Q3 2020 Corbus Pharmaceuticals Holdings Inc Earnings Call

Hello, and welcome to the corporate Pharmaceuticals third quarter November 2020 earnings Conference call.

Operator: Hello and welcome to the Corbus Pharmaceuticals third quarter November 10th, 2020 earnings conference call. As a brief reminder, all participants are currently in a listen-only mode. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad.

As a brief reminder, all participants are currently in English only mode. If anyone require operator during the conference. Please press Star then one on your telephone keypad. Following the presentation there will be a question answer session.

Operator: Following the presentation, there will be a question and answer session. Do note that this conference is being recorded at the company's request and will be made available on the company's website following the end of the call. I will now turn the conference over to your host, Ted Jenkins, Senior Director, Investment Relations and Corporate Communications. Please go ahead, sir.

Please note that this call is being recorded a company's request and will be made available on the company's website following the call.

Now I'll turn the conference over to your host Ted Jenkins Senior Director Investor Relations and corporate Communications. Please go ahead Sir.

Thank you operator, and good morning, everyone.

Ted Jenkins: Thank you, Operator. And good morning, everyone. Thank you for joining us today. At this time, I'd like to remind our listeners that remarks made during this call may state management's intentions, hopes, beliefs, expectations, or projections of the future. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements are based on Corbus's current expectations, and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Corbus files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the SEC's website.

Thank you for joining us today.

This time I'd like to remind our listeners that remarks made during this call may state management's intentions hopes beliefs expectations or predictions of the future. These are forward looking statements and involve risks and uncertainties <unk> statements. On this call are made pursuant to the safe Harbor provisions of the Federal Securities laws. These forward looking statements are based on corporate <unk> current expectations and actual results could differ materially.

As a result, you should not place undue reliance on any forward looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward looking statements are discussed in the periodic reports corpus filings with Securities Exchange Commission.

You talked much available in the investors section of the company's website and on the Securities and exchange Commission's website.

Ted Jenkins: We encourage you to review these documents carefully. Joining me on the call today are Dr. Yuval Cohen, our Chief Executive Officer; Dr. Barbara White, our Chief Medical Officer and Head of Research; Sean Moran, our Chief Financial Officer; and Craig Millian, our Chief Commercial Officer. With that, it is now my pleasure to turn the call over to you all. Thank you, Ted.

We encourage you to review these documents carefully.

Joining me on the call today are Dr., you've all Cohen, our Chief Executive Officer, Dr., Bob or White, our Chief Medical Officer and head of research.

John Moran, our Chief Financial Officer, and Craig million, our Chief commercial officer with that it's now my pleasure to turn the call over to you all.

Thank you Chad. Thank you everyone for joining us this morning for our third quarter 2020 earnings Conference call.

Dr. Yuval Cohen: Thank you, everyone, for joining us this morning for our third quarter 2020 earnings conference call. This past quarter has been, by far, the most challenging period for this company since we started it in 2014, with disappointing top-line data in both Resolve 1 Phase 3 studies in systemic sclerosis and our Phase 2b Cystic Fibrosis study. In each of these studies, Lanabasin did not meet its primary end point. This is a simple and rather brutal fact and is part and parcel of the inherent risks of drug development. What is now relevant is where we go from here. Our plan to rebuild shareholder value revolves around three simple concepts.

This past quarter has been by far the most challenging periods for this company since we started it in 2014.

Disappointing top line data in both resolve one phase three study in systemic sclerosis, and our phase to be cystic fibrosis study.

In each one of these studies on Addus and did not meet its primary endpoint. This.

This is a simple and rather brutal fact and is part and parcel of the inherent risks of drug development.

What is now relevant is where do we go from here.

Our plan to rebuild shareholder value revolves around three simple concepts.

Dr. Yuval Cohen: The first one is, we believe lanabasim is an active compound. These trials yielded valuable data that provides us with insight into potential clinical benefits associated with lanabicin, and Barbara will walk you through the summaries of each of those short, We believe that the data from these recent studies demonstrated that lanabasin had clinical activity in both systemic sclerosis and cystic fibrosis. They will allow us to map out a potential path forward that starts with us engaging with experts in these fields and other stakeholders.

The first one is we believe then Addison is an active compound.

These trials yielded valuable data that provides us with insight into potential clinical benefit associated with one Addison and each one of these diseases.

Barbara will walk you through the summaries of each of those shortly we've.

We believe that the data from these recent studies demonstrated that when that doesn't have the clinical activity in both systemic sclerosis and cystic fibrosis.

They will allow us to map out a potential path forward that starts with EPS engaging with experts in the field and other stakeholders weaker.

