VectivBio Holding AG

Welcome to the VictusBio fiscal year 2022 results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during your session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 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, Patrick Malloy, Senior Vice President, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to today's call, during which we will provide an update on the company and review our financial results for the full year ended December 31st, 2022. Earlier this morning, we issued a press release summarizing our financial results and progress across the company, which is available on our website. I'd like to remind everyone that during today's discussion, we will make statements about our 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. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including the risk factors discussed in our FCC filings, and we are not under any obligation to update these forward-looking statements. Joining me on today's call are Lucas Santorelli, our Chief Executive Officer, Claudia de Augusta, our Chief Financial Officer, along with Chief Medical Officer Omar Khawaja, and Kevin Harris, our Chief Commercial Officer. Following the prepared remarks, we'll open up the call to a question and answer session. Now, I'd like to turn the call over to Luca Santorelli.

Thank you, Pat, and thanks to everyone for joining us today. For those hearing our story for the first time, VectiBio is a growing, late-stage biopharmaceutical company that is focused on developing potentially life-transforming therapies for people living with serious rare diseases. We are a team of individuals with deep scientific expertise driven by a relentless passion to make a meaningful difference in the lives of people living with rare diseases by developing treatments that are both transformational and tailored to the needs of individual patients. In 2022, we've made tremendous progress in developing a lead molecule, apraglutide, a next-generation GLP-2 analog that bears the promise of unlocking the full potential of the GLP-2 class, thanks to its unique pharmacology and also our patient-tailored development strategy. We believe that apraglutide could transform the lives of people suffering from a broad range of severe, rare gastrointestinal diseases. including short bowel syndrome and intestinal failure, or SBSIF, and acute graft versus source disease, or AGDHD. In 2022, we focused on execution both towards our R&D and corporate goals. And we also positioned ourselves for our next stage of growth. We were able to achieve several key strategic and program milestones despite the challenges that 22 created in the biotech environment. In Q1 2022, we signed a Japan licensing deal with Azaikaze Pharmaceutical, designed to develop and commercialize aproputide in Japan. In Q2, we announced the dosing of the first two patients in targase, our proof of concept study in acute GVHD, currently recruiting across US and Europe. In Q3, we announced promising interim six-month data from the STARS Nutrition Study, a first-of-its-kind study in patients with colon and continuity anatomy, or CSC, which represents an underserved majority of SPS-IF patients. In November, we announced the completion of enrollment for the colon and continuity stratum of the Phase III STARS Pivotal Study. And finally, we strengthen our cash position by raising a total of $284 million via both non-dilutive and equity transactions. The current cash position provides VectiBio with a financial runway into 2025, which is over 12 months after the Phase III results. We believe that 2023 will be a transformational year for VectiBio, with clinical readouts from Stars Nutrition, Stargaze, and the Phase III STARS all over the next several months. More specifically, in early May, six-month data from STARS Nutrition will be presented at an upcoming scientific conference. This study aims to demonstrate that apoglutide can improve intestinal absorption and reduce the need of parenteral support in SBS-IF patients with colon incontinuity. In anatomical subtypes of SBS, where there is limited data supporting the use of GADX. Alongside the progress of the STARS Nutrition Study, the enrollment completion in our Phase III program of apoglutide in SBS-IF is anticipated by the end of this quarter. At this point, we have closed screening of new patients, as those currently under assessment will enable us to reach the enrollment target based on our current screen failure rates. We plan to issue a press release following the randomization of the last patients. Moving on to acute GVSD, I'm happy to announce that we have enrolled all patients necessary to perform the preplanned interim analysis of our Stargaze Phase II program by the end of Q2. These analyses will help us inform the development and filing strategy in acute GVSD, where apragutide has the potential to become the first non-immunosuppressive treatment to address GI damage, which is one of the most critical complications of this disease leading to mortality. A positive stargaze outcome would also establish the rationale to explore the GI healing and regenerative properties of apoglutide in other inflammatory GI conditions, where immunological therapy is currently the main therapeutic approach. Now, I would like to turn the call over to our chief medical officer, Dr. Omar Khawaja, who will share additional details on our pipeline progress. Omar, over to you.

Thanks, Luca, and good morning, everyone. I will provide more detail on some of the major studies of apiglutide that we'll read out this year. At Digestive Disorders Week in Chicago on May 9th, we'll present important six-month data on all nine patients enrolled in our STARS nutrition study. STARS nutrition is the first ever dedicated study in patients with FBSIS with colon incontinuity, or CIC. These are patients where the remnant small intestine remains connected to a functional colon. and represent the majority of SBSIS patients. The study participants were treated with the same dose used in our phase three study, and to whom the same CIC-specific parental support weaning algorithm was applied. The study has two components. The main component is an assessment of PS reduction at six months after the first metabolic balance period. We released interim data on five patients in October 2022, which demonstrated a very robust effect of a 50% reduction in PS volume at six months. We will present data from all patients at this time point. The study also has an exploratory component, which is the metabolic balance analysis to quantitatively assess acroglutide effects on intestinal absorption at an early time point of four weeks and a late time point of 48 weeks compared to baseline. We will report data from four-week time points at DDW, where we aim to show data that supports the early positive effects of apraglucide on measures of absorption. Mid-year, we will have data from the first interim analysis of patients in our Stargaze Phase II proof-of-concept study of apraglucide in patients with steroid refractory acute GI graft-versus-host disease. This disorder is a consequence of attack by donor T-cells on the GI tract. even with best available therapy, steroid refractory acute GVHD has a 50% mortality at six months and represents a very high unmet medical need. We're recruiting up to 34 patients who are treated with a high or low dose level of afroglutide on top of corticosteroids and ruxolitinib. The interim analysis will include safety, tolerability, response rates, and durability of response in the first 17 patients in the study treated for at least 56 days. All patients to support this interim analysis have been randomized. Positive data from the StarGaze can support a pivotal program in acute GVHD. In addition, we see this data in an immune disease of the GI tract as proof of principle that may unlock the potential for afroglutide in other immune and inflammatory GI conditions. such as ulcerative colitis or Crohn's disease. Finally, by Q4, we will have data from our Phase III STARS study in patients with SBSIS. Positive data would form the basis of our application for approval of apraglucide for use in patients with SBS who are dependent on parenteral support. STARS is the largest clinical study ever conducted in SBSIS patients and is recruiting 144 patients with prospective stratification to include 50% CIC and 50% stoma. Study participants are randomized to a single 5 milligram dose of apraglutide, 2.5 milligrams for patients with a body weight below 50 kilos, or to placebo in a two-to-one ratio. In the placebo control phase, stoma patients are treated for 24 weeks, while CIC patients who are thought to accrue benefits after six months are treated for 48 weeks. The primary endpoint is parental support volume reduction at 24 weeks in the whole study population, with common and anatomy-specific alpha-controlled key secondary endpoints assessed at 24 weeks and 48 weeks. In addition to important clinically meaningful secondary endpoints, such as DADOF parental support and enteral autonomy, The study also includes an extensive suite of patient-reported outcomes to further establish the clinical benefits of apoglutide. All patients from STARS are eligible to roll over into the STARS-Extend four-year open-label extension study. Recruitment has remained well on track. We completed recruitment into the CIC arm with a 48-week treatment period in October 2022. We are close to completing recruitment into the stoma arm, which requires a 24-week treatment period. As Luca mentioned, we have closed screening of new patients, as those currently in screening will enable us to reach our enrollment target. Study retention has been extremely good, and we look forward to our top-line results in Q4. We have made strong progress in the clinical development of acroglutide in SPS, as well as acute GVHD. and are actively exploring additional indications. We look forward to providing updates from the key readouts in 2023. Now, I'll turn the call over to our Chief Commercial Officer, Kevin Harris.

