Evelo Biosciences, Inc.

Good morning and welcome to Avela Biosciences conference call to discuss its fourth quarter and full year 2021 business highlights. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company's request. At this time, I'd like to turn the call over to Kendra Sweeney of Avela. Please proceed.

This morning, we issued a press release that outlines the topics we plan to discuss today. This release is available at www.avelobio.com under the Investors tab. Today on our call, Simba Gill, Chief Executive Officer, Mark Bodmer, President of R&D and Chief Scientific Officer, and Jonathan Zung, Chief Development Officer, will review our recent business highlights. Before we begin, I would like to remind everyone that statements made during this conference call that do not relate to matters of historical fact, including statements about our objectives and anticipated clinical milestones, the impact of any of our product candidates, and the timing and results of any clinical studies should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. Actual results could differ materially from those indicated by the forward-looking statements due to the impact of many factors. Participants are directed to the risk factors set forth in Avella's annual report on Form 10-K for the fiscal year ended December 31, 2021, and the company's other filings with the Securities and Exchange Commission. Any forward-looking statements made today speak only to Avello's operations as of today. Avello disclaims any duty to provide updates to its forward-looking statements, even if subsequent events cause the company's views to change. It is now my pleasure to pass the call to Simba.

Thank you, Kendra. Good morning, everyone, and thank you for joining us to review our progress during the fourth quarter. We are fortunate to face the headwinds of the current financial market from a position of strength, clinically and scientifically. Our goal on this call is simple, to provide you with the evidence that Avello has an exceptional opportunity to create value with a high probability of success. This bold statement from a mid clinical stage company working in new biology on a new modality of medicine is objectively rooted in both clinical and preclinical data. However much we do not like our current share price, it represents an exceptional opportunity for investors in both the short and the long term. We started working on syntax medicines five years ago with a radically innovative proposal that there is a connection between the small intestine and the rest of the immune system that would enable orally delivered gut-restricted drugs to safely modulate immunity and inflammation throughout the body. Preclinical and clinical results have been remarkable. We have observed coordinated downregulation of multiple inflammatory pathways driving inflammation resolution in both lab animals and in humans. And we now have a good understanding of the immunological mechanism that allows this to happen. The top line EDP 1815 phase two psoriasis clinical data that we reported last September demonstrated that a syntax medicine can have a therapeutic effect with safety and tolerability comparable to placebo. And as we heard from both Dr. Stroba as well as Dr. Daniel Rowling at a KOL event, Avello's Phase II clinical data supports the potential use of EDP-1815 in almost all patients, including, importantly, the mild and moderate population, which represents over 85% of the 55 million patients with psoriasis worldwide who are generally not treated with biologics or oral small molecules. The primary unmet need in psoriasis is for this segment of patients. We can't emphasize enough the importance of the clinical data. The trial addressed the central question, can targeting syntax be the basis for a completely new type and class of medicine? The answer is yes. Since September, we have reported two further data sets from the phase two trial. The first clinical data set was the reduced production of multiple inflammatory cytokines from blood immune cells of patients receiving EDP 1815. These reductions were statistically significant. Similar reductions were seen in skin biopsies for IL-12, IL-17, and IL-23, all validated cytokines in the skin pathology of psoriasis. This is human mechanistic evidence for inflammation resolution, similar to what we have long observed in animal models. The second clinical data set was the 24-week follow-up data from psoriasis patients in Part B of the Phase II trial after they stopped taking EDP-1815. Many patients had persistent and deepening responses with no flares or rebound of psoriasis consistent with what we now know about the cellular mechanism of action of EDP1815 from preclinical studies. We are delighted to announce data from this Phase II trial has been selected for a coveted late-breaking oral presentation this Saturday at 10.10 a.m. Eastern Time at the 2022 meeting of the American Association of Dermatology. significant external recognition for the potential of syntax medicines. The broad set of data are fundamental evidence for a new area of biology which we can harness to create effective, safe, oral, affordable medicines to treat all chronic inflammatory diseases. In a moment, I'm going to hand over to Mark Bodmer to talk about the scientific discoveries that underpin these clinical successes. Before doing that, we wanted to announce today further exciting positive data from the clinical trial examining a faster release capsule. As you know, we have been investigating the potential to consistently improve the release characteristics of our syntax medicines. The aim is to see consistent faster release higher up in the small intestine. Imaging results from the next phase of the study demonstrated that the improved release capsules of EDP-1815 are able to deliver drug faster and then higher up in the small intestine 88% of the time. Mark will explain these results in the context of preclinical evidence that clearly predicts the potential for increased efficacy with this release profile. Putting all of this together, we will focus on this faster release capsule as we advance our programs into later stage development. The faster release capsule gives us confidence that we are likely to see even greater efficacy than we have seen to date, both in terms of proportion of responders and in depth of response. Mark and Jonathan will now talk about our science and the clinical development plans, and then we'll wrap up with a view of what to expect next. Mark, over to you. Thanks, Simba.