Dr. Yuval Cohen: We continue to believe that there is real potential in these indications that could create value for Corbus. The second concept is dermatomyositis represents a potentially significant value driver for next year, with 30,000 patients in the U.S. with clear unmet needs. Dermatomyositis represents an attractive market opportunity that could create substantial shareholder value. A positive outcome in our Phase 3 determined study of lanabisim in dermatomyositis could increase the value of our company. We note recent changes in the dermatomyositis competitive landscape, with phase 3 studies that are shorter than one year. Therefore, we plan to shorten the duration of the determined phase 3 study from one year to just 28 weeks, accelerating top line data readout to spring of 2021. Sorry everyone, to the spring of 2021. We are Leveraging our pipeline to create value beyond Lanabas. That is our third con... Corbis is more than just Lanabas.

We continue to believe that there is real potential in these indications that could create value for cordless.

The second concept is dramatically myositis represents a potentially significant value driver for next year.

With 30000 patients in the U.S. with clear unmet need.

They're not in myositis represents an attractive market opportunity that could create substantial shareholder value.

A positive outcome.

In our phase three determine study of one Addison inter matter myositis could increase the value of our company.

We note recent changes in the dramatic myositis competitive landscape with phase three studies that are shorter than one year.

Therefore, we plan to shorten the duration of the determine the phase three study from one year to.

To just 28 weeks.

Accelerating top line data readout to spring [noise].

I'm 2021, [noise] sorry.

Sorry about.

The spring of 2021.

We are leveraging.

Our pipeline to create value beyond blunt Addison.

That is our third concept.

Corbis is more than just one addison we.

Dr. Yuval Cohen: We have a pipeline that is being developed both internally and with external assets. We believe our pipeline contains real value. We are prioritizing the development of those preclinical assets that we believe can deliver a data value inflection point in 2021, either in the form of a potential partnership or a meaningful increase in our enterprise value. We are evaluating options for expanding our pipeline further with external assets that offer synergy with our current pipeline and our expertise in taking programs from pre-clinical development all the way to complex Phase III studies. We look forward to our next Research and Development Day, at which we will showcase our pipeline beyond the Navis and the value we believe can be unlocked from it. We are committed to rebuilding the value of Corbus for our shareholders. We have the expertise and the cash runway.

We have a pipeline that is being designed both internally.

And with external assets.

We believe our pipeline contains real value.

We are prioritizing development of those preclinical assets that we believe can deliver aid data value inflection point in 2021.

Either in the form of a potential partnership.

Or a meaningful increase in our enterprise value.

We are evaluating options for expanding our pipeline further with external assets that offer synergy with our current pipeline and our expertise in taking programs from preclinical development all the way to complex phase three studies.

We look forward to our next research and development day at.

At which we will showcase our pipeline beyond in Addison and the value we believe can be unlocked from it.

We are committed to rebuilding the value of core business for our shareholders. We.

We have the expertise and the cash runway.

Dr. Barbara White: To do so, because of the dramatic restructuring we undertook that significantly extended our cash runway into mid-2022 and, with a shortening of the DiEM study, potentially even further than that. I will now turn the call over to Barbara. Thank you, you both.

To do so because of the dramatic restructuring, we undertook that significantly extended our cash runway into mid 2022.

And with a shortening of the D.M. study.

Potentially even further than that.

I will now I will now turn the call over to Barbara Barbara.

Thank you Paul.

As you know.

Dr. Barbara White: As you know, our phase 3 study of lanabisim and systemic sclerosis and our phase 2b study of lanabisim and cystic fibrosis did not meet their primary end point. In both studies, the safety profile of lanabasum remained unchanged and favorable, without evidence of immunosuppression. Post-hoc analysis showed what we believe to be evidence of clinical activity of monabicin in both studies. In the Phase 3 systemic sclerosis study, improvement in the placebo group was greater than expected and occurred mostly in subjects who started new immunosuppressive therapies within the last two years, compared to subjects who were on more established treatment regimens. Patients on mycophenolate, an immunosuppressant used in 51% of the subjects in this study, were especially associated with improvement in the placebo group.

Phase three study of love, assuming systemic sclerosis, no capex to be study I wouldn't assume in cystic fibrosis did not meet the primary endpoints.

In both studies the safety profile of letting some remained unchanged and favorable.

Well the evidence of immunosuppression.

Post hoc analysis showed what we believe can be evidence of clinical activity running both studies.

In the phase three systemic sclerosis study improvement in the placebo group was greater than expected and.

Cars, mostly in subjects she started new immunosuppressive therapies within the last two years.

Compared to subjects, who were on more established treatment regimens.

Subjects on micro satellite.

In immuno suppressant used to 51% of the subjects in this study were especially associated with improvement in the placebo group.

When post talk analysis were done in subjects treated with immuno suppressants for at least two years.

Dr. Barbara White: When post-hoc analysis was done in subjects treated with immunosuppressants for at least two years, improvement was seen in the lanabis and treated groups compared to the placebo group in forced vital capacity, a measure of lung function, whether assessed as percent predicted or in milliliters. Fewer subjects in this subset treated with established immunosuppressants had declines and more had stability in forced vital capacity compared to subjects treated with placebo; please refer to yesterday's press release for specific data.

