Description

Alpine Immune is a small-to-mid cap biotech focused on immunology diseases, both common and rare. Its lead asset is ALPN-303, a BAFF/APRIL inhibitor initiating development on a likely-registrational Phase 2 trial for lupus early next year. Data will  be released in 2026; we assume this long-term catalyst has not yet been priced in. Furthermore, Alpine Immune will present results on two P1 basket trials in glomerulonephritis and cytopenias. While patient numbers are small, we believe the data will be an important catalyst for the stock. Taken together, we believe Alpine Immune stock is worth at least $20/share, a 55% premium to today's price, and ~$1bn overall. As a word of caution, considering the binary nature of biotech investments, we have sized it accordingly in our portfolio.

History

Alpine Immune was incubated by Alpine Bioventures in 2015 on the concept of creating protein-based therapeutics against the immune synapse. The company launched on the public markets via reverse merger in 2017, with proceeds focused on lead candidate CD28/ICOS inhibitor ALPN-101. P1 trials were completed successfully in June 2020; weeks later, Alpine Immune signed an option exercise agreement to Abbvie with an initial payment of $60mm, up to $805mm in milestones, and high-single digit to low-double digit royalties.

As momentum built on the lead front, Alpine Immune introduced a follow-up candidate davoceticept into the clinic. Davoceticept was intended to serve as a combination therapy with blockbuster Keytruda – the company publicly called it a PD-L1-dependent CD28 costimulator –however trials were nixed following two deaths in the P1 trial. While one might assume readthrough because of the company’s touted “directed evolution” platform, each molecule stands alone. There will likely be no impact on the outcomes of ALPN-101 or ALPN-303.

Which leads to Alpine Immune’s chosen horse, ALPN-303, a best-in-class inhibitor of the BAFF/APRIL pathway. We will be exploring the asset with greater depth, but with a multi-billion dollar set up, we believe the opportunity will continue to price in with important readouts over the coming years.

Lupus Overview

When most people think of autoimmune diseases, they think of lupus. At a base level, systemic lupus erythematosus (the long version of the name) is a series of violent flare-ups around the body. All immune defects are dialed to eleven, with symptoms ranging from muscle pains and arthritis to persistent fevers to kidney damage. Of course, these immune defects can vary from person to person, which makes lupus difficult to treat. It is quintessentially heterogeneous.

The heterogeneity draws two major implications. First, no one drug will be enough. Unless you could target the source of the lupus, separate drugs are required to treat separate symptoms. One for fever, one for fatigue, one for muscle pains, and so on. Second, the diverse nature of the disease itself, which triggers multiple areas of the immune system, creates a high threshold for treating disease. The variance around outcomes is large, and so trials must be long, expensive, and meticulously planned to capture it all. In the case where there is a drug that performs substantially better, the effect is obvious – but this is rarely ever the case. It creates a barrier-to-entry for biotech and pharma alike; unless a mechanism is well-validated, it is unlikely to have much effect.

Relevant drugs to lupus are listed below and ordered line of therapy:

• Hydroxychloroquine: Recommended for all patients with lupus, HCQ is effective in reducing flare-up severity, lipid profiles (specifically metabolic syndromes), bone metabolism and structure, and irreversible organ damage (which two studies found protective effects for). SLE activity and mortality in particular correlates highly with treatment benefit; given the low cost and side effect burden, HCQ is touted as essential background therapy.
• Glucocorticoids: GCs are a source of rapid symptom relief and are the most likely first-line of therapy for patients with lupus flare-ups. They were used predominantly in the 1900s and early 2000s before the introduction of more nuanced immunosuppressive agents and biologics. While protecting against systemic lupus activity, GCs have a dose limit of <7.5mg/day prednisone to limit irreversible organ damage. The goal for most physicians is to taper patients off as quickly as possible. In recent years, GCs have increasingly been displaced at the first line by immunosuppressive drugs; more on those below.
• Immunosuppressive drugs: I/S drugs facilitate rapid GC tapering and are trending towards first-line therapy given the clear long-term safety advantage. There are three primary options – methotrexate (MTX), azathioprine (AZA), and mycophenolate mofetil (MMF). MMF is effective but expensive, MTX is less expensive and reasonable, and AZA is considered exchangeable with MTX albeit slightly worse, but safe for pregnant women.

BLγS / APRIL Pathway

Since its discovery in 1999, the target BAFF (B-cell activating factor of the TNF family) has had an important role in autoimmunity, and in particular, SLE pathogenesis. This was proven in 2011 when belimumab, a monoclonal antibody targeting human BAFF, demonstrated efficacy in a subset of patients with SLE. It subsequently became the first approved targeted therapy. A few years later, interest was sparked over a similar target called APRIL, which on paper, appeared to overlap in functionality. The rudimentary thesis therefore was that by inhibiting both, one could enhance the effects of belimumab alone.

In practice, the thesis holds some nuance. There are three receptors involved: BAFF-R, TACI, and BCMA. BAFF binds strongest to BAFF-R, followed by TACI, and weakest to BCMA. APRIL binds preferentially to BCMA, and with equal strength to TACI. Between the two, one can exhibit some level of control over the process of B-cell maturation and differentiation; BAFF maintains B cell homeostasis by acting as a survival and fitness factor for B cells while APRIL modulates the function and survival of antigen-experienced B cells.

While there are numerous treatments relevant to the story of BAFF inhibitors, three are most relevant:

• Benlysta – Approved in 2011, Benlysta was the first approved BAFF antibody. It generated $1.5bn of revenue in 2023, with consensus estimates up to $1.9bn by 2026. Benlysta has been approved to treat SLE and SLE-related lupus nephritis, though clinical remission by Lupus Low Disease Activity State (LLDAS) only comes out to 12.5-14.4% as per P3 BLISS-52 and BLISS-76 studies respectively. LLDAS, for context, refers to the proportion of stable patients for lupus as calculated by patients under the threshold for prednisone, with low lupus disease activity, no major organ damage, no new disease activity, and with maintenance therapy. It also only has a complete renal response – an effective measure of normal renal function – in ~30% of patients by the same trials.
• Saphnelo – Approved in 2021, Saphnelo is a Type-1 interferon antagonist designed to dampen the broad immune response associated with lupus. While not a direct competitor to ALPN-303 given the different mechanisms of action, it is generally comparable to Benlysta by the SRI-4 metric.
• Lupykinis – A next-gen cyclosporine (drug used in liver transplants), small molecule Lupykinis demonstrated complete renal responses of 41% (vs. 23%) in a more severe population of patients compared against Benlysta’s 30% at 52 weeks. Furthermore, time to 50% reduction in UPCR (urine protein-creatinine ratio) was 29 days vs. 63 days on background treatments alone. Clearly, the drug works. However, it renders a higher number of adverse events in almost every scenario relative to placebo (47% vs. 34% for GI disorders, 34% vs. 17% for infestations, 26% vs. 15% for CNS disorders, 21% vs. 13% for vascular disorders, making it only usable for patients with definite renal issues or susceptible to other safety concerns. This also implies immunosuppressed patients who have taken MMF, MTX, or AZA, are ineligible for Lupykinis treatment.
• Telitacicept – Conditionally approved in China on a Phase 2b trial, telitacicept demonstrated higher responder rates than Benlysta in a P3 trial – roughly 83% and 76% on SRI-4 compared to Benlysta’s 58% response. That said, most patients still experience flares in ~6 months, which makes the data somewhat dubious. Development has not commenced in the U.S., but the trials still preview a possible approval for ALPN-303 in glomerulonephritis – especially given its status as the first approved BAFF/APRIL inhibitor.
• Atacicept – Failed a P2b trial for SLE by Merck KGaA in 2015 due to the primary endpoint of SRI-4 (58% in 75mg and 54% in 150mg vs. 44% on placebo) demonstrating statistical significance over placebo in a lower dose at 52 weeks. The drug was then acquired by Vera Therapeutics in 2020, who are now testing the drug in a P3 trial on the premise that the presence of flares was far lower for the higher dose at 36% vs. placebo at 53%. The P3 trial however avoids all lupus scores and settles instead for renal response metrics like UPCR and glomerular filtration rate – even if successful, Vera is targeting the Lupykinis market and likely not the broader opportunity.

ALPN-303

ALPN-303 is an Fc fusion protein that inhibits both BAFF and APRIL with higher potency than its competitors. This was demonstrated in murine-based preclinical studies, where ALPN-303 presented immune control superior to any of its competitors.

ALPN-303 also binds more tightly to its targets in vitro when compared to any of the others (although it should be noted that the table below was developed using internally-created antibodies based on target sequences).

The results were corroborated in first-in-human trials, where the company has performed side-by-side analyses of IgM, IgG, and IgA reductions across BAFF/APRIL inhibitors. The three metrics, showed below, are especially important when evaluating the drug for glomerulonephritis.

The clear divergence between telitacicept and atacicept’s data when compared to ALN-303 (green) suggests tighter APRIL binding indeed has an antibody-reducing effect. Given telitacicept’s success in lupus in China so far, we believe ALPN-303 has the potential to duplicate – if not surpass – the SRI-4 benchmark noted for telitacicept above.

Dose-response studies in Phase 1 also revealed a dosing advantage for ALPN-303; currently, management believes they can achieve a once-monthly subcutaneous dose. For reference, Benlysta is currently dosed subcutaneously once-weekly or once-monthly intravenously (after three IV doses two weeks apart); Saphnelo is dosed once-monthly as well. Telitacicept is dosed as a once-weekly subcutaneous, as is atacicept. Orals like Lupykinis must be taken multiple times a day. Treatment options for lupus are sparse, but a once-monthly subcutaneous injection toes the line of adherence perfectly and still justifies value for the drug even if clinical results come out in line with the competition.

Glomerulonephritis Opportunity

Beyond lupus, the near-term catalyst for ALPN lies in its second set of trials in glomerulonephritis. Clearly the market has built up some anticipation here; the stock has run up +31% since the acquisition of Chinook – with the leading glomerulonephritis pipeline – by Novartis on June 12^th (+10% on the day of the acquisition).

The trial itself is designed as a three-arm Phase 1b/2a basket trial, with N=4 to 7 patients across IgA glomerulonephritis (IgAN), lupus nephritis (LN), and primary membranous nephritis (pMN) cohorts respectively. A brief word on each of these diseases follows:

• IgAN is the most common primary glomerulonephritis with over 265k patients worldwide; it is also one of the leading causes of renal failure. The disease is induced by the impairing of a process called O-glycosylation, leading to elevated levels of galactose-deficient IgA1 (Gd-IgA1). Gd-IgA1 is recognized as an autoantigen by the immune system, which deploys unique IgG autoantibodies to fend them off. Together, these circulating immune clusters gather in the mesangial glomerular cells and injure the glomeruli. The primary symptom of the disease is hematuria, or blood in the urine. It is generally a precursor for more advanced chronic kidney disease or end-stage renal disease.
• LN is a downstream effect of lupus with 190k patients worldwide, leading to kidney disease and kidney failure. The treatments mentioned above (Lupykinis, Benlysta) have both been approved for lupus nephritis which, as a late-stage disease, bears a higher unmet need for treatment.
• pMN is a kidney-specific autoimmune disease with 125k patients worldwide. In severe cases, it can lead to swelling around the legs, ankles, and eyes, and it is characterized by protein in the urine, low blood protein levels, and high cholesterol. Given a lack of precedent medications in the indication – and without an understanding of the commercial appetite – we treat development here as additional upside.
  
  

In terms of treatments, there are few relevant players in a crowded landscape. Zigakibart is an APRIL inhibitor in P1/2 development by Chinook, acquired by Novartis and a follow-up to lead candidate atrasentan. Sibeprenlimab is another anti-APRIL antibody with P2 data for IgAN in development by Otsuka. And atacicept – the leading BAFF/APRIL inhibitor in U.S. development – has been touted as the most important shot on goal for Vera.

IgAN endpoints are primarily centered on proteinuria reductions (UPCR) and glomerular filtration rate (eGFR) improvements, and as the space crowds, the bar to be best-in-class has only grown higher. However, biomarkers like IgM, IgG, and IgA are all important factors to the pathology of disease and are the clearest indicators of disease benefit in healthy volunteers. ALPN-303 and zigakibart performed virtually similar across all metrics in P1 trials. Most responses were sustained across both for at least two months – it’s interesting just how similar the dose-response curves are.

While biomarkers and dose-response are similar across targets, there is a lot of support for the BAFF/APRIL hypothesis over APRIL alone. First, telitacicept, the strongest clinical candidate of the bunch, appears to present a placebo-adjusted 49% reduction in proteinuria in intention-to-treat patients relative to its counterparts at 24 weeks (albeit in only 14 patients – trial was also conducted in China, where the standard clinical trial procedures are not as relevant). Atacicept by contrast reduces proteinuria by a placebo-adjusted 35% in ITT patients at 36 weeks, whereas zigakibart reduces by 39% in a non-placebo-controlled, per-protocol treatment group at 24 weeks. The nuance matters; in per-protocol patients, atacicept reduced proteinuria levels by 43%, placing it squarely at the top of the treatment landscape.

The other endpoint eGFR sets a different bar. Sibeprenlimab achieved a 43% reduction in proteinuria at 36 weeks, in line with atacicept’s per-protocol numbers. However, atacicept holds the advantage keeping eGFR stable, whereas sibeprenlimab did not separate from placebo at one year. Setting heterogeneity aside as a factor, failure on this secondary endpoint could be attributed to the anti-APRIL drug’s anti-APRIL mechanism of action; in other words, it seems BAFF inhibition may be necessary for success. Therein lies the case for ALPN-303; tighter inhibition precludes better performance on both endpoints, UPCR and eGFR.

Likely, the data later this year will be immaterial to the UPCR / eGFR thesis; given the low number of patients across all three arms, we can only really expect early biochemical analyses. We will be keeping an eye on IgG levels and Gd-IgG1 (BION-1031 was able to decrease IgG levels contrary to the healthy volunteer studies), but don’t expect to glean much else. Directionally and magnitude-wise, we hope to see changes on the two endpoints, but judging off prior readouts, we suspect hitting the thresholds set by precedents should justify some stock movement. A pivotal data readout for ALPN-303 in lupus should occur in 2026 – while far out, this is where we expect to see the true value inflection.

Finally, perhaps the greatest source of additional upside lies in the cytopenia basket trial, testing ALPN-303 in ITP, wAIHA, and CAD specifically. We view this as a lower priority to our analysis given only sparse data, but initial data is currently due for YE’23. Like glomerulonephritis, this is likely to kick off multiple Phase 2 pathways in 2024.

Corporate / Valuation

Given the previously-mentioned partnership agreement with Abbvie for acazicolcept, there is a path of least resistance for ALPN from a financing standpoint. The partnership was for $60mm upfront and up to $805mm in milestones in exchange for an option to acquire the asset. Over half the milestones are sales-related – as a result, ALPN will still need to perform at least 2-3 more capital raises over the next six to eight years as it inches toward a lupus approval. The stock is subject to significant dilution risk, though we believe the opportunity more than justifies the cost.

Valuation-wise, it’s difficult to put a number on Alpine Immune. Undoubtedly, for a company with its risk profile, it is on the higher end of the valuation spectrum. To get behind the price, one must assume a successful readout from the IgAN basket trial and a lack of variation around the lupus readout in two years. Sizing the opportunity and looking at comps (Ventyx, Dice, MoonLake, Vera, Cabaletta, Viridian, Calliditas), we see the valuation is roughly where it needs to be. Commercial IgAN companies like Travere and Aurinia are plagued by label / utilization issues, hence they are difficult benchmarks. But on a successful pivotal readout in 2026, we believe an outcome like Prometheus (acquired by Merck for ~$11bn) or Nimbus (acquired by Takeda for $4bn) is more than likely. A fair value would probably lie between the three former comps and the four latter, or ~$1bn total. This implies a value of ~$20/share.

Catalyst

Glomerulonephritis basket trial data by YE'23

Cytopenia basket trial data by YE'23