Thanks, Omar. In 2022, we've made great progress advancing our launch strategy and plans for Apraglitide and have been laying a strong foundation for commercialization over the past three years. We have been focused on four key areas, The first area is market development. We have a good understanding of the unmet needs and lessons learned from first-generation GLP-2 treatment and the challenges of living with chronic parenteral support, which will provide an important foundation for our market development messaging and plans. The second key area is building our product strategy and branding for Apraglitide, where we have completed key long lead time activities in advance of phase three results. The third key area is market access. We have had significant engagement with U.S. and European payers, which has informed our value strategy and our market access and data generation plans. The fourth key area is building our patient-centric infrastructure to support the successful launch of Apraglitide. We have completed the design work for a high-touch distribution and patient services model to enable a positive experience with Apraglitide from day one. We have also designed our compliance roadmap and IT infrastructure plans for launch. To ensure strong execution, we established a cross-functional launch team, which has been building an integrated and an aligned launch plan. And all of our activities have been significantly informed by listening to healthcare professionals, payers, patients, and the advocacy community. As we look ahead, 2023 is the year of launch readiness as we continue to finalize and execute our plans in advance of phase three results. We are already off to a strong start this year. We recently completed a large and robust U.S. insurance claims project with input from experts. This project had two goals. The first goal was to further refine U.S. projected prevalence of the SBS-IF population and improve our knowledge of patient demographics and treatment characteristics. We now estimate the number of adult patients living with SBS-IF in the U.S. to be 9,000 and growing. These are patients who have had surgical resections and are on chronic and continuous parenteral support for at least six months. We also estimate an additional 3 to 4,000 pediatric patients living with SBS-IF in the U.S. The second goal of the project was to generate more accurate and actionable targeting information for our commercial deployment strategy. We now have a very good understanding of who is treating SBS-IF patients and where they are being treated and have established a prioritized targeting list at the physician and account level. Account level targeting will be our primary go-to-market approach as we seek to support the multidisciplinary team that takes care of the patient. We will use this information as the basis for our field force size and structure work, which will begin later this year. We continue to be on track for all prelaunch planning activities and look forward to continuing to update you on the progress of our plan With that, I will now turn the call over to our CFO, Claudia De Augusta, to discuss our 2022 financial results. Claudia.

Thank you, Kevin. I will briefly comment now on the key financials for the year 2022. We recognize revenue from contracts with customers of $27.3 million over the year ended December 31st, 2022. related to the partnering agreement with AKP. Research and development expenses were $74 million for the year ended December 31st, 2022, as compared to $50.2 million for the year ended December 31st, 2021. The increase of $23.8 million year over year was primarily due to an increase of clinical manufacturing expenses of $16.1 million related to the progress made on our Phase III S.T.A.R.S. study, the Phase II S.T.A.R.S. nutrition study of apirutide in SPSIF patients, and the Stargaze proof-of-concept study in acute graft versus host disease and the dual-chamber syringe activities. An increase of $0.9 million of employee expenses, primarily caused by the increase in the payroll expenses of $2.2 million, driven by an increase in employee ad count, partially offset with the decrease of the non-cash share-based compensation of $1.3 million, and the impact of $6.9 million related to a revaluation gain of contingent liabilities recognized in 2021. General and administrative expenses were $33.9 million for the year ended December 31st, 2022, compared to $36.5 million for the year ended December 31st, 2021. The decrease of $2.6 million year over year was mainly attributable to a decrease in employee expenses of $5.4 million, primarily caused by a decrease of the non-cash share-based compensation of $6.8 million, partially offset with an increase in the payroll expenses of $1.4 million, driven by an increase in employee ad count, and an increase in professional services expenses of $2.1 million, mainly due to corporate activities. Cash and cash equivalents were $221.4 million as of December 31, 2022, compared to $102.7 million as of December 31, 2021. Based upon our current operating plan, we estimate that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into 2025. Now I'd like to hand the call back to Luca. Thank you, Claudia.

We covered a lot of ground during today's call. And to close, I'd like to underscore the following three points. First, 2023 promises to be a transformational year for VectiBio, as we will read out important data sets, including the six-month nutrition data in just a couple of weeks. followed by the interim analysis of the phase two Stargate study, and then for us, most importantly, top-line results of our phase three STARS study. Second, we are executing a comprehensive launch preparation plan with the aim of achieving a blockbuster launch of apaglutide in SBS intestinal failure. And finally, we are operating from a position of financial strength, with a cash runway that takes us more than 12 months past the top line readout of the Phase III STARS study. And with that, we would like to open the call for questions. Operator?

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first question comes from Allison Brazil with Piper Sandler. Your line is now open.

Hey, good morning, guys, and thanks for taking the questions. So just first, on the STARS Nutrition Update at DDW, could you just frame for us the scope of the data that's going to be available next month and just what measures, you know, body weight, what weight absorption or other metrics in addition to parenteral support reduction are going to be most important to illustrating the benefits of APRA in the CIC population. And then I do have a follow-up question after that.

Hey, Ali. Thanks for your question. Thanks for jumping on today. How about we have Omar handle that first question?

Yeah, thanks, Ali. So DDW, as well as the PS volume reduction, will also show the energy content of the PS, so the amount of calories in the PS, and how that changed over the six-month period, and then also what happened to the patient's body weight over that timeframe.

Great. And then just on the Stargaze readout this quarter, can you just kind of frame for us what you need to see to feel like you've established proof of concept in GVHD and also to feel like you've established proof of principle in inflammatory GI diseases more broadly? And I'm just hoping you could also describe your thinking on the opportunity or the role of APRA in larger indications like Crohn's and UC and just how the Stargaze interim data kind of informs on your strategy there.

Okay, great. You know, I think we'll have Luca take that question.

