Fractyl Health, Inc.

Good afternoon, and welcome to Fractal Health's second quarter 2026 financial results and business update call. As a reminder, this conference call is being recorded. At this time, all participants are in listen-only mode. There will be a Q&A session following management prepared remarks. I will now turn the call over to Brian Luque, Head of Investment 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 Lara Smith Weber, 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 quarterly report on Form 10-Q 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 Harith.

Thank you, Brian. Good afternoon, everyone. Nearly 30 million Americans are now on GLP-1 therapy. Approximately 1 million are discontinuing each month. What happens after discontinuation is now well characterized. On average, patients regain roughly 60% of their prior weight loss within 12 months of stopping therapy, and cardiometabolic benefits begin to erode even earlier. For many patients, the choice is either to resume chronic pharmacotherapy or accept substantial weight regain. We believe Revita has the potential to offer a third option, durable, drug-free weight maintenance following a one-time endoscopic procedure. A year ago, that was our thesis. Now, we have the first randomized sham-controlled evidence supporting that thesis one year after GLP-1 discontinuation and the most direct read-through to the Remain-1 pivotal cohort expected in early Q4. On our last three calls, I laid out four pillars that give us conviction in RUVIDA. First, the clinical signal is real. Second, our pivotal study is built to win. Third, there is a clear path to commercial value. and fourth, we are funded through definitive data later this year. Let me take each of them in turn, but I'll spend most of my time on the commercial opportunity today. Pillar one, the clinical signal is real. On July 15th, we reported one year randomized data from the Remain One midpoint cohort. The study asked a simple question. One year after stopping a GLP-1 therapy, how much of the weight loss do patients keep? Revita patients maintain more than 80% of their prior GLP-1 induced weight loss at one year, compared with 46% in the sham arm. The treatment effect held from month six through month 12 under maintained blinding in a cohort where not one patient reinitiated GLP-1 therapy. And an additional piece of confirmatory evidence, the open label REVEAL-1 cohort showed a consistent signal in June with participants maintaining approximately 78% of their prior weight loss through one year after a single procedure. So we now have two different patient populations showing one year of durable weight maintenance and compelling effect size after Revita. This directly addresses the most important question about our six-month data presented earlier in the year. Were we producing durable separation or simply delaying weight regain? Dr. Adarsh Thacker of UCLA, a principal investigator on Remain One, named that concern on our July call and told us that the curves are now showing hints of a plateau at the one-year mark. Two details sit behind those numbers. The strongest results came in patients who achieved complete ablations and higher run and weight loss, the two variables the pivotal study is enriched for. And the sham arm behaved as published literature would expect and predict, providing strong external validity to the study outcomes. I'd like to spend a minute on safety and tolerability because I believe it is one of the largest single drivers of Revita's eventual adoption. Through one full year, there were zero device or procedure-related serious adverse events. In fact, in the midpoint cohort, there were only four mild treatment emergent adverse events in the entire study, all resolved within two days. For a procedural therapy in obesity, this is an unusually clean profile, and it is the reason we believe adoption by physicians and patients may be substantial. Compare this profile with the only alternative these patients have today. GLP-1 medicines are associated with high rates of GI adverse events. The more potent the agent, the more adverse events. Primary care providers are already referring patients to gastroenterologists to help manage these GI side effects. That potential to address a real concern for patients is why a gastroenterologist is prepared to offer this procedure to the patient who walks into clinic or the endoscopy suite and why a patient who cannot or will not stay on a GLP-1 is willing to try it. Pillar two, the pivotal is built to win. The Remain One Pivotal cohort is a larger, well-powered version of the midpoint cohort, just run larger. Same patient profile, same protocol, same investigators, same blinded dietician oversight. It is the largest sham-controlled GI endoscopy pivotal trial for a novel therapeutic device ever conducted. We completed randomization in February with more than 300 participants, across more than 30 sites with more than 20 operators. Importantly, the pivotal is enriched for the two variables that were associated with greater treatment effect. The threshold for a complete ablation is 14 centimeters. In the pivotal, the median ablation length is 16 centimeters and the mean is closer to 17. The threshold for higher run-in weight loss is approximately 17.5%. In the pivotal, the mean run-in weight loss is 18.3%. We have two co-primary endpoints, and based on the data we've generated to date, we estimate both are well-powered above 95%. The first is percent total body weight regain between Revita and Sham at six months. The required margin is a separation of roughly two and a half percentage points, and the midpoint MITT result using the pre-specified statistical analysis plan submitted to the FDA clears that comfortably. The second is the responder rate. The FDA mandated pre-specified performance goal is a single arm result of at least 50% of patients maintaining at least 5% total body weight loss at 12 months. In the midpoint cohort, that figure was 73% in the MITT population and above 90% in the complete ablation population. Every operational metric that we believe is important to the pivotal success continues to track favorably. Retention remains well above 90%. Medication resumption remains below our model assumptions. The blinded adverse event profile remains consistent with what we have seen across prior studies reinforced by our DSMB interactions. We remain on track to report top-line six-month primary endpoint data in early Q4, 2026 and expect to report top-line 12-month data from the Remain One Pivotal