Tools meant was seen in law now doesn't treated groups compared to the placebo group inside.

Forced vital capacity.

A measure of lung function, whether assessed as percent predicted on our leaders.

Fewer subjects in this subset treated with established Immunosuppressants had declines and more had stability and forced vital capacity compared to subjects treated with placebo.

Please refer to yesterday's press release for a specific date.

Despite the improvement in subjects in the placebo group and the phase three study of blend that person in scleroderma [noise] yeah.

Dr. Barbara White: Despite the improvement in subjects in the placebo group in the phase 3 study of lenabasin and scleroderma, it remains clear that patients with systemic sclerosis still need new treatments for their overall disease and major organ-specific manifestations, especially new treatments with favorable safety profiles. We are encouraged about the analysis that suggests that lanabasin may improve lung function in patients already on established immunosuppressant treatment given the importance of controlling decline in lung function to the overall health and mortality of systemic sclerosis patients. Our next steps include additional analysis of the data to confirm these findings and then, if warranted, consideration of another Phase 3 study. In our Phase IIb study of lanabasin for treatment of pulmonary exacerbations, or PEX, in people with cystic fibrosis, we found very low pulmonary exacerbation rates in 21% of total subtypes from five Eastern European countries without regard to treatment assignment. Pulmonary exacerbation rates were about 85% lower in subjects in these countries than those in-study participants from other countries.

It remains clear that patients with systemic sclerosis still need new treatments of the overall disease.

Major organ specific manifestations, especially new treatments its favorable safety profiles.

We are encouraged about the analysis that suggest that one obviously may improve lung function.

In patients already on established immuno suppressant treatments.

Given the importance of controlling decline in lung function to the overall health and mortality.

Sclerosis patients.

Our next steps include additional analysis of the data to confirm these findings and then it's warranted consideration of another phase three study.

In our phase Twob study of blood cells.

Treatment of pulmonary exacerbations, RPX and people with cystic fibrosis, we found very low pulmonary exacerbation rates and 21% of total subjects from five eastern European countries without regard to treatment assignment.

Pulmonary exacerbation rates were about 85% lowering subjects in these countries and knows in study participants from other countries.

Dr. Barbara White: These low rates preclude observing a meaningful difference in pulmonary exacerbation rates based on treatment assignment in subjects from these countries. Post-hoc analyses were done that excluded subjects in the five countries with very low overall pulmonary exacerbation rates. In these analyses, we saw substantial differences in pulmonary exacerbation rates in the placebo group depending upon baseline lung function and background treatment with CFTR modulating drugs when comparing subjects with similar baseline function and treatment with CFTR modulators, when the Abyssinian treatment was associated with a range of numerical reductions in These findings suggest that lenabasum may be active in cystic fibrosis.

Do you slow rates precluded absorbing a meaningful difference in pulmonary exacerbation rates based on treatment assignment in subjects from these countries.

Post talk analysis would not exclude subjects and the five countries with very low overall pulmonary exacerbation rates.

These analysis, we saw substantial differences in pulmonary exacerbation rates in the placebo group, depending upon baseline assumption then background treatment with CSAPR modulating drugs.

When comparing subjects with similar baseline assumption and treatment with CF GR modulators.

Well the other some treatment was associated with her mate with a range of numerical reductions in pulmonary exacerbations.

To 62% maximum reduction depending upon the comparison.

These findings suggest activity I wouldn't atlas them in cystic fibrosis there.

Dr. Barbara White: Additional analysis is underway to extend these findings. The additional analysis will be done with input from the study's steering committee of experts in cystic fibrosis and the Cystic Fibrosis Foundation Therapeutic Development Network. We are pleased to report that Determined, the Phase III study of lanabasin and dermatomyositis, is progressing well, with more than 60% of subjects completing week 28 already. Baseline characteristics of the subjects in this study were reported at the American College of Rheumatology annual meeting this year. Determine is the first study to enroll the full spectrum of patients with dermatomyositis, with 82% of subjects with the classic form of dermatomyositis with clinically apparent skin and muscle manifestation, and 18% of subjects with the amyopathic form of dermatomyositis with skin involvement but without clinically apparent muscle weakness. Stable use of background immunosuppressants was allowed in the DM study, but differ Use of intravenous immunoglobulin has been reported to improve dermatomyositis, especially during the first few months of treatment.

Additional analysis are underway to extend these findings the additional analysis will be done with input from the study steering committee experts said cystic fibrosis.

Cystic fibrosis Foundation therapeutic development network.

We are pleased to report that determine the phase three study of one absent some dramatic myositis is progressing well with.

With more than 60% of subjects completing week 28 already.

Baseline characteristics of the subjects in this study were reported at the American College of Rheumatology annual meeting this year.

Determine is the first study to enroll the full spectrum of patients with the amount of mastitis.

With 82% of subjects with the classic form a dramatic myositis with clinically apparent skin and muscle manifestations.

And 18% of subjects with the aim my past explore automatic watched us with skin involvement, but without clinically <unk> muscle weakness.

