Altimmune, Inc.

Good day, ladies and gentlemen, and welcome to the Altamune, Inc. Q3 Earnings Conference Call. At this time, our participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require operator assistance, please press star then zero on your touchtone telephone. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference call, Will Brown, Chief Financial Officer of Altamune, Will, you may begin.

Thank you, operator, and good morning, everyone. Thank you for participating in Altimmune's third quarter 2021 earnings conference call. Members of the Altimmune team joining me on the call today are Vipin Garg, our chief executive officer, Scott Roberts, our chief scientific officer, and Scott Harris, our chief medical officer. Following the prepared remarks, we will hold a question and answer session. A press release with our third quarter 2021 financial results was issued last night and can be found on the IR section of the company's website. Before we begin, I would like to remind everyone that remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Altamune cautions that these forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those indicated and including those related to COVID-19 and its impact on our business operations, clinical trials, and results of operations. For a discussion of some of the risks and factors that could affect the company's future results, please see the risk factors and other cautionary statements contained in the company's filings with the SEC. I would also direct you to read the forward-looking statement disclaimer in our earnings press release issued yesterday and now available on our website. Any statements made on this conference call speak only as of today's date, Wednesday, November 10, 2021, and the company does not undertake any obligation to update any of these forward-looking statements to reflect events or circumstances that occur on or after today's date. As a reminder, this conference call is being recorded and will be available for audio replay on Altamune's website. With that, I will now turn the call over to Dr. Vipengard, Chief Executive Officer of Altamune.

Thank you, Bill, and good morning, everyone. We appreciate you joining us today for a discussion of our third quarter 2021 financial results and business update. The third quarter has been a very productive time for the company as we reached several key milestones in the development of Pembe Dutide. First, we delivered on the 12-week phase one study results in our trial in overweight and obese subjects. The data we generated exceeded our expectations. as we demonstrated double-digit weight loss in the 1.8 milligram arm, with favorable effects observed on blood pressure, serum lipids, and other measures. We believe we achieved a high watermark in weight loss, given that dose titration was not used and there were no modifications to diet or physical activity. Most other programs in this class of drugs must use dose titrations. that is, gradually increase dose to maintain tolerability. Dose titration presents considerable challenges for patient satisfaction and compliance, and logistical challenges for time-constrained primary care physicians charged with prescribing these therapies. So it's highly encouraging that with straight dosing, we saw primarily mild GI side effects with no study discontinuations due to adverse events. The next key milestone we met was the acceptance of our U.S. NASH IND for pembidutide and the initiation of a 12-week Phase 1b NAFLD clinical trial to explore pembidutide's effect on liver fat in the NAFLD population. We are highly encouraged at the prospects of this trial as we announced this morning the results from exploratory analysis that all of the patients with hepatic steatosis or fatty liver in the phase one trial that received 1.8 milligram or 2.4 milligram of pembidutide experienced reduction in liver fat to undetectable levels after only six weeks of treatment. These findings speak to the potency of pembidutide both to induce weight loss and quickly move fat out of the liver. We look forward with great anticipation to the results of the 12-week Phase 1b NAFLD data, which are expected in the first half of next year. Looking to the future, we are diligently working to submit an IND for pembidutide in obesity to enable a 48-week Phase 2 trial to study weight loss in obese subjects. This is an important program for the company as patients with obesity are grossly underserved. There is a tremendous market opportunity for effective therapies that safely induce meaningful weight loss. And should future data continue to reflect our recent experience, we believe that pembidutide could be a highly effective tool to address the obesity endemic. Finally, we continue to execute on our Phase II trial of hep T cell in chronic hepatitis B, with clinical trial sites enrolling patients across North America and Europe. We expect top-line data from this study in the second half of next year and look forward to potentially exploring combination therapies of hep T-cell with direct acting antivirals. I am pleased that we have developed a pipeline that seeks to address such high-value and significantly underserved indications as obesity, NASH, and chronic hepatitis B. Our company's value has tremendous upside with these assets, and we look forward to advancing our programs through the clinic. With that, I will now turn the call over to Scott Harris to discuss our data and clinical plans. Scott?