Thanks, Ali. So, in terms of what we will report in that analysis, we likely will report the effects of the drug overall response rate both at one month and two months and durability of response which obviously have a precedent at endpoints from previous trials assessing, for example, raxolitinib in this indication. And the exact bar is being set by the data that was generated in the past, both with Insight and Novartis in the REACH-1 and REACH-2 trial, as well as other datasets that we have been able to access in Germany and in the U.S. And we will create that comparator group from those combined datasets. You know, the importance of those datasets is such because all of those have a standard of care raxolitinib and, of course, steroids. And we are able to extract all the patients that had GI symptoms among, which represents about 80% of the patients in steroid refractory GBSD. So it's a very appropriate data set. In terms of where the bar is, we'll communicate that as soon as we have those data sets finalized. In terms of new indications, well, first I would say I would like to start by saying that clearly the novelty of this approach is that we're combining regeneration of the intestine and healing of the intestine with immunosuppression. So immunosuppression in these patients is crucial to dampen the alloimmune response from the engrafted tissue and is achieved by steroids and other immunosuppressants such as JAK inhibitors. And then you combine with those standard of care, you combine the GLP-2 mechanism, which adds gut regrowth as well as increased barrier function, healing, improvement in absorption, all of those features that are known to be part of the GLP-2 mechanism. But the importance of this proof of content is that this can be extended to additional immunological condition of the intestine. And we think IBD is the next place to go looking for opportunity when it comes to upper glutide. And, of course, they are the notion and the concept would be similar. We'd be combining our drug with existing immunosuppressant therapy, for example, you know, anti-GNFs or anti-integrins that are currently the standard of care for biologics in patients.

this indication or at least second line in these indications great and maybe just one last one i think um we talked about um developing a pre-filled syringe or a dual chamber syringe um could you just remind us uh kind of what what the status of that um and and just if you've um if you have a sense of what kind of data you need to generate to um to get a a pre-filled trench for opera approved thanks

Yeah, so we're developing with a timeline that is compatible with launching in 2025 with such a device, drug-device combination. So our main case is to launch, a base case is to launch with a dual chamber perfil syringe. We're going through a series of planned programs in the development of this syringe, including human factor studies, including relative VA studies or bioavailability studies, and validation studies that are purely on the CMC side. And all of that is progressing in parallel with the conduct of the phase three. We have completed the GMP manufacturing that will be required for the a relative bioavailability study, which is due to start imminently. So we're, you know, we're basically on time for a launch with a dual-championship range.

Excellent. Thank you.

Please stand by for our next question. The next question comes from Tazin Ahmed with Bank of America. Your line is now open.

Hi, guys. Thanks so much for taking my questions. I have a couple. So maybe just conceptually, Luca, can you explain to us, I think we've been getting a lot of inbounds with interest, specifically the CIC population that is enrolled into the STARS study. Obviously, the competitive landscape is wide open for CIC, but I think it would help if you could frame for us why you think Pragluton in particular has a better chance of showing higher success rate in CIC patients mechanistically relative to what's already on the market and from competitors? And then I have a follow-up. Thank you.

Well, there's two reasons. One is that one is molecule specific, and the other reason is design, trial design specific. So when it comes to the molecule, we believe our molecule has one of the greatest features, pharmacologically speaking, both in terms of half-life and pharmacology like affinity receptor that make it more potent as shown in published preclinical head to head studies. And then when it comes to design, I think this point is actually perhaps just as important, if not more important. CIC patients are physiologically different from stoma patients. They display response to drug in a way that is distinct from stoma patients. The old methodology for detecting response and adjusting parental support in clinical trials was perfected for stoma patients, but not for CIC patients. And we have evolved that methodology as shown in our nutritional trial, where that methodology was deployed for the first time. to basically increase the sensitivity of detecting the response in CIC patients. So essentially, we are enhancing both the chance of seeing a response because of the molecular nature of apoptotide, as well as for the methodology used in the trial. And of course, to be more specific, in CIC patients, their focus in terms of tracking their response is more on changes to their metabolism, changes to their body weight, their stool, consistency of frequency, and less so on their fluid balance of changes. In other words, diuresis and absorption of fluids, which are more critical for stoma. Those are the key differentiation aspects of the trial design. And lastly, I would add to that the fact that being able to inform the use of the drug in a bespoke fashion in a, you know, patient-tailored fashion in the two subtypes will also increase adherence to treatment and ease of use and compliance and persistency, which are critical objectives for our drug once it's on the market. So, you know, to help make the use easier and more appropriate with patients, something that has been left on the table, we think, from the past experience of the pioneering experience of GADX.

Okay, that's super helpful. Is there anything that we should be looking for at that top line for the STARS results as it relates to CIC? You talked about some of the observations that might be more important for those patients, but as it relates to those endpoints, are there certain cutoffs that you think are necessary in order for this to be considered clinically meaningful data in that subgroup?

Well, in the CIC subgroup, we put a lot of emphasis. First of all, there's a couple of different aspects that are relevant. The timeline of the response, as it focuses more on metabolic changes and less on fluid changes, is a bit longer. So the, you know, The expectation to have a very quick response should be tempered for this patient. That's why we ran our phase three trial and our nutrition trial for 48 weeks, which is double the duration of what we've done for stoma and what has been done in the past. The other point is we expect the effects not to stop at six months but to accrue beyond six months. So basically, we're likely, we hope and we're likely able to demonstrate that there is still benefit for patients to be on treatment beyond six months in a nine-month to 12-month timeframe. And then we can record maybe a larger effect size beyond the six-month point for this group. And again, that's why we kept the STARS phase three trial blinded for these patients all the way to 48 weeks. In terms of what outcomes are more relevant for these patients, of course, these are patients that are more likely to being able to shave days off because they don't dehydrate as readily as stomach patients. Dehydration is a key enemy of being able to come off days of infusion because one can dehydrate very quickly within a 24-hour period. And secondly, so again, days off is a crucial endpoint that we we have at the top of our hierarchy. And then another point is obviously enteral autonomy or complete wean-off from parental support, which we think is more achievable for CIC than it is for stoma patients. Again, for the same reason, they have less of a propensity to dehydrate. They start from fewer days a week on average of infusion. So, you know, achieving a full enteral autonomy, it's potentially easier for these patients.

Okay, perfect. Thanks, Luca.

Please stand by for our next question. The next question comes from Thomas Smith, SBB Securities. Your line is now open.

Hey, guys. Good morning. Thanks for taking the questions, and congrats on all the progress.

A couple questions on our end. I guess first, Hey, a follow-up question on the STARS pivotal trial and some of the assumptions you're making for the CIC patients. We know in the GATEX program there was a 24% reduction in PF volume in the placebo arm for CIC, but that was with a titration algorithm that relied only on changes in fluid balance. How do you expect the CIC patients who receive placebo and STARS to respond using your algorithm relative to the GATEX study? And can you remind us of the assume treatment effect and powering assumptions for the anatomy-specific endpoint?