Stable use background immuno suppressants was allowed in the game to study the.

It differs from your seat in the Scleroderma phase three study.

Michael satellite, where she was the baseline.

And only.

19% of the dramatic myositis subjects compared to 51% of subjects in the scleroderma study used.

Use of intravenous immunoglobulins has been reported to improve dramatic myositis, especially during the first.

Few months of treatment.

Dr. Barbara White: In our Dermatomastitis study, about 18% of subjects were receiving intravenous immunoglobulin at baseline, and only 5% of subjects had started that treatment recently in the last year. We look forward to the results of this important study in patients with dermatomyositis, as you've all mentioned, given recent industry developments. We plan to change the timing from one year to 28 weeks. This change would allow us to address, earlier than we originally planned, the question of whether lanabicin provides benefit in dermatomyositis, using a treatment duration consistent with other recent or ongoing Phase 3 studies in dermatomyocytes. Of note, recent findings in dermatomyositis skin biopsies further strengthen the case for linabasin as a potential treatment for DM. As presented in an abstract at the ACR annual meeting, expression of CB2, cannabinoid receptor type 2, was increased on immune cells in lesional skin from dermatomyositis subjects in the Linabicin Phase II study. Treatment with lanabasin was associated with a reduction in immune cell infiltrate, CB2 Expression, and Inflammatory Cytokine Production in Lesional Skin from these people with Dermatomycitis.

In our dramatic Myositis study, but 18% of subjects are receiving intravenous thing globulin a baseline.

And only 5% of subjects had started that treatment recently last year.

We look forward to results of this important study in patients with bottomless sides.

As you all mentioned given recent industry developments.

We plan to change the timing.

The primary endpoint for one year to 28 weeks.

This change would allow us to address earlier than we originally planned the question of whether one absent provides benefit intermat of my side as you have seen a treatment duration consistent with other recent or ongoing phase three studies and dramatic mastitis.

Of note recent findings intermat in myositis skin biopsies for this strengthens the case for the Nab as soon as a potential treatment for D.N.

As presented an abstract at the Ace your annual meeting expression of CB too can happen to like receptor type two was increased on immune cells in regional skin come from that unless I just subjects indolent absent phase two study.

Treatment with one Alison was associated with a reduction in new in cell infiltrates.

C B, two expression and inflammatory cytokine production and lesion skin problems.

People with dramatic myositis.

The NIH sponsored 100 patient phase two study of one absent in systemic lupus erythematosus husband rolled 93 of 100 plan subjects to date we've.

Dr. Barbara White: The NIH-sponsored 100-patient Phase II study of lanabasin in systemic lupus erythematosus has enrolled 93 of 100 planned subjects to date. We remain optimistic that enrollment may be complete by either year-end or early next year, with top-line data in the first half of 2021. We have promising preclinical programs that we view as a key component in rebuilding shareholder value. We are especially encouraged by preclinical data we've generated with a novel family of CB2 agonists that inhibit tumor cell growth in vitro and in a xenograft model of human cancer. This potential anti-tumor activity of several of our own CB2 agonists is supported by a robust literature testing other CB2 agonists and animal models.

We remain optimistic that enrollment may be complete by either year end or early next year with topline data in the first half of 2021.

We have promising preclinical programs that we view as a key component in rebuilding shareholder value.

We are especially encouraged by preclinical data we've generated with a novel family of C. B. Two agonists then in the tumor cell growth in vitro and in Encino grass model of human cancer.

This potential anti tumor activity.

Several of our own Cbtwo agonist.

Supported by a robust literature testing other cbtwo agonist, an animal models.

Dr. Barbara White: We are preparing to submit this data to an upcoming medical conference and will be increasing internal resources devoted to this program. Regarding our CB1 Inverse Agonist Program, we have recently identified several compounds with more promising physicochemical and pharmacokinetic properties than CRB4001. We are shifting our focus to prioritize the development of these compounds and are not continuing to develop CRB4001. We look forward to disclosing more details about these compounds at a future R&D day. With that, I will turn the call back to you all. Thank you, Barbara.

We are preparing to submit this data to an upcoming medical conference.

And we will be increasing internal resources devoted to this program.

Regarding our CB one inverse agonist program, we have recently identified several compounds with more promising physical chemical and pharmacokinetic properties and CRB 4001 week.

We are shifting our focus to prioritize development of these compounds.

And are not continuing to develop CRB 4001.

We look forward to disclosing more details about these compounds at a future R&D day with.

With that I will turn the call back to evolve.

Thank you Barbara I will now provide an update regarding our financial position.

Sean Moran: I will now provide an update regarding our financial position. As mentioned previously, in October, we announced a very dramatic restructuring of our operations, designed to reduce costs and reallocate resources towards our Linibosome clinical development program in dermatomyositis, as well as our early stage pipeline. Restructuring, which included layoffs and other cost reductions, was designed to extend our cash runway of $82 million to mid-2022. Lastly, a valued member of our senior leadership team, our Chief Operating Officer, Bob Discordia, has resigned from the company to pursue other interests.

