Morphic Holding, Inc.

Ladies and gentlemen, this is the operator. My name is Myra. Thank you for standing by and welcome to the Morphic Financial and Operational Results 2020 year-end conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. And to ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, simply press star zero. With that, I would now like to hand the conference over to our first speaker, Chris Ehrman, Senior Vice President of Communications. Thank you, and please go ahead.

Thank you, Myra, and good morning, everyone. Thanks for attending Morphix's first investor call. Today, we will review our 2020 operational and financial results and also provide an update on the ongoing Phase I clinical trial of MorphO5-7 A little housekeeping. This morning we issued two press releases. The first reported results for the fourth quarter and full year ended December 31st, 2020, and the second announced the preliminary positive results from the single ascending dose portion of our ongoing phase one trial of Morpho 5-7. These releases, as well as our most recent corporate presentation, are available on the investor section of our website at morphictx.com. Also, before we begin, please note that we'll be making forward-looking statements as defined in the Private Securities Litigation Act of 1995. These statements will include, among other things, projections regarding the timing of key events related to Morphix's proprietary pipeline and financial guidance for 2021 and beyond. Actual results may differ materially from those projected in the forward-looking statements due to numerous risks and uncertainties that exist in Morphix operations, development efforts, and the business environment, including those factors discussed in our reports on 4Q and 10K and other documents filed with the Securities and Exchange Commission. The forward-looking statements contained in this call represent the judgment of Morphic as of today. Morphic disclaims any intent or obligation to update any forward-looking statement except to the extent required by law. Now, here's a quick roadmap to what we'll cover today since we're reporting the financial results, but we're also especially excited to discuss the data from the Morpho 5-7 study. Hosting the call today is Dr. Praveen Tiparneni, our Chief Executive Officer. Dr. Mark Sedren, our Chief Operating Officer and Chief Financial Officer, will cover our strategic and financial updates. Dr. Bruce Rogers, our chief scientific officer, will provide some background on the Mint platform and our emerging pipeline. And finally, Dr. Peter Lindy, our chief medical officer, will describe the data that we announced earlier this morning. We'll then open the line for Q&A, and with that, I'll hand the call over to Praveen.

Okay. Thank you, Chris. We are live. I'm Praveen Tipraneni. Welcome to Morphic Live, our very first conference call. For our first clinical stage program, we hit the ground running and with stunning data. That's why we decided to have this call. The news we are sharing today is what we've been working for since the founding of Morphic. Just on my way over here this morning, I was thinking, what a relief. I always thought our thesis for 057 was obvious. An orally available alpha-4, beta-7 inhibitor for IBD would be a huge asset for patients and for Morphic. We believed we could do this, but still a million things could have gone wrong. On any individual day, Bruce could have said, this is it. But day by day, his team solved one problem, the next one, the one after that, and if you solve enough problems, you get data like ours today. So what's the backstory here? We took a long shot several years ago to turn the table on an area with promise, but decades of consistent failure, oral integrin R&D. Because we and our founding scientists are the experts in integrin science. Today, we're able to share the evidence that the bet we made is paying off. It's one of those rare times, the culmination of years of work, where we get results even beyond our greatest expectations. The data we are discussing today are early but predictive. We'll explain why later. But before we give you all those details, a story just came to mind that illustrates what I think we've accomplished. What keeps you up at night? We've been asked this question many, many times, actually mainly from investors. For five years now, I have always had the exact same answer. It's pharmacokinetics, PK, predicting PK in humans based on preclinical data. It isn't rocket science. It's actually harder. NASA can land a rover on Mars barreling through its atmosphere at five kilometers per second, but you cannot reliably predict how drugs will behave when they hit humans. It was on my mind every day. Oral alpha-4 beta-7 inhibition to treat IBD is a totally obvious need, if you only had the molecule to get there. Well, Houston, Morphic's rocket scientists came through in a big way, leading to the data we reported this morning. Now, let me turn the call over to Mark, who will give an update on our operations and 2020 financial results.