Thanks for the question. So basically, we have changed not just the winning algorithm, which should increase the sensitivity of detection responses, but we have also changed significantly the optimization stability mechanisms that are designed to reduce the placebo responses in this population. Essentially, what was observed in the past was, on average, a 20-22% placebo response, which was attributable to patients in the course of the trial requiring less parental support, irrespective of the GLP-2 treatment, because of a better optimization of their nutrition. oral nutrition, or parental support nutrition. So we have invested a significant amount of effort and time in making this patient very stable and optimized before they start receiving drugs. And so, again, so these two factors, the placebo response reduction and the winning algorithm, which we tested already in the nutrition trial, are predicted to give us a more significant result. in the CIC subgroup. Now, in terms of what we have powered towards for the CIC, we powered, the study was powered for the overall effect size, but I would say specifically the CIC, we powered it to about a 10% delta between placebo and inactive. So it's a relatively small delta that we are aiming for here. What we have seen in the nutrition trial would indicate that the delta could be as big as 30%. But of course, we have to assume that in a placebo-controlled trial, we may not get that large delta between placebo and active, simply because it's a more, typically when you run trials on a large number of sites and large number of countries, the seamless action diminishes. So we think that the nutrition, which has a reduction of about 50%, if you assume 20% placebo is about close to 30% delta there, I think that will be sort of the best case scenario.

Got it. That's super helpful. Great. And then just one on the competitive landscape in SPS. Can you just update us on your latest expectations for competing GLP-2 programs and generic GATTECs and how you see the market shaping up over the next three to five years?

Yeah, I'll start and then I'll let Kevin continue. In terms of the expectations from other sponsors who are reason not comment about our programs. You know, we're confident we have a very competitive package here. We are the only company with a weekly drug. We are the only company with an ability to discriminate between different anatomical subtypes, which we think is very crucial for this population. And we are the only company that has a significant amount of patient reported outcomes that are bespoke that were designed specifically for this population. And so there's plenty. And if you combine that with what we know about our molecule versus the others, we're very confident we have a very high chance of differentiation. In terms of the generic landscape, I think we now are further advanced into the generalization of garages. I'll have Kevin comment on that, because he has done a lot of work in this space. Kevin?

Yeah, thanks, Luke. As you may know or may be aware of, there could have been a possibility for a generic of GATX to launch in the second half of March of this year, and we haven't seen one emerge at this point. We think there's a lot of reasons why both the SBSIF market and the profile of GATX in particular has limited attractiveness for generics. There's some challenges one has to overcome in transitioning from the recombinant manufacturing approach for GATx today to synthetic manufacturing, which would be required under the ANDA guidelines, and that clearly would require pretty significant CMC investment. It does take some effort to identify patients and to keep them on treatment, as we've shown Patients on GATx have significant challenges with persistency, and half of them discontinue by month 12 and up to two-thirds by month 24. There's REMS and registry requirements for GATx, and so these are just some of the factors we think why the market isn't particularly attractive for generics. We've only seen one paragraph for filing to date, and that was done back in 2016, and we still have not yet seen an approval. you know, I think a generic remains to be seen whether one will come to market. If one does come to market, we've had significant engagement with payers. And, you know, at the end of the day, they view generic GATEX as GATEX without a lot of the support that a corporation would provide. And as Luca mentioned, you know, we believe we'll be able to demonstrate very significant differentiation on efficacy and obviously on dosing being a weekly dose drug. So we don't see a generic as a a strategic threat to the opportunity that we think Apricotide has in SBSIS.

Got it. That's super helpful. Thanks, guys, for taking the questions.

Please stand by for our next question. Our next question comes from Patrick Dolezal with LifeSci Capital. Your line is now open.

hi thanks for taking the questions so it's interesting thinking about the speed of cic enrollment and now kind of waiting a little bit longer for the stoma cohort just curious what's the relative proportion of cic versus stoma patients currently receiving gas x and how might your marketing strategy and pivotal trial design ultimately kind of shift this ratio over time yeah so um hi patrick uh so

Basically, we have different sources of information that we can rely on, including our own study experience in 18 countries and feasibility work we've done leading up to that, including macro research we're conducting both in the U.S. and in Europe. So we estimate the CIC population to have increased since the first launch of GALX because of the greater appreciation of the importance of keeping at least a portion of the colon intact to provide patients with the ability of absorbing fluids. And so we have seen an increase in proportion. We estimate that the number of CIC could be anywhere between 60% to 70%. We don't obviously know exactly the exact number, but I would say a fair estimate would be around 65% versus 35% being stoma. And what was the other part of the question?

I think it was how it may impact our marketing approach.

Okay, so maybe we'll have time.

Kevin, do you want to take the second part of the question?

Yeah, and we've got a couple data points to suggest that GATEX is used at least one and a half to two times more frequently in stoma than CIC, recognizing that CIC represents the majority of patients. And so, we've always believed that these patients have been underserved. We obviously have seen that GATEX in a retrospective analysis didn't demonstrate any effect in that population. We also have a good understanding that that is one of the main drivers of discontinuation for GATEX, which is lack of efficacy in particular in the CIC population. So much of our strategy beyond obviously having a product with better pharmacology is really to address the unmet needs by anatomy. There's certainly significant room for growth in the stoma population because our market research indicated that still less than half of patients might be getting GATEX in that population, but really the market growth potential and the long-term potential of a pragmatide can be significantly driven by that, you know, 60 to 70 percent of CIC patients, of whom only a fraction are getting GATEX today. So our design of the phase three trial with anatomy-specific endpoints and our ability to to be able to demonstrate in a prospective alpha-controlled manner, days off and enteral autonomy in the CIC population, I think uniquely position us to be able to proactively, you know, promote and educate people, not only on the benefits of APRA, but as Luca mentioned earlier, you know, how best to measure APRA's effect and to appropriately wean the CIC patient off of PS. So I think there's very tight integration between our development strategy and our commercial and marketing strategy. I think we're well positioned for success.

Got it. And in the Stargate trial for GVHD, could you just walk us through how GI involvement in particular affects outcomes? And then just curious how the propensity control arm is kind of handled. Do you guys have patient level data to kind of match disease characteristics and other features?

Yes, thanks, Patrick, so much. So in terms of the actual injury to the gut, so patients in preparation for stem cell transplant undergo conditioning, and that itself is toxic, particularly to the gut epithelium, which is a continually dividing tissue. And then post-transplant, the the donor T-cells, which are contained in the graft, attack the host, and the GI tract, the liver, and the skin are the primary targets for that. And basically, in the gut, that leads to a profound inflammatory condition, which often leads to the mucosa of the gut being denuded, and the patients develop quite life-threatening bile salts and osmotic diarrhea. And The other problem is that the gut barrier itself becomes, the intestinal barrier becomes impaired as well, and so there's translocation of bacteria across from the gut lumen into the bloodstream, and the patients will develop sepsis. So the GI tract disorders probably account for a significant proportion of the mortality. The skin and liver, typically are reasonably well addressed with immunosuppression, but it's the gut that kind of remains a significant unmet need in the population.

Thanks, Omar. Patrick, does that answer your question?

Yeah, and then I guess the second part was just on the propensity match control.

Yeah, so we do have patient-level data. And the propensity score matching basically is used to ensure that we've got a well-matched synthetic control to compare our outcomes from Stargaze.

Got it. Perfect. Thank you.

I show no further questions at this time. I would now like to turn the conference back to Luca Santorelli for closing remarks.

Thanks to everybody for participating and to all the people that participated in the Q&A for your insightful questions and for helping us continue to become a better company. Thank you.

This concludes today's conference call. Thank you for participating.

