that were not highly effective. So patients were treated primarily with steroids, which are highly effective. The problem with steroids, because this is a chronic disease, is chronic steroid administration just isn't possible. It was identified that targeting B cells, specifically with rituximab could be beneficial. And if you administer a regimen of rituximab, you can put a patient into remission, and if you periodically re-administer it, you can maintain that remission.

Now, the drug, though, has not been the subject of a Phase III trial, so the evidence isn't necessarily there for some payers, and it's not approved by the FDA, so it made it a challenge to get it for the vast majority of patients. So if you look at the IgG4-related disease market in the U.S., there are about 20,000 patients who we know are diagnosed and are treated with a variety of different modalities. We believe the actual market may approach 30,000 to 40,000, but with 20,000 today and just over half of those patients flaring frequently enough that they require chronic therapy, the options are limited, except for the approval now of UPLIZNA. If we think about that, the opportunity is really to bring to the clinicians and the patients an alternative. So today, when a patient is flaring, they think about administering a steroid, and then whether that's a patient that should get continuous therapy because they flared enough in the past, and that they have a choice of UPLIZNA or rituximab, and much of that is driven by that clinician's experience and whether they can get a payer to pay for rituximab or not, which can be a challenge.

So UPLIZNA is getting more and more use over time, and when we come to market, if approved next year in the second quarter. We anticipate that a large number of patients still haven't been started continuously on either UPLIZNA or rituximab, so there'll be a lot of patients that will end up in a flare, show up in a clinician's office with the diagnosis, and have not been on a therapy in a long time other than maybe a steroid a few years ago, or they're a brand new diagnosed patient. And the clinician will need to make a decision. And our market research and work that's been done by many, many of your colleagues on the sell side has indicated that clinicians think about our drug as one approach. It's an inhibitory approach. It shuts down B-cell activity, meaning it reduces antibody production, cytokine production, presentation of T cells, or antigen to T cells, and that's how it works. Or they could deplete a large compartment of the immune system and eliminate B cells.

So they think about that, and they generally talk about it as, well, maybe I'll use UPLIZNA, maybe I'll use rituximab, depends on the setting, depends on what I can get paid for, or I can use your drug, and for your drug, in my patient population, where almost 50% are over age 65, more than 1/3 of them have concurrent illnesses, that perhaps with your effective agent and inhibitor, that we can pull back at any time and based on the clinical Phase III data, where serious adverse events were lower in the drug arm compared to placebo, Grade 3 infections were lower in the drug arm compared to the placebo arm, that this could be a good first choice for my patients. So that's how many clinicians are thinking about it, and we think the data supports that thought process.

Okay, great. And then maybe just the dosing profile, how could that specifically be tied into the kind of convenience for the patient? What's the feedback you've gotten? Is it more for patients versus from practitioners on that front?

It's both, and both are important in the decision. Of course, in rheumatology, there are many, many medications that are administered by the patients at home via subcutaneous administration. It's sort of a standard now. So with our drug being an at-home subcutaneous administration, it fits into a typical paradigm as opposed to having to schedule a patient at an infusion center and send them off to find that and have that done. So part of our market research, as we're thinking about the launch of our drug, was to ask that question and understand how important it is. And from the survey that we conducted, about I'd say I think it's like 43% of the clinicians favored weekly sub-Q over every 6-month infusions. About 5% favored 6-month infusions over our sub-Q, and the rest were indifferent, right? And then we asked patients the question, and 75% of the patients said they'd rather do self-administered sub-Q. So I think that helps. It fits kind of the paradigm of how medicines are given in America today.

Got it. And maybe just like digging a little bit deeper. For the Phase III data, when those were reported, I guess in terms of the efficacy profile versus the convenience profile that's provided by obexelimab, I guess can you help us with physician feedback on how that convenience profile and that ability to pause dosing, especially in this older population, is being factored in when considering the efficacy versus UPLIZNA as well?

So from an efficacy standpoint, obviously, the trial met the primary endpoint and all of the key secondary endpoints. And the hazard ratio didn't hit a number that some people had in mind, but to the clinicians, that's an impressive number across rheumatology. So in their minds, it's an effective drug. The next thing they think about is that patient population and what would cause them the least issues from a safety and tolerability standpoint. And they like the idea of this inhibitory approach and the data from our Phase III study, and then in addition, the convenience that you mentioned of the at-home administration. I think the hierarchy is a trade-off of efficacy and safety. This population, they want an effective drug, but they want something that they're really comfortable with from a safety standpoint. And it's not as if the alternatives have a high incidence of severe adverse effects. It's not really that. It's just that these clinicians have used B-cell depletion for many years in various indications off-label, and they occasionally have a catastrophic infection, something really serious. They don't want to experience that again. They don't want to subject one of their older patients to that, so that's where they hesitate and think about our inhibitory profile perhaps being a better first choice.

Okay, that makes sense. You mentioned, obviously, you have a PDUFA upcoming, but I guess between now and then, I think you've talked about some additional data you could share, maybe at medical meetings how could additional data kind of further round out the profile for obexelimab?

I think what will be important is the upcoming meetings, the IgG4-RD biannual symposium, and that's run by John Stone out of Mass General, and that's where the world's experts in IgG4-related disease get together. And then later in November, or late October, November, is the American College of Rheumatology meeting, ACR. So we submitted information from our open-label extension. Previously, we had released that at 6 months. Remember, the randomized control portion of the study was 12 months. At 6 months in the open-label extension, we had a 92% protection from flare, so we'll update that with the probability of flare at 12 months so that was submitted.