As Praveen mentioned, 2020 was a great year for Morphic on both the operational and financial sides of our business. On the BD front, the Mint platform has generated opportunities for us to expand our therapeutic reach as well as provide significant non-dilutive capital for the company. And in 2020, we achieved important milestones in our partnerships with both AbbVie and the Janssen Division of J&J. In August, we announced that AbbVie, our partner in the Alpha V Beta 6 program for fibrosis, exercised their option to assume development leadership of the assets targeting the Synegrin. For historical context, we brought two development candidates forward in this mechanism, in a rapid timeframe, beginning with the initiation of this collaboration in late 2018 to the option execution just last summer. Morphic received a $20 million payment for AbbVie's option exercise at that time, in addition to the original $100 million upfront payment. Beyond just the financial benefits, this partnership has substantially increased our expertise in the fibrotic space, which accelerated other efforts we have in our earlier stage proprietary pipeline. Our partnership with Janssen represents a very different type of collaboration that is additive to our integrin expertise in both therapeutic area diversity as well as treatment modality. The Janssen collaboration is an earlier stage partnership, and while still undisclosed, we can say that this is in a new therapeutic area for us that extends beyond just fibrosis, GI, and oncology. The progress and promise in this partnership has been recognized by our partners at Janssen through the recent expansion to now include a third target, The goal here will be to discover an antibody activator of a particular integrin, which is a first for us in Morphic. Moving on now to the financials, and I'll be very brief since I know you're probably more interested in our clinical data, and all those details and more are available in our 10-K that we're filing today with the SEC. The company reported a net loss of $45 million, or $1.47 per share, for the year end of December 31, 2020, compared with a net loss of $43.3 million, or $2.69 per share, for the year ended December 31, 2019. As of December 31, 2020, the company had a total of approximately $228.3 million in cash, cash equivalents and marketable securities, versus $237 million as of December 31, 2019, which represents a total net cash burn in 2020 of about $9 million. Full year collaboration revenue for 2020 was $44.9 million, which includes the $20 million received from AbbVie compared with $17 million for the full year 2019. Research and development expense for the full year 2020 was $73.6 million, compared with $53.7 million for the full year 2019. The increase is due to increased external development costs for our partner programs and wholly owned programs, along with increased headcount and employee compensation costs to support our pipeline. Moving on now to our 2021 guidance, we expect our cash to be sufficient to fund operations into 2023. Before we move on to the most exciting clinical portion of the call, I wanted to mention that today's purpose was primarily to address a significant clinical update. And while this happened to coincide with our year-end results, we don't plan to conduct a similar call each quarter in the absence of a material corporate or clinical update. Now I'll turn the call over to Bruce to describe our Mint platform and provide some scientific context for how his team was able to generate, for the first time, integrin inhibitors capable of generating the type of data we presented this morning. Bruce?