Thank you, Vipin, and good morning, everyone. First, let me quickly recap our 12-week Phase I placebo-controlled single- in multiple ACE any-dose study of Pemvidutide. The study was conducted in Australia under a clinical trial application and enrolled otherwise healthy overweight and obese volunteers. The SAD portion of the study enrolled 36 subjects, and the MAD portion enrolled three cohorts at doses of 1.2, 1.8, and 2.4 milligrams, randomized 4 to 1 to drug or placebo weekly for 12 weeks. The study did not employ dose titration. Subjects receiving the 1.8 milligram weekly dose achieved an absolute mean weight loss of 10.3% at 12 weeks of treatment with penvidutide, with a similar degree of weight loss of 9.0% at the 2.4 milligram dose and 4.9% at the 1.2 milligram dose. Penvidutide was well-tolerated, even in the absence of dose titration, with no adverse events leading to discontinuations and predominantly mild adverse events. Favorable trends were observed in secondary measures, including a 28% decrease in total in LDL cholesterol and a 38% decrease in triglycerides at the 1.8 milligram dose. Remarkably, these changes occurred in only 12 weeks. Glucose homeostasis, as assessed by plasma glucose and hemoglobin A1C, was maintained, and there was an improvement of insulin sensitivity, as assessed by the HOMA-IR. Systolic and diastolic blood pressures also decreased in the absence of significant increases of heart rate. We've also had the opportunity to perform an exploratory analysis of the MRI PDFF data on liver fat content in a subset of subjects through the initial six weeks of treatment. While the study enrollment criteria did not pre-specify a minimum liver fat content, it did enroll a number of subjects with hepatic steatosis or fatty liver, defined as a liver fat content of greater than or equal to 5%, to enable an early assessment of the effects of pemphidutide on liver fat content. Five subjects had baseline hepatic steatosis and received pemphidutide at 1.8 milligrams or 2.4 milligrams, and in each of these subjects, liver fat fell to undetectable levels with only six weeks of treatment, declining from levels as high as 19.5%. This represents a greater than 90 percent reduction in liver fat content. While the subject numbers are small and the data is early, the reductions in liver fat are among the largest seen in clinical trials to date. As Vipin mentioned, these data have increased our excitement for the 12-week Phase 1b study of subjects with non-alcoholic fatty liver disease, or NAFLD, currently enrolling in the United States. The NAFLD study expands the enrollment criteria used in the first in human study in Australia to include diabetic and older subjects. We are optimistic that the reduction of liver fat content in the planned 12-week NAFLD study may parallel the impressive observations that we have already observed to date. In clinical trials performed by other sponsors, we see that high levels of liver fat reduction have been highly predictive of NASH resolution and fibrosis improvement. As previously announced, we plan to file a second IND for pembidutide and obesity that will create a parallel development path to our ongoing NASH development. This study will be 48 weeks in duration, and we expect to have top-line data from a 24-week interim analysis in the fourth quarter of 2022 or the first quarter of 2023. We are also considering a 12-week extension to the aforementioned Phase 1b NAFLD study that would provide 24-week data on weight loss lipids and blood pressure control towards the middle of 2022. In summary, double-digit levels of weight loss in 12 weeks, significant reductions in liver fat content, In the absence of the need for dose titration, all build our enthusiasm for the Penvidutite program, and we look forward to sharing data from our ongoing trials in the near future. I will now hand the call over to Will Brown to give an update on our third quarter financial results.