As mentioned previously in October we announced a very dramatic restructuring of our operations design to reduce costs and reallocate resources towards our the Nab is some clinical development program in dermatomyositis.

As well as our early stage pipeline.

The restructuring, which included legal and other cost reductions.

Was designed to extend our cash runway of $82 million to made 2022.

Lastly.

A valued member of our senior leadership team, our Chief operating Officer, Bob. This Korea has resigned to company to pursue other interests Bob.

Dr. Yuval Cohen: Bob played an important role and made many contributions during a critical period for the company, and his presence will be genuinely missed. On behalf of the senior leadership team, I would like to personally thank Bob for his leadership, service, and commitment. We wish him well. In closing, we continue to believe the endocannabinoid system is a key target for the development of therapeutics for the treatment of debilitating diseases. With these unique clinical databases now in hand, we will continue to collaborate with both systemic sclerosis and cystic fibrosis experts and explore the roadmap for potential follow-on confirmatory studies for both programs. We are excited for the completion of our Phase 3 clinical trial in VM next year, with an anticipated top-line data readout less than one year away and potentially sooner than initially planned. We also look forward to data from our FLE program. We are actively prioritizing our pipeline to focus on those programs that we can deliver, at the earliest data inflection point, and look forward to providing you with an update at an upcoming research and development meeting. With that, I want to thank you all for your time and attention today.

Bob played an important role and made many contributions during a critical period for the company and his presence will be genuinely missed.

On behalf of the senior leadership team I would like to personally thank Bob for his leadership service and commitment.

We wish him well.

In closing we continue to believe the Endocannabinoid system is a key target for the development of therapeutics for the treatment of debilitating diseases with these unique clinical databases now in hand, we will continue to collaborate with both systemic sclerosis.

<unk> and cystic fibrosis experts and explore the roadmap.

Two potential follow on confirmatory studies for both programs.

We are excited for the completion of our phase three clinical trial in D.M. next year.

With an anticipated topline data readout less than one year away and potentially sooner than initially planned.

We also look forward to data from our F. L E program next year.

We are actively prioritizing our pipeline to focus on those programs that we can deliver.

The earliest data inflection point and look forward to providing you with an update.

An upcoming research and development day.

With that I want to thank you all for your time and attention today I now turn the call back to the operator, and we will open the call to questions from the audience.

Operator: I will now turn the call back to the operator, and we will open the call to questions from the public. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Thank you we will now be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone indicate your line is another question in queue you.

You May press Star two if you like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we post our first question. Our first question comes from Brian Abrams with RBC Capital Markets. Please proceed. Hey guys.

For participants using speaker equipment, it may be necessary to pick up your handset before passing to starkey.

One moment lobby poll for our first question.

Our first question comes from Brian Abrams with RBC capital markets. Please proceed.

Hey, guys. Thank you for taking my questions. I guess my first question is on the tomato Myositis study I'd love to hear a little bit more about the rationale behind shortening. The study obviously you can get to a quicker read out but I'm just sort of wondering what this means for the overall conduct and powering of the study if you're.

Dr. Barbara White: Thank you for taking my questions. I guess my first question is about the dermatomyositis study. I'd love to hear a little bit more about the rationale behind shortening the study. Obviously, you can get a quicker readout, but I'm just sort of wondering what this means for the overall conduct and design of the study. If you're expecting most of the effects to be observed within those first six months, and are there any additional FDA or regulatory sign-offs that you need in order to amend the protocol and have it potentially still enable an adequate safety database to enable registration? Hi, Brian, this is Barbara.

Specking most of the effect will be observed within those first six months and is there any additional FDA regulatory sign offs that you need to in order to amend the protocol that habit potentially still be.

Enabler.

Enable a an adequate safety database to to enable registration.

Hi.

Brian This is Barbara. Thank you. Thank you very much for that question.

Dr. Barbara White: Thank you. Thank you very much for that question. In response, a number of things have changed since we first planned the study, and we are the first large Phase III study in dermatomyositis. And there have been a number of studies since that point. We had originally planned for a study duration of 52 weeks. But we note that OptingM just reported phase 3 results in a study of a duration of 16 weeks, which is far less than the 52-week study we had planned. Also, when we look at study durations for other Phase III studies, endometriomyositis, we see that all are less than 52 weeks and range from 16 weeks, 17 weeks to 24 weeks. So, in fact, our damatomyositis study is the outlier in terms of treatment duration. Competitively, I think that data would be compared from comparable time points.

In response to a number of things have changed since we first plan to study and we were the first large phase three study interim and Las Vegas, and there have been a number of studies since that point.

We had originally planned for a study duration the 52 weeks.

We note that opinion just reported phase three results in a study of the duration of 16 weeks, which is far less than 52 week study we had planned.

Oh, so when we look at study durations.