Thanks, Mark. Today, I'll give you a quick overview of the Mint platform. We built this platform at Morphic with one purpose in mind, integrin drug discovery. I'll introduce a couple of new examples of the promising candidates that Mint has generated for our early-stage pipeline and describe some of the challenges we faced designing Morpho 5.7. Oral integrin inhibitors introduce an extremely challenging set of problems, and the solutions to these problems, I think they'll provide you with some useful context for the phase one results that Peter will discuss in just a few minutes. Morphic, and by extension our mint platform, was founded with the goal of discovering and developing oral medicines that modulate integrins, an all important class of biological receptors that is the only class of receptors capable of bidirectional signaling. Our work at Morphic is based on the pioneering research of Dr. Tim Springer at Harvard's Boston Children's Hospital. He discovered this class over 30 years ago. we strive to create oral integrin drugs based on the tremendous therapeutic promise for integrin modulation. The clear evidence of integrin's promise, it is demonstrated by the immensely successful biologic drugs from this target class of receptors that have been developed over the past three decades. These biologics include life-saving cardiovascular drugs as well as life-changing drugs to treat IBD. However, efforts to create the oral integrin drugs have previously failed. due, we believe, to a lack of understanding of the receptor itself. This is the challenge we assumed at Morphic. And with Tim's foundation and vision, we believe we have succeeded in cracking the code for the creation of a new class of oral integrin candidates with our platform. Mint is a three-pronged platform that includes the following. First, a one-of-a-kind understanding of integrin structural biology. Our insights into the structure and conformational behavior of integrins is truly unparalleled. This had historically been an intractable problem for researchers, but at Morphic, we've elucidated the structure of each and every integrin in its relevant conformation that we've attempted to solve so far. In total, we have access to half of the integrins in their various conformational states, having solved now over 300 ligand-bound crystal structures. We believe that the ability to understand the structure of integrins is paramount in describing highly selective integrin modulators, affording us a tremendous advantage in the integrin space. Second part of our platform, a tunable product design engine. A key element to our design engine lies in the proprietary chemistry capabilities that the Morphic team has developed over the past five years. We have the ability to develop candidates that stabilize the integrin receptor in the specific conformational state of our choice. Our library of chemical compounds now exceeds 12,000 and continues to grow. Our in-house medicinal chemistry capabilities coupled with our understanding of integrin structure enables the creation of highly selective small molecule candidates that we believe are required to precisely modulate the integrin activity and provide therapeutic benefit while avoiding any off-target activity. We've also integrated our chemistry expertise with the powerful computational chemistry capabilities of Schrodinger to accelerate our optimization of our chemical designs. Morphic has an exclusive license in the integrin space and to use the in silico structural modeling and physics-based guidance that Schrodinger provides. The third component of our MIT platform, a focus on biology and translation. This is the key part of understanding the mechanism of action of our selective integrin candidate inhibitors and translating that pharmacology into the clinic. We've invested heavily here, and we've developed perhaps the most diverse assay set in the integrin space, standing in vitro to in vivo to ex vivo assays. This enables us to develop a sophisticated understanding of integrated biology across a range of diseases based on studying human disease cells and tissues, and we are using that knowledge to develop oral candidates for clinical studies. As a visual metaphor at Morphic, we like to describe the Mint platform as a flywheel. To us, this beautifully describes the integrated benefit that we get, the iterative benefit that we get when we turn the Mint crank again and again. Through this iterative process, we gain learnings from one integrin project that's directly applicable to the other and provides synergy as we repeat. A fantastic illustration of this are our efforts in the Alpha V family of integrins. This is a natural example where our chemical and biology knowledge gained first through our work on Alpha V Beta 6 naturally informed the chemistry and structural biology of the other two programs in our portfolio to new programs, Alpha V Beta 1 and Alpha V Beta 8. This is because these integrins are structurally very closely related and the knowledge gained in one program is now directly applicable to the next. A different and perhaps more tangible example of this is time. Our Morpho 5-7 program took three years from inception to the identification of our development candidate, Morpho 5-7. We brought the Alpha B beta 6 candidates from inception to development candidate in less than two. This is the beauty of our flywheel in action. I mentioned briefly our Alpha-B-Beta-1 program where we have highly selective compounds already in hand for fibrosis. But an area I'm particularly excited about today is our Alpha-B-Beta-1 inhibition program. It's used in targeting immuno-oncology. We recently disclosed early but very promising data that demonstrates that inhibition of Alpha-B-Beta-8 can turn a cold tumor hot. In other words, those tumors that despite the promise of immunotherapy are not susceptible to PD-1 those tumors actually respond when they are treated with immunotherapy in combination with our alpha-beta-8 inhibitors. While these data are early, they are in well-characterized models, and we will share more of these data at medical meetings this year, starting with AACR in April. Finally, let me transition with Morpho 5-7. This is another outstanding example of the power of our platform. When we started this program, we set out to design a highly specific alpha-4-beta-7 inhibitor to replicate the therapeutic potential of an already approved biological therapy for IBD. In doing so, we knew that inhibition of a closely related integrin, alpha-4, beta-1, would be disqualifying because it's linked to a very rare but serious CNS condition called progressive multifocal leukoencephalopathy, or PML. To identify the solution to this problem, we solved over 45 alpha-4, beta-7 crystal structures, each and every one of them telling our chemists something new to incorporate into the design of the next compound. The Schrodinger team, they work side by side with us using advanced medicinal chemistry computational multi-parameter optimization tools and the power of free energy perturbation or FEP calculations to predict the potency of molecules before we ever step in the laboratory and make them. We did over 10,000 quick FEP scans in this program, over 1,000 full FEP calculations to identify just a little over 300 compounds in this series to make in the lab. identifying and leading to the discovery of Morpho 5-7. Our MIT platform, in a little tenacity, we brought these together and we were able to design a molecule that's over 3,000-fold more highly selective for its intended target, alpha-4-beta-7, than the target we sought to avoid, alpha-4-beta-1. This was accomplished while maintaining high-quality oral drug properties to ensure good permeability, leading us to a solution projecting good oral human PK was possible based on our in vivo work. With this candidate in hand, we profiled extensively in ex-vivo as well as in vivo assays. We built a high-quality receptor occupancy assay that we've now deployed to the clinic to connect our data directly back to the activity of that approved biologic that I talked about a little bit ago. Identifying the solution to this type of challenge is why we believe that at Morphic, we've built a platform that may be able to access not only the potential of alpha-4 beta-7 with Morpho 5-7, but the broader potential of integrins with oral therapies where others have failed in the past. So now, let me hand the mic to Peter, who can go through our clinical data on Morpho 5-7 to support this thesis.

