Fractyl Health, Inc.

Good afternoon and welcome to Fractal Health's fourth quarter and full year 2024 financial results and business updates call. As a reminder, this conference call is being recorded. At this time, all participants are in a listen-only mode. There will be a question and answer session following management's prepared remarks. I will now turn the call over to Brian Duque. Head of Investor Relations and Corporate Development at Fractal. Brian, you may now begin.

Thank you. This afternoon, we issued a press release that outlines the topics we plan to discuss today. This release is available at www.fractal.com under the Investors tab. Joining us on the call today are Dr. Harith Rajagopalan, Chief Executive Officer, and Lisa Davidson, Chief Financial Officer. During this call, we make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, including the annual report on Form 10-K filed today, which I encourage you to review. Any forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements, even if subsequent events cause the company's views to change. It is now my pleasure to pass the call over to Harit.

Thank you, Brian, and good afternoon, everyone. Thank you for joining us today. GLP-1 drugs have undoubtedly transformed people's ability to achieve short-term weight loss. However, real-world data reveal the significant unmet need in obesity that remains, nearly 65% of patients discontinued these treatments within the first year, with many experiencing rapid weight regain thereafter. According to a recent study in JAMA, only a minority of individuals who stopped taking GLP-1 drugs reinitiate therapy within one year. So while these drugs deliver initial success, long-term weight maintenance remains elusive for too many people caught in an unending pattern of loss and regain. Even as more drug options become available, it's becoming clear that non-drug options will play a crucial role in long-term weight maintenance. This is the single largest gap in obesity care today. Fractal is pioneering the first potentially durable solution to address the weight maintenance crisis, not just managing symptoms but tackling the root cause of obesity in the duodenum with Ruvita and developing a potentially one-and-done smart GLP-1 gene therapy with Rejuva. The unmet need is clear, and we are driving as rapidly as possible to deliver important datasets to demonstrate the potential of our solutions to address this need. Today, I'll take you through the defining milestones of 2024 and why we believe 2025 marks a pivotal step forward for fractal as we are laser-focused on our efforts to deliver long-term metabolic health solutions to patients who need them. We made tremendous strides across clinical, regulatory, and financial milestones in 2024. We completed our IPO, debuting on the NASDAQ under the tickler symbol Guts, strengthening our financial position. Secured FDA IDE approval for a pivotal study of Revita's role in weight maintenance following GLP-1 drug discontinuation. setting the stage for a major value inflection point as we generate the industry's first-ever randomized data in weight maintenance, a completely untapped market. Earned FDA breakthrough device designation for Rovita in weight maintenance after discontinuation of GLP-1-based therapy. Initiated the Remain One pivotal study with an overwhelmingly positive response from both patients and physicians, reinforcing the urgent demand for an off-ramp to GLP-1 drugs. Advanced our Rejuva gene therapy platform, nominating Rejuva 001 as the first smart GLP-1 type 2 diabetes candidate and Rejuva 002 as a smart GIP GLP-1 candidate for obesity. Received industry recognition with Rejuva's preclinical data being named a top abstract at ADA's 84th scientific sessions for a head-to-head study that showed Rejuva prevented weight and glycemic rebound after semaglutide withdrawal. and completed key in vivo studies to support a clinical trial application for Rejuva 001, laying the foundation for the next steps in this important program. Turning to 2025, we expect this to be a breakout year for Fractal, our first pivotal data readout, our first regulatory filings for our gene therapy platform, and our clear path to market leadership in obesity and metabolic health. We have two distinct but highly de-risked event paths. one for Revita and weight maintenance, and the other for Rejuva001's path to first-in-human data in type 2 diabetes. We expect to achieve key clinical milestones from the Remain 1 study in 2025, starting with open-label data from the Reveal 1 cohort expected at the end of Q1, a midpoint analysis anticipated at the end of Q2, and full study enrollment expected in the summer, each milestone driving us closer to breakthrough advancements in weight maintenance. We also plan to submit the first CTA module for Rejuva 001 and Type 2 diabetes to regulators in the first half of 2025. And if our CTA is authorized, we expect to report preliminary data in 2026. Now let's dive deeper into the progress we've made and what's on the horizon. In January, we made the strategic decision to focus our Revita program exclusively on weight maintenance post-GLP-1 withdrawal. prioritizing the Remain One Pivotal Study. This decision was driven by promising early insights from Reveal One and overwhelming demand from both patients and physicians to participate in the Remain One Pivotal Study. In just six months, over 189 patients have enrolled across 13 clinical sites, reinforcing the urgent need for an effective off-ramp from GLP-1 therapy. In January, we also shared initial results from the first patient treated in the Reveal-1 open-label cohort. This patient lost more than 15% of their total body weight on a GLP-1 drug and, after discontinuing per-study protocol, underwent the Revita procedure. One month post-procedure, the patient successfully maintained their weight loss during the holiday season, a notoriously challenging time for weight management. For context, Prior studies of transeptide withdrawal show an average 3% weight regain within four weeks of GLP-1 discontinuation. These early findings suggest Ruvita may provide a path forward for patients transitioning off GLP-1s, and we look forward to sharing additional patient data later this month. The financial pressures on current GLP-1 treatments are becoming impossible to ignore. With over 70% of US adults affected by obesity, driving an estimated $170 billion in annual medical costs, payers are reassessing their coverage. For example, West Virginia's Public Employees Insurance Agency recently discontinued GLP-1 coverage, citing unsustainable monthly costs, and insurers in states like North Carolina and Colorado are following suit, amplifying the need for sustainable long-term solutions. There