For other phase three studies into him out of my side as we see that all are less all the ones that we can see a less than 52 weeks and range from 16 weeks 17 weeks to 24 weeks. So in fact are doing that in last five study is the outlier in terms of treatment duration and.

Competitively I think that data would be compared some comparable time points. So I think it's reasonable to determine what our efficacy is at these are all your time points.

Dr. Barbara White: So I think it's reasonable to determine what our efficacy is at these earlier time points. When we look at blinded data from our study, and it is blinded, we know already that we've had good progress in the study and that more than 60% of the patients are through week 28, and that a number of them have already completed the study, so we can get a reasonable idea of what the overall rate of response is and the primary outcome, which is the total improvement score. And when we do this... With the data to date, about 85% of the improvement is already apparent. In these analyses of blinding data, about 85% of improvement is already apparent by week 28. So, while improvement continues beyond that, the majority of improvement occurs in the first six months or so.

When we look at blinded data from our study and it is blinded.

We know already that we've had good progress in this study and that more than 60% of the patients are true week 28 and that.

A number of them have already completed.

Study, so that we can get a reasonable idea of what the overall weight Oh sponsorship and the primary outcome, which is the total score.

And when we do this.

With the data to date.

About 85% of the improvement is already apparent.

And he's very pull them and these analyses of blinded data, but 85% of improvements already apparent by week 28, So while impose my continues beyond that.

The majority of improvement occurs in the first six months or so so I don't think we'll be losing a lot oh.

Dr. Barbara White: So, I don't think we'll be losing a lot of data or signaling a lot of value by shortening the study. The trade-off for loss of efficacy, I don't think will be great. So I think that's important, what other studies are doing; the trade-off is not great, but it will provide us with a major inflection point sooner than we would with other ones, six months. The time point to get the last patient out of 28 weeks will be sometime at the juncture of the first and second quarter next year, and if the study is positive, we think that this will provide meaningful value for the company.

Signal a lot of value by shortening the study Oh, the trade off for loss of efficacy I don't think will be great.

So I think that's important it's what other studies are doing trade off is not great. It will provide us with a major inflection point sooner than we would otherwise six months so the oh.

[music].

Time points, you get the last patient out at 20 weeks will be some time at the job shop, the first and second quarter next year.

And if the study is positive.

We think that this will provide meaningful value for the company.

We don't think that it necessarily precludes the opportunity to take the data on for approval, we certainly need to have a protocol amendment every wash the statistical analysis plan. These things can be done, but if I repeat <unk>.

Dr. Barbara White: We don't think that it necessarily precludes the opportunity to take the data on for approval. We certainly will need to have a protocol amendment and revise the statistical analysis plan. These things can be done. But, as I repeat, this study design with an outcome shorter than 52 weeks will be quite consistent with what others are doing in their phase 3 studies. Got it. That's really helpful color, Barbara.

This study is designed with an outcome.

52 weeks will be quite consistent with what others are doing in their phase three studies.

Got it that's that's really helpful color Barbara and then just maybe one more question for me just curious if you could expand a little bit more about you know some of the limitations that you observed with four 001 was this on the formulation side on the blood brain barrier penetration side and I guess, what the you know maybe some of the characteristics of the.

Dr. Barbara White: And then maybe one more question for me, just curious if you could expand a little bit more about some of the limitations that you observed with 4001. Was this on the formulation side, or on the blood-brain-barrier penetration side? And I guess maybe some of the characteristics of the next generation EB1 inverse agonists when we could learn more about those moving forward into the clinic. Thank you, Brian, again for the question. We actually had both of those problems. We observed both of those problems with 4,001. We have a fabulous... CMC team, and they were and have been able to make formulations of 4001 that were adequate for us to begin our clinical testing. Nonetheless, it's a fairly insoluble, difficult-to-formulate compound.

Yeah next generation CB, one inverse agonist when those when we could learn more about those moving forward into the clinic next.

Sure. Thank you Brian again for the question, we actually had both of those.

We observed both of those problems with 4001, we have a fabulous.

She M.C. team and they work and have been able to make formulation for a 4001 that were adequate for us to begin our clinical testing. Nonetheless, it say, it's fairly insoluble a difficult to formulate compounds.

Dr. Barbara White: In addition, we extended and expanded upon the initial toxicology and pharmacokinetic studies that had been done and had previously been adequate to enable Phase I testing. However, for safety purposes, we decided to extend these studies. And when we did this, we found levels of 4001 in primate brains that we felt were adequate, did not support further development of 4001, have more favorable physical chemical properties in terms of likely solubility and ability to formulate, and also in the studies that we've done to date don't show some of the early signals of concern about 4001. Accumulation and Brain.

In addition, we extended and expanded upon the initial toxicology PAAMCO kinetic studies that had been done and had previously been adequate to enable phase one testing, but for safety purposes, we decided to expand these studies.

When we did this we found levels of 4001 and Playmate grain that we felt.

Did not support for the development of 4000, I don't want you other compounds that we are pursuing.