Thank you, Scott. I will now provide a brief update on Altamune's third quarter 2021 financial results. Results, more comprehensive information can be found in our Form 10Q filed with the SEC last night. Altamune ended the third quarter of 21 with approximately $200 million of cash, cash equivalents, and short-term investments, representing a cash burn of approximately $18 million during the quarter. We continue to have sufficient cash to operate through 2023. Turning to the income statement, revenue in the third quarter was $158,000 compared to $2.9 million last year. The change in revenue during the periods was primarily due to a decrease in revenue attributable to the TCOVID program. During the comparable period in 2020, we were performing a lot of activities in the Phase 1-2 trial of TCOVID, which was completed earlier this year. We are currently collecting the related accounts receivable as the contract was completed during October. Research and development expenses were $29.2 million in the third quarter compared to $17 million in 2020. The increase in R&D expense was primarily the result of ADCOVID-related development costs, including the expensing of payments made to Lonza for the construction of a manufacturing suite. We continue to evaluate our strategic options with respect to that space. The increases were offset by a decrease in the value of contingent consideration related to changes in the fair value of contingent consideration liability connected with the acquisition and development of Pembedutide. As a reminder, we will owe one last development milestone upon the dosing of the first patient in a Phase II trial of Pembedutide. This milestone is payable in shares of our stock, and we estimate about 850,000 shares when we meet that milestone. General and administrative expenses remain consistent between the periods at 4.2 million in both the third quarter of 2021 and 2020. Net loss for the three months ended September 30th, 2021 was 33.5 million or 81 cents of net loss per share compared to 17.8 million or 54 cents net loss per share during 2020. The difference in the net loss is primarily attributable to the higher research and development expenses and the lower contract revenue. I will now turn it back over to Vipin for his closing remarks. Vipin?

Operator, that concludes our formal remarks, and we would like to open the lines to take questions. Could you please instruct the audience on the Q&A procedure?

To ask a question, you will need to press star, then the number one on your telephone keypad. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Seamus Fernandez with Guggenheim.

Thanks for the question. So, you know, guys, the first question really is what additional color can you provide us on these five patients? You know, the ALTs, you know, directional changes there. anything with regard to the liver fat comparisons. As we actually have looked at other drugs in the NASH space, the FGF21 class, you know, appears to have rapid liver defatting as well, which, you know, I think only the absolute best number matches up to what you guys are showing in these five patients. How confident are you that this is going to expand to the broader population array of patients. And then separately, you know, a lot of investor concerns around ALTs, but you guys only had one patient that had an elevated ALT. Afroxiferman had, you know, a similar type patient in its own clinical study. Maybe we can talk a little bit about, you know, the potential non-drug-related mechanisms that could be at play here like rapid liver defatting, you know, I guess which is drug-related, but, you know, is obviously may not be a direct effect of the drug, but it may be the defatting of the liver itself. And then separately, you know, rapid weight loss, which some of our thought leaders also comment can have associated effects liver enzyme elevations that result in absolutely no liver damage whatsoever, and then those ALTs decline over time. So I'd love to just kind of get a sense of, you know, your thoughts as, you know, you continue to compile the data and the data evolves. Thanks.

Yeah, thanks, Seamus. Thanks for the question. There are lots of questions there. We'll try to answer them all. Let me just start out by saying that we are very, very encouraged with this data, both the weight loss data and now the liver fat reduction data. Yes, these are small numbers, and this is early data, but it's very consistent. Every single subject that had baseline liver fat content of 5% and higher reached below the limit of detection on 1.8 and 2.4 milligram dose, so the two most effective doses. So we'll talk more about it, but as you know, we're doing a much larger study in FLD, and really, to us, this is a window into what we might see in that study. So the potential of this drug, both in obesity and weight loss, and now in liver fat reduction, seems really, really good, and that's what we are excited about. We think we will have a drug here, both for obesity, not only for obesity, but also for NASH. With that, I'll turn it over to Scott Harris, to talk to provide you more color on these five subjects as well as talk about the ALT.

Dr. Sure. Good morning, Seamus. So, regarding the ALT elevations, none of these five subjects had any changes in their ALTs. And as we've said in the past, ALT elevations are often sporadic and unexplained in studies, particularly in first and human studies. And in fact, as you've noted, they've frequently been reported with other drugs. We did report on the prior patient with ALT abnormalities. I would finish that conversation to say that we had many patients in the trial with more dramatic changes in MRI, PDFF, and also to your question about weight, changes in weight as well who did not experience ALT abnormalities, including a subject who dropped his liver fat content from 19.5% to below the limit of detection without an ALT elevation So we don't think that the data currently supports that hypothesis, but obviously more information is needed. Regarding the comparison to other drugs, it has to be emphasized that the reduction of the MRI-PDFF to below the limit of detection is unchartered territory. Companies have not reported this in the past. We've achieved a degree of liver fat reduction that has not been realized by other drug development programs, where the goal is merely to normalize the liver fat content to 5 percent or less. The head of the imaging laboratory that performed the MRI PDSS analysis, who has very extensive experience in these assessments, advised us that the observed reduction in liver fat was among the largest he had seen so far, if not the largest. You know, I would emphasize that while the study was small and exploratory, the pattern that we've seen is a level of reduction in liver fat that's not been observed with previous compounds.