Two basic questions for any drug are, does it get to the right place, and how does it work when it gets there? Starting with the question of the right place, the goal, as Simba said, is simple, based on known immunology of the gut and preclinical evidence. It is to protect the drug from acid and digestive enzymes in the stomach and release it as soon as possible in the small intestine. The new data that Simba mentioned have identified a solution. The headline result is that a faster release capsule of EDP1815 opened in the jejunum, higher up in the small intestine, in 88% of human volunteers in the scintigraphy study versus 18% with the original capsule. The release of EDP1815 can be measured by giving human volunteers a capsule of EDP-1815, which contains a radioactive tracer, technetium-99m. Technetium emissions can be followed by scintigraphy with an external gamma camera, showing how long it takes the capsules to start releasing their contents and where in the gut this takes place. We first tested a capsule that was used in the Phase II psoriasis trial. In 18% of subjects, this capsule released EDP-1815 in the jejunum, an upper portion of the small intestine. The other 82% of subjects released in the ileum at the lower end. This profile was still sufficient to generate the Phase II efficacy. Now, we know from preclinical experiments that a release profile higher in the small intestine can increase efficacy by as much as tenfold. Based on this, we tested a version of EVP1815 capsules with faster release. Fifteen out of 17 of the human volunteers showed release higher up in the jejunum and only two lower down in the ileum. This is 88% higher up for the new profile versus 18% for the original one. This faster release gives much more consistent overall exposure to the active drug higher in the small intestine. We tested the efficacy of these different release profiles in mice using very small tablets formulated to replicate the profile of human capsules, which can be given orally. Faster release in the jejunum led to excellent preclinical efficacy. The version that released lower down worked significantly less well. So comparing the human's integrity release profile with the efficacy of the equivalent profile in mice provides a clear path It's a building on the foundation of efficacy that we've already seen in the clinic. This is a significant result. It's simple. The faster and higher in the small intestine the capsule opens, the more opportunity the drug has to exert its effects. Because the EDP 1815 drug substance is unchanged, the faster release profile can be evaluated within our current clinical development plans with minimal impact on timelines. We'll let you know the plans once the details are settled. Turning now to the second basic question posed at the beginning, how does it work? What is the scientific basis for the clinical observations both about duration of efficacy after the drug is stopped and the range of inflammation-resolving effects? I've touched on this before. If we treat mice with EDP1815, they induce a regulatory phenotype in circulating immune cells. We've now shown that this is due to reprogramming of circulating CD4-positive T cells. This was formally demonstrated by transfer of CD4 T cells from drug-treated animals to drug-free animals, resulting in inflammation resolution in the recipients. This effect is from the transferred CD4 cells alone. The recipient animals receive no drug, only T cells from the treated mice. The induction of regulatory T cells has been a major elusive goal of immunology drug discovery for 20 years. We've now achieved it with an oral agent, which has shown excellent safety, and tolerability. This can explain the clinical observations in the Part B drug-free follow-up portion of the Phase II psoriasis trial. The critical responses seen during the treatment period persisted and deepened after the drug was stopped, probably because cells that conferred efficacy remained even after the drug did not. We've also tested for this effect in mice with a number of systemic anti-inflammatory drugs, including JAK inhibitors and biologics. So far, we've not seen it. The only other drug that does it is dexamethasone, which is not suitable anyway for chronic use because of limiting side effects. This property of generating regulatory T cells with a safe oral agent appears to be a unique characteristic of the small intestinal axis. It has important implications for the breadth of potential benefit of syntax medicines. Most efforts to make more effective medicines are based on breaking common diseases down into the diverse underlying molecular mechanisms and then more precisely targeting those mechanisms and subsets of patients. The biology of the small intestinal axis seems to allow us to go in the other direction towards a common mechanism for diverse diseases. I'll just finish with a brief comment about extracellular vesicles. We've said before that the potential for EVs based on preclinical data is to approach biologic levels of efficacy with these all gut-restricted products. The physical and pharmacological properties of EVs have provided evidence that they may enable this, better diffusion and higher packing densities due to their much smaller size than microbes. And with that, I'll hand over to Jonathan to update on our clinical programs, including EDP2939, our first EV product on track to enter the clinic later this year.