More favorable physical chemical properties in terms of.

Likely solubility and stability.

The living formulate and also in need of studies that we've done to date don't show some of the early signals of concern about 4001 and it's.

Dr. Barbara White: Does that help, Brian? Very helpful. Thanks again, guys. Our next question comes from Dr. Maury Raycroft with Jefferies. Please proceed. Hi, this is Kenny Chan on behalf of Murray Raycroft.

Accumulation membrane.

Does that help Brian.

Very helpful. Thanks again guys.

Our next question comes from Dr., Maury Raycroft with Jefferies. Please proceed.

Hi, This is Kenny Chen on for married Raycroft I have a question on D. systemic sclerosis trial.

Dr. Barbara White: I have a question on the systemic sclerosis trial. How do you see the greater-than-two-year IST mark from the recent post hoc press release incorporated into the FDA label? Has there been precedent for approvals based on years of background therapy failure, or would you run additional trials either in-house or with a partner? Hi, Kenny.

Do you see the greater than two your ice tea Mark from the recent post hoc.

Press release incorporated into the Ft label has there been a precedent for approvals based on years of background therapy failure or would you run additional trials either in house or with a partner.

Hi, Kenny.

Dr. Barbara White: Thanks for the question. To be clear, we do not think that the current Phase 3 study that was just completed is adequate to support regulatory approval. So we've taken that off the books. We didn't meet the primary, and therefore we didn't meet the secondaries. And we just don't think that that's a pass-forward to approval. At the same time, we think the data are very informative, not only to us but to the clinical community. And they provide a very rich database from which we can... further discern how to design an additional phase three study that then could be used for approval. So again, the one that was just finished is not adequate for approval.

Thanks for the question to be clear, we do not think that the current phase three study that was just completed is adequate to support regulatory approval. So so we've taken that off the books.

We didn't meet the primary and therefore, we didn't meet the secondaries and we just don't think that that's a passport <unk>.

To approval at the same time, we think the data Oh, very informative not only to us but to the clinical compute clinical community and they provide a very rich database from which we can.

Further south.

On.

How to design an initial phase.

Phase three study, but then you could be used for pool.

So again the one that was just finished its not adequate for approval.

Dr. Barbara White: We are in the process of determining a path forward, and if we do move forward, that will, by necessity, involve another phase three study. Thanks, and one more question on CF. You previously mentioned that you would talk to the CF community regarding approval and potential trials. Have you received any feedback?

We are in the process of determining path forward and if we do move forward that went by necessity involve another phase three study.

Thanks, and one more question on CF you previously mentioned that you will talk to the CF community regarding profitability and potential trials have you Andy.

And the feedback.

Dr. Barbara White: Yes, we've had some conversations, and we will engage in more. At this point, we're still a little bit early to think about that, but at the same time, I do want to point out that we failed to meet our primary endpoint, and usually, generally, that precludes that trial being used to support—it could support approval, but it precludes that trial being used as the basis for approval. Gotcha, and maybe just one last question. For DM, was the trial shortened based on competitors, or did you feel there was efficacy read through from CF or SSC that contributed to that shortened decision? I think it was more the former that we are, we've assessed, we continue to assess. [inaudible] And we think that, should Lin-Abison be effective, physicians would use that time point to judge efficacy in comparison to other compounds that may be available. It will be at an earlier time point, so we felt it was very reasonable to see what the Lin-Abison data looked like.

Yes, we've had some conversations and we will engage in more.

At this point, we're still a little bit early to think about that but at the same time I do want to point out that we failed to meet a primary endpoint and usually naturally that precludes that trial being used to support I guess, you could support approval, but it.

I put that trial being used as the basis for approval.

Got you and maybe just one last question for D. M was the trial shortened based on competitors or did you feel there was efficacy read through from CMS for us to see that contributed to that shortened decision.

I think it was more the formula that we are we've assessed we continue to assess.

The evolving status of trials and dramatic loss I think we've seen that they're all at least half the shortest ours is.

And we think that that's the time point that should well have some be affected that.

Positions would use to judge efficacy in comparison to other compounds that may be available, we'll be at an earlier time point.

So we felt it was very reasonable to see what's the one Alison data looked like that enables us to do that.

Dr. Barbara White: That enables us to do that. Gotcha, thanks. Once again, ladies and gentlemen, to ask a question, please press star 1 on your telephone keypad. Our next question comes from Leyling Rochelle on behalf of Oppenheimer. Good morning.

Got you thanks.

Once again, ladies and gentlemen to ask a question. Please press star one on your telephone keypad.

Our next question comes from leaving the show with Oppenheimer. Please proceed.

Good morning, Thanks for taking my questions first a question on the systemic sclerosis with the identification of the pulmonary function improvement.

Operator: Thanks for taking my questions. First, a question on systemic sclerosis. With the identification of the pulmonary function improvement potential that you've seen with linambucin from the RESOLVE data, it sounds like you're contemplating going forward potentially with a focus on that. Just wondering, Barbara or Yuval, when we might hear clarity on the decision process to move forward in SSC with a focus on FEC, and what further you may need to go into that consideration as you make that decision. I'll start and then pass it to you all.