And then in addition to the flare protection, there's a vaccine sub-study underway in the open-label extension. And that's where patients at select sites pause their obexelimab treatment, then are administered either a flu, COVID or both vaccines, and then wait 2 weeks and then measure titers that would indicate protection, and then restart obexelimab. So we also submitted those data sets and hope to have that presented.

Okay, great. And then you talked about kind of the off-label nature of utilizing rituximab. I guess, how could you see that dynamic changing with another drug potentially coming to market?

And this is more a prediction. So if you look at the current utilization, rituximab is still used more than UPLIZNA. UPLIZNA is growing. When you have a launch of a drug that has an indication in the disease and rituximab is the current drug that's used but doesn't have an indication, you see the launch drug surpass it at some point in time. So I believe UPLIZNA will surpass rituximab in utilization, of course, with an FDA-approved label and payer support. And we'll come along, if approved, with an approved drug with Phase III data. And payers will make that decision, recognizing that UPLIZNA and rituximab are on the medical benefit side of a payer, as infusions, and our drug, obexelimab, will be on the pharmacy benefit side. So the decision process is a little bit different, different group of people in many cases, but UPLIZNA has broad access across the country right now, and we would anticipate having the same as the only approved drug on the pharmacy benefit that exists.

Right. That makes sense. And maybe, I mean, I'll ask this question this way, I guess within the BLA submission process, and you mentioned the PDUFA kind of late in May, in this upcoming year. Any indication of FDA's appreciation of the remaining unmet need in IgG4-related disease that you could highlight?

They're very actively engaged in the review. They don't really comment on it. It's not a discussion point. They correspond to any questions, you respond to the questions, and then you don't hear anything back. Or further clarification of a question, right? So there's nothing really to point to there, except the review is very active, and from a statutory standpoint, there'll be a mid-cycle part of the review as we approach early November and then a late cycle in March, and this is all statutory. You can calculate it. And then if things are moving along, they'll give us feedback on the label in April.

Okay, perfect. And you touched on the commercial opportunity briefly, and I think you'll have an investor event upcoming, so I don't want you to front-run your own event, but I guess maybe we could start with, I think you talked about a $3 billion opportunity domestically, and maybe we start with just how does pricing factor in there? How are you thinking about maybe where pricing could come in relative to the appropriate comparators?

The way we arrive at that is, I'll go back to what I said earlier, although we believe there are 30,000 to 40,000 patients with the disease in the U.S., we know there are 20,000 diagnosed and treated today, and then that other number of patients who flare frequently enough, they should have continual therapy, and that's 10,000 or 12,000, so that's a conservative TAM today. It could grow.

If you just apply the UPLIZNA annual cost, which is $300,000 to that, that's how you get at $3 billion. What I'm not including in that is the first year of UPLIZNA, because there's an extra dose, it's actually $450,000 in the first year, so the $3 billion is maybe a slightly conservative way to look at it. We're not declaring our pricing for this type of disease, and the benefit that comes from that disease, and we've done some of the health economics work around this, that's a reasonable price point to consider for sizing the market as we enter it. We're not going to declare the price now, but that's in the range.

Okay. That's helpful. Yes. No, that's great. And then maybe just kind of the second layer of that is you've done some payer and market access work already. What are you hearing on that front that kind of helps support your thinking on pricing?

So this is an orphan disease. So from an overall budget and focus standpoint, it's not really moving the needle for the payer. And they look at orphan diseases like this a bit differently. It's not the type of thing that they manage. It's not a managed class or a managed disease. And as I said, on the pharmacy benefits side, there are no other approved drugs. And of course, Amgen has done a really nice job with their market access team, educating payers and others about the need in the disease.

Okay. And then you touched on kind of the armamentarium here. That has evolved, and obviously there's some off-label nature to it as well. But I guess when you talk to docs, is there a slotting dynamic that you expect to happen in terms of where obexelimab could slot in terms of line of therapy, or do you think -- should we be thinking about this as first line for most docs that are going to use it?

We did market research before our Phase III study and after our Phase III study, and interestingly enough, regardless of what we put in front of them, we got the same answer that, and obviously this has to play out with our execution, but about 50% of the front line would be obexelimab, and the remaining 50% would be split between UPLIZNA and rituximab. So that's been confirmed in two large market research studies. Obviously, it's our job to make that happen. And the reasons behind it, and we talked about this already, is the patient profile. A lot of these patients are older, more susceptible to infections. If they have an infection, they have a lot of concurrent illnesses, which is more susceptible to greater morbidity or even mortality, and they think about that. That's top of mind for them. And then of course, the patient convenience of the at-home sub-Q.

Super helpful. All right, maybe we'll park IgG4 there for now, and then I want to make sure we touch on the SLE data that's upcoming in fourth quarter. It is an all-comer design trial. There's a biomarker sub-population analysis. I guess just maybe from a high level, talk about kind of what you're hoping to see. Is there any way to bifurcate that expectation by the overall population versus the biomarker-enhanced population?

And you had commented on the event we have coming up for IgG4-RD. We'll also be sending out invitations soon. Instead of doing a large analyst day, we decided to have two bites: first, IgG4-RD, commercialization, September 29, and the invite will be for an R&D investor day in late October, and there we're going to spend a lot of time taking people through the SunStone SLE trial, the design of it, the biomarker, the science behind the biomarker, how we're analyzing the biomarker, and we'll also touch on other pipeline programs. We'll talk a lot about the IL-17 inhibitor and putting context to the results we'll have later this year of the SAD and MAD study.