Thank you, Bruce. As Bruce described, Morph-057 is designed to be a highly selective and orally available inhibitor of the alpha-4, beta-7 integrin. This is an extremely well-validated target in IBD, given the enormous clinical and commercial success of the approved monoclonal antibody therapeutic, Vitalizumab, which is typically administered via repeated IV infusion at a hospital or infusion center. The SAD portion of the phase one trial of Morpho 5-7 began in Healthy Volunteers last September and consists of a single ascending dose portion of five cohorts, a multiple ascending dose portion with three cohorts, as well as a small food effect study. Earlier this morning, as Praveen mentioned, we announced the top line data from the completed SAD trial, while the other two trials are ongoing. The SAD portion consists of five early dose cohorts, 25, 50, 100, 150, and 400 milligrams. At each dose, we of course assess safety and tolerability, but also pharmacokinetics and the highly relevant pharmacodynamic biomarker of alpha-4, beta-7 receptor occupancy, or RO. Binding of the endocrine receptor on the T cells in the systemic circulation prevents its interaction with MADCAM1, which therefore prevents these T cells from entering the gut tissue where they cause the inflammatory damage that characterizes inflammatory bowel disease. If we can prevent these inflammatory cells from ever entering the gut tissue, then we believe we can significantly alter the course of this group of diseases. And we measured the receptor occupancy 12 hours after the single dose to conservatively assess what we expect to be the trough concentrations in a twice-daily or BID dosing regimen. As a reminder, Moravit's goal has always been to achieve alpha-4, beta-7 receptor occupancy of 90% or more at our chosen dose at steady state. As you may have seen in our announcement this morning, those data are very much consistent with previously published preclinical data and are now available three beds couldn't be happier with the results at this stage. First, in terms of the primary safety measures of this phase one study, MORF057 was well tolerated at each dose administered. There were no serious adverse events, or SAEs, reported in any patient. There were also no severe adverse events, a more conservative view of significant adverse event reporting. In addition, there were no clinically significant treatment emergent laboratory abnormalities in any patient. Notably, we were not able to observe any quantifiable inhibition of a separate integrin alpha-4 beta-1 in any of the subjects at any of the doses. This is important because inhibition of alpha-4 beta-1 is associated, as Bruce mentioned, with the condition known as PML after chronic administration. Therefore, we are pleased that the preliminary results of this study are consistent with our previously published preclinical results referring to high selectivity of MORF057-4 alpha-4 beta-7 over alpha-4 beta-1 receptors. In terms of PK, MORF057 demonstrated pharmacokinetics consistent with our modeling and also with BID dosing. And most importantly, with respect to the key pharmacodynamic measure, alpha-4 beta-7 RO, we achieved levels that truly exceeded our own ambitious goals even after only a single dose. A couple of notes about these data. Each of these data readouts reflect the mean values of receptor occupancy of the alpha-4, beta-7 integrin measured in that cohort, conservatively 12 hours after administration of a single dose of Morpho 5-7. Also, I'm glad to report that these data support a consistent progressive dose response curve that we all hope for in drug development. the mean receptor occupancy for the lowest tested dose, 25 milligrams, was greater than 70%. The mean receptor occupancy for the 50 milligram dose cohort was greater than 85%, while for each of the 100 milligram, 150 milligram, 400 milligram cohorts, mean alpha-4, beta-7 receptor occupancy was greater than 95%. It is also very important to note that we see the ability to saturate alpha-4, beta-7 in specific subjects in all SAD cohorts above 25 milligrams, again measured in 12 concentrations of MorphO5-7. Finally, our pharmacokinetic modeling really suggests that we'll be able to saturate the receptor with BID dosing. With these data in hand, we are now focused on completing the MAD and food effect studies and then submitting those data for presentation at a GI-focused medical meeting in the middle of the year. We are, of course, working in parallel to design the Phase II program in ulcerative colitis patients and look forward to announcing those plans after the full Phase I data set is reported out. In summary, these data obtained across a wide range of doses provided us with strong conviction that our platform was able to generate a highly specific, orally available, and highly potent inhibitor of alpha-4 and beta-7 on par with currently approved biologics, but with the advantages and ease of oral administration. If these results are borne out in future studies, we believe that Morpho 5-7 could ultimately represent a dramatically improved treatment option for those suffering from inflammatory bowel diseases, such as ulcerative colitis and Crohn's disease.