cohort in Q1, 2027. On the regulatory front, We have favorable FDA feedback in hand that Revita's safety profile is consistent with a moderate risk rather than a high risk device classification. We remain on track for a potential de novo submission in late Q4, 2026, following the six month pivotal data readout. As with all applications, final pathway determination will follow FDA's review of the complete safety data set, which we intend to include in the submission. Pillar three, the path to commercial value. One overarching point. The trends that are shaping the GLP-1 market strengthen Revita's commercial opportunity. They expand the addressable market, they increase the potential treatment effect, or they improve the economics, and often all three at once. We will take you through the detail at our Investor Day in September. First, the market opportunity is well understood by all key stakeholders. FDA has granted Ravida breakthrough device designation for post-GLP-1 weight maintenance. CMS has begun covering GLP-1s for weight loss while openly raising concerns about frailty and about the affordability of a therapy taken for life. And physicians are already fielding the question. Patients are asking obesity medicine specialists how long they need to stay on the medicine at the moment they are provided the first prescription and gastroenterologists are now taking referrals for GLP-1 side effects with no off-ramp to offer as of yet. And here is the part I think is most underappreciated. It does not need a new site of care either. These patients are already in GI clinics and GI labs every day and the endoscopy suites, physician expertise and clinical workflows are already in place. Second, we view the oral era as a demand engine. One question we often hear is whether more convenient GLP-1 therapies reduce the need for Ruvida. The evidence to date suggests the opposite. Most oral GLP-1 initiations are new prescriptions rather than switches, and there is no evidence that oral formulations lower the barrier to stopping. Every initiation, oral or injectable, is a potential future discontinuation and need for an off ramp. Third, the next generation of these medicines may increase rather than diminish Revita's treatment effect. As next-generation therapies deliver even more weight loss, the need for a durable off-ramp only grows. In the Remain program, the placebo-adjusted Revita treatment effect in the midpoint cohort increased with greater run-in weight loss. The more weight a patient lost on drug, the greater the weight regain after discontinuation, and the larger the measured Revita benefit. Fourth, payers are converging on the need for a durable solution. A major development this year was the introduction of the Medicare GLP-1 bridge demonstration, having gone live on July 1st in a population that has both the highest obesity prevalence and high discontinuation risk. CMS administrators expect single-digit million number of patients under Medicare to be on GLP-1s within the next year. The bridge program sunsets at the end of 2027 and the major payer objection is not that obesity treatment does not work. Their concern is the affordability of treatment that continues indefinitely together with poor adherence and high discontinuation in real-world practice. That is exactly the challenge Revita is designed to address. Pillar four, we are funded through definitive data. Fourth and finally is our capital situation. Lara will take you through the quarter in detail, but let me state our posture plainly. We ended the quarter with $47.1 million in cash. Our runway extends into early 2027 beyond the pivotal data readout and through a potential de novo submission. Our ATM facility remains closed. We do not plan to raise capital before we have pivotal data in hand. The marked reduction in cash outlay in the second quarter versus the first or versus next year versus last year reflects the completion of pivotal randomization and sustained fiscal discipline across the organization. This is a deliberate choice grounded in conviction. We believe the pivotal data will be positive and we are choosing to operate inside our existing capital envelope through the most consequential two quarters in this company's history as a signal of management's alignment with shareholders. Turning briefly to Rejuva, our smart GLP-1 gene therapy platform targeting long-term metabolic remission from a single dose. In Q2, we received clinical trial authorization in the Netherlands to initiate the Phase 1-2 first in human study of Rejuva 001. We have also now received Ethics Committee approval in Australia. We believe Rejuva 001 is the first AAV-based gene therapy candidate to enter clinical development for type 2 diabetes. 001 is a one-time beta cell targeted gene therapy designed to enable nutrient responsive physiologic GLP-1 expression within the pancreas delivered by a minimally invasive endoscopic ultrasound guided infusion. The design intent is to avoid the high circulating drug levels that drive the side effects associated with systemic GLP-1 therapy. The primary objective of the first in human study is to evaluate the safety and tolerability of 001 together with the feasibility and safety of delivery to the pancreas using the Rejuva system. Secondary objectives include assessment of glycemic effect using continuous glucose monitoring and mixed meal tolerance testing, characterization of GLP-1 secretion, and evaluation of immune response. The study uses staggered sentinel dosing in which the first participant is monitored for a minimum of 14 days and their safety data reviewed before any additional participants in that cohort are dosed. We expect to dose the first patient subject to imminent site of activation and patient enrollment and to report preliminary data in the second half of this year. Importantly, Rejuva's clinical development is funded within our existing runway and does not compete with Revita for capital. Before I hand to Lara, here is our near-term calendar. In early September, we will host an investor day to walk through the commercial opportunity, our market access strategy, and the health economics work our new Senior Vice President of Market Access and Commercial Strategy, Mike Zumdahl, and his team have been leading. In early Q4, we anticipate reporting top-line six-month randomized data from the Remain One pivotal cohort. In late Q4, we anticipate our potential FDA de novo marketing application submission. and in Q1 next year, we anticipate reporting top-line 12-month data from the Remain One pivotal cohort. Lara?