Nektar Therapeutics

Good day and thank you for standing by. Welcome to the Nectar Therapeutics Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Vivian Wu. Please go ahead.

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. With us on the call are Howard Robin, our President and CEO, Dr. Jonathan Zalewski, our Chief of Research and Development, Dr. Mary Tagliaferri, our Chief Medical Officer, Jennifer Ruddock, our Chief Business Officer, and Sandra Gardner, our Acting Chief Financial Officer. On today's call, we expect to make forward-looking statements regarding your business, including statements regarding the therapeutic potential of and future development plans for drug candidates in research programs, the timing of the initiation of clinical studies and the availability of clinical data for drug candidates, the timing and plans for future clinical data presentations, the formation, future development plans, or success of our collaboration agreements, the expectations following our corporate restructuring and reorganization plans, financial guidance, and certain other statements regarding the future of our business. Because forward-looking statements relate to the future, they are subject to uncertainties and risks that are difficult to predict, many of which are outside of our control. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our Form 10-Q that was filed on May 10, 2023, which is available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments, or otherwise. A webcast of this call will be available on the IR page of Nectar's website at Nectar.com. Before turning over the call to Howard, I would like to note that Jennifer will be moderating the Q&A session for our team so we can avoid technical issues during the session. We appreciate your patience. With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian, and thank you for all joining us today. The first half of this year has been a pivotal time for us. In April, we implemented a new strategic plan that focuses on our immunology programs and also extends our cash runway through at least the middle of 2026. Our most advanced program is RESPEG, which a large phase 2b study is being initiated shortly for patients with ectopic dermatitis. I'll talk more about that and yesterday's announcement in a moment. We're also continuing to advance our preclinical programs in immunology, a TNFR2 agonist antibody and a CFS1 program. Our goal is to file an IND for one of these programs in 2024. Additionally, we're continuing the two phase two randomized clinical studies for Nectar 255 in solid and liquid tumors. With our new strategic plan, we believe we've created a company that is strongly positioned to get to important value-enhancing phase two catalysts in 2024 and 2025. And these will come well before our cash runway guidance, which extends us into at least the middle of 26. So first and foremost, we're committed to advancing RESPEG, our first-in-class regulatory T-cell program. RESPEG is now a wholly owned asset of Nectar's And preparations are well underway to initiate a randomized phase 2B study for RESPEG in patients with ectopic dermatitis. And we expect to have initial data from this study in the first half of 2025. Yesterday, we announced that clinical efficacy data previously generated by Eli Lilly for RESPEG were incorrectly calculated for both ectopic dermatitis and for psoriasis. This discovery was made after all rights to RESPEG were returned to Nectar, and the raw data files from the RESPEG clinical studies were transferred to Nectar. The internal statistical and clinical teams in charge of these two studies at Lilly were made aware that Nectar discovered the data errors, and Lilly confirmed the errors in writing and written communications with Nectar. The new and corrected data from the ectopic dermatitis study demonstrate that 12 weeks of RESPEG therapy at the highest dose resulted in a mean E-size score improvement of 83% and an E-size 75 response rate of 41%. The corrected data also show RESPEG resulted in a very rapid and steep drop in E-size scores shortly after therapy start, much sooner than existing biologic therapies approved today. And one of the most interesting attributes of RESPEG is that when the 12-week induction treatment period was over and treatment stopped, the mean drop in E-size score continues for patients who were followed in the study. The possibility that Respec would offer both a differentiated mechanism to the existing field of IL-13 therapies and a remittive effect for patients is clearly a provocative one. The biologic treatment landscape for atopic dermatitis is significantly growing. The approvals of Dupixent and other IL-13-based biologics have driven this growth. About 16 million people are living with ectopic dermatitis in the U.S. alone, with 75% of these affected by moderate to severe disease. In 2021, biologic sales for ectopic dermatitis were close to $5 billion, and these sales continue to grow. An agent like RESPEG that eliminates the need for frequent dosing after induction treatment period would be highly disruptive to the multi-billion dollar biologic treatment landscape for ectopic dermatitis. For the therapies available today and near approval, continued and frequent dosing is required to maintain benefit. And in many cases, when a therapy is removed, patients see their eczema, ectopic dermatitis return. And we also know that at least 50% of patients on IL-13 therapies fails to adequately respond to therapy. So clearly, RESPEC holds great promise for treating patients with ectopic dermatitis, and these corrected data reinforce NICTR's strategic plan to invest in a robust Phase IIb study for RESPEC. As we stated in our press release yesterday, we plan on holding an investor meeting and key opinion leader meeting in the coming weeks to discuss these data and share the study design for the Phase IIb trial for RESPEG and ectopic dermatitis. Jayvee will discuss more on the corrected RESPEG data in a moment and also discuss our early stage immunology programs. With respect to our oncology asset, NECTAR255, we're continuing to evaluate potential strategic partnership options for the program at the same time as we're continuing the Phase II clinical trials. I've asked Mary to join us to share more about the ongoing clinical studies for Nectar 255. And with that, I'll hand the call over to Jay Z to discuss RESPEG and our preclinical programs in immunology.