But to your question here on the SunStone trial, it's a trial that took all comers, and we were very diligent about the population when we entered into this trial. Obviously, there's inclusion/exclusion criteria, but once investigators did their work, the patients were then put in front of an expert, and it's interesting how high the screen failure rate is because that expert discerned that a number of those patients that investigators initially determined were eligible truly weren't eligible. They tended to be a little more mild than they should with their disease, and that increases the placebo response and ruins studies, so we took care of that. And I would point to the Roche study with their anti-CD20 antibody that had a decent effect size, SRI-4 and BICLA, just over 20%. They had a screen failure rate of over 50%, so think about our study more in that range. We worked really hard to get the right patients.

But the primary is BICLA, but we'll display BICLA and SRI-4 results. And then the biomarker population, which was first identified in the original sponsor's Phase IIa, we've taken that approach and we've put it in the hands of more of a commercial entity to develop it further. We've worked with them. So we'll put out the overall population, the biomarker population side by side. And this Phase II study is really designed to help us design a Phase III registration program. So we're able to look at SRI-4, BICLA, overall population, biomarker-positive population, the effect size and determine what we want to do next.

Okay. All right. That sounds good. And then just -- you touched on it, but the competitive landscape in SLE, it's active, but clearly room for improvement there. What's your sense of where unmet need stands and kind of what demand is for a product like this in SLE?

Yeah, I think, obviously this is a heterogeneous disease. The driver to the disease is different in different patients. I'm really excited about the opportunity with this biomarker approach to identify a population that's highly responsive to obexelimab. We learned a lot in oncology over the years and how to select patients and pick patients that are really going to benefit the most from the drug. We can do the same in rheumatology, specifically in SLE, where we're giving the drug to a patient that's more highly likely to respond to it. That would be a great outcome.

Okay. And just moving kind of down the pipeline slide, you mentioned 021, which, again, oral IL-17 inhibitor. You're in Phase I with SAD and MAD, dosing ongoing in healthies, I believe, and initial clinical data by year end. So I guess what would be exciting for this asset? In terms of what you could see in Phase I, PK, safety, tolerability, anything beyond those measures that we should be thinking about?

Yes, I think in this case, because IL-17 is a well-validated target, if you can bring a once-a-day oral option that has efficacy in the range of what's known in IL-17 and different diseases, that could be a significant product for us and really meaningful therapy for patients. So in this data set, we have the SAD, but then moving to the MAD study, we're going to have a comprehensive set of ADME properties, importantly, at once-daily dosing, what kind of exposure do you get relative to your IC50 and your IC90? And if you have what you want and you have the right safety and tolerability, that should be the drug.

So then the next step is where do you put it into a treatment paradigm for patients, and the decision we need to make next year will go into patients, right, whether we do the typical rapid psoriasis program so you can benchmark or instead go into a Phase II indication or a Phase II for ultimately an indication you would do a registration study on. So we'll land on which one of those we'll do, but next year we'll have some patient data besides. But I think this data set of exposure, safety, tolerability really sets us up to have a significant program.

Okay. So it sounds like there could be some maybe proof of concept done in psoriasis patients, but that wouldn't necessarily be the go-forward indication?

That would be one. Or we could do a Phase II next year in the go-forward indication, so when we have the results, we'll talk more about that.

Okay. And maybe just help us with the oral nature of this molecule and what the differentiation is there within the IL-17 development landscape.

So this is a true small molecule, which is important. The molecular weight around 600. In primates, it had 80% bioavailability, good metabolic stability, all the characteristics that say this is a developable molecule. Obviously, it's gone well through SAD, well into MAD, so we have internal data. We're pleased with what we're seeing.

Great. And you touched on orelabrutinib up at the front. You in-licensed this asset from InnoCare in October of last year, and like you said, you have two global Phase IIIs running. Can you help us with your thinking kind of just behind the in-licensing of the asset, what made this BTK inhibitor potentially best in class in your view for progressive MS?

For us, we are focused on a rheumatology franchise around IgG4-RD, lupus. For our IL-17 inhibitor, there are rheumatology indications we're thinking about. And then leveraging first the obexelimab to generate multiple sclerosis data, but we have our extended half-life molecule we can talk about that might have potential in MS. So we have our neuroimmunology franchise. It's behind the rheumatology franchise. We have a brain-penetrant TYK2 inhibitor, and bringing in the BTK inhibitor, progressive MS is a significant unmet need. PPMS, SPMS, specifically, naSPMS which is the definition the FDA likes.

So with this molecule really targeting, we think, a mechanism that's important in progressive MS, and specifically being one that has the greatest brain penetration, the IC90 ratio, so let's look at it this way. If you take the different BTK inhibitors that have been investigated in progressive MS and you line them up and you look at their first of all, how clean they are on the kinase scan, there's a very clean molecule. Then you look at the brain penetration, because central compartment macrophages, microglia, B cells are critical to this disease and especially impacting disability progression. So you want brain penetration and you want a highly potent molecule once you get to the brain, and orelabrutinib stands out there.

And there's practical things, the BTK inhibitors that are moving forward, it's once a day, the other two are twice a day. And when we conducted our diligence on it, the Phase 2 data was best in class in RRMS, which is where you go in Phase II. But importantly, and first of all, this came from InnoCare, but this was a global study run by a U.S. CRO, so this wasn't a Chinese-focused program, it was global. U.S. CRO ran the study, and when we conducted our diligence, we actually had 96 weeks of follow-up data. So we had disability progression data, NfL data, all the way out to 96 weeks. That gave us the confidence that this is a very special molecule, progressive MS, there's great unmet need, and we like the way this matches up compared to every other molecule in the class.

Okay, great, we'll look out for that. Just touching maybe on the earlier stage assets, and you mentioned 022, the brain-penetrant TYK2. You also have 014, half-life extended, CD19, Fc gamma receptor mAb. So I guess just maybe high-level development plans for those earlier stage assets and what resource allocation could look like.