Great, and also quite rapid as well. Maybe just to provide a little bit more color on the NAFLD study, can you just help us, you know, what are the thresholds for enrollment as it relates to liver fat content? And, you know, I assume for simplicity reasons, you know, biopsies are likely not going to be included in this phase one study. but just wanted to get a little bit more color on the enrollment criteria, you know, for that study and the pace of enrollment that you anticipate as a result of the more, you know, maybe restrictive criteria. Thanks.

Thanks for the question, Seamus. Well, if anything, the enrollment criteria are less restrictive than they were in the phase one study and will include a wider variety of patients. Now, the threshold for liver fat in that study is 10 percent. That's the cutoff that's been used by most sponsors. And as you mentioned, there will not be a biopsy in this study. This is a non-invasive study based on liver fat content. But I would emphasize that this population will now include older subjects. as well as subjects with diabetes, and we actually expect the pace of enrollment to be very rapid.

Great. Well, I'll jump back in the queue. Congrats on, you know, some really intriguing data. You know, looking forward to the next data set from your Phase 1B. Thank you.

Your next question comes from the line of Yasmeen Rahami with Piper Sandler.

Hi, team. Thank you so much for taking my questions, and congrats on the great new data that you shared with us. I have a number of very short tailored questions for you, and I'm going to just go one by one. The first question directed to you is, what was the average weight loss that was observed in these five patients that really got great liver fat reduction? So let's start there.

Right. The average weight loss that I have for you is at week six. I would imagine that the numbers that we tell would be approximately double that, although I don't have that number in front of me. And the average weight loss in these subjects was, well, the range of weight loss was between 3.1 and 4.7 percent. So the average weight loss was approximately 4 percent.

Thank you.

And then again, Yasmin, that was at week six, so it doubled at week 12.

Thank you. Second question directed to you is, was there any other MRI PDFF analysis done at an earlier point? I'm trying to understand. I mean, we're already at the plateau of 90%, but sort of what the curve looks like in terms of the slope. If you could just comment on that, and then I have two more short questions.

Yeah, thanks, Yasmin. So The way the study was conducted, there was a baseline MRI PDFF in week six and then week 12. We don't have the week 12 data yet, so we don't have a slope other than to be able to tell you what happened at baseline and at week six.

Thank you. The next question I think for us, and a lot of our clients are asking us, to just really understand the translation of weight loss between overweight population versus the net worth population that you will be enrolling in your 1B. So when we look at the data from other GLP-1 constructs, what we notice is that the presence of being an Apple patient does not impact the degree of weight loss, but what does impact it is the presence of diabetes. So I would like you to maybe explain to us, you know, should we be expecting weight loss rates that we saw in obese populations to be similar to the NAFLD population, specifically the NAFLD non-diabetic? And then the second thing is, what do we know about GI tolerability based on historical data when we go from an obese population to NAFLD?

Thank you for the question, Yasmeen. So you're correct that studies with drugs and other mechanisms have shown approximately a 30 percent lower weight loss with diabetics. So our prospective plan in this study is to read out a weight loss in both the non-diabetics in the population and the diabetics and stratify enrollment in that manner because it is an important covariate in the amount of weight loss that will be achieved, although not in the amount of liver fat reduction. So that's to your first point. Regarding the adverse events, We do not feel that there will be any difference in the adverse event profile going forward because of the inclusion of other patients. It's been said by experts in the field that diabetics actually realize lower adverse events than non-diabetics. Also, recognize that as we go from phase one to phase two, in general, because of the change of the way the studies are conducted, adverse events drop between phase one, where you have intensive monitoring, often inpatient in phase two. So I would say that as we move from the phase one study to the phase 1B NAFLD study, that we'll actually see no worse than the adverse events that we have, if not an improvement.