Jay Z. Thank you, Howard. Starting off with our lead immunology program, RESPEG is a unique molecule that aims to address the underlying Treg deficiencies and consequently overactivity of affected T cells in autoimmune diseases. by selectively activating and expanding Tregs. ResPeg provides a completely different mechanism of action compared to the other drugs that are currently approved or under development in the atopic dermatitis space. This program is uniquely positioned as the most advanced IL-2 based Treg mechanism in the clinic. ResPeg has potential in multiple autoimmune diseases, and while right now our focus is on atopic dermatitis, there are plans to explore RESPEG and other autoimmune indications in the future. As Howard mentioned, we discovered the data previously reported for RESPEG by Eli Lilly was miscalculated. The primary errors were related to miscalculations for the EZ score and the PASI score, as well as the EZ-related and PASI-related clinical efficacy endpoints reported at EADV in September of 2022, in the atopic dermatitis and psoriasis posters that were presented. This discovery was only made after all rights to RESPEG were returned to Nectar, and the raw data files from the RESPEG clinical studies were transferred to Nectar. A leading independent statistical firm was then employed to analyze the raw data de novo, and the firm confirmed that the original statistical analyses calculated by Lilly were incorrect. For atopic dermatitis, EASY is the validated and widely used standard measurement for atopic dermatitis studies that has been used by clinicians and reported in the literature for over 20 years. The EASY measures the severity of atopic dermatitis for patients, and scoring ranges from zero, no disease, to 72, maximal disease. The corrected and audited interim data analysis for the atopic dermatitis study utilizes the validated 72-point EASY scoring system and includes all the patient data that was available at the time of the EADV 2022 data cut. The data demonstrate that 12 weeks of RESPEG therapy at the highest dose resulted in a mean EASY score improvement of 83% with a p-value of 0.002 as compared to placebo, and an EZ-75 response rate of 41%. In addition to the strong efficacy, we observed a 12 weeks of treatment with RESPEG, which is at least in line with or better than efficacy observed after 16 weeks of treatment with dupilumab, which in Phase IIa and Phase IIb studies showed a 74% and 68% improvement, respectively. An important observation in the new and corrected data was that RESPEG also provided a rapid and steep drop in EZ scores immediately after initiation of therapy. Specifically, after only two doses of RESPEG, the mean drop was minus 71% for the highest dose at the week four time point. The corrected data also reinforces the remittive effect and durability of RESPEG responses in atopic dermatitis patients. As Howard stated, the possibility that RESPEC could provide, for the first time, a therapy that could be dosed less frequently than anything patients have available now and could provide real long-term durability. With the differentiated T-regulatory cell mechanism that we specifically designed, the underlying scientific basis for why this is happening has been hypothesized for some time. The concept is that stimulating the T regulatory cells could result in the reeducation of the immune system by treating the underlying pathology and not just the symptoms of the disease. These clinical data provide for the first time a novel clinical finding demonstrating that the Treg mechanism can translate into effectively what looks like memory of the immune system resulting both in long-term durability and strong efficacy in atopic dermatitis. This is the first clinical observation of a Treg-stimulating therapy being efficacious in atopic dermatitis and has the key opinion leaders extremely enthusiastic. The durability of response that we've observed is not seen with Dupixent or the other agents in the IL-4 and IL-13 class or with JAK inhibitors. And again, this has us and KOLs very enthusiastic about the potential for long-lasting responses and infrequent maintenance dosing with RESPEG in the setting of atopic dermatitis. There were no underlying formulaic or mathematical miscalculations of the other efficacy endpoints presented at EADV last year. However, I'll point out that with all the patient data included in the new and corrected data, there was also some improvement in the VIGA responder and NRS itch responder endpoints from what was previously reported at EADV. For the highest dose of ResBag, the VIGA increased from 24% reported at EADV up to 29%. And for the NRS itch measurement, the improvement was from 35% reported at EADV up to 41%. For psoriasis, Endpoints related to the PASI were similarly miscalculated for the validated 72-point PASI scoring system. PASI is also the validated and widely used standard for over 20 years, which is used by clinicians and reported in the literature to measure the severity of psoriasis plaques in patients. The scoring also ranges from zero with no disease to 72 for maximal disease. The corrected and audited final data analysis for the psoriasis study utilizes the validated 72-point PASI scoring system. The corrected data showed a 44% change from baseline PASI and PASI 50 and PASI 75 response rates of 32% and 21%, respectively. The statistical and clinical teams in charge of the two studies at Lilly were made aware that Nectar discovered the data errors. The Lilly team confirmed the errors in written communications with Nectar. We plan to hold an investor meeting with key opinion leaders in the coming weeks to present additional new data from the atopic dermatitis study for the 12-week induction and for the 36-week follow-up period for RESPEC, all of which strengthens the concept of RESPEC providing a remittive effect. We will also share more details about the new study design for the Phase 2b study in biologic naive patients with moderate to severe atopic dermatitis who have progressed on topical corticosteroids. We expect to initiate the trial in October of this year, and we expect data in the first half of 2025. While our near-term focus for RESPEG is on atopic dermatitis, We continue to believe that RESPEC has broad potential and multiple indications. As development of this program progresses, we will continue to evaluate further opportunities and indications for RESPEC. Now, turning to our immunology preclinical research programs. We are advancing our research pipeline for two autoimmune disease programs. The first program we are working on is our TNF receptor 2 or TNFR2 agonist antibody being developed in collaboration with Biologic Design. TNFR2 is highly expressed on Tregs, neuronal cells and endothelial cells, and TNFR2 agonism has been shown to potentiate the suppressive effect and overall functional properties of Tregs. If absent, it is associated with autoimmunity and other genetic conditions resembling FOXP3 loss of function. In contrast, its presence has been associated with immunoregulatory function and protective effects for multiple cell populations and tissues in the body. Working with our collaborator, we have identified two lead antibodies that have been validated for selective TNFR2 binding, cell type specificity, and TNFR2 agonism in primary human cell-based assays. The lead antibodies are currently undergoing manufacturing cell line development. We, along with the immunology community, are very excited about the TNFR2 target. And our lead TNFR2 agonist antibodies show a desirable biochemical and cellular profile. We are aggressively progressing this program toward IND-enabling studies and believe that a selective TNFR2 agonist holds great promise for the treatment of multiple autoimmune diseases. Our second preclinical program is a conjugate version of the CSF1 protein. This molecule was engineered to optimize the receptor ligand interaction and the exposure to selectively modulate the resolution processes of inflammation. So traditionally, CSF1 is a myeloid-targeting cytokine that's involved in monocyte development and monocyte mobilization. In the right cytokine milieu, CSF1 creates the kind of resolution macrophages that are ideal whenever you need to turn off an inflammatory response. With CSF1, we have tuned the ligand receptor binding property to generate a novel signal through the CSF1 receptor. We are characterizing this biology in multiple biologic contexts, including acute and chronic inflammation, as well as fibrosis. We are very excited about these programs, and plan to file an IND for at least one of the programs in 2024, and look forward to keeping you updated on our progress as these programs mature. And now, I'd like to turn the call over to Mary to provide an update on our oncology program, Nectar 255. Mary?