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Welcome to the VictusBio fiscal year 2022 results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during your session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 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, Patrick Malloy, Senior Vice President, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to today's call, during which we will provide an update on the company and review our financial results for the full year ended December 31st, 2022. Earlier this morning, we issued a press release summarizing our financial results and progress across the company, which is available on our website. I'd like to remind everyone that during today's discussion, we will make statements about our 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. Actual results may differ materially from those indicated by these forward-looking statements. as a result of various important factors, including the risk factors discussed in our FCC filings, and we are not under any obligation to update these forward-looking statements. Joining me on today's call are Lucas Santorelli, our Chief Executive Officer, Claudia De Augusta, our Chief Financial Officer, along with Chief Medical Officer Omar Khawaja, and Kevin Harris, our Chief Commercial Officer. Following the prepared remarks, we'll open up the call to a question and answer session. Now, I'd like to turn the call over to Lucas Antorelli.

Thank you, Pat, and thanks to everyone for joining us today. For those hearing our story for the first time, VectiBio is a growing, late-stage biopharmaceutical company that is focused on developing potentially life-transforming therapies for people living with serious rare diseases. We are a team of individuals with deep scientific expertise driven by a relentless passion to make a meaningful difference in the lives of people living with rare diseases by developing treatments that are both transformational and tailored to the needs of individual patients. In 2022, we have made tremendous progress in developing a lead molecule, apraglutide, a next-generation GLP-2 analog that bears the promise of unlocking the full potential of the GLP-2 class. thanks to his unique pharmacology and also our patient-tailored development strategy. We believe that apoglutide could transform the lives of people suffering from a broad range of severe, rare gastrointestinal diseases, including short bowel syndrome and intestinal failure, or SBSIF, and acute graft-versus-source disease, or AGDHD. In 2022, we focused on execution both towards our R&D and corporate goals, and we also positioned ourselves for our next stage of growth. We were able to achieve several key strategic and program milestones despite the challenges that 2022 created in the biotech environment. In Q1 2022, we signed a Japan licensing deal with Azaikaze Pharmaceutical, designed to develop and commercialize aproputide in Japan. In Q2, we announced the dosing of the first two patients in Stargaze, our proof of concept study in acute GVHD, currently recruiting across U.S. and Europe. In Q3, we announced promising interim six-month data from the Stas Nutrition Study, a first-of-its-kind study in patients with colon incontinuity anatomy, or CISC. which represents an underserved majority of SPS-IF patients. In November, we announced the completion of enrollment for the Colon and Continuity stratum of the Phase III STARS Pivotal Study. And finally, we strengthened our cash position by raising a total of $284 million via both non-dilutive and equity transactions. The current cash position provides effective value with a financial runway into 2025, which is over 12 months after the Phase III results. We believe that 2023 will be a transformational year for RectiBio, with clinical readouts from STARS Nutrition, Stargaze, and the Phase III STARS all over the next several months. More specifically, in early May, six-month data from STARS Nutrition will be presented at an upcoming scientific conference. This study aims to demonstrate that apoglutide can improve intestinal absorption and reduce the need of parenteral support in SBS-IF patients with colon incontinuity. In anatomical subtypes of SBS where there is limited data supporting the use of GADX. Alongside the progress of the STARS Nutrition Study, the enrollment completion in our phase three program of apoglutide in SBS-IF is anticipated by the end of this quarter. At this point, we have closed screening of new patients, as those currently under assessment will enable us to reach the enrollment target based on our current screen failure rates. We plan to issue a press release following the randomization of the last patient. Moving on to acute GVSD, I'm happy to announce that we have enrolled all patients necessary to perform the preplanned interim analysis of our Stargaze Phase II program by the end of Q2. These analyses will help us inform the development and filing strategy in acute GBSD, where apoglutide has the potential to become the first non-immunosuppressive treatment to address GI damage, which is one of the most critical complications of this disease leading to mortality. A positive Stargate outcome would also establish the rationale to explore the GI healing and regenerative properties of apoglutide in other inflammatory GI conditions. where immunological therapy is currently the main therapeutic approach. Now, I would like to turn the call over to our Chief Medical Officer, Dr. Omar Khawaja, who will share additional details on our pipeline progress. Omar, over to you.

Thanks, Luca, and good morning, everyone. I will provide more detail on some of the major studies of apoglutide that we'll read out this year. At Digestive Disorders Week in Chicago on May 9th, we'll present important six-month data on all nine patients enrolled in our STARS nutrition study. STARS nutrition is the first ever dedicated study in patients with SBSIS with colon incontinuity, or CIC. These are patients where the remnant small intestine remains connected to a functional colon and represent the majority of SBSIS patients. The study participants were treated with the same dose used in our phase three study, and to whom the same CIC-specific parental support weaning algorithm was applied. The study has two components. The main component is an assessment of PS reduction at six months after the first metabolic balance period. We released interim data on five patients in October 2022, which demonstrated a very robust effect of a 50% reduction in PS volume at six months. We will present data from all patients at this time point. The study also has an exploratory component, which is the metabolic balance analysis to quantitatively assess acroglutide effects on intestinal absorption at an early time point of four weeks and a late time point of 48 weeks compared to baseline. We will report data from four-week time points at DDW, where we aim to show data that supports the early positive effects of apraglucide on measures of absorption. Mid-year, we will have data from the first interim analysis of patients in our Stargaze Phase II proof of concept study of apraglucide in patients with steroid refractory acute GI graft-versus-host disease. This disorder is a consequence of attack by donor T cells on the GI tract. Even with best available therapy, steroid refractory acute GVHD has a 50% mortality at six months, and represents a very high unmet medical need. We're recruiting up to 34 patients who are treated with a high or low dose level of acroglutide on top of corticosteroids and ruxolitinib. The interim analysis will include safety, tolerability, response rates, and durability of response in the first 17 patients in the study treated for at least 56 days. All patients to support this interim analysis have been randomized. Positive data from the Stargate can support a pivotal program in acute GVHD. In addition, we see this data in an immune disease of the GI tract as proof of principle that may unlock the potential for afroglutide in other immune and inflammatory GI conditions, such as ulcerative colitis or Crohn's disease. Finally, by Q4, We will have data from our Phase III STARS study in patients with SBSIS. Positive data would form the basis of our application for approval of afraglucide be used in patients with SBS who are dependent on parenteral support. STARS is the largest clinical study ever conducted in SBSIS patients and is recruiting 144 patients with prospective stratification to include 50% CIC and 50% stoma. Study participants are randomized to a single 5 milligram dose of apraglutide, 2.5 milligrams for patients with a body weight below 50 kilos, or to placebo in a two-to-one ratio. In the placebo control phase, certain patients are treated for 24 weeks, while CIT patients, who are thought to accrue benefits after six months, are treated for 48 weeks. The primary endpoint is parenteral support volume reduction at 24 weeks in the whole study population, with common and anatomy-specific alpha-controlled key secondary endpoints assessed at 24 weeks and 48 weeks. In addition to important clinically meaningful secondary endpoints, such as days off parenteral support and enteral autonomy, the study also includes an extensive suite of patient-reported outcomes, to further establish the clinical benefits of acroglucide. All patients from STARS are eligible to roll over into the STARS Extend four-year open-label extension study. Recruitment has remained well on track. We completed recruitment into the CIC arm with a 48-week treatment period in October 2022. We are close to completing recruitment into the stoma arm, which requires a 24-week treatment period. As Luca mentioned, we have closed screening of new patients, as those currently in screening will enable us to reach our enrollment target. Study retention has been extremely good, and we look forward to our top-line results in Q4. We have made strong progress in the clinical development of acroblutide in SBS, as well as acute GVHD, and are actively exploring additional indications. We look forward to providing updates from the key readouts in 2023. Now, I'll turn the call over to our Chief Commercial Officer, Kevin Harris.

