Surrozen, Inc.

Good afternoon and welcome to the Sarozen corporate update conference call. My name is Josh and I will be your manager for this call. I will now turn the call over to Craig Parker, CEO of Sarozen to begin the call.

Thanks, Josh. And thank all of you for joining us today for this important corporate update. As Josh said, I'm Craig Parker, CEO of Sarozen. And with me today is Chuck Williams, the chief financial officer at Sarozen. We'll be providing corporate and R&D pipeline updates today, and we'll then address questions. Slide two. I'll be making forward-looking statements. Please consult our SEC filings, in particular our 2022 annual report on Form 10-K for a full discussion of our risk factors. Slide three. As some of you know, Surizin is the preeminent innovator in using the Wnt pathway, the body's own physiologic mechanism for tissue repair, to selectively stimulate tissue regeneration in a broad range of diseases. We do this through our proprietary platform and technologies that combine an understanding of Wnt pathway biology in specific disease settings with advanced antibody engineering techniques and proprietary antibody technologies. Our vision is to design and develop tissue-selective antibodies that have the potential to regenerate tissue in many severe diseases. It's this targeted approach to Wnt modulation and the extremely broad potential therapeutic applications that distinguish our approach and our technologies. The ultimate clinical promise of our approach is disease-modifying benefit. Wnt signaling plays an essential role in regulating many biological processes, including regenerative responses to tissue injury, and we see myriad opportunities to regenerate tissue for clinical benefit. We've invented several novel multivalent antibody-based approaches to selectively modulating Wnt signaling and have advanced two into the clinic. We believe that the Wnt pathway's broad physiologic role portends a role for Wnt therapeutics in a wide range of severe and acute diseases. Our approach overcomes a significant limitation to most regenerative medicine approaches that are limited by availability of donor tissue or long-term viability. We're currently focused on two key clinical areas. severe alcoholic hepatitis with our candidate SCN043, and inflammatory bowel disease with our candidate SCN1326. Today we'll provide you with corporate and pipeline updates, including anticipated timelines for our lead clinical programs, our prioritization efforts for the research pipeline, updates on our partnered program with Boehringer Ingelheim, and our expectations around cash runway as we look toward key inflection points in our lead programs. We'll also provide an overview of our initial evaluation of the Transaminase elevations observed in the Phase Ia studies and our approach to advancing both lead programs. In November, we disclosed several adverse events observed in clinical trials that had commenced in 2022. One of the studies, the phase one single ascending dose study for SCN1326, was voluntarily paused pending further evaluation of grade three transaminase or liver enzyme elevations. We're excited to be able to update you on progress for both SCN043 and SCN1326 phase one clinical trials. Both are currently open to enrollment. For SCN043, we've enrolled our first patient. and we'll provide more information later in the call. Slide four. If Wnt biology is so promising, why has it taken decades to drug this pathway? There are many technical impediments. Wnt proteins themselves are insoluble, promiscuous, and not manufacturable, so a typical recombinant native protein strategy is just not possible. Surazin's platform technologies and strategies have helped us overcome all of these limitations. Our candidate molecules are full-length by specific antibodies that have desirable drug-like properties such as solubility, stability, and manufacturability. They're also highly targeted to tissue-specific receptors. Importantly, we're mimicking a normal physiologic response, so our antibodies in a selective way are able to do what Wnt pathway proteins do in all of our bodies in many tissues, either to maintain the tissue or respond to injury. The novelty and breakthrough nature of our work is validated by our strong publication record and high-impact peer-reviewed journals, including Science, Nature, cell chemical biology, nature scientific reports, and nature communications. We have filed or licensed over 20 patent families related to our key discoveries involving the wind pathway and its modulation. We recently received notices of allowance from the United States Patent and Trademark Office for two patent families assigned to CSRSN related to the SCN 1326 program. We think the breadth of our scientific discoveries and related patent application and claims can establish a dominant position for us in the use of antibody therapeutics to modulate Wnt signaling. Slide five. Our proprietary technologies have led to two different lead programs that entered the clinic in 2022. the licensing of the lead development candidate SCN413 for treatment of retinal diseases to Beringer-Ingelheim in the fourth quarter of 2022, and a focus on two discovery pipeline programs for cornea and lacrimal gland. Our research programs focus on indications of high unmet need with no or few available treatments, including a group of ophthalmologic indications that we'll tell you more about. We're excited today to provide an update on advancing both of our clinical programs, SCN043 and SCN1326. Since our announcement in the fourth quarter of 2022 regarding transaminase elevations, we've completed numerous studies to understand the mechanism of transaminase elevation seen in the SCN1326 programs and also at a lower grade in the SCN043 program. We'll provide you with an overview of our efforts to date and clinical program plans. For SCN043, we're really excited we've advanced to the second phase of the study in chronic liver disease patients following completion of dosing at two dose levels in healthy volunteers. For SCN1326, we will progress our phase one single ascending dose study at lower doses pursuing a dosing strategy frequently applied to first-in-class antibodies referred to as a MABEL, or Minimal Anticipated Biological Effect Level. Additionally, we look forward to the opportunity to advance another development candidate in 2023 in collaboration with our partner, Beringer Ingelheim, with the potential to identify the final Frizzled 4 targeted development candidate by year-end, a milestone that would trigger a payment to CERZIN. Finally, we anticipate that our prioritization and restructuring will result in a cash runway into the second half of 2024, allowing us to achieve multiple key milestones and catalysts.