Thanks, Peter. This concludes our prepared remarks, and we'll be glad to take any questions. But before we do, I'd like to just take this moment to thank the Morphic team. Our goal has always been to bring integrin medicines to patients. 2020 has been a remarkable year for all of us. The global health crisis has bent and broken us, but as Dickens predicted, hopefully into better shape. The just and unjust causes of social discord have spilled into the streets and reminded us that we still have miles to go. At Morphic, we channeled those events and focused on what matters most, our health, our families, our work, and our patients. And through this, we had a spectacular year. Though apart, we came closer together as a company, and I'm so proud of the team's work and their many accomplishments in the midst of so many distractions. We still have a long journey to go, but we've made tremendous progress, and it's due to their incredible creativity, knowledge, and dedication. Operator, at this time, feel free to open the line for questions.

Thank you. At this time, we would like to take any questions you might have for us today. And as a reminder, to ask a question, you will need to press star, then the number one in your telephone keypad. To withdraw your request, you may press the pound or hash key. We'll pause for a moment to compile the Q&A list. Our first question comes from the line of Michael Lee from Jefferies. Your line is open. Please go ahead.

Hey, guys. Good morning, and congrats on some great data. Very exciting. Two questions that I think are related. Maybe just the first question is describing the assay and maybe just quantitatively differences between greater than 95 or even higher than that. Maybe just describe some of that. Is it all basically the same at the top doses? And what would you expect if you gave chronic multiple steady state dosing? So that's kind of the first question. And the second question is just what other answers and what do we expect to learn from the MAD study, I think, that's going on? And how fast can you move to a phase two? Thank you so much.

Thanks, Mike. Good to hear from you, Mike. I think I got like four questions there, but I appreciate it. Actually, Mike, I think we did answer most of those questions in the call itself, but let me pass it to Bruce and to Peter to talk about it. But I think the first one we were talking about the assay and about saturating receptor. I think most of those were in the call script. So Bruce, and then we'll come back to, I'll have Mark here talk about the MAD study and the phase two start.

Thanks, Michael. Let me describe the assay first and your question about 95 and higher. And yes, we are currently looking at all of the data very carefully, but I want to step you back to how the assay was actually developed. So we have a fluorescent-based MAD-CAM approach to the assay that we've actually formulated here, and it's fluorescence that we're actually looking at in the assay. So we do an ex vivo assay and then assess fluorescence. the mean values were reported as greater than 95. So what that tells you, based on what we described, is very similar to what we reported non-clinically, and that we actually are above that 95% receptor occupancy most of the time, and we're able to essentially saturate the receptor often. Is there a big difference between the two? From our non-clinical data, there's some differential between those, but really what it's saying is that we have the ability to saturate the receptor when we're above that 95% based on what we've shown. I'll turn it to Peter now to describe the clinical results.

Thanks very much for the question, Michael. With regard to what we plan to learn in the MAD, obviously with multiple dosing, we're going to be looking at PK and receptor occupancy and seeing what that is under multiple dosing. As we said in the announcement, the MAD and the food effect are both ongoing and they're both critical inputs into our final phase two design and therefore the timelines which will be discussing after the results were read out mid-year.

I think we have to mark here to talk about the timing of the phase two.

Yeah, absolutely. I mean, I think, thanks for the question, Michael. I think, you know, the MAD study, all your questions were really related in the sense that the MAD study will contain additional data with respect to the RO, also patient-by-patient details for the SAD and the MAD portion of that study. And that's really the data that we're going to analyze specifically, you know, in collaboration with our KOL expertise to design the trial or trials that will constitute our phase two program. And we'll announce the details as soon as we have them. Thanks, Michael.

Yep.

We have our next question. It comes from the line of Gregory Ranzal from RBC Capital Market. Your line is open. Please go ahead.

Hey, guys, congratulations on the data and all the progress, and thank you for taking my question. I just wanted to start with respect to measuring the receptor occupancy at 12 hours, certainly rather high exceeding those expectations here. I'm just curious how we may think about looking at the prospect of QD dosing, measuring that out to 24 hours, and maybe what the importance and the significance of that and perhaps the path forward there could be. Thank you.

Thanks, Greg. I appreciate it. Thanks for being on the call. It's a great question. I think the first thing to start with is that what we're looking for is to achieve a TPP of BID dosing. We think that's a huge drug in and of itself. And I think what we've shown today is that we clearly think we have a BID drug, which is one of what we've been looking for this whole time. But as you astutely noted there, these results are even much better than we expected. And so we are looking at what are the possibilities there for once a day. But at this time, we're comfortable saying that we've more than hit the TPP that we're looking for, and we think that's a really big drug here. Edgy Mark, anything to add to that?

No, absolutely. I mean, I think that really covers it. There's absolutely things that we're looking at behind the scenes with respect to potential QD dosing. The one you mentioned is certainly one, but there's also formulation work we can do which could potentially enable that. It's just a little bit premature to be making those promises. So for now, all we can really say is that we're even more confident in our ability to deliver a BID or twice daily dosing regimen for these patients based on the data, at least at this point.

That's great. Very helpful. And Mark, maybe just one more for you, if I may, just on the finance side. Just wondering if you could perhaps comment on some of the share counts, just so we can get that right, just looking at the 2019 versus 2020. And granted, coming public that year, I just want to make sure we understand any of the implications or drivers there. Thank you very much.

Absolutely. Thanks, Greg. And when you look at the financial statements that we're filing today with the SEC and even in our press release, you notice a large share count jump from 19 to 20, and that's probably the source of your question. It's a good observation. The accounting rules dictate that the basic share count used in the denominator of the EPS calculation is on a time-weighted average basis. And it was before my time, but we went public about midway through 2019. So when you look at our 2020 share count, it's 30 to 31 million shares, which is the correct share count. But when you look at 2019, it's about half that, 15 to 16 million shares. And that's only because we were public for approximately half of 2019, if that makes sense.

Fantastic. Congrats again on all the updates. Thanks, Greg.

We have our next question. It comes from the line of Kim from BMO Capital Markets. Your line is open. Please go ahead.

Hi. Good morning. Thanks for taking my questions. Congrats on the data. When you look at this data in detail and you start thinking about the potential Phase II dose, Is there sufficient differences between the highest dose cohorts that you see reason to dose over 100 milligrams? And related to that, are you seeing any dose relationship and safety in those three highest doses?

Yeah, let me – hey, Joe. How are you doing? This is Praveen. Well, thanks for the question. Yeah, no, I think as you noted there that you know, we believe that we're going to have very low doses going forward. I think that's really what you see here. And obviously that is, you know, so far the drug is as safe as can be, and it bodes very well going forward on just how low those doses are, right? And so I think, I know we feel like we're in a we're in very good shape from a doses perspective and a very clean and safe profile here.

Okay, great. And I was hoping that you could tell us where the FDA is at in thinking of the possible PML risk associated just with selective alpha-4, beta-7 inhibitors, are they comfortable that if you avoid alpha-4, beta-1, that you won't be linked with PML and not have the potential class label that Antivio has?

Well, you know, there will be ongoing dialogue all along, though. But, yeah, we're very comfortable, you know, with the results that we've shown today that there is no risk of PML at this point, right? You know, this is like taking Tysabri once a year is the dosage that you're talking about here, right? And so, you know, we think there's, you know, no risk.

Great. Thank you. And congrats again. Thank you.

We have our next question. It comes from the line of . Your line is open. Please go ahead.

Good morning, guys. Thanks for taking the question. Praveen, could you detail any more information on just the general AEs, even mild or moderate? I guess specifically I'm just looking at GI tolerability even at these high doses. And then I wanted to just ask about the consistency or the variability interpatient of the binding that you observed? Was it within your expectations?

Yeah, great. I'm happy to speak on both of those. Yeah, so why don't we take it, I'm sorry, what was the first question again? I think, yeah, you astutely answered I mean, that's the one to think about there, right, is that GI one, and we showed no issues there whatsoever, right? And so I think you keyed in on exactly the right thing there, and, you know, it's very positive from an 057 perspective, and we saw nothing else as well. In terms of the Consistency and variability, again, there, I think, you know, you can look to our press release, but, you know, the PKA tracks the, you know, RO very tightly. And so we've shown a very tight consistency that, you know, that is able to pick the right doses for phase two. So on both those fronts, you know, we're very confident.

Great. And just a quick follow-up. On your food effect study, what does the chemistry – of your molecule suggest the food effect may be? Like, would this be a fed fasting thing, or would this be like a high-fat, low-fat meal difference?

Yeah, yeah, so we're, this is just a routine food effect study, you know, that, you know, for this type of indication, but, you know, from a chemistry, Bruce, let me pass to him.

Yeah, you know, we've had a number of patents that are published within this space disclosing kind of the broad chemistry of our molecules that are out there. They're acid-based molecules that bind into the active site of the receptor. And we felt that running this food effect very early on would give us a good understanding of it. We're dealing with a GI indication, and we want to understand if there's any effect at all very early on. And so it's just a standard routine study that we're looking at.

got it okay so not anticipating anything great looking forward to the detail thanks thank you once again i would like to remind everyone if you wish to ask a question please press star then the number one on your telephone keypad to enjoy a request you may press the pound or hash key We have our next question from the line of Yanan Zhu from Wells Fargo. Your line is open. Please go ahead.

Hi, guys. Good morning, and thank you for taking my questions. And congrats on the data. So first, have you explored the receptor occupancy of Entevio in a system that is measured with your assay? in what range is the antiviral receptor occupancy? And then also, what might be any incremental benefit in receptor occupancy levels above 95%? Or maybe, perhaps in your mind, it's a threshold effect, and once it's above a certain threshold, you wouldn't try to aim at an even higher receptor occupancy.

Yeah, I'm happy to answer that now. I can pass it to Bruce for any details. But it is a different assay, right, because it's a biologic versus a small molecule. But I think the big picture concept that you're describing is that once you saturate the receptor, you prevent the pathology, which is kind of what we've shown here, right? And so we do... we have always said that we wanted to be an oral and tibio, right? And so our goal has always been to saturate the receptor, which is what we've shown today. However, if you look at the data elsewhere, there are possibilities that even lower will have benefits, but our target product profile is always to saturate the receptor, which is what we showed today. For any details, on the assay itself, which I'm not sure if you have a question there, but I'll pass it to Bruce to talk about that.

Yeah, you know, thanks for the question. The only place that we've compared them directly, of course, is in our non-clinical work. As Praveen mentioned, they are slightly different assays. The key thing to remember with Intivio is that description of saturation of receptor occupancy is what Intivio does. We demonstrated that as well. Setting a bar of 90% at trough, the key thing that we've seen in our non-clinical data is that when you look at that time period at 12 hours, that is the lowest receptor occupancy that we actually measure. And the fact that we're actually greater than 95% and in many of the subjects we're actually saturating at those higher doses, suggest that we're having an equivalent type effect. Mechanistically, this is the only mechanism we know of Intivio. We know that it inhibits the transgression of T cells from the periphery into the GI system. We studied that very carefully, and we can actually shut down that process in our non-clinical studies. But the only direct comparator we have is non-clinically, and we see high levels of receptor occupancy, much like we did with Intivio.

Great. And then just to have a, I'm wondering about the effect of affinity versus receptor occupancy. You know, Antibio is a large, is a protein, so it's not surprising that it might have higher affinity of binding to the target. But I'm just wondering, could you, you know, does affinity matter in this situation, or receptor occupancy can override affinity differences? Thank you.

Yeah, let me pass it to Bruce for that.

Sure. It's actually a really interesting question. So, you've really keyed in on something that's interesting about biologics versus small molecules. And I'll focus on 057 specifically. So, our molecules bind at the active site. They bind where MADCAM binds to activate and have its activity. And so, the affinity at the actual binding site is very relevant. And you want to make sure you can sustain that at, again, those high levels of receptor occupancy for long periods of time. So the affinity at that active site is important. The affinity you're actually measuring with an antibody is a different binding perspective, right? The antibodies typically bind to the surface. They have large parts of the surface that they actually bind to. So you can't really directly compare the two to your point. But the receptor occupancy is what we always come back to. If you're occupying greater than 90% receptor occupancy, which was our goal, that's a very high bar in terms of being able to sustain the effect that we need. Mark?

Thanks. Just to add on to that a little bit, remember 90% was our goal. at steady state at our chosen dose. It was not necessarily our goal for a particular dose in the SAD study. Remember, this is primarily a safety study that starts at nearly homeopathic doses. That's the intention of any SAD study. It's primarily safety. And so to achieve these receptor occupancies 12 hours after the dose, after a single dose, we think is really spectacular.

Thank you. Very helpful.

We have our next question comes from the line of Yasmeen Rahimi from Piper Sandler. Your line is open. Please go ahead.

Hi, team. Congratulations on the fantastic data and all the hard work behind the scenes to get this done. I just wanted to drill down a little bit on the pharmacokinetic profile that you could share with us. You did a phenomenal job in providing the pharmacodynamic details, but if you could comment on sort of, you know, half-life, AUC, excretion, dose dependencies to the next end, you can give a little bit more color, and that would be very helpful.

Hey, Edwina, great to hear from you. Thank you. You know, we're excited. I think most of that we can't describe today, mainly because of the publication. You know, the TKINRO are very tightly connected, So stay tuned. But, you know, I mean, you can understand we're trying to preserve a really high-quality publication in a couple months, and so we're not sharing all that data. But, you know, the PK and the RO are very tightly connected and correlated.

Thank you. Then maybe one more follow-up question. So as we anticipate this publication, can you maybe just provide a little bit of color of what additional biomarker or data points we should be looking forward to? to kind of correlate besides receptor occupancy to clinical remissions. If you could just give us a glimpse of maybe what are additional data points that are, in your view, key as you're educating us and providing more results.

Yep, yep. Thanks, Yasmeen. I'm going to pass it to Mark here.

Thanks, Yasmeen. Great to hear from you. There are a couple of things, I think, to look for in the upcoming presentation. One, of course, is all the details that's coming from the MADS study itself. So multiple weeks of dosing twice a day will provide a wealth of information not only on safety, multiple dose safety, but also kind of receptor occupancies at equilibrium. You also mentioned something in your question around additional biomarkers. And we really feel, especially in the healthy population, that by far the most relevant biomarker that translates from this population into a UC population is the receptor occupancy that we will be showing. Down the road in subsequent studies, there are additional secondary or exploratory biomarkers that we'll look at as a matter of course. but they're not nearly as telling, especially in the healthy population, as receptor occupancy. Again, as Bruce mentioned, that is, as far as we know, the only mechanism of the approved biologic, and so to the extent we can recapitulate that in the clinic, even in healthies, where the situation is very similar with respect to CD4 positive T cells and that receptor, we think that's what translates the best.

Thank you, team, for taking my questions and congrats again. Thank you.

We have our next question comes from the line of Matt Phipps from William Bayer. Your line is open. Please go ahead.

Good morning. Thanks and congrats. Praveen, you mentioned at the beginning that human PK had really been your answer to what kept you up at night or what worried you. So now that you seem to have some pretty nice PK data here with 057, I'm just curious what your answer will be to that question in the future.

Yeah, no, it's a good question. I was thinking about that last night as I actually touched with, you know, what would keep me up. But, you know, I think like you're keying in on, you know, I think it's very difficult to predict human PK and all of us have been burned in the past. I've been very cautious about that over all the years whenever that question came up. My answer has always been that Bruce is extraordinarily conservative. We have good confidence, but you never know until you find out the data. It was a big relief and we're super excited that the data came out even even better than we expected. Now, I think, you know, I'll have to think about that question more. You know, nothing, certainly in 057, there's nothing that concerns me at this point, you know, because the other thing is just how low those doses are, right, and it really bodes well. You know, another part of that question in the years past was, you know, I was never worried about the efficacy. You know, if we could design the molecule, there's a good basis for the efficacy. You know, if anything to think about is the safety. And here today, we kind of show just how low these doses are, which really bodes well going forward. So on 057, I'm just very comfortable at this point.

Great. Thanks for being curious.

Thank you.

And we have no questions at this time. Praveen, you may continue.

Well, thank you, everybody. Thanks for working with us all these years, and we're really excited to share great data and look forward to talking to all of you in the coming weeks and presenting all the data in a few months in a high-quality publication. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you all for participating, and you may now disconnect. Have a great day.