Thank you, Tim, for the clarity. I'll jump back in there.

Your next question comes from the line of Lisa Baker with Evercore ISI.

Hi, thanks. Most of my questions have been answered, but I guess I'll just kind of riff off the last series of questions. Can you just comment on the effect of age? I know these patients were slightly younger than perhaps, you know, future studies will be, and just wanting to understand what you know about the effect of age on weight loss and also loss of fat in the liver and if that would have any impact. And if you could just comment a little bit on what the age of these five patients were where you looked at liver fat. Thank you.

Right. So as been shown in other studies, as well as our studies, we did an analysis of that, which we presented, but it's also been discussed in the STEP programs. There is no effect of age and weight loss, and if there is any effect, there's a higher level of weight loss as you get to older age. So translating from our younger population in this phase one study to the next study or studies that we'll be doing, if anything, based on that information, we'll be seeing more weight loss. There's also been no effect of age on the degree of fatty liver reduction that's reported in other programs. The average age of this cohort was similar. These five patients were similar. to the general cohort that we reported on earlier.

Thanks.

Your next question comes from the line of John Wolbin with JMP Securities.

Hey, good morning, and thanks for taking the questions. So, can you just remind us what doses you're studying in the NAFLD study, how many patients are in that one, as well as how many patients are in the DDI study?

Thank you, John. So we're going to be taking three doses into the NAFLD study, 1.2, 1.8, and 2.4 milligrams. There will be 72 subjects in that study. That means 18 for each of the arms, and that also includes the placebo arm. And the DDI study will be 36 subjects.

Got it. And with the liver meeting coming up this weekend, I'm not sure if you had a chance to take a look at this yet, but I saw an interesting analysis for semaglutide where they found that 69% of the histologic improvement was due to weight loss. So I'm wondering kind of your thoughts on that analysis and then also what you might expect with a direct-acting glucodone effect with pembrodutide.

Right. Well, we would agree with the interpretation but recognize that with semaglutide, It has no direct effects on the liver, so it relies entirely on weight loss. In a similar analysis on hemoglobin A1C at one year that they performed in their STEP program, the majority of the hemoglobin A1C drop that they had was not due to the incretin effect, that is, the stimulatory effect of GLP-1 and insulin secretion, which did give better acute diabetic control in the first few weeks. At 52 weeks, the majority of the drop in the hemoglobin A1C was due to the weight loss. So that paralyzed what you've just said about the effects of weight loss on histologic improvement. Now, as you've often mentioned, there's a direct effect of glucagon here on the liver, which is different from semaglutide, which differentiates pembidutide from GLP-1 mechanisms, semaglutide. So we believe that there's an opportunity for even greater weight, greater fat reduction, as well as greater weight loss with the additive glucagon agonism. So we agree with your assessment.

Interesting, Collar. Thanks again for taking the questions. You're welcome.

Your next question comes from the line of Ma'am Tommy. with B. Reilly Securities.

Good morning, team. Congrats on the progress, and thanks for taking our questions. So maybe if I can just quickly ask a follow-up on the NAFLD study and just comparing the baseline characteristics of the Phase I obese study that we talked about What are the expectation sort of differences that you may have on the, you know, the baseline ALT levels that the NAFL study would have? I think you had about, you know, somewhere between 20 to 30 in the obese healthy volunteer study. And just trying to understand, you know, what might be the difference in kinetics that you may observe on ALT levels? given now that we have a good idea on what you have on PDFF and weight loss as we think about the NAFLD study?

Mayank, I'm going to try to answer the question. I'm not sure I fully understand it, so please chime in if I don't answer your question completely. In the Phase I study that was recently completed, we allowed up to two-fold elevation. And we'll have a very similar very similar cutoff in the upcoming study. And I'm not really sure I understand your question about the kinetics. Could you please elaborate on that a bit so I can answer it?

Yeah, so we, just based on your ALT data from the phase one study, you know, we are not seeing, you know, it's kind of like except for that one anomaly, we're not seeing, you know, significant loading, for example, but generally in NAFLD studies, you know, you would want to see that, you know, ALT drop along with liver fat and weight loss. So should we be expecting that as you, you know, go into the NAFLD diabetic and non-diabetic study? Just curious.

I understand that. Yeah, we should expect that. You know, recognize that in the study that we recruited, because these patients in general were not a NAFLD population, we're not going to see or have the opportunity to look at ALT dropping. That was in the phase one study. But specifically recruiting people where we're going to be having a pharmacologic effect on liver fat, which is driving the ALT, we should see that reduction in the upcoming NAFLD study. Understood.

And then on the lower dose, 1.2 meg dose level, Scott, did we have any patients there with ALT elevated liver fat. Just curious, you know, what were the findings, if any, on the MRI PDFF for that dose level?

Right. We had two patients at the 1.2 milligram dose who had elevated liver fat, one with 19% and one with 11% approximately. The drops there were 27% and 70%. for a mean of about 48%. So the effects were there, very comparable to other drugs, but not as robust as the reductions at 1.8 and 2.4 were in each of those arms. The reductions were greater than 90% and to below the limit of detection.

Wow, that's amazing. And then on the IND package for obesity, just remind us how this is different than the NASH IND, just what goes into it. Just curious.

So the heavy lifting MIANC was done by the NASH IND because that's where the major parts of the IND were presented, things like the manufacturing, the toxicology, and also some of the early clinical data. Now, the emphasis of the obesity IND will mainly be clinical, and we will provide the first study to be conducted under the IND. That's a requirement of the IND. And we'll update with any additional data from the Phase 1 study and from our chronic tox, which will be completed before that study. So, really, it's a smaller IND oriented mainly towards the clinical development program with some additional update dates. But the heavy lifting was done with the NASH IND submission in August, and as you know, it cleared in September.

Great. And my final question on HEPD and HPV. I understand we are a little away from the data, second half of next year. I'm just curious how you might be thinking of this being deployed as a combination. I think you commented on this being used with a DAA. it's becoming clear that at least an RNAI and a nuke is sort of what you need. And the importance of an immunostimulant is becoming increasingly clear. So, you know, you might be in a sweet spot there. So have you thought of thinking about this more strategically as you look to, you know, be part of a potent combination for developing functional gear for HPV?

Yeah. Mayank, I have Scott Roberts on the line. I'm going to ask Scott to answer that question. Scott?

Hi, Mayank, and thanks for that question. I mean, you've hit the nail on the head. That's exactly how we see this. You know, the thinking is to create a window with even lower levels of surface antigen than are currently encountered with new treated patients alone, and that would provide a better for the immunotherapy to stimulate the T cell response. So, you know, as you know, the RNAi approach is mean to do that. It's not really clear if they're doing that well, and they're certainly not doing it for a long term, but they can create that window of opportunity for a hefty cell to work better. So that's how we're thinking about that, and, you know, we think that there's a lot of potential in that approach.

Thanks for taking our questions, Tim.

Your next question comes from the line of Patrick Truccio with HC Wainwright.

Thanks. Good morning. I just have a couple of follow-up questions. The first one's on NASH. I'm just curious, based on your discussions with regulators in Europe and North America, how likely or unlikely do you think kind of a change in the regulatory endpoints as they currently exist for potential approval of NASH compounds, how likely or unlikely is that to change? or is it more likely to kind of stay how it is for the foreseeable future?

Male Speaker Thanks for the question, Patrick. It's extremely important. I'm not aware of any public announcements that FDA or EMA will be revising their guidances for NASH approval. I think that there's a great deal of talk that they should change and perhaps have to change. to veer towards non-invasive assessments and steer away from the liver biopsy. But I can't give you any further guidance myself as to the likelihood of either of those regulatory bodies making a change and when it would occur. Got it.

And then just on the hep T cell on the Phase II program, can you remind us, is this study powered to demonstrate a certain reduction in surface antigen or What would you need to see in this data to give you confidence that it can act as that potent immunostimulatory to combine with another, you know, with a direct acting antiviral?