Slide seven.

SCN043 is our bispecific multivalent antibody that mimics the activity of R. spondin. but importantly is specifically targeted to hepatocytes via its ASGR1 binding. SCN043 specifically activates Wnt signaling in the liver, resulting in hepatocyte proliferation, liver regeneration, improvement in liver function, and reduction in fibrosis. We think the biological rationale and preclinical data that support the concept of activating Wnt signaling for the treatment of severe liver diseases is compelling. We developed a data-driven clinical plan to align the molecule's pharmacology with specific disease pathologies and advance into clinical trials in 2022. As mentioned, we observed some mild to moderate adverse events in the first two dose cohorts which we'll describe in more detail. Importantly, these observations did not impact our ability to advance into the next stage of the phase one program in liver disease subjects. We'll describe our planned next steps and the significant opportunity in severe alcoholic hepatitis. Slide eight. It's important to point out that our SWEETS antibody platform, on which O4-3 is based, allows for cell-specific targeting of the Wnt activating mechanism. SCN-O4-3 utilizes a well-characterized hepatocyte-specific receptor, ASGR1, to target O4-3's activity to hepatocytes. Our SWEETS technology mimics the activity of a naturally occurring protein, R-spondin. Our spondin's contribution to regeneration is well described, and we've focused its activity on hepatocytes with our technology. We've confirmed the cell-specific Wnt pathway effects of the molecule, and our animal toxicology studies showed no adverse effects up to 125 milligrams per kilogram dose level. Let me explain why we think severe alcoholic hepatitis is the right indication for the molecule and for surazin. Alcoholic hepatitis is a severe clinical entity characterized by acute onset of jaundice and coagulopathy in patients with alcohol use disorder. The incidence of alcoholic hepatitis is increasing over recent years. Short-term mortality of severe AH remains very high. 20% of patients with AH die within 30 days of admission to the hospital. And 30% die within 90 days due to hepatocyte loss and lack of sufficient regeneration to overcome that loss. The medical management of alcoholic hepatitis has not evolved substantially in the last two decades with multiple potential therapeutic agents tested without success. There are no approved drugs indicated for severe alcoholic hepatitis. Corticosteroids remain the only established treatment for AH, but are contraindicated in more than half the patients. Liver transplants often are denied due to alcoholism. And even if available, transplants are limited by donor organ availability, cost, and limitations on medical centers with transplant capabilities. Hospitalization rates are very high in severe alcoholic hepatitis and represent about 130,000 hospitalizations per year. People with severe AH are typically admitted to the ICU, so this is an identifiable population with an extremely high unmet need. We're also aware that alcohol consumption increased by over 30% during the pandemic, and hospitalizations also increased during the pandemic for alcoholic hepatitis. We think that the critical medical need in this population, the dearth of novel approaches and alignment of our mechanism with the disease pathophysiology is reinforced by an award to Susan of a several million dollar NIH grant for this program. Importantly, hepatocyte regeneration is known to correlate with improved survival. Furthermore, we can utilize surrogates for response and survival such as the LIL and MELD scores to assess early signs of clinical benefit. Both of these tools are using clinical practice to assess response to treatment, prognosis, and eligibility for transplant. They are objective and are calculated using common laboratory tests like bilirubin. The LIL score at seven days is a well-characterized marker of disease severely severity that is highly correlated with 90-day survival. We expect 90-day survival to be the approvable endpoint in a registration trial. Because of the disease severity and unmet medical need, we believe there's an opportunity for favorable regulatory treatment such as breakthrough therapy designation and a potentially rapid approval pathway as seen in other grievous diseases. Slide nine. We've published data from multiple rodent liver injury models demonstrating that SCN043 rapidly proliferates mature hepatocytes, resulting in functional improvements and a reduction in fibrosis. These publications and abstracts can be found in the investor section of our corporate website. The efficacy of SCN043 spans injury models specific to our initial indication of alcoholic hepatitis to models of fibrosis that could ultimately provide translation to additional liver indications in the future. Slide 10. We're excited to have completed two cohorts of patients in the phase one single ascending dose study in Healthy Volunteers, and we've enrolled our first patient with chronic liver disease. Following the outcome of the mild to moderate TA elevations in the first cohort of healthy volunteers treated at three milligrams per kilogram, we enrolled a second cohort in six healthy volunteers at a lower dose of one milligram per kilogram. We observed one case of mildly elevated grade one transaminitis that also resolved spontaneously. following completion of cohort two in the phase one sad and healthy volunteers we opened enrollment in the phase one sad in patients with chronic liver disease and as i said have enrolled our first patient we expect to enroll four subjects per dose group with an option to expand the cohort we're proceeding with lower doses as our preclinical data indicates that damaged tissue may be more sensitive to the beneficial hepatocyte proliferation effects of SCN043. Patients in cohort one will be dosed at 0.5 milligrams per kilogram. Importantly, we anticipate having data from the phase one single ascending dose in chronic liver disease patients by year end 2023. Assuming acceptable safety, we anticipate moving into a Phase 1B clinical study in severe alcoholic hepatitis patients in 2024 with proof-of-concept data expected to be available in the second half of 2024. In summary, we believe that SCN043's mechanism and preclinical data are ideally aligned with our initial target indication and that SCN043 has a well-defined clinical development and