The brain-penetrant TYK2, as I mentioned before, fits in the neuroimmunology franchise. Obviously, there are a variety of diseases that people have thought of to apply that against. We're a little bit behind a few others, and I think we'll learn from them. Our molecule will go into the clinic next year, and we'll have our SAD and MAD data next year, and then we'll determine where we go from there. For 014, which is an extended half-life molecule that leverages CD19 and FC gamma RIIb, just like obexelimab, a similar molecule, it just has two mutations in the FC portion to extend the half-life, with obexelimab being weekly subcutaneous self-administration.

The preclinical data indicates this could be monthly. So next year we'll do SAD and MAD to support whether it is in fact monthly. And as you think about this, because it really, in all of our non-clinical work, including in animals, we've kind of validated the CD19 binding is the same, the FC gamma RIIb binding is the same, such that we could move quickly after we have that data, let's say a SAD study, a MAD study in a patient population, and then go to registration. So across our rheumatology and our neuroimmunology franchise strategies, what indications could we consider? Of course, in the neuroimmunology area, a lot of people are focused on myasthenia gravis, so UPLIZNA is doing well there. That could be possible. RRMS, if we can get to a point with the primary endpoint with the FDA as something other than annualized relapse rate, that could be somewhere to take it. And then in the rheumatology area, we've thought about things like Sjögren's disease and others. So let us first get the SAD and MAD study, and then we'll determine the path forward.

That's fair. All right, maybe in the last couple of minutes, going to walk through sort of a mini survey we're asking all the management teams at the conference, so curious about your insight specifically on this one. With the rise in Chinese biotech innovation, how are you thinking about competitive positioning and will this influence internal R&D efforts, business development or both?

Yes, my perspective comes from experiences where many years ago, at a company called Abraxis, when I was CEO, we built a China organization. We launched ABRAXANE in China. China's changed quite a bit since then. I've been a member of the Zai Lab board for a number of years and spent time back and forth to China. And as you mentioned earlier, we did a significant transaction bringing in three molecules from InnoCare. We have InnoCare. We have a we actually have a team in China that manages all of our Asian clinical trial sites, so we're quite familiar with what goes on there. Visit it every so often, and it's just fascinating how fast things are moving. Some of the government policies that are evolving that are going to position them even better for developing innovative medicines and getting them paid for in China. The question is, how are those medicines going to make it to other parts of to the world. I think Europe is going to be an excellent outlet for them. What happens in the U.S. is determined by a lot of geopolitical conversations and I can't predict what's going on there. I just know that there's good science, good medicine, good collaborators, and we'll see where it all goes.

Okay, great. AI, how is Zenas leveraging AI in different parts of the organization?

We're probably a little newer to it. We don't do drug discovery. We in-license, so we don't leverage AI in drug discovery. We don't have drug discovery. But think about data scientists and what they do. We use AI that way to learn everything about targets, everything about other molecules, everything about clinical science. How do you put it all together and make some good decisions? In the commercial arena, all of the data we get that we interrogate with AI to bring different meaning to it, and then obviously a human steps in to understand it. Medical writing, but I would say our BLA for obexelimab was done the old-fashioned way.

And then lastly, just on the regulatory side of things, whether it's changes at FDA, which seem to be constant, or pricing, whether that's MFN pricing, anything on the regulatory side that keeps you up at night?

It doesn't necessarily keep us up. I know the agency is working hard, active. We're interacting with them. They're busy. I would say MFN considerations as we think about Europe. We retain rights. We don't want to out-license to Europe because we need to control the pricing. Our last several companies we successfully launched in Europe. We would like to do that again. We're going to submit, but launch will be dependent upon where MFN lands.

Okay, great. With that, we're out of time, but thanks again, Lonnie. This was great.

Thanks, Judah.

This is day 1 of Citi's Biopharma Back-to-school Summit here in New York City. I'm Yigal Nochomovitz. I'm one of the biotech analysts. It's my great pleasure to introduce Zenas BioPharma, Lonnie Moulder and CEO. Lonnie, I've known you for a long time. So great to see you again running yet another company. And so love to discuss everything you're doing. I know you wanted to make some introductory remarks going through a little bit on a high level on the slide.

So over to you to get it started, and then we can dive into some of the details. So great.

Thank you, Yigal. We appreciate the invitation and being here at the Citi conference that we've attended many years in a row at various companies along the way. And today, we're here as Zenas. We've had a good day with investors, and I thought it would be good maybe to start out with a few comments. But of course, we'll be making some forward-looking statements, and I would refer anyone to our SEC filings.

So as a company, before we get into, I think, some of the things that people have in mind, some of the topical items is to step back and what are we building here. So right now, in 2026, if you look at Zenas, we have 2 late-stage programs that are substantial. And one of them, obexelimab, is under review with the FDA for IgG4-related disease with a PDUFA date of May of 2027. 3 additional programs that have great potential that we brought into the company through our business development activities and a team that we've assembled that many people who we worked with previously that have brought medicines across the finish line and ultimately commercialize successfully. And an infrastructure that's global in scope from a development standpoint, we conduct all of our trials globally.

And then finally, the company is well positioned from a cash position. If you take our last reported cash of over $670 million and with an obexelimab approval, an additional $75 million coming in from Pharmakon and $75 million from Royalty Pharma, we would have a cash runway through the second quarter of 2029. So well positioned.

And just look out 5 years with execution, we have the potential approval of 3 molecules across multiple indications in large markets totaling over $50 billion in sales globally. So I think we're well positioned. And now what we need to do is execute.

So what's in the near term, meaning even the next quarter and the next couple of quarters for obexelimab, as I mentioned, the IgG4-RD BLA is under review. We have an investor event coming up September 29, where Dr. Guy Katz from Mass General Hospital, and IgG4-related disease expert, will cover clinical data and management will describe all of our commercialization activities and how we view the market.