Thank you, Mark. This morning, I would like to provide updates on several of our ongoing clinical trials, upcoming readouts, as well as planned trials. We announced last month the dosing in our Phase II trial of EDP1815 for the treatment of mild, moderate, and severe atopic dermatitis began. We continue to execute according to plan, and top-line results from this trial are expected in the first half of 2023. As a reminder, this is a 16-week multicenter, double-blind, placebo-controlled trial being conducted in North America, Europe, and Australia. Approximately 300 patients will be randomized into one of three cohorts. Cohort one will explore a dose of 1.6 times 10 to the 11th total cells of EVP1815 or matching placebo as two capsules administered once daily. Cohorts 2 and 3 are administered as a dose of 6.4 times 10 to the 11th total cells of EDP1815 or matching placebo, either as two capsules once daily or one capsule twice a day, respectively. The primary endpoint is the percentage of patients achieving an EZ50, which is a reduction of 50% in the eczema area and severity index at week 16. Key physician-reported secondary endpoints are the investigator global assessment, the IGA, and body surface area, or BSA. Key patient-reported secondary endpoints include the dermatology life quality index, DLQI, the patient-oriented eczema measure, or POEM, and the pruritus numerical rating scale, NRS. All patients in the Phase II trial will have the opportunity to join an open-label extension trial once they complete 16 weeks of dosing. All patients in the open-label extension will receive EDP1815 for up to 52 weeks. Results from our Phase Ib trial of EDP1867 in a cohort of patients with moderate atopic dermatitis are anticipated in the second quarter. As a reminder, EDP-1867 is from a different genus to EDP-1815 and has been rendered non-live by gamma irradiation. We are excited to remain on track to bring our first extracellular vesicle, or EV candidate, EDP-2939, for inflammatory diseases into the clinic in the third quarter. The healthy volunteer portion will be followed by a cohort of patients with psoriasis. We anticipate reporting Phase II results in psoriasis in the second half of 2023. In terms of next steps regarding the development of EDP1815 and psoriasis, we have had discussions with community and academic-based dermatologists around our clinical development plans. We anticipate meeting with different health authorities over the next several months to solicit their feedback. This will, in turn, allow us to finalize our plans for advancing EDP 1815 in psoriasis into the registrational trials. I'll now hand it back to Simba for closing remarks.

Thank you, Jonathan. You've heard from Mark and Jonathan about the scientific and clinical progress we've made over the last quarter and last year. The data support our bold statement that we have proved that we can harness syntax to open up a massive new field and type of medicine that goes beyond existing biotech and pharmaceutical products and opens up the treatment of all stages of inflammation with orally delivered, convenient, safe and well-tolerated effective medicines. We have uncovered the science that underlies the fundamental connections that link our gut to the immune and inflammatory system throughout the body. This is a medical and scientific breakthrough. To sum up, in the last quarter, we've hit all three of our major clinical milestones with very positive results. Firstly, the maintenance and deepening of clinical responses of psoriasis patients in the Phase II Part B follow-up. Secondly, the reduction in inflammatory cytokines produced by systemically circulating immune cells and inflammatory cytokine production at the site of disease. And then today, and thirdly, the improved faster release profile of EDP 1815 capsules. This puts the future of EDP 1815 and of syntax medicines into an even stronger position as we move closer and closer to realizing our vision to improve health for the hundreds of millions of people living with inflammatory disease around the globe. I want to thank the Avello team and our partners. These are very challenging times where remarkable commitment and resilience is needed. We are fortunate to have such an exceptionally committed and strong team. And with that, I'll now open for questions. Thank you.

Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the start and the one key on your touched-on telephone. you may press the pound key to withdraw your question. Please stand by while we compile the Q&A roster. And our first question coming from the lineup, Chris Howardson with Jefferies. Your line is now open.

Hi, good morning. Thanks so much for taking the questions and appreciate the bold statement, Simba, from you and the team. So I guess for my questions would be, you know, with respect to 1815 and psoriasis, Based upon the feedback that you're seeing so far from physicians, what do you think is going to be an acceptable endpoint for approval for that agent in mild to moderate psoriasis? So that would be one question. And then the second question I would have is, as you're progressing your programs into registrational studies, what is the strategic thinking with respect to business development opportunities? Thank you.

Chris, thanks for the question. Good, Chris. So on the first question with regards to endpoints, obviously we do need to meet with regulators. The plan, just to remind you and everybody, Chris, is to engage and complete regulatory interactions with FDA, MHRA, the European authorities around the middle of this year with submitting all the relevant background information. shortly. So we need to get through those meetings, obviously, to finalize what the endpoint would be. At the moment, we would anticipate that a PGA score of 0 or 1, so clear or nearly clear skin, is likely to be the clinical endpoint. So that's the answer to the first question. With regards to moving towards registration studies and corporate partnering, our view has always been, Chris, that the opportunity with Syntax Medicines and with Avello is so enormous that corporate partnering will be a key part of what we do. We cannot capture the massive breadth of the opportunity on our own. At the same time, we've always been unashamed and very clear that we have one of those rare opportunities in the history of science, medicine, and biotech to create something that could completely transform healthcare and biotech, we've always said that syntax medicines have the potential to be even more transformative than monoclonal antibodies have become. And in that context, our view philosophically is the best way to develop that type of innovation to patients is to remain a strong, independent company that forward integrates and becomes a key forever biotech company. But we will do that together with partners, and what it translates to is an openness to forming partnerships, which allow us to do that, Chris. So capturing a lot of the forward value from any of the products, including 1815, and allowing us to forward integrate and build towards that fully integrated company.

Okay. All right. Awesome. Thank you so much, Simba, and I appreciate everything moving forward. Thanks, Chris.

Our next question coming from the line of Gary Nagler from BMO Capital Markets. The line is open.

Hi, good morning. Data from the scintigraphy study on the earlier release of 1815, are there any additional GI side effects releasing drug earlier in the small intestine? And for the two patients where it didn't release earlier, 88% was clearly a good outcome, but is it ever possible to get to 100% with these formulations? And is there a chance that you'll need a small clinical bridging study before moving into phase three for psoriasis? And then I have just a couple of quick follow-ups.

So, sorry. Hey, Gary, how are you doing? Just remind me on the first question, Gary. I couldn't write quickly enough.

I've got it actually, Simba.

The GI, if there were any GI side effects. Oh, yeah, got it. So no on the first question. And very importantly, Gary, it's a core piece of the platform, as you know. We continue to see an extremely safe and well-tolerated profile in all of the clinical studies we've done. We've been in over 500 human subjects at this stage and consistently seeing very, very clean safety and tolerability. So nothing to be concerned about there, including with regards to the faster release capsule. In terms of 88% versus 100%, absolutely always possible to do. Better and better in life care is one of my core life principles, and that also includes with regards to the science around a release capsule. efforts, et cetera. Having said that, 88% is a great result. We are ecstatic, Gary. And just to remind you, in the preclinical models, exposure early and over the full anatomy of the small intestine led to antibody-like efficacy consistently in animal models. So this type of result where we're seeing 88% releasing quickly in the jejunum is remarkable and is very, very encouraging for what we're likely to see in the clinic. And that then links to your next question in terms of any bridging studies. We don't anticipate there'll be a requirement to do that. Obviously, we do have to have the conversations with regulators. We will be moving as quickly as possible into a Phase II atopic dermatitis study. and more details to follow on that, but we expect we'll be able to do that in short order without impacting any of our existing clinical studies.