regulatory pathway. Excuse me. We look forward to advancing our understanding of the therapeutic potential of SCN043 as we initiate treatment of subjects with chronic liver disease and ultimately patients with severe alcoholic hepatitis. Slide 12. SCN1326 is based on our SWAP technology. And we're developing SCN1326 for moderate to severe inflammatory bowel disease. Based on a compelling effect in well-established rodent models of colitis, showing near complete healing of damaged intestinal epithelium, including reestablishment of the critical barrier function, using just one or two doses of SCN1326, we designed a clinical development plan leveraging the extensive experience of other biologic agents in IBD. In contrast to other biologics, though, our biology and preclinical data suggest we have an opportunity to directly drive mucosal healing or histologic remission. In May 2022, we commenced dosing of SCN1326 in a healthy volunteer phase one single ascending dose study. Several subjects in cohort one treated at 25 milligrams experienced asymptomatic liver transaminase elevations, including two subjects with grade three ALT and AST elevations and two subjects with grade one ALT elevations. There were no corresponding increases in total bilirubin nor any changes in other liver function markers and no other clinically significant laboratory abnormalities. The transaminase elevations resolved spontaneously in all subjects. No serious adverse events were observed during the study. Although the protocol did not require that we halt the study, we announced a voluntary pause to enrollment in the phase one healthy volunteer portion of the study in November following an observation of a grade three ALT elevation at a lower dose in order to give us an opportunity to analyze the clinical data. We have not observed transaminase elevations or any other adversities at doses up to 125 milligrams per kilogram in pilot or GLP toxicology studies. So these adverse events were unexpected and as such could not be characterized with nonclinical data available at the time of the observed events. We've invested significantly in efforts to understand the mechanism of the TA elevations. Importantly, a better understanding of the nonclinical data and clinical data combined with a modified dosing strategy allows us now to proceed to dose additional healthy volunteers in the phase one SAD portion of the study, which we expect to do in the next few weeks. Our initial rationale for dose levels for SCN1326 was based on doses tested in multiple models of colitis and the absence of any observed toxicities preclinically. Such a dosing strategy is informed by the NOAEL or no observed adverse effect level as well as other indicators of activities such as a therapeutically active dose. In light of the TA elevation observations, we're now pursuing a dose-level strategy with SCN1326 that, as I said, is commonly employed with agonistic antibodies for first in human studies, and that's a MABEL, or minimum anticipated biological effect level. Slide 13. So I probably don't need to reinforce for all of you the remaining unmet need in this significant market. Initially, we're developing SCN1326 for ulcerative colitis. Ulcerative colitis is a chronic immune-mediated inflammatory disease of the large intestine that's frequently associated with inflammation of the rectum, but also extends proximally to involve additional areas of the colon. Nearly 1 million individuals each in the US and EU are affected. Peak incidence occurs between the ages of 15 and 45. Some patients with UC have persistent disease activity despite medical therapy, and 20% will develop at least one episode of acute severe ulcerative colitis requiring hospitalization. Importantly, Although there are medical therapies on the market in development, there remains a significant unmet need in UC for the following. Rapid induction, as current anti-inflammatory biologics can take months to induce clinical remission. Improved efficacy, especially histologic remission, as anti-inflammatory biologics achieve clinical remission in less than 50% of patients at 52 weeks. And low rates of histologic remission, as low as 20%. Histologic remission has been associated with a better clinical course. Additional mechanisms of action as an additional unmet need as many patients fail first-line anti-inflammatory biologics and subsequently fail second and third-line therapies. Slide 14. So what's the rationale for a Wnt memetic in inflammatory bowel disease? A major component of the pathophysiology of IBD is an impaired epithelial barrier or gut wall, allowing for exposure of gut microbes to the gut's immune system, resulting in inflammation. This inflammation further destroys the epithelial barrier. SCN1326 can directly address this epithelial barrier dysfunction. It binds to intestinal stem cells in the colon crypt, replacing Wnt ligands that in normal circumstances are produced by the stromal cells, but that's disrupted in IBD. This binding of 1326 leads to proliferation and differentiation of these cells as they move up and out of the colon crypt, replacing the damaged epithelium and restoring the epithelial barrier. We've shown preclinical that this results in reduced inflammation and reduced disease activity. Slide 15. In preclinical studies, we've demonstrated that 1326 restores Wnt signaling in the damaged intestine, repairs the damaged colon epithelium, reduces inflammatory cytokines, and reduces disease activity. We've also shown that this activity in preclinical models of colitis compares favorably to approved biologics and immunosuppressants. you can find abstracts related to some of this preclinical data on our website. Slide sixteen. Over the last several months, we've identified several potential hypotheses for the Transaminase elevations we've seen in the clinic and have established a rigorous science-based investigation plan. Our in-house expertise and capabilities have proved invaluable in expeditiously analyzing the available data and conducting additional experiments designed to specifically address key questions. Let me describe some of these activities, data, and our conclusions. We've established additional in vitro and in vivo systems, specifically employing human hepatocytes in order to most closely model human physiology. We've observed that our molecules do not have a direct toxic effect on human liver cells in multiple in vitro and in vivo experimental systems. We