And then in October, we had the IgG4-RD symposium and in November, the American College of Rheumatology Conference, and we've submitted to those meetings our open-label extension data from the original INDIGO Phase III IgG4-related disease trial. People may recall that in that Phase III trial, we had a flare protection rate of about 3/4 of the patients. But we previously reported in the open-label extension, the OLE that at the 6-month point, we were protecting over 90% of the patients. And we're really excited to share the 12-month data at these medical conferences. In addition, the vaccine sub-study data where in the open-label extension, we're looking at the administration of either flu or COVID vaccines and how that can be utilized in patients that are on obexelimab.

And then, of course, people are well aware of our lupus program, our SunStone SLE Phase IIb top line results in the biomarker population and the overall population will be available in the fourth quarter. The orelabrutinib Phase III programs ongoing, both the PPMS study, PRIMROSE and the MONARCH SPMS study.

ZB021 that is garnering quite a bit of interest now because we're in the clinic, our oral IL-17 inhibitor will have the SAD and the MAD study results that safety, tolerability and pharmacokinetics in the fourth quarter as we prepare to move into a patient clinical program next year and report results in a patient setting. ZB014, the anti-CD19 Fc gamma RIIb long-acting molecule will have SAD and MAD studies up and running next year with clinical data. And then finally, our ZB022 brain-penetrant TYK2 inhibitor, part of our neuro-immuno franchise, we will have clinical data next year. So a lot going on.

Indeed, a lot going on. All right. Well, maybe we could start with obexelimab. So the data that you're going to show this longer-term flare protection data, I gather the data is going to continue to improve? And what time point are you looking at for this next look?

Yes. So what I had mentioned was that we previously reported in the patients who had achieved 6 months on therapy in the open-label extension that the flare protection was over 90%. It was 92%. So you'll have to stay tuned for what the data would be. I would say I'm not going to categorize it as an improvement because that's about as good as it gets.

Fair enough.

So you'll see the data when it comes out. And what we'll be sharing is the 12-month flare probabilities and people can assess that data when it's available.

So tell us -- so the PDUFA is next year, tell us a little bit more about what you're doing in terms of understanding the market in IgG4-RD. Obviously, you have one other drug that's approved there and has launched. So talk about what you your commercial team is doing to understand where you would expect the uptake for obex and how its profile would be competitive relative to the Amgen product?

Yes. So I would back up and just look at the whole treatment paradigm and how it's evolving for IgG4-related disease patients. As you know, historically, glucocorticoids, an intensive steroid dosing regimen and then tapering the dosing down is what was used in patients who flared. And that's still used in a reasonable number of patients. Over time, it was determined that targeting B-cells was effective, and that was with rituximab. The challenge with rituximab has always been that it's not FDA approved, and there is not data from a randomized Phase III controlled trial. It does work, but it's many times hard to obtain and get it paid for.

As you mentioned, another drug has launched, and that's now been in the marketplace for just over a year. So it's still early days of the first and only approved drug. So there's a lot of market development still to take place. And when I speak to market development, that covers several areas. One important area is diagnosis. So an improvement in diagnosing patients. We believe there are 30,000 to 40,000 patients that have IgG4-related disease in the U.S. But the actual diagnosed and treated population today is 20,000. So how does the diagnosis rate increase? How are patients identified and brought into the treatment market?

And then the other aspect of the market is because historically, there were no approved drugs and what was used were steroids and steroids just can't be administered chronically, the market was intermittent administration of steroids. So patient flares, treat their flare. And some patients, maybe give them low-dose steroids for a period of time, but that's just not sustainable. It's hard for patients to tolerate. So that was intermittent. The drug that's approved is a drug for maintenance. It's based on the maintenance design of a Phase III trial, similar to the maintenance design of our INDIGO trial for obexelimab. So we would anticipate the same thing.

This is long-term maintenance. And it's shifting the paradigm to go from the steroid intermittent treatment to continual therapy. That's important. That's what we're going to need to do in this marketplace. But it's important to build the market, but importantly, for patients, these patients have a chronic disease with chronic inflammation, and they don't always have symptoms. They may not have symptoms, but they have inflammation lesions, lesions that become fibrotic that then lead to a decrement in the organ. So to continually suppress that inflammation is critical. And that's why the first drug, we would anticipate our drug is for continuous administration. And we believe our drug as an at-home subcutaneous formulation, which really fits the paradigm in rheumatology. And we know from the GLP-1 market that at-home subcu administration is something that's well accepted by patients and with our drug also well tolerated.

So the market obviously is evolving to drugs that are approved and needs to evolve where there's continuous therapy. And for our drug, a drug that's an inhibitor of B cells as opposed to a depleter of B cells, if you consider the other 2 biologic agents, they deplete B cells. So you're depleting -- if this is good continuous therapy to protect these patients, you're depleting the B cell compartment every 6 months for years and years. And for clinicians, they pause in thinking about that in rheumatology. They've had patients with severe hospitalized infections. They had patients who have succumbed during COVID because they couldn't mount a vaccine response. So having a highly effective agent like obexelimab that has perhaps flexibility in, of course, being an inhibitor where you could pull it back if you needed to, to treat a comorbidity to vaccinate a patient potentially is highly desirable.

And our market research, you asked about what our team is doing. We're doing a lot of market research, and we've shared some of this publicly, point to that profile leads to a preference share of 50% of the frontline treatment with the other 2 agents dividing the rest of the share. Our goal is then to achieve that, but that's what the market research is telling us. So the team is being built to execute and deliver that type of outcome. We've had our medical science liaisons in the field for some time now. We've had our commercial infrastructure, marketing, sales leadership, market access in place for some time. Really, what we need to add finally would be the sales force, and that's a team of about 45 to 50 people. That's the right size for the number of rheumatologists and gastroenterologists that treat IgG4-RD. We have a good sense from claims data where these treatments take place, where these patients exist so that we deploy efficiently this group, and we'll be well prepared for the approval.