Okay, that's great. And then congrats on getting the late breaker at AAD. So any additional Phase II data on 1815 that you'll present there, or will it be what we've seen already And then the 1867 and atopic derm, what should we be expecting to see from the interim 1b data? And just remind us a little bit more what the difference is between 1815 and 1867, and could you ultimately pursue both for atopic derm, or will you just pick one in the end? Thanks.

Yeah. So let me take the 1867 second question. I'll let Mark take first in terms of the difference between 1867 and 1815. And I've done it again, actually. I forgot your first question, but we'll come back to that in a moment. So in terms of how we would develop 1867 and what the expectation is, it's not an interim. The phase 1b will be top line, and we're looking at essentially top line efficacy data which is what we'll report out in a similar way to what we've done historically. We should have that very soon, actually. To the degree we get positive data there, one of the many beauties of both 1867 and 1815 is what we've seen preclinically as breadth of efficacy across many different areas of inflammation, including, for example, neuroinflammation. So if we were to see a positive result from 1867. There's many different directions in which we could develop it. We could potentially have two products in atopic dermatitis. They could address potentially different segments of atopic dermatitis. We could also segment obviously inflammation and focus on 1867 in different indications to 1815. To be clear, atopic dermatitis is a clinical proof of principle for us and is not necessarily the indication in which we'll move forward with 1867. It's a way to get a fast, positive result in the clinic with some fairly clear endpoints and the ability to, for example, look at patient biopsies, et cetera. So lots of different ways we could take it forward. Mark, do you want to answer the question on 1867 versus 1815 in terms of how they're different?

Yeah, sure. Thanks, Gary. There are three or four points there. is isolated from a small intestinal sample. Just to reinforce that point, these are mucosally resident microbes, not microbes that come from stool samples, and it's in these mucosally resident microbes that we find the good activity. EDP-1857 was from an ileal sample in a patient with Crohn's disease in remission. It's taxonomically quite distinct from EDP-1815 And one of the things that we had as a strategy from the outset was to look at the range of taxonomy, which is effectively the range of biochemistry in these to find out what the potential of different types of bacterial isolates and the rest of the cellular vesicles in fact would be for pharmacological properties. This one has a molecular mechanism of action. which is slightly overlapping, but actually different from EDP 1815. It's different patterns of pattern recognition receptors, including toll-like receptors with very potent activity. The other thing which was key with this is that part of the manufacturing process involves gamma radiation. And we talked a lot about the fact that our products work through direct action and not through colonization and being live biotherapeutic products. EP1867 is dead by design at the point when a patient takes it. So all of the activity that we've seen pre-clinically and what we're looking for clinically is due to direct interactions of microbial preparation with host cells in the gut.

So, Gary, I remembered your other question with regards to the 18th presentation. So, yeah, we're obviously thrilled, first of all, that we've been selected to late break up. As you know, very unusual for that to happen for a mid-stage clinical biotech company. I think it's great validation for how the germ community is seeing the potential for what we're doing. We will provide more color, obviously, than we've been able to do so far. That said, obviously, the three key pieces of data beyond the top-line efficacy we've reported out on, obviously, both today as well as recently. But I would encourage you to listen to it. Great. Okay. Thank you. All right. Thanks, Gary. Saturday morning, 10, 10 a.m. Good time to listen. I'll quiz you on it later, Gary.

Our next question coming from Lana of Josephson with Colin. Your line is open.

Good morning, and thank you for taking our questions. Maybe the first one, on the EV candidate, are you going to be using the same formulation as this updated formulation that releases higher in the jejunum? And maybe is there anything differentiated about the release kinetics or kind of where the EV candidate should release in the intestine that might be different than kind of the first-generation candidates at all? Or do you expect kind of better advocacy with similar release kinetics?

Yeah, so Hydro, look forward to skiing with you later today, hopefully. So the beauty of the faster release capsule formulation is that it's platform related as opposed to product related. So whether we're talking about microbes or EVs, it's a dramatically improved release profile that should be applicable for all our products going forward. So we will We anticipate we're going to use it for the EVs straight away as well. And again, I said it already, but we are thrilled with that result. It's really the best possible result we could have expected. And we see it as having potential to drive very significant increase in efficacy across everything we're doing, microbes or EVs.

Perfect. And I know on the KOL call the other week, they mentioned potentially using 1815 and psoriasis and more severe patients potentially as a combination approach. I guess how straightforward is that clinically? Are you able to get reimbursement for combination therapies and have physicians prescribe this? Or would you need to have additional data showing combinatorial benefit in more severe patients before uptake in that segment?

Yeah, so in the real world, very straightforward. It was actually touched on very briefly at the KOL event we had recently. We may, for example, have to go through, step through, at least initially in the mild and moderate, certain segments of mild and moderate, where topicals are gold standard, Joe, but that will be very, very straightforward. Clinicians are used to doing it, and it should be a very straightforward process. And once we've been through that, then in the real world, use in combination will be very, very straightforward, we expect. Patients will, for example, in practice, at least initially, go on acute topicals to treat acute flares, for example, and then essentially the equivalent of maintenance on 1815 with the use of topicals. We expect where this will start off and then moving potentially to monotherapy with 1815. So we think it's going to be very, very straightforward.

Perfect. Thank you very much, and see you later today. Thanks, Joe. Look forward to that.

Our next question coming from the line of Kristen Kliska with Cancer. Your line is open.

Hey, good morning, everybody. Thanks so much for taking the questions. With the new data that you reported today, I wanted to ask how specific anatomical targeting of the small intestine relates to the targeting of the dendritic cells, the macrophages, and also how this correlates with the intestinal resident immune cells.

Morning, Tristan. Always good to hear your voice. I'll let Mark answer that.

Yeah, actually, Tristan, that's a really interesting question. A more detailed view of the preclinical support for this hypothesis of higher release includes looking at the distribution of immune cells longitudinally throughout the gut. There's been some very nice publications about this, which we refer to. Interestingly, the dendritic cells in particular are and higher densities in the gut wall in the upper parts of the gut in the duodenum, which is relatively short, and into the jejunum. So we have the hypothesis from the outset that that would be a place to target. The other thing is if you think about the primary role, job of the gut immune system, it's actually to stop the immune system responding to things because the gut, the mouth and the stomach is where massive amounts of foreign stuff are coming into the body constantly. And it would be a disaster if we had immune responses against all those things. So actually what we're doing is we're harnessing the natural ability of the gut to actually prevent inflammatory responses against all the foreign stuff that's coming in. And at a sort of principled level, I think that's what our drugs are doing, we're providing a pharmacological level stimulus at the right dose to engage those systems whose natural function is to maintain homeostasis in the face of continual foreign barrels of food and all the microbes and everything else that's in the food that we ingest and, you know, dirt that we take in from environmental things. That is focused in the higher parts of the small intestine. So it was, we don't talk about this very much because it gets a bit complicated in immunology, but it's actually built into the understanding of small intestinal immunology and actually taking a step back and thinking about what its real role is. Most people think the immune system's role is to protect against infection of cancer. At one level, that's true. But if you've got a system like that, you need an even more potent system to prevent it continuously being an uproar. And that's essentially what harnessing syntax with these types of medicines appears to be doing. And doing it, as Simba always emphasizes, for immune resolution on multiple pathways of inflammation. So this is not molecular targeted single pathway intervention. As occurs naturally, all systems are taken down in parallel to reestablish the normal homeostasis, just what the body normally does. And of course, one final point, it's able to do that because of the way the gut immune system works without generating immunosuppressive responses. We do not immunosuppress ourselves by failing to have adverse reactions to most of the foreign antigens we're exposed to. So this whole clinical profile that we're describing makes complete sense in terms of the distribution of immune cells in the gut and in terms of the predominant requirement functionally for the gut immune system I hope that was clear enough.