have not observed a direct effect on ALT or AST in vitro. And importantly, we have not seen any immune mediated effects using multiple experimental settings. No cell death, no immune activation, no observed hepatocyte killing effect in any of our studies that we've undertaken over the last few months. Although O43 and 1326 employ different receptor systems for activity, the downstream Wnt pathway effects are shared. We think the similarities in the patterns of transaminase elevations between the two molecules in light of their different pharmacokinetics is supportive of the hypothesis that activation of Wnt signaling and subsequent hepatocyte-driven liver regeneration is at least partially responsible for the transaminase effects. We'll continue to investigate additional models for applicability to understanding the mechanism of these TA elevations. I'll also remind you that this seems to be a liver-specific effect, and many of our molecules would not be expected to affect liver cells based on either receptor targeting or route of administration. We'll be commencing dosing of SCN1326 in the next cohort of healthy volunteers at a dose of 0.04 milligrams or 40 micrograms. Assuming acceptable safety in this and subsequent cohorts, we anticipate proceeding to doses up to at least 1 milligram. Following acceptable safety, We anticipate enrolling a proof-of-concept study in ulcerative colitis patients in 2024 with proof-of-concept data expected to be available in the second half of 2024. Slide 18. We have three research programs in late stages of lead optimization or candidate selection, two wholly owned by Surizin and one partnered with Beringer Ingelheim. As I mentioned, Wnt signaling plays a central role in tissue regeneration, and Wnt-responsive cell types are found in tissues throughout the body. We believe this broad physiologic role portends a role for Wnt therapeutics in a wide range of severe and acute diseases. The role of Frizzled 4-mediated signaling in blood vessels in the retina has been validated through human genetics, rodent models, and our own and collaborators' data and publications. We've shown that a Frizzled IV targeted swap, SCN413, could fill a unique mechanistic role in the treatment of retinopathies by simultaneously addressing vascular leakage and retinal non-perfusion. In two different models of retinal injury, we've shown that SCN413 could reverse multiple manifestations of retinal injury, including vascular leakage and areas in the retina that were not adequately vascularized and areas with characteristic pathologic neovascular tufts. This and other data stimulated interest from multiple parties in an SCN413 partnership and led us to sign a collaboration agreement with Beringer Ingelheim in October 2022. Slide 19. We also have a research program in regenerating cornea. Fuchs endothelial cell dystrophy is a disease characterized by corneal swelling and ultimately vision loss and discomfort caused by excessive loss of corneal endothelial cells. The cause of corneal endothelial cell loss is not well understood, but has a genetic component. Current therapies are limited to endothelial transplant or resection at late stages of the disease. There is a significant unmet need for therapies that mitigate disease progression and or improve surgical efficacy. Our strategy for treating corneal disease is to specifically activate when signaling in the tissue, regenerate corneal endothelial cells, reduce corneal swelling, and improve vision. We've established a cornea research effort including in vitro and in vivo models that to date have demonstrated the following. Specific frizzled receptors are expressed in corneal endothelium of both normal and fuchs human donors and can therefore be used in designing and targeting our swap molecules. We can observe Wnt activation through specific swaps that enhance proliferation of primary human corneal endothelial cells in vitro. And we've established a corneal cryo-injury model to measure the therapeutic effect of activating Wnt signaling in the corneal endothelium. In vivo, cirrus and Wnt activating molecules are efficacious in reducing corneal thickness and improving opacity. The next step for our program is to optimize a lead molecule and select a development candidate. Slide 20. Well, let me tell you about another ophthalmologic program that we're excited about. We're pursuing a potential treatment for severe dry eye with our SWAP technology. Severe dry eye is characterized by atrophy of the tear-producing glands in the eye and insufficient regeneration. The objective with the Wnt activating approach is to stimulate regeneration of the tear-producing cells in the lacrimal gland and restore fluid secretion. We've established multiple lacrimal gland injury models in rodents in which tear production is reduced. One using interleukin-1-alpha to promote inflammation-driven injury. The other, a lacrimal duct ligation model that results in necrosis to the gland. An important first mechanistic step in restoring tear production is to regenerate the tear-producing cells in the gland called the acinar cells. We've shown that a single injection of a SWAT molecule results in an increase in the weight of the lacrimal gland and a demonstrable proliferation of these acinar cells. So we're having a clear effect at the cellular level of increasing the number of target cells in the gland. In the IL-1A induced injury model, we've shown that SWAT molecules activate when signaling in the tissue, which leads to an increase in tear secretion. The method for measuring tear secretion in this model is actually the same as that used in clinical trials of agents for dry eye, a phenol red thread. In this model, there's a statistically significant increase in tear production with SWAT molecules at days two, three, and four. Similarly, in a duct ligation model of lacrimal gland injury, we've shown that treatment with a SWAT molecule restores tear production through activation of Wnt signaling and proliferation of acinar cells. Next step for the program is to optimize and finalize a lead molecule for development. We expect at least one of these programs to move forward into development in 2023, potentially in collaboration with a corporate partner. Both involve local administration of our antibodies to the affected tissue and therefore would not be expected to have any potential liver exposure liabilities. Slide 21, and I'm going to turn the slide over to Chuck.