Thank you, Jay-Z. We have two different development pathways for Nectar 255, one in solid tumors and a second in liquid tumors with cell therapies. So let's talk about our bladder cancer study first. In our partnered program with Merck KGA, Merck is conducting a randomized clinical trial comparing Evelumab versus Evelumab plus Nectar 255 as maintenance therapy for unresectable or metastatic bladder cancer after completion of first-line platinum-based chemotherapy. Our joint scientific hypothesis is that Nectar 255 will synergize with Evelumab by generating new cytotoxic and memory T-cells as well as NK cells to enhance the unique ADCC effect of avelumab. With the ability to capitalize on this dual mechanism of action in the javelin bladder medley study, we are excited about the combination of avelumab and Nectar 255. Enrollment to the Merck KGA study is on track, and the first interim data analysis for progression-free survival is scheduled for the second half of 2024. Our second development pathway is in liquid tumors. Enhancing in vivo T cell function or fitness of CAR T cells has been a key focus to improve the efficacy of cellular therapies. Several studies have now shown that higher endogenous IL-15 concentrations post lymphodepletion are associated with greater CAR T cell expansion and improved persistence as well as clinical responses. Because of this foundational data, We are evaluating Nectar 255 in one Nectar-sponsored study and two investigator-sponsored trials to enhance the cellular PK of CAR T cell therapies to improve response rates and clinical outcomes. We believe there is a potential broad application for Nectar 255 to enhance the efficacy of cellular therapies, including autologous and allogeneic CAR T cells and other cell therapy products from TILs to TCR-based therapies. And with that, I will turn the call over to Sandra for a review of our financial guidance. Sandra?

Thank you, Mary, and good afternoon, everyone. We ended the second quarter with $409.4 million in cash and investments with no debt on our balance sheet, and we still expect to end 2023 with at least $315 million in cash and investments. We rapidly executed our restructuring and strategic plan in April, and because of this, our financial position remains strong with a cash runway that extends at least through the middle of 2026. This will take us through several key value generating milestones for our pipeline. As discussed in May, we reduced our San Francisco-based workforce by approximately 60% And this personnel reduction represents approximately $30 million a year in operating expense reductions. The costs related to the restructuring were substantially paid in the second quarter, and we have begun to realize the cost savings in this third quarter and will fully realize the annual savings in 2024. In Q2, we recorded a $13.3 million non-cash impairment charge for leased assets. For the full year 2023, we now expect to recognize restructuring, impairment, and costs of terminated programs of approximately $40 million to $45 million, which includes $27 million of non-cash impairment charges recognized in the first half of 2023. I will now review the remainder of our 2023 financial guidance, which remains unchanged. Our gap revenue for the full year 2023 is expected to be between $80 million and $90 million. This revenue includes $65 to $70 million in non-cash royalties and $15 to $20 million in product sales. We anticipate full year 2023 gap R&D operating expenses will range between $105 million and $115 million, which includes approximately 15 to 20 million of non-cash depreciation and stock compensation expense. We expect G&A operating expense for full year 2023 to be between 75 million and 80 million, which includes approximately 15 million to 20 million of non-cash depreciation and stock compensation expense. Our full year 2023 non-cash interest expense is expected to be between $20 million and $25 million. As I mentioned earlier, we expect to end 2023 with at least $315 million in cash and investments. We will now open the call for questions. Operator?

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. In the interest of time, we do ask that you please limit yourself to one question at this time. Please stand by while we compile the Q&A roster. And our first question will come from Jay Olson from Oppenheimer. Your line is open.

Oh, hey. This is Chell on the line for Jay. Thanks for taking the question. We kind of have a couple of questions on RASPAC, if we may. And yeah, congrats on the corrected data on the phase 1B-80 trial. I guess one thing that's caught our attention, and Jay, you alluded to, is that the corrected data now seem to have even stronger early separation of the curves. And we cannot see like over 70% easy improvement that week four or week six. So I'm just curious if you think this is like something potentially differentiating from others and how important is the early Simpson improvement based on your market research and KL feedback and have a follow-up.

Thanks.