is an interesting emergent dynamic in that obesity has become a health equity concern for public payers, and yet they are struggling to justify ongoing coverage of drugs that clearly work, but where their own real-world evidence shows that adherence is a significant issue. Dr. Shailendra Singh, Director of Bariatric Endoscopy at West Virginia University Medicine, and a PI in our Reveal One study, has observed that patients who have achieved weight loss with GLP-1s are now beginning to ask, what's next? He shared with me, I'm excited to provide solutions for patients who otherwise have none. There is incredible interest in joining the study and in the prospect of long-term durable weight maintenance solutions. Shifting focus to the Remain One randomized pivotal study, this groundbreaking double-blind trial is designed to evaluate the efficacy of our Revita procedure in sustaining weight loss after discontinuation of GLP-1 drugs. As the first study of its kind, remain one place's fractal at the cutting edge of innovation in long-term weight maintenance solutions. Let's frame what is a reasonable expectation for a clinically meaningful weight maintenance solution. The FDA has specified that weight maintenance is defined as the achievement and maintenance of clinically meaningful weight loss for one year after the discontinuation of ongoing therapy. In their Surmount IV study of triseptide withdrawal, Eli Lilly reported that only about 16% of study participants maintained at least 80% of the weight they had lost while on the drug one year afterward. We believe that a weight maintenance therapy should, at a minimum, retain at least 50% of their weight loss at one year. A home run would be for a majority of patients to retain at least 80% of the weight they had lost at one year. Given the magnitude of the unmet need, we believe this range of outcomes would be a tremendous victory for patients who need to maintain their hard-won weight loss. And despite the development of a variety of products for obesity, ranging from peptides to small molecules to siRNA approaches, we are unaware of any other products in development that have the potential to sustain metabolic benefits for more than one year after drug discontinuation, like the ones we are developing at Fractal. The German real-world registry study in patients with type 2 diabetes has given us valuable data that validates our confidence in Revita as a potential solution. We have seen impressive clinical results in the first tranche of 17 patients who have achieved one year of follow-up. Despite the fact that these individuals represent a hard-to-treat patient segment, at 12 months post-Revita procedure, mean weight was reduced by more than 7 kilograms within one month and then sustained for one year thereafter. At 12 months post-procedure, 94% of participants reported they would undergo Revita again, and 100% would recommend the procedure to a family member or friend. To date, no device or procedure-related serious adverse events have been reported. Think about what this means. In a hard-to-treat patient population, they undergo a procedure, and one year later, they are living their lives at a lower weight sustainably. We believe this is a very powerful clinical profile for weight maintenance therapy in a real-world setting. Looking beyond data and with an eye towards commercialization, we plan to leverage our relationships with GI endoscopists who specialize in bariatric and metabolic endoscopy to build a scalable and efficient commercial model. These physicians have a built-in patient base actively seeking sustainable weight management solutions and a strong referral network from primary care providers. The integration of Revita into these existing workflows, where millions of endoscopic procedures are already performed annually for patients with obesity, creates a clear, high-volume opportunity for broad adoption. Unlike traditional drug-based approaches, Revita represents a durable, procedure-based intervention designed to fit seamlessly into the standard of care for patients transitioning off GLP-1 therapy. We look forward to continuing to build out this targeted commercial model and discussing our path forward in future quarters. Now let's talk about Rejuva, our next generation approach to metabolic disease. Unlike traditional GLP-1s that bombard your system with high drug levels, our smart GLP-1 candidates are designed for physiologically regulated expression. More GLP-1 when you need it, where you need it, and how much you need. we believe this is the next generation of incretin therapy. Moreover, the anticipated low viral doses can enable a low cost of goods and a new pricing model for gene therapies because a patient population at risk is so large. This is a new commercial model for gene therapies and one that we believe can overcome the challenges of commercializing gene therapies to date. At the end of last year, at the World Congress for Insulin Resistance, We presented key preclinical data demonstrating the successful, targeted delivery of Rejuva 001, our smart GLP-1 pancreatic gene therapy, in large animal models. Using our proprietary endoscopic ultrasound guided system, we achieved safe and precise pancreatic delivery in Yucatan pigs at a low total viral dose, closely mirroring our planned first-in-human studies. Results showed therapeutically relevant GLP-1 expression within pancreatic beta cells with no adverse safety effects, reinforcing Rejuva001's potential as a breakthrough approach for type 2 diabetes. We recently met again with German regulators and achieved alignment on a patient population and study design for the Rejuva001 person-human study. Our primary focus will be to evaluate its safety and tolerability, And the study is also designed to provide an early indication of potential efficacy to help determine the optimal dose for a future Phase III study. We plan to investigate OO1 in a patient population with uncontrolled type 2 diabetes who are on a GLP-1 drug and between one to three other non-insulin glucose-lowering agents. We're very encouraged by the positive dialogue with German regulators and the favorable feedback we have received thus far on our preclinical program and data. and our upcoming CTA filing. And with this critical validation and alignment in place, we are on track to submit this first CTA module to regulators in the first half of 2025. And if our CTA is authorized, expect to report preliminary data in 2026. We hope to show how a smart GLP-1 can reshape the treatment paradigm in metabolic disease and bend the curve toward remission of obesity and type 2 diabetes. With that, I will now turn the call to Lisa to provide an update on our fourth quarter and full-year financials. Lisa?