The -- so you got 50% share from your market research and then the other 2 agents that would split the residual part of the market would be the other drug, [ inebilizumab ] and then rituxan as...

As a market research. Outcome was...

Okay. Even though the rituxan didn't have any approval there, it would be an off-label option.

That's how it's being used now when it can be obtained.

Right. Okay. And then, of course, you mentioned this vaccine substudy and the point being regarding the ability to maintain or amount of vaccine response. So just at a high level, just kind of outline what you're going to show there.

So the open-label extension study, I mentioned before, has a substudy within it, where there's clinical sites throughout the world that are participating and entering patients that would receive either a flu vaccine, a COVID-19 vaccine or both. So what happens is obexelimab is paused for varying periods of time. So we're investigating that. The vaccines are administered and 2 weeks later, titers are assessed. So we're looking at protective titers, which is a standard that's known and whether those are achieved in a reasonable percentage of the population in the study. So that's the type of data that will be shared.

Okay. And so then you'll sort of figure out -- you said it's sort of staggered in the sense that you'll withdraw obex for different periods of time and then do the vaccination and see what the minimum amount of time is you need to stop obex. Is that kind of where you're going to?

It's measured in weeks and then the vaccine and then measure the titers in 2 weeks and then restart obexelimab.

Okay. So we'll get that data later.

That's right.

Later this year.

This fall.

Yes. And then on one of the earlier slides, you've mentioned, well, you have your own R&D Day, but then there's also this IgG4 Summit or symposium. So tell us a little bit more...

There's a -- well, it's typically every 2 years. I think during COVID, it might have been in every 3 years. But in every other year, and it's going to move to annual, IgG4 International Symposium where the top 100 or so IgG4 experts get together. And this year, John Stone and Mass General is sponsoring it. So it's a Boston-based meeting in October. And it's a typical medical conference, except there's only one room, right? And there's presentations from those who have submitted abstracts. So there'll be posters, oral presentations, et cetera, across all aspects of diagnosing, treating, managing IgG4-RD. And then, of course, ACRs in November.

Right. As far as outside of the United States, do you have any -- can you just quickly elaborate what you would do in terms of filing ex U.S. for Obex?

Yes. So we have plans to file this half of the year in Europe. So we'll file an MAA. We already have medical science liaisons in the field. We have market access in Europe. And Europe was a really important part of our Phase III program. Quite a few KOLs there. We're investigators, and we're close to the IgG4-related disease community there. And when you say a launch in Europe, you typically talk about Germany. For us, we're going to submit. Obviously, we have strategic assessment to do relative to MFN and what impact that could have on pricing. So we're not making any strategic decision about Europe yet, but we will move forward at least with the submission at this time. And we have plenty of time to think through the strategy.

And just big picture, like the scale of the opportunity in Europe in IgG4, how does it -- is it just scale by population? Or is it...

Yes, it scales by population. So Europe, depending on how you define Europe, but if you're defining Europe of the more of the 350,000 or more of the 400,000 -- 400 million, sorry, population, you're going to get a market size that's similar to the U.S. population.

Okay. And Japan is a future consideration or...

Japan is our partner, Bristol-Myers Squibb. So they'll take the lead. They'll take the lead on that.

Okay. That makes sense. And now you mentioned the second-generation longer half-life version. That one, that would be sort of a life cycle extension or would it launch -- I mean you have both available in the market, I gather?

Yes, that's a way to think about it, life cycle extension. Our current dose administration for obexelimab is a weekly subcutaneous administration. We'll launch with prefilled syringes. We'll submit an sBLA for the auto-injector pen as soon as the BLA is approved, and then that should launch within a year. And so a low viscosity 2-ml solution. So it's about an 8-second subcu, pretty convenient. And then the product profile for ZB014 which is CD19 Fc gamma RIIb antibody with 2 mutations in the Fc portion of the antibody, the target based on the preclinical data would be a monthly administration. And then we would also anticipate longer exclusivity. So strategically, we'll make decisions about which future indications would go to obexelimab and which indications would go to this new molecule. Obviously, those strategic decisions will come after we have the initial clinical data next year.

Okay. All right. Let's switch over. So the other big catalyst you mentioned is SLE. Actually, I'm getting a lot of questions on that one from people interested in the story. So everyone is trying to understand the expectations. And so just tell us -- well, first of all, just sort of summarize the SunStone study, what your design is and then what are the endpoints? And what would be -- what are you aiming for in terms of a profile there that would be competitive?

So this is a randomized study, 1:1 obexelimab versus placebo with background lupus therapy, corticosteroids with a target deescalation down to 5 milligrams prednisone equivalent. The study really takes in moderate to severe disease. We put in place a screening tool where investigators who then assess inclusion/exclusion criteria to enroll a patient leads to a screening additionally by an expert, which interestingly enough, removes a number of patients to make sure we truly get moderate to severe disease that controls the placebo response.

And the trial also, although we would call it an all-comer trial is interrogating a biomarker in all patients, and that biomarker was based on some earlier work that showed a much higher level of responsiveness to the drug in a Phase IIa lupus study. So it's a biomarker assessment in a classical design, looking at BICLA. We'll also look at SRI-4 and a number of other measures.

Okay. So the biomarker is something that you haven't specified yet or you talked about it?