Potential that you you've seen with wouldn't have to some from the result data.

It sounds like you're contemplating going forward potentially with a focus on not just wondering I'm Barbara or evil. If you can comment on.

When we might hear a clarity on the decision process to move forward.

That's the Si you know with a focus on on a PC.

And what what further you may need to go into that consideration as you make that decision then I've a follow up thanks.

So I'll start and then pass it to two you've all.

Dr. Barbara White: And thank you, Leland, again for your question and your interest. We will do some additional data analysis. As you can appreciate, these are post-hoc analyses, and post-hoc analyses are fraught with the problem that they are after-the-fact, although we did certainly call out the need to look at forced vital capacity ahead of time. That was one of our secondary endpoints. We just hadn't known the impact of background immunosuppressants ahead

And thank you Leland again for your question and your interest.

We will do some additional data analysis.

As you can.

Appreciate these are post talk analysis and post talk analysis are fraught with with that that they are after the fact, although we did certainly call up and he took a forced vital capacity ahead of time that was one of our secondary endpoints. We just hadn't I know the impact of background in suppressants ahead of time.

Dr. Barbara White: So we will continue to analyze the data to convince ourselves and experts that this improvement that we are seeing in FVC is indeed as robust as we think it is in these analyses to date. And when we have done that, and that shouldn't take too much longer, then the next step is to design an additional study and to gain agreement from regulatory authorities that such a phase 3 design would be appropriate to implement. Support Approval, We know that force vital capacity has already been used as a primary efficacy endpoint in a successful phase 3 study. OFEP has recently been approved for treatment of lung function and lung involvement in patients with systemic sclerosis.

So we will continue to analyze the data to convince ourselves and experts on that this improvement that we're seeing in FCC isn't Davis robust as we think it is.

Indeed analysis to date and when we've done that and that shouldn't take too much longer than our next step is to design, an additional study and to.

[noise] gain agreement from regulatory authorities that such a phase three design would be appropriate to.

She ports approval.

We know that forced vital capacity has already been used as a primary efficacy endpoint in a successful phase three study OFAF has been approved for treatment of.

Well im function Oh long involvement in patients with systemic sclerosis recently, she got regulatory path forward focusing on my assumption how to us seems pretty clear.

Dr. Barbara White: So the regulatory path forward focusing on lung function, to us, seems pretty clear. Okay, thank you. Yuval, do you have any additional comments? Not especially.

Dr. Yuval Cohen: It's intriguing. We want to make sure we have a full... Please see the complete disclaimer at https://sites.google.com or www.sites.google.com. A whole bunch of people out there in the scleroderma landscape see what they think if any one of them is wrong.

Okay. Thank you for you folks do you have any additional government.

Not especially you know, it's it's intriguing we want to make sure we have a full.

Handle on it.

I think looking at another thing that will be important Dave.

Really talk to.

A whole bunch of people out here in the scleroderma landscape.

See what they think if any one of them is.

Dr. Yuval Cohen: Again, their feedback, their interest, and then, obviously, in parallel, start a regulatory path. My guess is it's certainly... Next year's event, and we'll be busy working on it from now and into Q1. Okay, thanks. That's helpful. And then with regard to the 4001 program, I'm just curious if, you know, in the earlier stage compounds that look to be more attractive versus... (inaudible) Leland, thank you. That's an interesting plot. Right now, our plan would be to move the one that appears better forward into clinical development. Certainly, moving several would be an option, but to move one would probably be more conservative for our resources. And we would hope to have enough data, pre-clinical, to pick the best of what now look to be several promising compounds.

They get their feedback their interest.

And then obviously in parallel start a regulatory path My guess is it's certainly.

Nick your event.

And will be busy working on it.

From now and into Q1.

Okay. Thanks, that's helpful and then with regard to the or is your one.

Program I'm just curious if you know in the earlier stage compounds that look to be more more attractive versus.

Got one you know given given that that that finding wondering if you plan to announce multiple development and that could be evaluated in parallel.

In the clinic or it'll be they need so you'll you'll settle on one that you'll take forward based on the preclinical profile just in terms of hedging your bets and you know that that.

Okay.

Well listen thank you that's an interesting plot right now our plan would be to move I'm. The one that appears better.

Forward into clinical development certainly the other two move several would be an option, but to move one would probably be more conservative or resources and we would hope to have enough data preclinically to pick the best of what now looks to be several promising compounds.

Dr. Barbara White: All right, great. Okay, thanks very much for taking the question. Thank you. We have reached the end of our question and answer session. Ladies and gentlemen, that concludes today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation.

Alright, great. Okay. Thanks, very much for taking the question.

Thank you we have reached the end of my question answer session, Ladies and gentlemen that concludes today's teleconference and webcast. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation.