Scholar Rock Holding Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Scholar Rock Management Intro and Second Quarter 2020 Financial Results and Business Progress 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. To ask a question during the session, you would need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, to Catherine Hu, Vice President, Investor Relations and Corporate Communications. Thank you. Please go ahead.

Good morning, and thank you for joining us on today's call to provide an update on second quarter 2020 financial results, as well as an introduction to our newly appointed President and CEO, Tony Kingsley, and CFO and Head of Business Operations, Ted Miles. Young Chung, our Chief Medical Officer, will also be joining Tony and Ted on today's call. The webcast slides for this call can be accessed on the Events and Presentations section of the Investor Relations page on the Scholar Rock website. Before I turn it over to Tony, I wanted to note that during today's call, we will be making various statements about Scholar Rock's future expectations, plans, and prospects that constitute forward-looking statements. for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Scholar Rock's actual results may differ materially from those indicated by any four lifting statements as a result of various important factors more fully discussed in the section entitled Risk Factors in our quarterly report on 410Q, as well as other important factors in Scholar Rock's future filings with the Securities and Exchange Commission. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any future date. We disclaim any obligation to update any forward-looking statements unless required by law. Thank you, and I will now turn the call over to Tony.

Thank you, Catherine, and thank you, everyone, for joining us this morning. ScholarRock is at an inflection point. The company's science is beginning to prove its potential clinical utility. Our programs are moving quickly toward multiple data readouts, and the company has new leadership to take it to the next phase. Let me tell you a little about myself and why I have joined Solid Rock at this time. As described on slide three, I was most recently president and CEO of Tariff Bio, a development stage oncology company. that was acquired by Janssen Pharmaceuticals at the end of 2019. Before Charis, I served as president and COO of the medicines company, and prior to that, led global commercial operations at Biogen. I bring extensive experience in later stage drug development and commercialization, both of which are rapidly becoming critical to ScholarDoc's success. And I have provided both strategic and operational leadership to life sciences companies in times of great transition and growth. That is the profile that the Solid Rock Board was seeking to replace our founding CEO, Nagesh. This was a very planned and purposeful transition and it signals confidence in the future. The fact that I was able to bring on Ted Miles as our CFO and head of business operations almost immediately should also signal to you that this transition is about building for success. Ted has served on our board for nearly two years and knows the company well. You will hear from Ted shortly. Now let me describe what drew me to Swell Rock. Powerful science, great programs, and talented people. I've been impressed with the level of execution and collaboration and commitment to take on tough targets as we work toward the goal of changing medical practice and helping patients suffering from cancer and neuromuscular disease. My conviction on the scientific platform and programs has only increased as I fully immersed into the culture of the company. Going to slide four in our presentation, my top three takeaways are, first, The scientific platform has produced multiple programs with significant therapeutic potential. Our two most advanced programs, SRK015 and SRK181, are advancing quickly at both address markets that are well-developed and growing very rapidly. There are multiple programs at multiple milestones, and that offers near and long-term value inflection points as well as significant strategic optionality. I can clearly see South Rock's growth potential. The science is highly differentiated. The clinical programs are well designed. And as you will see on slide five, we are moving quickly toward multiple milestones over the next 12 months that will elucidate each program's potential to help patients with serious diseases. I believe this slide captures the breadth and depth of our pipeline and demonstrates the power and productivity of our scientific platform and our talented scientists. It also illustrates the key factors that drove my decision to join Solid Rocks. To start with SRK015 in the spinal muscular atrophy, or SMA, we will be reporting interim results from the ongoing Topaz Phase II trial in the fourth quarter, followed by 12-month data in the first half of 2021. Our goal here is to establish SRK015 as the first muscle-directed therapy for patients affected by SMA. Next, we're making rapid progress in building momentum on the DRAGON Phase 1 trial for SRK181, a potential therapeutic backbone to cancer immunotherapy. We are advancing to Part A2 of the study this quarter. evaluate SRK181 in combination with checkpoint inhibitors and will provide an update on dose escalation in the next quarter. We believe we have the key to unlock the power of checkpoint inhibitors. We are the first and only company to specifically target the TGF-beta-1 isoform, which we believe has the potential to improve efficacy in while minimizing the risks of adverse events. We believe that SRK181 has an immense potential to increase response rates to checkpoint inhibitors and change medical care for cancer patients across multiple solid tumor types. In addition to these two clinical aspects, there are many potential opportunities for us to extend our science, whether it's additional indications additional tumor types or treatment settings, or additional growth factors to start with. And furthermore, we have an important partnership with Gilead around fibrosis, which continues to progress well. This collaboration is another proof point of the attractiveness of our platform and our approach. So with that, I will turn it over to Young Chung, our Chief Medical Officer. Young? Thanks, Tony.

I want to extend another warm welcome to you and Ted. Thanks to everyone for joining us on this call today, and I'm very excited to provide an update on the great progress we are making across all of our development programs. First, I want to say how proud I am of the team's dedication and commitment to advancing our clinical programs and how appreciative we are of the high level of engagement from our clinical trial investigators and study sites despite the challenges of the ongoing COVID-19 pandemic. we continue to make great strides towards important readouts for both the SRK015 and SRK181 programs. Starting with our most advanced product candidate, SRK015, which is a fully human monoclonal antibody and a highly specific inhibitor of the activation of pro- and latent myosin. Our goal is to establish SRK015 as the potential first muscle-directed therapy to promote a clinically meaningful increase in motor function for patients with SMA. As outlined on slide 7, we view the SMA treatment landscape as being classified into two distinct but complementary therapeutic strategies, SMN upregulator therapies and muscle-directed therapies. Over the past few years, there have been advances in the development of SMN irregular therapies, also known as SMN corrector therapies, which are aimed at addressing the SMN deficiency in order to prevent further motor neuron deterioration. While the advent of such therapies represents important progress, the primary benefit of such an approach appears to be to stabilize one's disease course. Even with early intervention, individuals continue to have motor function impairment as complete correction of the disease manifestations is unlikely. Therefore, we believe that a second category of therapies, namely muscle-directed therapies, is needed to aim at driving absolute improvements in motor function. This need for therapeutic advances to go beyond SMN upregulators is highlighted by data from the Phase III CHERISH trial of Nersen-Nersen in later-onset SMA, as shown on the right-hand side of the slide. Patients treated with misinertin for 15 months experienced a mean improvement from their baseline of 3.9 points on the Expanded Hammersmith Functional Motor Scale, or HSMSE, as shown in green. While this result is certainly viewed as clinically meaningful, there is still significant room for improvement in motor function as depicted by the gray gradient area. Taking a deeper look at the CHARIS trial on slide 8, it is evident that the improvements in Hammerson scores predominantly occurred in patients who were treated at a very young age. In contrast, patients who were aged five and older at the time of this nursing initiation appeared to primarily experience a stabilization with less than 15% able to achieve at least a three-point improvement, even with 15 months of this nursing treatment. A three-point improvement in the Hammerson score in a given patient is widely considered to be clinically meaningful and a very favorable patient outcome as compared to the usual course of disease. A similar phenomenon of motor function stabilization was observed in the Sunfish trial of Rizopam in patients with type 2 or non-ambulatory type 3 SMA between the ages of 2 and 25, as shown on the right-hand side of the slide. The primary endpoint in this trial used a different motor function scale, the MFM32 score, over 12 months of treatment. While this primary endpoint was met, most patients over the age of five did not attain a three-point improvement. This motor function stabilization phenomenon was also observed across all patients in the SUNFISH trial in the HFMSE secondary endpoint, which showed a mean 0.58-point improvement over placebo, which was not statistically significant. To reiterate, estimate of regulators represent an important advance in the treatment of SMA, as these agents prevent further motor neuron deterioration and stabilize the disease course. Now, the stage is set for the next era of SMA drug development that seeks to drive motor function improvement. Towards this vision, we believe SRK015 has the potential to be the first muscle-directed therapy in SMA and potentially become the backbone of treatment to any SMN upregulator. With that as a backdrop, let's now turn our attention to SRK015 and the ongoing COPAS Phase II trial. We have made substantial progress on the path towards investigating the therapeutic potential of SRK015 as outlined on slide 9. We have formulated a strong translational rationale for investigating myostatin blockade in SMA. We have demonstrated therapeutic effects preclinically in the SMN Delta-7 mouse model. We have completed a phase one trial in adult healthy volunteers that showed initial safety, a PK profile that supports the every four-week dosing regimen we were evaluating in the TOPAS trial, and importantly, PD data that confirmed robust engagement of the target of SRK-ON5, the latent form of myosin. Preliminary PD data from the TOPAS trial demonstrated this target engagement in patients with SMA as well. We are far along on this development path for SRK1-5 and look forward to the interim efficacy and safety analysis expected in the fourth quarter. Turning to slide 10 to review the TOPAS trial design. This Phase 2 study consists of three parallel cohorts, each evaluating a distinct subpopulation of patients with Type 2 and Type 3 SMA. At the beginning of this year, we completed enrollment of a total of 58 patients in the U.S. interim. Cohort 1 enrolled 23 patients with ambulatory type 3 SMA between the ages of 5 and 21. These patients are either treated with SRK015 as a monotherapy or in conjunction with an approved SMN upregulator. Cohort 2 enrolled 15 patients with type 2 or non-ambulatory type 3 SMA, also between the ages of 5 and 21, and all patients are treated with SRK015 in conjunction with an approved SMN upregulator. Cohort 3 enrolled 20 patients with type 2 SMA age 2 and older and who had initiated treatment with an approved SMN upregulator before 5 years of age. All patients in the study received IV SRK 015 most every 4 weeks or 12 months. The primary efficacy endpoints planned to be evaluated in the TOCAT study are the Expanded Hammersmith Functional Motor Scale, or HFMSE in short, for non-amplified SMA, and the Revised Hammerson Scale, or RHS in short, for ambulatory estimates. The HF-MSE is a validated outcome measure specifically designed for SMA that is often used in clinical practice and clinical research and served as the primary efficacy endpoint previously used in the Phase III CHERISH trial of Mr. Nerson. The RHS is very similar to the HF-MSE with some modifications to tailor the assessments to patients who are ambulatory. Let us now walk through our expectations for the six-month interim analysis, which we expect to receive and disclose in the fourth quarter of this year. We are planning for a robust readout looking across efficacy and safety endpoints. Starting with cohort one on slide 11, we will be looking at the mean change from baseline in revised Hammerson scale to evaluate if SRK015 treatment can indeed lead to absolute improvements in motor function over baseline rather than merely just spatialization. We will also evaluate the proportion of individual patients to achieve at least a three-point improvement in RHS over baseline. To reiterate, a three-point improvement in a given patient would be unexpected in most patients and is also widely considered to be clinically meaningful. In addition to RHS, we will also be looking at time motor tests, such as the six-minute walk test, then 10-meter walk and run, and time rise from four. While our base assumption is that SMN correction through an SMN upregulator will be necessary to complement the effect of SRK0 and 5 in this patient population, it would be interesting to see if SRK0 and 5 monotherapy may have any impact. For cohort 2, we will be looking at the mean change from baseline in HFMSE, and we'll also evaluate the proportion of individual patients who attain at least a three-point improvement in HFMSE over baselines. We will be evaluating additional outcomes, including revised upper limb module, or RALM in short, and the World Health Organization Motor Development Milestones. Cohort 3 enrolled a younger patient population to investigate the potential benefit of SRK015 in patients who were initiated on misnursing before the age of 5. We're also conducting dose exploration in this cohort by seeing if a lower dose may still offer meaningful efficacy. we'll be looking to see if treatment can lead to a substantial improvement in HFMSE. In addition, we will be exploring for potential differentiation of therapeutic effect between the two studios arms, such as the time course and onset of therapeutic effect. Additionally, patients will be evaluated on the ROM and WHO motor developmental milestones. While we are enthusiastic about SRK015's potential in all three cohorts, we should note that each of the three cohorts evaluates a different SMA subpopulation in which there are a sizable number of patients and there's high unmet medical needs. The demonstration of proof of concept for any one of these three cohorts would therefore be an important result to us and would also encourage us to broaden the subsequent investigation of SRK15 to a broader population of patients, whether it be a wider age range or in combination with any approved FMNF regulator. In addition, A successful proof-of-concept result in cohort 3 would encourage us to further evaluate SRK015 therapeutic potential in the early intervention setting, such as patients with type 1, SMA, or pre-symptomatic individuals. Furthermore, we believe that a positive efficacy outcome across any of the three cohorts would validate the motor function-building hypothesis of SRK015 and support the investigation of SRK015's therapeutic potential and other neuromuscular disorders for which fast-twitch fiber deficits play a key role. Before turning to SRK181, I just want to remind everyone that while all patients receive active treatment with SRK015 in the TOCAT trial, we are firewalled from the efficacy data. We are eager to see the interim results and look forward to sharing the data with you in the fourth quarter. As a final note, as of August 1st, of the eight patients who have completed the entire 12-month treatment all eight have elected to enroll in the voluntary 12-month extension study. Now let's discuss SRK181, our highly selective inhibitor of TGF-beta-1, which we believe has the potential to increase response to checkpoint inhibitor therapies and may be the backbone of a new era of cancer immunotherapy. Turning to slide 12. While checkpoint inhibitors have revolutionized the treatment of a wide range of cancers, this therapeutic approach is only effective in approximately 20% of patients. So the central question in immuno-oncology is what is driving the lack of response to checkpoint emitters in most patients. As highlighted on slide 13, the science in this arena is moving fast, and evidence is mounting that implicates TGF-beta-1 as a key culprit in driving primary resistance to anti-PD-1 and to anti-PD-L1 therapies. For example, a seminal observation was made by researchers at Genentech that identified an association between increased TGF-beta-1 levels in signaling women tumors and the lack of response to checkpoint inhibitor therapy, as well as reduced survival outcomes in patients with urothelial carcinoma. Mechanistically, tumors with an immune-excluded phenotype, that is to say, tumors in which T cells accumulate around the periphery of the tumor but fail to effectively infiltrate into the tumor for enema, have been observed to be less likely to respond to checkpoint inhibitor therapy. And TGF-beta has been implicated in driving this immune-excluded phenomenon. These emerging insights have captured the attention of industry. Just last year, GSK and Merck KGA announced a global alliance to jointly develop and commercialize a bispecific molecule that targets both TGF-beta and NPD-L1. And Merck acquired Kegel Therapeutics, develop antibodies that modulate TGF-beta. As detailed on slide 14, the therapeutic potential of blocking TGF-beta towards an aim of overcoming checkpoint inhibitor resistance may be broad across many different types of cancer. Earlier this year, a publication in Immunity delineated that a substantial proportion of solid tumors exhibit an immune-excluded phenotype. And we ourselves conducted analysis of human tumors through the TCGA database and found that the TGF-beta-1 isoform was the predominant isoform in most solid tumors. So an exciting therapeutic hypothesis has now emerged. Blockade of TGF-beta, particularly TGF-beta-1, has the potential to overcome checkpoint inhibitor resistance, and thus this combination therapy approach has the potential to substantially increase the response rates to immunotherapy. Turning to slide 15. There are several approaches to targeting TGF-beta, whether through a ligand trap, bispecific, or through non-selective antibodies or small molecules. We believe SRK181 offers a unique and potentially optimal approach to targeting the TGF-beta1 pathway. SRK181 is a fully human, monoclonal antibody designed to bind to and throughout the activation of latent TGF beta-1 with minimal or no binding to the latent TGF beta-2 and latent TGF beta-3 isoforms. Because of its selectivity for the TGF beta-1 isoform, SRK181 may offer the potential to increase the therapeutic window by avoiding toxicities associated with non-selective TGF beta inhibition. we view having an anti-TGF beta-1 agent as a distinct molecule, rather than be physically linked with a checkpoint inhibitor, potentially could offer advantages over bispecific approaches by enabling pairing of SRK181 with a checkpoint inhibitor that may be more optically suited for a given tumor indication, as well as enabling the optimization of dosage for each individual component of the combination therapy. Turning to slide 16, the rationale for investigating SRK181's therapeutic potential in immuno-oncology is strong. The body of evidence implicating TGF-beta-1's pivotal role in checkpoint inhibitor resistance continues to grow. Momentum in the scientific field is accelerating, and we believe that our SRK181 program is well positioned to pursue and investigate this exciting hypothesis. Through its selective inhibition of the TGF-beta-1 pathway, SRK181 offers the potential overcome the toxicity associated with non-selective inhibition of TGF-beta, and therefore the potential for a greater therapeutic window to permit more robust dosing against this target. And preclinically, we have observed that inhibition of the TGF-beta-1 pathway in combination with anti-TGF-1 therapy leads to significant antitumor responses in multiple mouse tumor models. Now let's turn to the DRAGON Phase I trial on slide 17. We commenced dosing in this trial in the second quarter and are encouraged by the engagement of the trial investigators and the pace of the trial progression, particularly against the backdrop of the COVID-19 pandemic. Let's walk through some of the highlights of the Dragon trial design, which drew upon significant input from oncology thought leaders and clinical trialists, and which offers the potential for early and frequent asphyxia and safety readouts. The trial is enrolling patients with locally advanced or metastatic solid tumors, and is comprised of two parts. The Part A dose escalation portion of the trial will evaluate SRK181 as a monotherapy, as well as in combination with anti-PD-1 or anti-PD-L1 therapies. The Part B dose expansion portion of the trial will evaluate the anti-tumor activity of SRK181 in combination with anti-PD-1 or anti-PD-L1 therapy in four parallel tumor cords. Slide 18 provides a more detailed look at Part A of this Dragging Trial. We have been advancing dose escalation of SRK181 as a single agent in Part A1 of the trial. As Part A1 and Part A2 of the trial are designed to progress in a staggered fashion, we expect to initiate Part A2 of the trial this quarter to evaluate SRK181 in combination with anti-PD-1 or anti-PD-L1 therapy. Part A2 will follow a 3 plus 3 dose escalation design. While the primary focus of this portion of the study is done evaluating the safety of SRK181, there is a potential for observing early efficacy signals. To illustrate, each enrolled patient will have to have a documented history of checkpoint inhibitor resistance defined by a lack of response at any time to anti-PD-1 or anti-PD-1 therapy. If a given patient goes on to subsequently have an anti-tumor response upon combination treatment with SRK181, That result would not be consistent with the expected clinical course and could be attributed to the addition of SRK181. As a result, we could potentially observe efficacy signals even with relatively small patient numbers. Moving to Part B of the Dragon Trial on slide 19. This will consist of four parallel cohorts, each enrolling up to 40 patients with primary resistance to checkpoint inhibitors, to evaluate the therapeutic potential of SRK181 in combination with anti-PD-1 or anti-PD-1 therapy across multiple solid tumor types. For non-small cell lung cancer and urethelial carcinoma, we will be enrolling patients who have demonstrated primary resistance to pembrolizumab, and for melanoma, we are planning to enroll patients who have shown primary resistance to either pembrolizumab or nivolumab. Again, if we observe antitumor responses following combination treatment with SRK181, then we believe the therapeutic effect may be attributable to the addition of SRK181. We believe this Part B design allows potential for a rapid path to proof of concept with multiple opportunities for efficacy signals across multiple tumor types. Given the high unmet need in the context of patients with primary resistance to checkpoint inhibitors, a strong proof of concept signal could also support an efficient drug development path towards the longer-range goal of registration. We are pleased with the progress to date in this trial. Despite the impacts of the ongoing COVID-19 pandemic, we are moving expeditiously. We plan to provide an update on dose escalation progress in the fourth quarter of this year and are planning to initiate Part B in the first quarter of 2021 with anti-tumor efficacy and safety data expected starting in 2021. Before I turn it over to Ted, I want to thank the team, our study investigators and site staff, as well as all the patients participating in our clinical trials. Together, I hope we can work towards achieving our aspiration of transforming medical care for individuals suffering from SMA and cancer. Ted?

Thank you, John. Like Tony, I'll start by describing why I made the decision to join ScholarRock. This is a dynamic time for ScholarRock. The company is growing and advancing quickly, and we are just months away from some important clinical data readouts, which, if positive, could lead us to potentially initiating a registrational trial as early as next year, subject to feedback from regulatory authorities. I'm excited to apply my expertise as a senior financial and operational executive at late-stage clinical and commercial-stage biopharmaceutical companies to Skyrock as we advance our important clinical programs. Ultimately, the goal is to commercialize our therapies so that we can help the broadest set of patients in need. I look forward to partnering with Tony, Young, and the rest of the executive team to begin the long-range strategic planning necessary to execute our ambitious plans. Furthermore, I had the honor of serving on Skyrock's Board of Directors for nearly two years before joining as CFO and Head of Business Operations last month. This gave me a clear view into the many accomplishments of the company and is also why I have a high degree of confidence in the scientific platform, the clinical programs, and the team's ability to execute. Now let's turn to slide 21 to highlight second quarter GAAP financial results. Revenue in the quarter was approximately $4 million and was exclusively related to the Gilead collaboration. R&D expense was approximately $17 million in the second quarter compared to $14 million in the prior year quarter. The year-over-year increase can be attributed to the ongoing Topaz SRK-015 trial. a payment to Specifica for the delivery and acceptance of a customized antibody display library, as well as higher personnel-related costs. G&A expense was approximately $6 million compared to just about $5 million for the year-ago quarter. This year-over-year increase was primarily the result of personnel-related costs and professional services. Net loss for the quarter was about $19 million, For a net loss of $0.65 per share, this compares to a net loss of $12.5 million, or $0.48 per share, for the quarter a year ago. To summarize, our spending for the second quarter and the first half of 2020 was aligned with our plan and is focused on advancing our clinical development programs, investing our research and discovery platform with ambitions to generate many more clinical stage products in the future. and investing in G&A capabilities that can support our expanding R&D infrastructure. As of June 30, 2020, we had cash and cash equivalents in marketable securities of approximately $141 million versus $157 million at the end of 2019. Our current operational plan points to a runway that extends into the fourth quarter of 2021. To wrap up my comments, we believe that we have a productive scientific platform and will continue to invest our drug discovery efforts to feed the pipeline. We have two ongoing clinical trials. SRK is on the cusp of important value-creating milestones. SRK181 is moving quickly towards clinical data, as well as we believe it has immense potential to change the treatment landscape for cancer patients. And on top of these clinical programs, we have a lot of optionality in terms of next indications. Simply, there's a lot going on and many great programs for us to invest in. Now I'll turn it back to Tony for some closing remarks. Tony?

Thank you, Ted. To close, I want to say how impressed I am with the progress the company has made, especially against the backdrop of this ongoing pandemic. Coming back to slide 22, the next six quarters are filled with a number of important R&D milestones that will continue to elucidate the potential of our programs and our scientific platform. We are very much looking forward to providing updates from both SRK 015 and SRK 181 in the fourth quarter. And based on our achievements with our scientific platform, I'm confident that we can take on some of the toughest targets of medicine so that more patients can benefit. I want to thank my colleagues for their hard work and dedication to the many patients who are awaiting our therapies. And I also want to thank our shareholders for their support and time this morning. I think we can now turn to Q&A. Operator?

Thank you, sir. As a reminder, to ask a question, you would need to press star 1 on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. I'm sure our first question comes from the line of Michael Yee from Jefferies. Please go ahead.

Hi. Good morning. Thanks, guys, and congrats, Tony, on the new role. Looking forward to this. Maybe two questions for Young. you might think that cohort three would be the group you could see the greatest effect given the most youngest patients. But in that group, you also see a lot of improvement with Spinraza and the Cherish study. So maybe you could just delineate how you think about a three-point improvement in cohort three versus cohort one and two. In other words, how do you delineate your expectations between those groups? And then on 181 and TGF-beta, Are you expecting you could actually see responses even at low doses and dose escalation and data that we're going to see later this year? Thank you so much.

Hi. Hi, Mike. Yeah, so starting with your first question about thinking about discerning efficacy in the context of the various cohorts. the primary evidence indicates that the background expectation would be that it's disease stabilization, right, motor function stabilization rather than absolute gains. So what we're going to look for there is for mean change from baseline that indicates an absolute improvement in motor function rather than a zero-point change in that context. But a key analysis there will be to see what proportion of patients achieve at least a three-point improvement from baseline improvement given that, you know, data from the Phase III trials in Ms. Nerson, as well as now RISDA plans show that it's rare to see individual patients achieve a sizable improvement, such as less than 15% in the Cherish trial. So we would think it would be exciting if a substantial portion of patients in SRK1-5 achieve a three-point or greater improvement from baseline, as this would not be consistent with an otherwise expected course. Now, for course three, as you point out, patients who are started on Ms. Nerson at a young age, i.e., before the age of five, they do see some improvements over baseline. It's not just motor function stabilization. So what we're looking for there is to see substantial improvements in motor function above what you might generally observe when misnursing, both in terms of the amount as well as over time, right, because there's data now indicating just the trajectory of what that curve looks like in terms of improvement on nursiness, and it's not like this dramatic improvement, like just, you know, this is very rapid. There's a steady improvement, so you can just track along that. In addition, a key part of this Core 3 analysis is we're doing some dose exploration, right? We're looking to see if the low-dose arm may offer efficacy, too, as well as the high-dose arm. And then we'll see if there's any differentiation between the two arms, such as in the time course of effect, which can inform the dosing strategy in the future. And then finally, we're going to look for effects upon other outcome measures, such as the RISE upper limb module and the WHO motor milestones. And as a reminder on the WHO motor milestones, That's a very high bar to see efficacy. Even in the nurse-nurse and chair study, they did not show a significant improvement in effects on motor-motor milestones, and approximately only 20% achieved one milestone gain. So I think there's a variety of different ways in cohort three to evaluate for therapeutic effects from SRK1-5 on top of nurse-nurse. With regards to your question, Mike, about looking for efficacy in the context of dose escalation. I think our base assumption is that it's really part B, where we're really going to explore for the efficacy potential of combining SRK181 with checkpoint inhibitors. The advantage of that is we're looking at multiple different tumor types with sizable numbers. We're looking at a population where patients have experienced primary checkpoint inhibitor resistance, so now in combination, if you start seeing efficacy, even in relatively small numbers, it's exciting, right, because each patient would not be expected to otherwise have a clinical response, given their prior history of checkpoint inhibitor resistance. So we'd be excited from that. Now, with Part A, yeah, I mean, we are going to look and explore for potential efficacy. This would be more of an upside-pleasant surprise, I think, but the advantage is we do have the opportunity to take a look to see if it's possible, right, because, like in Part A2, the study population there our patients who tried to check one inhibitor, didn't have a response, and now we can see what happens in combination. But, again, our basic expectation is really Part B is where we're going to look for efficacy signals. But, again, you know, as you know, in oncology, we're just going to continue to track and see what happens in dose escalation.

Okay, great. Thanks.

Thank you. Our next question comes from Duke Kim from BMO Capital. Please go ahead.

Hi, this is Jameson on Bordeaux. Thanks for the update and congrats on all the progress. Two on 181 from us. First one for Young. Could you elaborate a little bit more on expectations for us on that data that will be presented by year-end? The amount of patients, type of biomarkers, and how we should interpret that as a potential read-through for the full readout of 2021. And then the second question for Tony, maybe. Given that the 181 study is targeting a wide variety of tumor types, significantly large opportunity in that checkpoint-resistant market. Could you tell us your thoughts on the commercial strategy and how you see the program being developed going forward? Thanks.

Yeah, so the first question on the update on dose escalation. So, yeah, so in the fourth quarter, we're anticipating a Friday update on progress in dose escalation. So, in other words, how far along we've gotten in the dose escalation process, and obviously that will include making sure that there's no major safety signals that would limit dosing. In terms of one thing I should point out is we do anticipate, given the progress we've been observing to date, that we will be starting the combo dose escalation, Part A2, this quarter. Part A1 and A2, as a reminder, are staggered, and so we anticipate providing some updates of where we stand in dose escalation in the fourth quarter, heading towards our goal of initiating Part B in the first quarter of next year with expectations of seeing clinical response and safety data in 2021.

Thanks, James. This is Tony. So on commercial strategy, I mean, look, let's be clear. Task 1 is the dragon trial and what's ahead of us. We need to prove the case here. Having said that, our thinking is that this drug, if it performs as we think it could, Could the backbone therapy, there's reason to believe you could use it across multiple checkpoint inhibitors. We'll obviously be exploring, can you use it across multiple tumor types? So that's an exciting set of possibilities. You could start to imagine things like you start in primary resistance, and is there a chance to expand the checkpoint naive, et cetera, continue to add things across different tumor types. There's potentially a big, exciting development plan here with a really exciting kind of set of commercial possibilities attached to that. But, you know, job one is to get Dragon done and start to get some of this efficacy. But we're thinking about it in a very big way.

Great. Thanks, and congrats again on all the progress. Looking forward to the data readouts.

Thank you. Thank you. Our next question comes from the line of Madhu Kumar from Baird. Please go ahead.

Yeah, thanks for taking our question. So we'll start with a big picture question about SRK181. So you have these dose escalation and the dose expansion cohorts. So a big question to Tony is how far do you go with 181 on your own versus kind of looking for a collaboration or partner to kind of more broadly really test this drug in this digit beta inhibition in a kind of broader array of IO combination studies?

Yeah, thank you. Good question. So, look, oncology is a big space, and as I just laid out, there's a potential for this to be a very big drug with a lot of ways to take it in clinical development. We would certainly be open to partnering in development on the part that I think one naturally would be, given the potential size of this and how big and competitive the oncology space is. Look, it's all a question of time, obviously, which is you want to engage in those discussions from a position of strength. I think we have a task ahead of us, and we have some funds to do it to add some value and get some proof of concept. So we'll certainly consider partnering and a lot of people, it's interesting, there are a lot of big players in this space and a lot of people interested in what we're doing because it did be enabling to the whole checkpoint effort. So very open to that, but the question is the right time. I think our first target is to generate some more data and strengthen our hand.

Okay, and then more micro question on 1A1. So To go to Part A2 this quarter, is that decision based on kind of just safety data you've seen from the monotherapy dose escalation? Is it based upon safety and PK data? It's kind of like you reach the PK where you think you're starting to see drug exposures that will make sense to combine with PD-1. Can you kind of tease out what is the – how do they think about the dose escalation in A2, given what you might have seen so far in A1 from Dragon?

Oh, yeah. So just taking a step back, so I think the way we've designed and selected the doses was informed by where we believe, based upon modeling and the preclinical data, about where we anticipate the potential therapeutic effect range would be, if our hypothesis is true, and then making sure that we had drug coverage above that to survive this additional buffer, right? And so the way we approached it is now you're going through Part A1, it's staggered to Part A2, and we want to make sure that there's dose-only toxicity challenges that would preclude us from escalation. So it's primarily a safety-driven decision-making process. And so then as you progress along, you know, we'll be evaluating all these other parameters, of course, like TK as well as biomarker. But the primary thing in terms of making dose escalation decisions is driven by safety because we're trying to push the dose. to get it to as high as we can because until proven otherwise, we want to carry the highest dose forward and make sure that we're well into the therapeutic range that we hypothesized could lead to the effects we hope to see.

Okay. And then in 015, in the healthy volunteer study, can you remind us, did healthy volunteers see muscle growth on myostatin inhibition therapy? We think about the genetics of myostatin a lot. So did you see any change in muscle mass in those healthy volunteers?

Oh, a healthy bouncer? So our focus for the Phase I trials as well as Phase II is actually on motor function, particularly fast-twitch fiber function. So that wasn't a focus of ours. So I think the key thing here is remember, as opposed to, say, rodents, humans have a much more mixed balance proportion of fast-twitch and slow-twitch fibers. And given that the mice then have the preferential effect on fast-twitch fibers, you can imagine an individual muscle, which is composed of a mix, if you have effects of fast-tritch fiber, but then diluted by no effect on the flow-tritch fibers or minimal effect, it would be hard to detect something. So, yes, while the folks have half-focused on that, our focus is really on the fast-tritch fiber function. That really is why we're excited about the SMA hypothesis and the potential in SMA, given the prominent contribution of fast-tritch fiber actually, fast-tritch fiber deficits, and mechanism of action. That's why we think it really makes sense to evaluate SRK1-5 to see if we can derive faster fiber function improvements that we will measure directly through the Hammerson scale and other clinically meaningful outcome measures to see if our hypothesis is true.

Okay, and then one last one about O1-5. So given the preclinical data you have combining it in SMA mouse models with an SMN modulator, do you think six months will be enough time for myosin inhibition to improve motor function performance? And do you think you'll get greater improvements at 12 months versus six months? Like, how are you thinking of the kinetics of myostatin inhibition improving motor function?

Yeah, so this is a 12-month study, right? But with that said, it is quite biologically plausible and conceivable that we may see therapeutic effects at six months. And so given, you know, preclinic, we do observe effects in a short course of time. with treatment. And so certainly because of that, we want to investigate the potential that SRK1.5 may have benefits at the six month time point. So that's why we're doing the internal to see, do we see the effects at that time point? But as you point out, it is a 12 month study. So we intend to carry it forward too.

Okay, great. Thanks.

Thank you. Our next question comes from the line of David Maringarten from Wedbush Security. Please go ahead.

Thanks for taking the question. On the patients who have completed the 12-month treatment period for 015 and Topaz, could you tell us how many were monotherapy patients or in, I believe, that would be cohort one and monotherapy? Thanks.

Oh, yeah. So we haven't broken out just in terms of where those patients are, but I think at a high level, I think, There have been eight patients who have completed the 12-month treatment period, and all eight have opted in to continue forward. Obviously, it's early in the rollover opportunities for booming image extension, but we certainly are encouraged that today there continues to be good patient engagement, as well as clinical trial investigator and site engagement across the whole study. All right. Thanks.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound key. I show our next question comes from the line of Mark Fram from Cowan & Company. Please go ahead.

Hi. Thanks for taking my questions, and congratulations on the new roles across the team. Maybe just focusing back on the Dragon update just to be clear here on what to expect. Is this really going to be focused on enrollment status, or are you also likely to share whatever data you do have already on, say, PD markers and those types of analysis as well?

So, yeah, I assume you're referring to the fourth quarter update. Yeah. So, in terms of the fourth quarter update, The primary focus is just to provide an update of where we stand in terms of justification, how far we've advanced, both in our Part A1, Part A2. And obviously, as part of that, you know, it would be just to make sure that there's no major safety signals, right? And then as part of, you know, as we continue to go through justification, we will look at PK and we are exploring various biomarkers. And so, certainly, we will be exploring that as well. Now, in terms of In terms of where we might anticipate efficacy data, our expectation is that that's going to be more of a 2021 event. As we talked about earlier, our base assumption is that really it's Part B that will really interrogate efficacy. Now, is there upside potential from the dose-dose question? Sure, yes, and certainly we will be – we set up this study so that we have the potential to detect an early efficacy signal But our base assumption is that really it's part B that we'll be looking for the efficacy. And that's a, yeah.

Okay, great. Thanks. Very helpful. And then I'm thinking about the TOPAZ update before the end of the year. I guess one of the therapeutic goals you listed was, you know, just having a substantial portion of patients get a three-point increase on the various scales. I guess you give a little bit more granularity there as to what you'd define as substantial. I mean, are we talking, you know, 10%, 20% of patients getting that, or, you know, are we talking about more like 50% plus of getting to that level?

Yeah, yeah. So I think, you know, again, there's two ways we're looking at it, right, for both course one and two. One is looking for immune change for baseline, right, given the natural history data that's available, the data for nurse-nurses and patients who are age five and, at the time of initiation, and now there's RISDEPLEN data using a different endpoint with MFM32, as well as HFMSE. It all is a consistent observation that patients who are started in this nursing age five and older, the primary benefit is more motor function stabilization rather than absolute improvement. So our goal here is to see if we have a mean change from baseline to ensure absolute improvement rather than zero point stabilization. So we're really looking for that improvement. Now, as you point out, there is a key analysis here, which is to look at what subset of patients or percentage of patients are able to achieve at least a three-point improved baseline. And to provide a little more context around that, remember that from the CHERISH study, right, for patients who are starting nursing at the age of five and older, it was rare to see anyone achieve that. In fact, it was less than 15%. And so what we're looking for is a substantial proportion that's considerably north of that to, you know, because we would believe that would be very exciting, right, because that would not be expected given the otherwise course of disease, even in the setting of just a nursing treatment.

Okay. Thank you.

Thank you. I turn it over to questions in the queue at this time. I would like to turn the call over to Mr. Tony Kingsley, President and CEO, for closing comments.

Good. Thanks all for joining. Exciting science. We're moving fast. We've got a lot of data potentially coming out in the next 10 public orders, so we're going to get back to work and pursue our destiny. Thank you guys for joining this morning. Look forward to following up with you.

Thank you, sir. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.