Thanks, Omar. In 2022, we've made great progress advancing our launch strategy and plans for Apraglitide and have been laying a strong foundation for commercialization over the past three years. We have been focused on four key areas. The first area is market development. We have a good understanding of the unmet needs and lessons learned from first-generation GLP-2 treatment and the challenges of living with chronic parenteral support, which will provide an important foundation for our market development messaging and plans. The second key area is building our product strategy and branding for Apraglitide, where we have completed key long lead time activities in advance of Phase III results. The third key area is market access. We have had significant engagement with U.S. and European payers which has informed our value strategy and our market access and data generation plans. The fourth key area is building our patient-centric infrastructure to support the successful launch of Apraglitide. We have completed the design work for a high-touch distribution and patient services model to enable a positive experience with Apraglitide from day one. We have also designed our compliance roadmap and IT infrastructure plans for launch. To ensure strong execution, we established a cross-functional launch team, which has been building an integrated and an aligned launch plan. And all of our activities have been significantly informed by listening to healthcare professionals, payers, patients, and the advocacy community. As we look ahead, 2023 is the year of launch readiness as we continue to finalize and execute our plans in advance of phase three results. We are already off to a strong start this year, We recently completed a large and robust US insurance claims project with input from experts. This project had two goals. The first goal was to further refine US projected prevalence of the SBS-IF population and improve our knowledge of patient demographics and treatment characteristics. We now estimate the number of adult patients living with SBS-IF in the US to be 9,000 and growing. These are patients who have had surgical resections and are on chronic and continuous parental support for at least six months. We also estimate an additional 3,000 to 4,000 pediatric patients living with SBS-IF in the U.S. The second goal of the project was to generate more accurate and actionable targeting information for our commercial deployment strategy. We now have a very good understanding of who is treating SBS-IF patients and where they are being treated and have established a prioritized targeting list at the physician and account level. Account level targeting will be our primary go-to-market approach as we seek to support the multidisciplinary team that takes care of the patient. We will use this information as the basis for our field force size and structure work, which will begin later this year. We continue to be on track for all prelaunch planning activities and look forward to continuing to update you on the progress of our plan With that, I will now turn the call over to our CFO, Claudia De Augusta, to discuss our 2022 financial results. Claudia.

Thank you, Kevin. I will briefly comment now on the key financials for the year 2022. We recognize revenue from contracts with customers of $27.3 million over the year ended December 31st, 2022. related to the partnering agreement with AKP. Research and development expenses were $74 million for the year ended December 31st, 2022, as compared to $50.2 million for the year ended December 31st, 2021. The increase of $23.8 million year over year was primarily due to an increase of clinical manufacturing expenses of $16.1 million related to the progress made on our Phase III SARS study, the Phase II SARS nutrition study of apirutide in SPS-IF patients, and the Stargaze proof-of-concept study in acute graft versus host disease and the dual-chamber syringe activities. an increase of $0.9 million of employee expenses, primarily caused by the increase in the payroll expenses of $2.2 million, driven by an increase in employee ad count, partially offset with the decrease of the non-cash share-based compensation of $1.3 million, and the impact of $6.9 million related to a revaluation gain of contingent liabilities recognized in 2021. General and administrative expenses were $33.9 million for the year ended December 31st, 2022, compared to $36.5 million for the year ended December 31st, 2021. The decrease of $2.6 million year over year was mainly attributable to a decrease in employee expenses of $5.4 million, primarily caused by a decrease of the non-cash share-based compensation of $6.8 million, partially offset with an increase in the payroll expenses of $1.4 million, driven by an increase in employee ad count, and an increase in professional services expenses of $2.1 million, mainly due to corporate activities. Cash and cash equivalent were $221.4 million as of December 31, 2022, compared to $102.7 million as of December 31, 2021. Based upon our current operating plan, we estimate that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into 2025. Now I'd like to hand the call back to Luca. Thank you, Claudia.

We covered a lot of ground during today's call. And to close, I'd like to underscore the following three points. First, 2023 promises to be a transformational year for VectiBio, as we will read out important data sets, including the six-month nutrition data in just a couple of weeks. followed by the interim analysis of the phase two Stargate study, and then for us, most importantly, top-line results of our phase three STARS study. Second, we are executing a comprehensive launch preparation plan with the aim of achieving a blockbuster launch of apaglutide in SBS intestinal failure. And finally, we are operating from a position of financial strength, with a cash runway that takes us more than 12 months past the top line readout of the Phase III STARS study. And with that, we would like to open the call for questions. Operator?

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first question comes from Allison Brazil with Piper Sandler. Your line is now open.

Hey, good morning, guys, and thanks for taking the questions. So just first on the STARS Nutrition Update at DDW, could you just frame for us the scope of the data that's going to be available next month and just what measures, you know, body weight, what weight absorption or other metrics in addition to parenteral support reduction are going to be most important to illustrating the benefits of APRA in the CIC population. And then I do have a follow-up question after that.

Hey, Ali. Thanks for your question. Thanks for jumping on today. How about we have Omar handle that first question?

Yeah, thanks, Ali. So DDW, as well as the PS volume reduction, will also show the energy content of the PS, so the amount of calories in the PS, and how that changed over the six-month period, and then also what happened to the patient's body weight over that timeframe.

Great. And then just on the Stargaze readout this quarter, can you just kind of frame for us what you need to see to feel like you've established proof of concept in GVHD and also to feel like you've established proof of principle in inflammatory GI diseases more broadly? And I'm just hoping you could also describe your thinking on the opportunity or the role of APRA in larger indications like Crohn's and UC and just how the Stargaze interim data kind of informs on your strategy there.

Okay, great. I think we'll have Luca take that question.

Thanks, Ali. So, in terms of what we will report in that analysis, we likely will report the effects of the drug on overall response rate, both at one month and two months, and durability of response. which obviously have a precedent as endpoints from previous trials assessing, for example, raxolitinib in this indication. And the exact bar is being set by the data that was generated in the past, both with Insight and Novartis in the REACH-1 and REACH-2 trial, as well as other datasets that we have been able to access in Germany and in the U.S. And we will create that comparator group from those combined datasets. You know, the importance of those datasets is such because all of those have a standard of care raxolitinib and, of course, steroids. And we are able to extract all the patients that had GI symptoms, which represents about 80% of the patients in steroid refractory GBSD. So it's a very appropriate data set. In terms of where the bar is, we'll communicate that as soon as we have those data sets finalized. In terms of new indications, well, first I would say I would like to start by saying that clearly the novelty of this approach is that we're combining regeneration of the intestine and healing of the intestine with immunosuppression. So immunosuppression in these patients is crucial to dampen the alloimmune response from the engrafted tissue and is achieved by steroids and other immunosuppressants such as JAK inhibitors. And then you combine with those standard of care, you combine the GLP-2 mechanism, which adds gut regrowth as well as increased barrier function, healing, improvement in absorption, all of those features that are known to be part of the GLP-2 mechanism. But the importance of this proof of content is that this can be extended to additional immunological condition of the intestine. And we think IBD is the next place to go looking for opportunity when it comes to upper glutide. And, of course, they are the notion and the concept would be similar. We'd be combining our drug with existing immunosuppressant therapy, for example, you know, anti-GNFs or anti-integrins that are currently the standard of care for biologics in patients.

this indication or at least second line in these indications great and maybe just one last one i think um we talked about um developing a pre-filled syringe or a dual chamber syringe um could you just remind us uh kind of what what the status of that um and and just if you've um if you have a sense of what kind of data you need to generate to um to get a a pre-filled trench for opera approved thanks

Yeah, so we're developing with a timeline that is compatible with launching in 2025 with such a drug-device combination. So our main case is to launch, our base case is to launch with a dual-chamber perfil syringe. We're going through a series of planned programs in the development of this syringe, including human factor studies, including RTDA studies or bioavailability studies, and validation studies that are purely on the CMC side. And all of that is progressing in parallel with the conduct of the Phase III. We have completed the GMP manufacturing that will be required for the a relative bioavailability study, which is due to start imminently. So we're, you know, we're basically on time for a launch with a dual-chemistry range.

Excellent. Thank you.

Please stand by for our next question. The next question comes from Tazeen Ahmed with Bank of America. Your line is now open.

Hi, guys. Thanks so much for taking my questions. I have a couple. So maybe just conceptually, Luca, can you explain to us, I think we've been getting a lot of inbounds with interest, specifically the CIC population that is enrolled into the STARS study. Obviously, the competitive landscape is wide open for CIC, but I think it would help if you could frame for us why you think Pragluton in particular has a better chance of showing higher success rate in CIC patients mechanistically relative to what's already on the market and from competitors? And then I have a follow-up. Thank you.

Well, there's two reasons. One is that one is molecule specific, and the other reason is design, trial design specific. So, when it comes to the molecule, we believe our molecule has one of the greatest features, pharmacologically speaking, both in terms of half-life and pharmacology, like affinity to the receptor that make it more potent, as shown in published preclinical head to head studies. And then when it comes to design, I think this point is actually perhaps just as important, if not more important. CIC patients are physiologically different from stoma patients. They display a response to drug in a way that is distinct from stomach patients. The old methodology for detecting response and adjusting parental support in clinical trials was perfected for stomach patients, but not for CIC patients. And we have evolved that methodology as shown in our nutritional trial, where that methodology was deployed for the first time. to basically increase the sensitivity of detecting the response in CIC patients. So essentially, we are enhancing both the chance of seeing a response because of the molecular nature of apoptotide, as well as for the methodology used in the trial. And of course, to be more specific, in CIC patients, their focus in terms of tracking their response is more on changes to their metabolism, changes to their body weight, their stool, consistency and frequency, and less so on their fluid balance of changes. In other words, diuresis and absorption of fluids, which are more critical for stoma. Those are the key differentiation aspects of the trial design. And lastly, I would add to that the fact that being able to inform the use of the drug Bespoke fashion in a, you know, patient-tailored fashion in the two subtypes will also increase adherence to treatment and ease of use and compliance and persistency, which are critical objectives for our drug once it's on the market. So, you know, to help make the use easier and more appropriate with patients, something that has been left on the table, we think, from the past experience of the pioneering experience of GADX.

Okay, that's super helpful. Is there anything that we should be looking for at that top line for the STARS results as it relates to CIC? You talked about some of the observations that might be more important for those patients, but as it relates to those endpoints, are there certain cutoffs that you think are necessary in order for this to be considered clinically meaningful data in that subgroup?

Well, in the CIC subgroup, we put a lot of emphasis. First of all, there's a couple of different aspects that are relevant. The timeline of the response, as it focuses more on metabolic changes and less on fluid changes, is a bit longer. The expectation to have a very quick response should be tempered for this patient. That's why we ran our phase three trial and our nutrition trial for 48 weeks, which is double the duration of what we've done for stoma and what has been done in the past. The other point is we... we expect the effects not to stop at six months, but to accrue beyond six months. So basically, we're likely, we hope, and we're likely able to demonstrate that there is still benefit for patients to be on treatment beyond six months in a nine-month to 12-month timeframe, and that we can record maybe a larger effect size beyond the six-month point for this group. And again, that's why we kept the STARS phase three trial blinded for these patients all the way to 48 weeks. In terms of what outcomes are more relevant for these patients, of course, these are patients that are more likely to being able to shave days off because they don't dehydrate as readily as stomach patients. Dehydration is a key enemy of being able to come off days of infusion because one can dehydrate very quickly within a 24-hour period. And secondly, so again, days off is a crucial endpoint that we have at the top of our hierarchy. And then another point is obviously enter autonomy or complete we know from parental support, which we think is more achievable for CIC than it is for stoma patients. Again, for the same reason, they have less of a propensity to dehydrate. They start from fewer days a week on average of infusion. So, you know, achieving a full internal autonomy, it's potentially easier for these patients.

Okay, perfect. Thanks, Luca.

Please stand by for our next question. The next question comes from Thomas Smith, SBB Securities. Your line is now open.

Hey, guys. Good morning. Thanks for taking the questions, and congrats on all the progress.

A couple questions on our end. I guess first, a follow-up question on the STARS pivotal trial and some of the assumptions you're making for the CIC patients. We know in the GATEX program there was a 24% reduction in PF volume in the placebo arm for CIC, but that was with a titration algorithm that relied only on changes in fluid balance. How do you expect the CIC patients who receive placebo and SARS to respond using your algorithm relative to the GATEC study? And can you remind us of the assumed treatment effect and powering assumptions for the anatomy-specific endpoint?