Actually, in the Phase IIa study that was previously published, the biomarker is well described in that publication. At that time, it was a -- it was RNA sequencing, identifying really a gene profile, several gene profiles that happen to be highly responsive. We've taken that and we're working with a commercial entity who have simplified the whole process to -- so that it's not deep sequencing, and that's what we're using in our study.

Okay. And so as far as what you're looking for in terms of an effect size relative to placebo, potentially reduced use of background therapy. Can you speak to some of those endpoints as far as what investors should look for?

Sure, sure. The study, as you know, the currently approved agents on the market, there's 2 on the market that are approved for SLE. Both of those had effect sizes in the teens. And then there's some recent data from a B-cell targeting agent, an anti-CD20 depleting antibody that had an effect size just over 20%. So we're looking at that around 20%, put an error bar around it. That says you have a drug. We think our profile based on our ease of administration at home, the tolerability would play well.

But then we're assessing the biomarker population. So in the fourth quarter, we'll present the biomarker top line results and the overall top line results. And where we go from there really depends upon that data. The biomarker in the Phase IIa study showed up in about 1/3 of the patients. We think it could be a little higher than that based on the work we've done since. So that alone could be a stand-alone if, in fact, the effect size was dramatic enough that, that would be a really compelling program. If the overall fits into the range I was talking about before, that could be a program or you can combine it where you would do an overall population, but test the biomarker population first and then test the overall. So think about oncology studies, think about PD-1, think about PARP inhibitors. That's the concept. But we won't know. We have plans for all scenarios, but let's see the data.

So I guess at the risk of getting too into the weeds on this, what -- just kind of can you frame what aspects of this biomarker signature that you've got from the prior studies would suggest or imply a stronger performance with Obex? Is there evidence that would suggest?

So in the original Phase IIa study on the primary endpoint of the study that was conducted by the discovery of the molecule. The overall effect size was an intent-to-treat population was 17%. In that same study, that was using an IV dosing regimen that lost target coverage at Ctrough. In that same study, if you looked at patients that were at the median of Ctrough or above, the effect size doubled to 35%. Our current subcu regimen puts every patient at Ctrough above that level. So that's encouraging as a signal finding study, and that's why we went into this program.

In the biomarker population, again, smaller numbers, retrospective, the effect size was 52%. So that was the signal that told us we should investigate that in a Phase II program.

Okay. So there's sort of 2 higher levels there. There's the exposure, as you point out, and then this additional lever of the biomarker.

Okay. That's all and the timing for that, you said fourth quarter, but gather, you haven't been more specific than fourth quarter. Okay. All right. Great. So let's talk a little bit about the product that you got from InnoCare, orelabrutinib.

Which one? We have 3.

That's true. Okay. Well, let's talk about -- let's start with orelabrutinib. So there have been some interesting good developments in MS even last week, the RMS data from Novartis. But in any case, so just tell us a little bit more about the MS strategy at Zenas because you had started after the IPO, there was a potential for obex to be an MS drug. You've brought in orelabrutinib, the BTK inhibitors, as we know from speaking with the experts in MS is sort of the next frontier in terms of innovation. So tell us a little bit more about orelabrutinib, how does it differentiate from some of the notable pharma molecules that are getting a lot of attention to.

Yes. So we have 2 strategic components to the franchises we're building, rheumatology and neuro-immunology with MS being the initial focus. So as you mentioned, obexelimab, we had conducted a Phase II study in RRMS and those results were highly positive. In RRMS, the challenge today to start a Phase III program with a primary endpoint of ARR or annualized relapse rate is challenging because the patients who are available for clinical trials have such low relapse rates. The ones that tend to have higher ones are already receiving a B-cell targeting agent. So it's a bit challenging.

Now if we can evolve to a different primary endpoint, let's say, disability progression, then it's a different story, perhaps. But that's B-cell targeting with obexelimab in MS. And if we get an evolution in regulatory thinking, perhaps 014, our extended half-life molecule might be a reasonable thing to consider.

So we landed on -- at this point, we're pursuing progressive MS forms, which is where the greatest need is, and that's primary progressive, PPMS and secondary progressive and specifically with FDA guidance, non-active or na-SPMS. So that's our strategy, progressive MS.

So we know level setting across the BTK inhibitors, of course, we have the tolebrutinib challenges that they face with FDA in nonrelapsing SPMS, which isn't quite what FDA is asking for and some toxicity. That drug, though, is now approved in Europe for patients. And then we had earlier in the year, fenebrutinib from Roche report out RRMS data, relevant to us, the progressive data in PPMS. And you might recall that the PPMS trial compared fenebrutinib to Ocrevus, which is the only approved agent for PPMS.

A data set that's probably not overly impressive, but it works, it's approved. And numerically, fenebrutinib beat it. Not statistically, it was a non-inferiority trial. So that NDA is in, and we would expect an action in the first quarter if they get priority review. I think that's likely in the first quarter of next year. And I think that will be interesting news for the BTK inhibitor class in MS.

And then most recently, you mentioned remibrutinib from Novartis in an RRMS trial with data to come at the MS Toronto meeting, where we'll also be with additional data on orelabrutinib, we'll get to see, I would assume, their full data set from an efficacy and a safety standpoint. And then that molecule is also in an SPMS trial that we'll report out at some point. At least what's publicly available, it doesn't look like a pure na-SPMS trial. But for us, we're focusing on PMS, PPMS and na-SPMS. And both of those Phase III trials are up and running and results from those trials should be in 2030.

Now when we look at the molecules, we think this molecule, although it's indicated in other parts of the world in heme malignancies, it is purpose-built for progressive MS, a combination of potency and CNS penetration. If you look across the BTK inhibitors, you'll see that tolebrutinib and remibrutinib have the lowest CNS penetration. Very modest CN penetration. Remibrutinib, very potent peripheral agent, effective, hits B cells, works in RMS. But we believe in progressive disease, you need to get in the central compartment, not only hit B cells, centrally resident macrophages, microglia, that's what's going to make a difference on disability progression. So those agents, less brain penetration, reasonable potency.