Thanks, Craig. As Craig outlined, we've made significant progress with our programs over the last few months, and I wanted to highlight a few things that we've accomplished from a corporate and capital structure perspective to establish an even stronger foundation for continued future success. So first, I wanted to highlight we executed a partnership with Boehringer Ingelheim in the fourth quarter of 2022 to develop a Winn Agonist SCN413 for the treatment of people with retinal diseases. We anticipate the potential to identify the lead Frizzle 4 targeted Winn Agonist candidate by year end 2023 would trigger a potential $10 million milestone payment. Secondly, we implemented a restructuring in Q1 of this year. Our efforts were focused on maximizing shareholder value by, one, aligning resources and R&D investments for the two lead clinical development programs with a focus on obtaining proof-of-concept data. Two, prioritizing investment in the most advanced discovery preclinical programs, Lacrimal and Cornea. And thirdly, reducing operating expenses with the goal of maintaining a strong balance sheet. Following the corporate prioritization and restructuring activities, we anticipate a reduction in operating expenses, excluding non-cash and non-recurring charges, of approximately 15% in 2023 compared to 2022. Cash, cash equivalents, and marketable securities were approximately 76 million as of the end of 2022, and we expect our cash runway to last into the second half of 2024. Finally, I wanted to highlight in the fourth quarter of 2022, we entered into a securities purchase agreement with Consonance. Given they decided that they were winding down their fund, they were an overhang on our stock, so we entered into an agreement to repurchase approximately 5.4 million shares of our common stock and approximately 1.3 million warrants for a purchase price of approximately 2.7 million. Following the repurchase, Consonance no longer holds any shares of our common stock or warrants to purchase Sarazin common stock. We're excited with the multiple opportunities that lie ahead of Sarazin in 2023 and 2024. We've shared some of our key milestones and catalysts through 2024 on this slide. We share our thoughts on cash runway into the second half of 24 as we think about our key upcoming milestones and catalysts. And I'll briefly highlight a few of these. First, for SBN043, as Craig mentioned, we've enrolled the first patient for chronic liver disease and expect to have data by the end of the year and plan to initiate a Phase 1B clinical trial in 2024 with potential proof of concept data in the second half of 2024. As it relates to 1326, we've opened enrollment for the phase one in healthy volunteers, and we expect to be able to have data by the end of the year. And we'll initiate a phase 1B trial in 2024 in UC patients and expect to have proof of concept data in the second half of 24. As I've already mentioned, with SCN, 413, which is partnered with Boehringer Ingelheim. We expect by the end of the year for them to nominate a candidate, which will trigger a $10 million milestone payment. And as it relates to our research programs, we expect to nominate an additional program and or partner that potential program. So now I'd like to turn it back to the operated and we'll open up the call for questions.

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. Our first question comes from Dagon Ha with Stifel. You may proceed.

Good afternoon. Thanks for taking my questions and congrats on all the progress. Good to hear things are back in motion on your side of the table. Maybe I'll just start with two before I hop back in the queue. Regarding the 043 plan... Josh, I don't hear anything. Hello? Can you guys hear me? Hello? I can hear you. Hello, you are coming in loud and clear. Can you guys hear me now?

Yes.

Hey, Craig. Great, so thank you for taking my questions. Congrats on all the progress. I wanted to ask two questions. One was more of a clarification for the 043 plan. Is there a change in the study plans? Because I thought the phase one next study was in early cirrhotic patients, but now it seems like chronic liver disease. So was there a change or what was the, I guess, the nuance that I'm missing? And based on the liver transaminase observations, Can you speak to your confidence or strategy to mitigate similar observations in more hepatically impaired patients? And then I've got a follow-up.

Thanks for the questions, Dagon. So, yes, you observed a nuance in what we think are the patients likely to be enrolled in the study. So... The general objective of the study, well, the primary objective of the study is unchanged, which is safety. We think that, and cirrhotic patients are chronic liver disease patients. For many etiologies, like patients with Hep C, for example, cirrhosis is defined by, in part, a fibroscan score or transient elastography score of 7.5. we're taking patients with lower FibroScan scores, so they will certainly have chronic liver disease. They will have fibrosis, but whether they have frank cirrhosis, I think we'll just have to see. So that's the nuance in the description of the target population that you picked up on is they may have fibro scan scores that are low enough that they would not be considered to be cirrhotics yet, but they would certainly have fibrosis and have hepatic impairment.

Got it. And what about the, uh, the hepatically impaired aspect? How might that be a potential complication for you guys? Or do you have strategies to mitigate that?

You know, we have not identified, um, a specific mechanism where, you know, one could, um, you know, mitigate, for example, by co-administering, you know, something else. And so I think, as I mentioned, we've observed that damaged tissue tends to be more sensitive. And so I think this is really going to come down to, you know, the dose response in diseased tissue, you know, versus healthy tissue. So there's no specific mechanistic strategy at this point based on the data that we've generated. But again, it's possible that at quite low doses, there's a regenerative response that doesn't bring with it some hepatocellular injury.

OK. Regarding that Mabel aspect you were talking about, So, if we think about your 1326 study, how many more dose cohorts are you going to be exploring? I think I heard you say starting with 0.04, but going up to one milligram dose. Have you clarified how many cohorts that would be? And kind of by extension,

this notion of higher than expected exposure in humans versus animal studies is that also in effect for your 043 molecule as well thanks so much yeah we'll publish some of the pharmacokinetic data at some point for both molecules but but 043 was roughly in line with our pk projections from animals um know what we're the Dagon we're not going to disclose all the dosing cohorts but it's a pretty typical dose level strategy and we can continue to go above one and it's possible for example that we could go up to 2.5 where we've seen one of these events with a different route of administration So one potential hypothesis, for example, is that Cmax may be a contributor. We don't have preclinical data suggesting that, but it's seen with other molecules, and we're giving the molecule IV. And we may ultimately want to test whether there's a difference at doses we've tested IV with the subcutaneous dose.

I see. Okay. Thank you very much. I'll hop back in the queue.

Okay.

Thank you.

Our next question comes from Hannah Adeoye with JP Morgan. You may proceed.

Hi. This is Hannah on for Eric. Thanks for taking the questions. Just a few from us. Have you commented on the half-life of 1326 before? And if so, are you able to speak to any of the expected dosing regimens or frequency for a multiple ascending dose study based on your preclinical and clinical findings thus far? I guess generally I'm trying to see what gives you comfort that the AEs that you've heard initially... Hannah, I couldn't hear that.

I don't know if others could.

Oh, okay. I can repeat. I was saying, have you guys commented on the half-life of 1326? And are you able to speak to any expected dosing regimens or frequencies for a multiple ascending dose study based on your preclinical and clinical findings thus far? Just trying to see if... there's any data points that give you comfort that the AEs that you've observed thus far won't be seen over longer dosing intervals.

Were you able to get that? Hello.

One moment, please. The conference will begin momentarily.

There we go. I think we can. Go ahead, Hannah.

Hi. Can you guys hear me now?

Yes.

Hi. Okay. Hi. I'm going to repeat. Okay, you can hear me? Okay, great. Yes. Just was asking about the half-life of 1326 and your expected dosing regimens or frequencies for a multiple ascending dose study.

The half-life is about, for 1326 you're asking, correct?

Yes.

Yeah, the half-life is about five days. Keep in mind, though, that because there are a number of Wnt pathway target genes that are activated when you activate the pathway, the biological effects could be longer lasting than what you might anticipate from the half-life. of the antibody. And so it's not a straightforward align the PK with the frequency of dosing. So we think this could be in every other week or perhaps even less frequent dosing regimen. We have not finalized that yet for the phase 1B portion.

Okay, that's helpful. Thanks for taking the time.

And obviously we want to see all the human PK data at different dose levels.

Okay, great. Makes sense. Thank you.

That half-life, by the way, was in primates.

Oh, okay.

The five days.

Thank you.

Thank you. And as a reminder, to ask a question, you will need to press star 1-1 on your telephone. Our next question comes from Yatin Zuneha with Guggenheim. You may proceed.

Hey, guys. Can you hear me?

Yes, you're coming in loud and clear.

I can't hear him. Okay, we'll wait. Craig, can you hear me now?

Once we get signal from the company, I'll ask a question.

Craig, please give us the word when you can hear us.

I can hear you. I can't hear you. Okay.

Now, hello.

I think we are able to hear.

I don't know because my other line is able to hear. Can you hear us?

I can hear you, Craig. Can you hear, Gautam?

No.

You can hear me. Yes.

Can you translate the question? Why don't we do that?

Let me ask the question. Chuck, do your best in translating. So with regard to 043, I think you mentioned that you have confirmed target engagement. Can you characterize that for us? Was there a dose response? And how do you feed about 0.5 dose? Is that sufficient to elect either a clinical or a biological activity? That's one. And maybe a similar question for the other one, because I don't think you said Um, for 1326, anything on the target engagement.

Yeah, so, Craig, can you hear me? Yeah, question is, we mentioned that we've confirmed target engagement and there was a dose response. So, I think, you know, for John's asking actually for both programs, you know, for for 3 specifically, how do we feel about. You know, 0.5 and the biological activity that we might see. And a similar question as it relates to 1326.

I can't hear you, so make sure you let Chuck or others know that you can hear me.

Yeah, we can hear you.

He can hear you, Craig. He can hear me? Okay. As you've noted, we've confirmed target engagement with 043. targeting the ASGR1 receptor through ALP elevation. So these are not adversities. These are ALP elevations that result from blocking ASGR1, which is a scavenger receptor in the liver that takes ALP out of the circulation. I think your question is really about, you know, what kind of doses have we seen activity in animal models and are we in the range with 0.5. And while we've typically employed higher doses in animal models, we think we're in a range that could be a therapeutically active dose. And then I'll just also make the observation that obviously, given that we had not seen any of these adversities in other species, Other species may not be that translatable for predicting the dose response. So, you know, we're in the range, and I wouldn't be overly concerned or focused on the exact dose in the mouth translating to human, since the translatability for tox has not been there. For 1326, we do not have a target engagement assay. it will take getting into UC patients and biopsying the tissue to identify whether we've activated Wnt signaling. So in that situation, in that setting, we have an assay for a Wnt target gene called Axin-2, which we'll look for to confirm that we've activated the pathway.

Got it. Maybe one more question, Chuck, if you can translate. This is, So I think it seems like at this point we cannot rule out whether this is a, you know, the phenomenon that you are seeing at least on the liver-related AEs is a target-specific, and we cannot rule that out. However, you are saying that these damaged tissues might be more sensitive. So can you help us understand if there is a, is there any threshold effect, you know, at certain doses you might not see? I'm just curious. Like, what gives you confidence? Chuck, I can't hear anyone still. Yeah, these damaged tissues are more sensitive.

Craig, can you hear me? Yes. Okay. So, Yatin's question has to do with we can't, at this point, we can't really rule out the liver issues are target-specific, and seeing that the damage, you know, might be more sensitive. Is there any threshold effect at certain doses that we've seen or might see based on the data we've collected?

So, to answer the first part of your question, Yatin, you know, this does seem to be a liver-specific effect while our SCN1326 is targeting Frizzled 5, which is enriched in the intestinal epithelium in ulcerative colitis patients. It is expressed on hepatocytes. So that would be consistent with an effect that's similar to O43, meaning they're both hitting liver to some extent. And I think As to the second question, I think is how do we find a therapeutic index? What's the likelihood of finding a therapeutic index? And again, I think we have to be cautious about extrapolating too much from the animal models. As I've emphasized, I think the robust nature of the response in multiple different animal models for both molecules the consistency of that response across experiments and across different types of injury, I think is very compelling evidence of the pharmacology and the biological rationale. But I wouldn't get too focused on the exact doses that we tested in animals. And I think if this is a Wnt-related effect related to regeneration, in the healthy liver, it may be, and we don't have data to support this hypothesis right now, but it may be that the damaged liver, because there is some active regeneration ongoing, will really just display the benefits of regeneration and not these bumps in transaminase, but we'll just have to see what the data says in humans. I don't think we have any preclinical data to exactly answer that question.

Got it. Very good. Thank you, Chuck, for translating. Thank you for the call. I appreciate it.

Thank you. And this concludes the Q&A session. I'd now like to turn the call back over to Craig Parker for any closing remarks.

All right. Well, thanks, Josh. And thanks, tourism team, for joining me. And thank you all for joining the call and for your interest. I apologize that we had a little bit of a phone game for me to be able to hear questions. But thank you again for your participation and look forward to hearing from you in the future.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.