Thanks for the question. So basically, we have changed not just the winning algorithm, which should increase the sensitivity of detection responses to CIC, but we have also changed the significantly the optimization stability mechanisms that are designed to reduce the placebo responses in this population. Essentially, what was observed in the past was, on average, a 20-22% placebo response, which was attributable to patients during the you know, in the course of the trial requiring less parenteral support irrespective of the GLP-2 treatment because of a better optimization of their nutrition, oral nutrition, or parenteral support nutrition. So we have invested a significant amount of effort and time in making this patient very stable and optimized before they start receiving drugs. And so, again, so these two factors, the placebo response reduction and the winning algorithm, which we tested already in the nutrition trial, are predicted to give us a more significant signal in the CIC subgroup. Now, in terms of what we have powered towards for the CIC, we powered, the study was powered for the overall effect size. But I would say specifically the CSC, we power it to about a 10% delta between placebo and inactive. So it's a relatively, you know, small delta that we are aiming for here. What we have seen in the nutrition trial would indicate that the delta could be as big as 30%. But of course, we have to assume that in a placebo-controlled trial, we may not get that large delta between placebo and active, simply because it's a more, typically when you run trials on a large number of sites and large number of countries, the seamless action diminishes. So we think that the nutrition, which has a reduction of about 50%, if you assume 20% placebo is about close to 30% delta there, I think that will be sort of the best-case scenario.

Got it. That's super helpful. Great. And then just one on the competitive landscape in SPS. Can you just update us on your latest expectations for competing GLP-2 programs and generic ATEX and how you see the market shaping up over the next three to five years?

Yeah. I'll start, and then I'll have Kevin continue. In terms of the expectations from other sponsors, we're obviously not comment about our programs. You know, we're confident we have a very competitive package here. We are the only company with a weekly drug. We are the only company with an ability to discriminate between different anatomical subtypes, which we think is very crucial for this population. And we are the only company that has a significant amount of patient reported outcomes that are bespoke, that were designed specifically for this population. And so there's plenty. And if you combine that with what we know about our molecule versus the others, we're very confident we have a very high chance of differentiation. In terms of the generic landscape, I think we We now are further advanced into the generalization of GATEX. I'll have Kevin comment on that, because he has done a lot of work in this space. Kevin?

Yeah, thanks, Luca. As you may know or may be aware of, there could have been a possibility for a generic of GATEX to launch in the second half of March of this year. And we haven't seen one emerge at this point. We think there's a lot of reasons why both the SBSIF market and the profile of GATEX in particular has limited attractiveness for generics. There's some challenges one has to overcome in transitioning from the recombinant manufacturing approach for GATEX today to synthetic manufacturing, which would be required under the ANDA guidelines. clearly would require pretty significant CMC investment. It does take some effort to identify patients and to keep them on treatment. As we've shown, patients on GATEX have significant challenges with persistency, and half of them discontinue by month 12 and up to two-thirds by month 24. There's REMS and registry requirements for GATEX. And so these are just some of the factors we think, while the market isn't particularly attractive for generics, We've only seen one paragraph for filing to date, and that was done back in 2016. And we still have not yet seen an approval. So yeah, I think a generic remains to be seen whether one will come to market. If one does come to market, we've had significant engagement with payers. And at the end of the day, they view generic gatex as gatex without a lot of the support that a corporation would provide. And as Luca mentioned, you know, we believe we'll be able to demonstrate very significant differentiation on efficacy and obviously on dosing being a weekly dose drug. So, we don't see a generic as a strategic threat to the opportunity that we think apraglitide has in SBSIS.

Got it. That's super helpful. Thanks, guys, for taking the questions.

Please stand by for our next question. Our next question comes from Patrick Dolezal with LifeSci Capital. Your line is now open.

Hi, thanks for taking the question. So it's interesting thinking about the speed of CIC enrollment and now kind of waiting a little bit longer for the stoma cohort. Just curious, what's the relative proportion of CIC versus stoma patients? currently receiving GAT sex and how might your marketing strategy and pivotal trial design ultimately kind of shift this ratio over time?

Yeah. So, um, hi Patrick. Uh, so basically the, we have different sources of information that we can rely on, uh, including our own, uh, study experience in, in 18 countries. and feasibility work we've done leading up to that, including macro research we're conducting both in the U.S. and in Europe. So we estimate the CIC population to have increased since the first launch of GALX because of the greater appreciation of the importance of keeping at least a portion of the colon intact. provide patients with the ability of absorbing fluids. And so we have seen an increase in proportion. We estimate that the number of CSE could be anywhere between 60 to 70%. We don't obviously know exactly the exact number, but I sort of, I would say a fair estimate would be around 65% versus 45, you know, 35% being Stoma. And what was the other part of the question?

I think it was how it may impact our marketing approach.

Okay. So maybe we'll have time.

Kevin, do you want to take the second part of the question?

Yeah. And we've got a couple of data points to suggest that GATX is used at least one and a half to two times more frequently in stoma than CIC, recognizing that CIC represents the majority of patients. And so we've always believed that these patients have been underserved. We obviously have seen that GATEX in a retrospective analysis didn't demonstrate any effect in that population. We also have a good understanding that that is one of the main drivers of discontinuation which is lack of efficacy in particular in the CIC population. So much of our strategy beyond obviously having a product with better pharmacology is really to address the unmet needs by anatomy. There's certainly significant room for growth in the stoma population because our market research indicated that still less than half of patients might be getting GATEX in that population. But really, the market growth potential and the long-term potential of a pragmatide can be significantly driven by that 60% to 70% of CIC patients, of whom only a fraction are getting GATEX today. So our design of the phase three trial with anatomy-specific endpoints and our ability to be able to demonstrate in a prospective alpha-controlled manner days off and enteral autonomy in the CIC population, I think uniquely position us to be able to proactively promote and educate people, not only on the benefits of APRA, but as Luca mentioned earlier, how best to measure APRA's effect and to appropriately wean the CIC patient off of PS. So I think there's very tight integration between our development strategy and our commercial and marketing strategy. I think we're well positioned for success.

Got it. In the Stargate trial for GVHD, could you just walk us through how GI involvement in particular affects outcomes? And then just curious how the propensity control arm is kind of handled. Do you guys have patient-level data to kind of match disease characteristics and other features?

Yes, thanks, Patrick, so much. So in terms of the actual injury to the gut, so, you know, patients in preparation for stem cell transplant undergo conditioning, and that itself is toxic, particularly to the gut epithelium, you know, which is a continually dividing tissue. And then post-transplant, the donor T cells, which are contained in the graft, attack the host, and the GI tract, the liver, and the skin are the primary targets for that. In the gut, that leads to a profound inflammatory condition, which often leads to the mucosa of the gut being denuded, and the patients develop quite life-threatening bile salts and osmotic diarrhea. And the other problem is that the gut barrier itself becomes – the intestinal barrier becomes – impaired as well, and so there's translocation of bacteria across from the gut lumen into the bloodstream, and the patients will develop sepsis. So the GI tract is thought to probably account for, you know, significant proportion of the mortality. The skin and liver typically are reasonably well addressed with immunosuppression, but it's the gut that kind of remains a significant unmet need in the population.

Thanks, Omar. Patrick, does that answer your question?

Yeah, and then I guess the second part was just on the propensity match control.

Yeah, so we do have patient-level data, and the propensity score matching basically is used to ensure that we've got a well-matched synthetic control to compare our outcomes from Stargaze.

Got it. Perfect. Thank you.

I show no further questions at this time. I would now like to turn the conference back to Luca Santorelli for closing remarks.

Thanks to everybody for participating and to all the people that participated in the Q&A for your insightful questions and for helping us continue to become a better company. Thank you.

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