Yeah, sure. Yeah, certainly. Yeah, so thank you for the question. So, and you rightly, you know, noted and you saw in the materials that we released with the press release, yesterday, that there is a very rapid and steep drop. And that week four time point is very interesting because it's basically after patients have taken two dose administrations of RESPEC, first of week zero, the next of week two. And you see a pretty strong inflection point and actually a change in the slope in the curve. And you reach a minus 70% reduction in EASY score, which is quite fast. Now, this is a really important element because, remember, in this disease, patients are used to being treated with topical corticosteroids. And basically, those patients expect pretty fast relief by applying a cream. Now, in our patient population, patients have progressed. Their disease is no longer under control by topical corticosteroids, and they're moving on to systemic biologic therapy, as they are in our study. So again, having a really rapid response is very good. It's very good for the patient, and it's very good for the expectation. We do think this is a sign of differentiation for RESPEG, and it goes quite well with the depth of the response that we reported at week 12, and of course, the additional very highly differentiated element of that prolonged disease control that we observed for 36 weeks after we stopped dosing. All three of those elements really go together And we think that's one of the elements that comes from this novel mechanism. So then I think you had a second question.

Yeah, thanks. Just like with this more robust data now in AD, just curious how you are thinking about the timing and also interest level in exploring additional opportunity with RETPAC, maybe in autoimmune diseases. Also, I'm wondering some potential opportunities opportunity in even like neuroinflammatory diseases? Thank you.

Yeah, I can answer that. Look, it's a very good question. I think at this point, you know, given our capital position and our strong financial position, I would like to focus our company on ectopic dermatitis right now. I think Respeg, if it proves successful in ectopic dermatitis, which I think at this point it will based on this very robust data, as you said, I think there's opportunities in other autoimmune diseases. I still, while lupus is a much smaller market, of course, than ectopic dermatitis, I think it worked fairly well in lupus, and there are data corrections there that also we're analyzing. And I do think there's other indications, type 1 diabetes, food allergy. There's a number of places where one could develop RESPEG if we believe we have a drug that proliferates regulatory T cells in the proper fashion. But for now, for Nectar, our focus is on getting excellent results in a phase 2B study, a randomized phase 2B study in ectopic dermatitis. And then from that point on, if that's successful, we can go from there.

Thank you. And our next question will come from Chris Shabutani from Goldman Sachs. Your line is open.

Hi, everyone. Thank you for taking your questions. This is Charlie on for Chris, and also I'll extend my congrats on the correct RESPEC data. So just two quick ones from us. First, just wondering if, did Lilly provide any basis for the exclusion of the three atopic dermatitis patients? Just wondering if there was a specific reasoning behind that exclusion there that they may have provided. And then also with the corrected RESPEC data, just wondering if there was any impact on the safety and tolerability results that were presented last year. Thank you.

Thanks, Charlie. I'm going to ask Jay-Z to comment on both of those questions. Go ahead, Jay-Z.

Yeah, thank you. Thanks for the question. So really, in terms of the data that was excluded, so that was really a judgment that Lilly made. And it was a judgment on using a criteria around topical medications that were permitted by the protocol. And so, in reality, this is something that, you know, all the patient data should have been included from the very beginning as all of that patient data and the use of all of those components are specified in the protocol. Now, the next question you asked for was about safety and tolerability. And so those results are the same as they were in the EADV presentation. So in terms of what we did at Nectar is we reviewed everything. We calculated and recalculated all of the components. And for the safety information that was presented at EADV lab from last year, that is the same.

Thanks. Great. That's very helpful. Thank you so much.

Thank you. Our next question will come from Mara Goldstein from Mizuho. Your line is open.

Great. Thanks so much. I apologize I signed in late, so if this is repetitive, please excuse me. But two questions for you. And one is, given the reanalysis of data and the prior clinical work, do you have to approach FDA with this? I mean, obviously, you're planning on launching a trial, but is this something that they need to be apprised of, number one? And then the second question is on the lawsuit understanding that you can't comment on because you're in active litigation. Maybe you can just tell us procedurally what are the next steps here since you have filed that suit?

Yeah, thanks, Mara. Mary, could you take the first part about FDA, and then I'll ask Howard to comment on the second part?

Sure. Regarding reporting of data to the FDA, we would do that in a clinical study report. At this time, we have not finalized the clinical study report, and we will be providing all of the updated and corrected data into the clinical study report, which will be submitted to the FDA. I'm going to turn it over to Howard for the next part of the question.

Sure. With regard to the lawsuit, obviously, as you correctly stated, we're not going to comment on an active litigation. Suffice it to say that we will move forward on this. And we take it, look, we take this lawsuit very seriously. It's significant. It's substantial. If you look at the development of RESPEG, RESPEG could have likely been in a phase two study in ectopic dermatitis a year ago, a year and a half ago. So we take this lawsuit very seriously. We went out to a very, very well-known and well-respected outside statistical firm to have them recalculate everything Genovo, basically gave them the raw data, gave them the clinical plan and said, what do you come up with? And they came up with the same corrected numbers we did. So we take it seriously. I can't comment on how it proceeds, but it's important to us, obviously.

Thank you. And our next question comes from Roger Song from Jefferies. Your line is open.

Hi, team. This is Kambizhan for Roger. Why have you decided to move into Phase 2b in specifically bio-naive patients? Any preclinical or mechanism action related reasons that should work better in those patients?

Thank you. Thanks, Kambizhan.

Jay-Z, I'll ask you to address that.

Sure. Thanks, Kambizhan. So one of the things that we wanted to do, importantly, is to build upon the data from the phase 1B study that we've just been, you know, speaking about today and for which we released corrected data yesterday. So that study was run in biologic naive patients. So we wanted to continue the development in the same patient population. And the strength of the data that we discussed today, as well as all of the elements of differentiation that RESPECT provides in this patient population, we want to just really continue to build on in the very next focused clinical development step for RESPEC. Now, in terms of maybe your broader question, which is, you know, what is the applicability of this mechanism? And specifically in atopic dermatitis, one of the things that we think is quite compelling about the Treg component of the mechanism is that it really should have the ability to work in multiple lines. So while we're starting our focus in the biologic naive patient population, there's a very good scientific rationale to also expect there will be efficacy in patients that are post-biologic. So for example, patients that have stopped to respond or never responded to an IL-13 therapy, like Dupixent or ABRI, and even other mechanisms that are in development, you should be able to provide a Treg component in that post-population as well. And so in our future development plans, we'll be looking as well into the biologic experience population.

Thank you. Our next question will come from Greg Harrison from Bank of America. Your line is open.

Hi, this is Mary Keenan for Greg. Thanks for taking our question and going through all the programs. I was looking at the potential here with Respeg and the path forward with atopic derm. Are you aware of any precedents for this situation? And if so, what was the path forward here?

Well, let me try to take that.

When you say are there any precedents for this, I don't know of any precedents for companies making this kind of a calculation error, so I can't comment on that. The path forward, as you know, is now that we have what I think is very impressive Phase 1B data in a randomized trial, I believe that, you know, we're certainly very enthusiastic about moving forward into phase two, where I think we can demonstrate that RESPEC becomes a novel therapeutic mechanism for treating autoimmune disease patients, ectopic dermatitis in this case. The lawsuit that we filed against Lilly will be we'll be working on that. And as I said, it's very, very important to us. But I don't know of many precedents for this. It's in my mind an egregious error.

Thank you. And our next question will come from Boris Peeker from TD Cowan. Your line is open.

Thank you for taking my question. This is for Boris. So for the RASPAC, are you still exploring psoriasis as your next indication, or are you exploring other indications?

And I have a follow-up. Thanks, Hansi. And you have a follow-up as well. Jay-Z, I'll ask you to take the first part of her question.

Sure, yeah. Thank you. So one of the things we discussed today, right, was about the PASI score calculation and sort of the under-reporting of the data from EADV. which we're very pleased to have been able to correct yesterday. In terms of the long-term focus of RESPEG development, you know, from a dermatology standpoint, we're clearly focused on atopic dermatitis, where, you know, we see a very, very profound activity for RESPEG that we've been discussing on this call. In psoriasis, there are other mechanisms of action that are quite well entrenched, such as the IL-17 inhibitors. And so, we might consider psoriasis as a potential development in the future, or maybe even in a lifecycle management setting. But right now, near term, we're really focusing on atopic dermatitis for our development in the dermatology space.

Thank you. For the next question, just regarding your developing preclinical assets targeting TNFR2 and CSF1, can you just talk generally regarding the competitive landscape over those two targets and your potential market opportunities there. Thank you.

Sure. That's a. Yeah, thank you for that question. So they're early assets, obviously, in the research setting. But I can give you some flavor around the targets and the opportunities. So with TNFR2, that is certainly a very kind of hot target. And there are just a couple of companies sort of that are coming up that are studying that target and trying to create agonistic drugs. Some of the companies are focusing on applications for oncology and others are focusing on applications for autoimmune disease. We're interested in the autoimmune disease applications for the TNFR2 target and our agonistic antibodies. Now, it's a very unique target because it really controls a lot of tissue protective and tissue regenerative pathways. And it can particularly well act on regulatory T cells once they move into individual compartments in the body. And they undergo different kinds of cytokine pressure. And basically, NF-capid B signaling through the TNF superfamily become much more critical for driving their biological importance. So we can see a lot of application for a TNF R2 agonist antibody in certain kinds of organ and, you know, sort of pathology type of inflammatory conditions. So the GI and a family of GI diseases is one. Neuronal and neuroinflammatory diseases are another, for example, MS. And so there's really a range of opportunities for a TNFR2 agonist. In the case of our CSF1 program, you know, that targets a myeloid component of the immune system. And it targets it with the goal of creating an immunoregulatory effect. So this is not targeting lymphocytes, not targeting T cells like the other molecules in our pipeline, but targeting a whole different set of immunoregulating and immunosuppressing cell populations. And we think that could have, again, also very broad application because the myeloid compartment participates in a large number of diseases from the common rheumatic diseases to even some more rare ones as well. Thanks for the questions.

Thank you. And as a reminder, to ask a question, please press star 1-1. And our next question will come from Dana Graybosh from Levering Partners. Your line is open.

Hi, thank you. I have two questions. I wonder for the EC score recalculation, if you could help us by separating out the impact of the two changes, Lilly's mathematical error and then the inclusion of the additional patients, how much of the additional total benefit and the speed of benefit came from those two changes. And then I'll have a follow-up after that.

Thanks, Dana. Appreciate it.

Sorry. Sorry, Jennifer. Yeah. Hi, Dana. Yeah. Thanks for the question. So basically, the majority, if not the totality, of the difference in the data that we presented on Monday really comes from the mathematical calculations of the EASY score. So for example, if you correctly calculate the EASY score and you include all the patient data, the week 12 LS mean results that we presented yesterday were 83% reduction. If you correct the EASY score but not correct the data that was excluded, then the LS mean results at week 12 are 82%. So the two numbers are virtually the same. Really, the majority of the effect And the change, right, in the corrected data that we reported came from the mathematical calculation of the EASY score.

That is very helpful. Thank you. My second one is it seems like they made a mistake, and correct me if I'm wrong, in setting up their staff. So was the mistake consistent for all patients, meaning a certain column or a certain multiplier was consistently left out? And does that actually tell us anything about the biology of RESPEG that we got such a big benefit from that consistently being left out?

Daisy, do you want to talk about that as well?

Yeah, sure. Yeah, thank you. Yeah, so basically when you calculate the 72-point EASY or PASI score, there are multiple components that make up the mathematics that get you to the 72-point numbers. So the first set are typically what are kind of known as the severity scores. And so they score components of eczema or components of psoriasis, depending on if the EZ or PASI is used. And they score those categorically in four sections of the body. Then the next components of the score really assess the area. And so they assess how much skin in each region is affected by disease. And then they also take into account if you're scoring the head, that's less dermis on your body than if you're scoring the lower extremities, which is much more. And so sort of consistently, the same error was made across both the easy and the PASI that didn't capture all of those severity and area components. And so consistently, a score was arrived at that was less than the 72-point score. And that same mathematical calculation was done for every person in every time point. It was basically like an error kind of like in the code that was used to do the calculation. So a couple of important points to add to that to sort of complete the thought of your question is that really for over 20 years, there's been only one measure. used for either atopic derm or psoriasis studies. Not only is it validated, but these are the key endpoints that have been seen in study after study after study, as well as just in use in dermatology clinics. And the only score is a 72-point score. Anything other than that is not even an apple-to-apple kind of a comparison. So I hope that answers your question and gives some more color around this.

Thank you. And I am showing no further questions from our phone lines, and I'd like to turn the conference back over to Howard Robin for any closing remarks.

Well, thank you, everyone, for joining us today, and we remain focused on executing on the development of RESPEG and our immunology-focused research programs. And I'd like to thank, of course, all of our employees for their efforts and their extraordinarily hard work, and I want to thank our shareholders for their continued support. So we look forward to providing you with updates on our progress and Stay tuned. Thanks again for joining us today.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.