Right. So the study has two key endpoints. The primary endpoint is a one-log reduction in surface antigen, and the study is powered to show that. But another key endpoint is the clearance of the surface antigen, and we think that that should be achievable as well, but we don't have our power yet. oriented towards that. The approval endpoint will be the clearance of the antigen, probably, although that discussion with the agency has not taken place. Clearly, to get reductions is extremely meaningful as we move forward, especially in combination therapies with partners.

Got it. And then just one last one, just in terms of potential collaboration on Pembidutide. How are you thinking about that, or Is there kind of a point in development in which you would look for a collaboration partner? How far along can you bring this program on your own?

Yes, Patrick, thank you for the question. I mean, as we have said previously, we are well positioned to take the program through the next phases of trials here. We're well funded to do that. Our goal is to really increase the value of this asset with each study. So that's why we are planning, you know, multiple different studies to really gather a very compelling package. Ultimately, we think this is an asset that we will have a partner. At what stage, I can't tell you exactly right now, but we are marching towards that goal and making good progress. Perfect.

Thank you very much.

As a reminder to ask a question, you will need to press star, then the number one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your next question is a follow-up question from the line of Lisa Baco with Evercore ISI.

Hi, this just kind of relates to what we talked about earlier with baseline fat level, but I know future trials are going to be looking at patients with at least 10% liver fat as a cutoff. Can you maybe talk about that higher threshold, you know, could impact outcome, you know, do patients with higher baseline levels of liver fat, you know, would you expect to see the same more or less? How much more difficult is it to reduce liver fat from a higher baseline? Thank you.

I would phrase the question as a positive. The higher the liver fat, the greater the opportunity for the percent reduction. As we saw in the program, the data that we presented, Lisa, we had patients with up to 19.5% liver fat who not only dropped their liver fat content by substantial amounts, Not only did we normalize liver fat to 5%, we actually dropped that 19% in just six weeks to below the limit of detection. This is uncharted territory. Drugs have not done this before. So we think that the opportunity to expand the change and see an even greater change is even higher. So in moving to a 10% population, I think the opportunity to duplicate these changes are great and see really unprecedented changes in liver fat.

Okay, thank you. And that's really helpful. And then just, you may have addressed this already, but were any of those five patients, one of the five patients with the elevated ALT?

No. The patient with the elevated ALT-LISA had a liver fat content of baseline of 3.7%, and that patient dropped below the limit of detection. So that patient was not included in the analysis that we just provided. But I would also emphasize the patients that we've reported on with much greater reductions in in liver fat content, as I just mentioned, from 19.5% to below quantitation. Another one, 17% below quantitation, I could go through the series here, did not, repeat, did not have ALT drops. Excuse me, elevations. So consequently, although that might have been the framework for initial conjecturing or hypothesis generating, The data that we have that we're reporting now does not confirm a relationship between the drop in liver fat and the ALT elevation.

Understood. Thank you. And then just one more question. You know, moving forward, are you going to include diabetics in your studies? And, you know, maybe you can describe the impact of diabetes on weight loss for us. Thank you.

Yeah. So as we talked about earlier, traditionally in drug development programs, Diabetics have lost less weight over the course of a trial than non-diabetics, typically about 30 percent less. So based on that, in our NAFLD study, we will be stratifying subjects. That's the 12-week NAFLD study that we've recently launched, Lisa. We're stratifying subjects by the presence or absence of diabetes at baseline and analyzing the weight loss separately. In the phase two study that we'll be conducting and launching next year, we are enrolling non-diabetics, so that'll be a pure look at that population and the weight loss in that population. And as I mentioned before, should we conduct the 12-week extension to the NAFLD study, we'll have 24-week data on weight loss in both non-diabetics and diabetics, and probably around the middle of next year.

Okay, and then just, is there a certain... proportion of diabetics that you want to have in the studies, understanding you're stratifying them, but do you expect it to be like, you know, a third or you cut off a 50%? Is there some number?

Right. I mean, I think that to say it'll be a third to 50% is probably an initial good estimate.

Okay.

Thank you.

You're welcome.

At this time, there are no further questions.

Thank you, everyone, for participating today. We appreciate the opportunity to share our results and outlook with you, and thank you for your continued interest. Have a nice day.

Ladies and gentlemen, this concludes today's conference call. Thank you. You may now disconnect.