Yes, it was. Thank you for that. And then I wanted to ask you about the pediatric market for psoriasis, how you view this. And in light of everything that you've communicated, the KOLs have said about route of administration, safety, et cetera. Is there anything that you would emphasize or perhaps say is different about the opportunity for an oral therapy for pediatrics? Thank you.

Yeah, so I go above psoriasis in terms of responding to the question. So if you look at inflammatory diseases, particularly atopies, a massive issue in children and pediatric populations. And obviously when we're dealing with children, the safety and tolerability side of things becomes even more paramount than it is normally. and it is a major limitation of almost all current inflammatory products, very, very hard to prescribe them to the pediatric population. I don't even know if you've got children, Christina, but anybody who has a child, just to put it in context, has about a one in four chance of an atopic inflammatory disease and condition. And obviously, as a parent, of those children you want safe, very well tolerated, So we have the safety and tolerability profile, which I'll keep emphasizing. It is essentially completely unique in the world of inflammation and is ideally suited to use in the massive pediatric population who suffer from inflammatory diseases, ATPs in particular, but more broadly. The next piece is obviously what you're touching on, which is how do you give children, particularly little ones, medicines from a formulation perspective. Obviously, if we're talking about teenagers and so on, relatively straightforward. Even unruly teenagers are able to swallow tablets and capsules. So no issue there in terms of formulation. The issue is obviously to go younger, administration cannot be done through an oral capsule delivery, for example, in very young patients. So we're working already on alternative formulations which will allow ingestion for that pediatric population. And that's a work in progress, basically, Kristen. Confident we'll be able to get there, so no issues around all of that. And I think the most important thing is we're really excited about the potential here for the pediatric population. Very, very happy to have a clear path forward in the first instance. And we see huge potential for what we're doing in pediatrics.

Great. Thank you.

Our next question coming from the line of Brickham Pirohit from Morgan Stanley. You'll let us open.

Good morning, everyone. This is Gaspo on Fort Beckham. We have one question, and the question is, what would the planned clinical study of the first release ADP1850 capsule look like in terms of design and size? And has there been any regulatory input to guide the study design that you have in mind here?

Good morning. Appreciate the single focus one question, and I think you focused on the right topic. So, again, most importantly, we are thrilled with the faster release capsule, and it dramatically improves the likelihood that we're going to be able to get great responses in a very significant proportion of patients. We have just got the data gospel, so we have not yet interacted with regulators. We're working through clinical study designs, more to follow on that, but we expect we will move forward with a powered Phase II study to show clear benefit in atopic dermatitis, and that will get going very quickly, and we expect we'll likely have results from that. Certainly, there's not yet formal guidance, but I would expect that. somewhere around the first half of next year as an informal directional sense of what we're expecting. And we'll interact with regulators in due course. All right. Thank you very much.

And I'm showing up for the questions at this time. I would now like to turn the call back over to Simba Gill for any closing remarks.

Thank you very much. So thanks very much, everyone. Obviously, remarkably exciting time for us. Things continue to progress from strength to strength, so we are extremely excited about where we are and very confident that we're going to be able to realize the broad vision that we have for Avello. It is very clear at this stage that the small intestinal axis exists. I'm at an investor conference right now and have had some very interesting discussions on ski slopes and over nice glasses of wine, but what's very clear from those conversations is what we've always said. This is one of the rare situations in biotech, in medicine and science, where we've uncovered a fundamental platform linked to a completely new area of human biology that we didn't know existed before, that plays a fundamental role in regulating systemic immunity and inflammation throughout the body. As you've heard from us repeatedly, including today from Mark, we have uncovered the key connection between the gut and systemic immunity and inflammation that probably links to the evolutionary background of microbes needing to make sure, as Mark said, they don't trigger a systemic inflammatory response. And very quickly, we've now generated very clear positive phase two clinical data showing that we can harness that with something that's very safe and well tolerated. And today's faster release capsule formulation really takes it to the next level. So we're in a fantastic place and look forward to keeping everybody updated. We've got a lot of continuous news flow in the near future. Thanks very much, everyone.

Ladies and gentlemen, that's our conference for today. Thank you for your participation. You may now disconnect.