Fenebrutinib, a combination of potency and brain penetration steps up just a bit. It's multiples when you look at our orelabrutinib ratio of CNS concentration to potency. So we think this molecule has an opportunity to be best-in-class and also compared to those other 2 agents, might sound simple, but really important to patients, it's the only once a day being investigated in progressive disease. So that's how we see it, and we're executing on the studies right now.

And then on the sort of the -- that's the efficacy side and the convenience side. In terms of the safety side, obviously, in this class, we've seen other -- some of the other compounds have seen liver signal. Can you just speak to your comfort around that with orelabrutinib and what you might expect?

Yes. I think across the agents that did Phase II trials, all of them showed up with an elevation of liver enzymes and sometimes bilirubin, a few highs law cases here and there. In the orelabrutinib program in Phase II, some was also observed. No clinical sequelae, no clinical symptoms, all patients recovered. And that moved everyone towards doing liver monitoring because you need to catch the trajectory early. Interestingly, remibrutinib was not the subject of Phase II. So everyone else experienced that in Phase II, then put the monitoring into the Phase III. Remibrutinib went right to Phase III and put the monitoring it. So it's a different ball game.

The other thing to think about here is this disease. These patients -- the orelabrutinib Phase II trial, 7.5% of the patients had elevated liver enzymes in the placebo group. A year ago, Roche issued a Dear Doctor letter on Ocrevus to assess liver function before starting therapy because a number of patients had shown up on the liver transplant list who had taken Ocrevus. Dear Doctor letter went out.

What does an anti-CD20 antibody have to do with driving liver toxicity? There's something background happening in MS patients, and we would hope to figure it out, but no one's figured it out yet. So for us, in our trial program, aligned with FDA and EMA, we have liver monitoring over the first 3 months. You catch the trajectory, you should be in good shape. What's really interesting, these patients that have elevated liver enzymes, a large percentage of them, if you pause the drug and restart it, you don't see it again. It's a real interesting dilemma, but what you do is monitor and you keep patients safe. This is progressive disease. This is PPMS, SPMS. This is a serious disease. The risk benefit, we believe, is there with a highly effective agent, and that's why the agency is allowing for these trials to go forward with monitoring.

And then so RMS, you mentioned potentially the longer half-life next generation could be applicable there. If we see the full data from Novartis, you mentioned an RMS in a few weeks, maybe would orelabrutinib potentially be something you would consider for an RRMS trial or not necessarily or the bar would not be good there.

Yes. I think RRMS is in a parking lot until the primary endpoint evolves potentially.

Okay. Fair enough. All right. The -- so some of the other assets, if we could speak to those quickly, the IL-17 and the TYK2 inhibitor, where those?

The TYK2 inhibitor is an IND-enabling and we'll initiate the initial Phase I next year. The IL-17 inhibitor, it's an AF inhibitor is really exciting and moving quickly. So we're almost through all of SAD, the single ascending dose. We're well into the MAD. We'll report in the fourth quarter, the safety, tolerability and the pharmacokinetics and then we'll move right to a patient proof-of-concept study next year. So what we want to look for is the kind of exposure we're getting.

I can tell you now, and we've already discussed this openly that this is a once-a-day drug. This is a true small molecule. In primates, it had 80% bioavailability. That's been a challenge. and trying to come up with good molecules in this area. So we're excited about the potential here. It's early days, but we'll have that data next quarter.

Okay. Looking forward to that, too. One more, which we're asking all the companies today and tomorrow is just anything you want to say in terms of the use of artificial intelligence tools at Zenas, either on the drug discovery level or the efficiency level, helping filing your -- you've submitted the BLA, obviously, has that helped in any way? -- just quickly tell us.

Obviously, this is a topical subject. We're not a discovery organization, so we don't use AI in that arena because we don't do drug discovery, where we search and we in-license. And -- but across the organization, we spent some time and we picked what we would use, and we use Claude, and we have a number of use cases and a lot of training going on and appropriate policies in place. And it's touching all parts of the business in the administrative parts of the business, obviously.

We do a lot of it things that you would do with Internet searches in the past, how quickly you can assemble information across a field in all the published studies and all the science in an area and have that summarized for you. In writing, we use it in writing. We did not use it in the BLA for obexelimab. For our very first BLA, we did it the old-fashioned way. I'm quite comfortable doing it the old-fashioned way. So over time, it will expand. And we imagine all the ways we can use it. I can't say we've implemented nearly what's possible at this point in time.

Sure. Any of us have fully leveraged its potential. All right. Well, there's a lot to look forward to with the several readouts next quarter and then, of course, the PDUFA in the second quarter of '27.

So very good. Looking forward to all of it. Thank you, Lonnie.

Thank you all.

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

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

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

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

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

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

I'll now hand the call over to Lonnie.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Our next question comes from Cory Kasimov with Evercore.

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

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

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

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

Got it. And on the glucocorticoid use?

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

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

Our next question comes from Yigal Nochomovitz with Citigroup.

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

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

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

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

Was there another part of your question, Yigal?

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

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

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

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

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

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

Our next question comes from Yatin Suneja with Guggenheim.

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

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

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

It's around the clustering of your...

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

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

Our next question comes from Judah Frommer with Morgan Stanley.

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

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

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

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

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

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

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

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

Our next question comes from Martin Fan with Wedbush Securities.

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

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

Our next question comes from Andy Chen with Wolfe Research.

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

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

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

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

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

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

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

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

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