Q1 2024 Aclaris Therapeutics Inc Earnings Call

May 7, 2024

Operator: Good day, and thank you for standing by. Welcome to the Aclaris Therapeutics first quarter 2024 conference call. At this time, all participants are in a listen-only mode.

Good day and thank you for standing by welcome today of course Therapeutics first quarter 'twenty 'twenty four conference call.

At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session, and to ask a question during the session, you will need to press star one on your telephone, and 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, Kevin Balthaser. Please go ahead. Thank you. I am Kevin Balthaser, Chief Financial Officer of Aclaris.

After the speaker's presentation, there will be a question and answer session.

And to ask a question during the session you will need to press star one one on your telephone and you will then hear an automated message advising her hand this race.

To withdraw your question. Please press star one one again.

Please be advised that today's conference is being recorded.

Kevin Balthaser: Please note that earlier today, we issued a press release highlighting our first quarter 2024 financial results and other business matters. For those of you who have not yet seen it, you will find the release posted under the press releases page of the investor section of our website at www.aclaristx.com. In addition, we will be referring to a slide deck entitled ITK Portfolio, which can be found on the Investor Presentations page of the Investor section of our website and furnished as an exhibit to our Form 8K that we filed with the SEC earlier today.

I would now like to hand, the conference over to your speaker today, Kevin Bounces. There. Please go ahead.

Kevin Balthaser: Thank you.

Kevin Balthaser: I am Kevin Ball Theater, Chief Financial Officer for a claris. Please note that earlier today, we issued a press release, highlighting our first quarter 2024 financial results and other business matters for those of you who have not yet seen it you will find the release posted under the press releases page of the investors such.

Kevin Balthaser: <unk> of our website at Www Dot Claris, TX dot com.

Kevin Balthaser: In addition, we will be referring to a slide deck entitled ITK portfolio, which can be found on the investor presentations page of the investors section of our website and furnished as an exhibit to our form 8-K that we filed with the SEC earlier today.

Kevin Balthaser: Joining me today for the call are Neil Walker, our Interim Chief Executive Officer, and Joe Monahan, our Chief Scientific Officer. Wally Smith, our scientific and business development consultant, will also be available for the Q&A portion of the call. Before we begin our prepared remarks, I would like to remind you that various statements we make during this call about the company's future results of operations and financial position, business strategy, and plans and objectives for Aclaris' future operations are considered forward-looking statements within the meaning of the Federal Securities Act. Such forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions, and uncertainties that could cause actual results to differ materially from those reflected in

Kevin Balthaser: Joining me today for the call are Neil Walker, our interim Chief Executive Officer, and Joe Monahan, Our Chief Scientific Officer.

Kevin Balthaser: Wallace Smith, our scientific and business development consultant will also be available for the Q&A portion of the call.

Kevin Balthaser: These risks are described in the Risk Factors section of Aclaris' Form 10-K for the year ended December 31, 2023, and other filings Aclaris makes with the SEC from time to time. These documents are available on the SEC Filings page of the Investors section of our website at www.aclaristx.org.

Kevin Balthaser: Before we begin our prepared remarks, I would like to remind you that various statements. We make during this call about the company's future results of operations and financial position business strategy and plans and objectives for <unk> future operations are considered forward looking statements within the meaning of the federal secure.

Kevin Balthaser: These laws.

Kevin Balthaser: Our forward looking statements are based upon current expectations that involve risks changes in circumstances assumptions and uncertainties that could cause actual results to differ materially from those reflected in such statements.

Kevin Balthaser: These risks are described in the risk factors section of <unk> Form 10-K for the year ended December 31, 2023, and other filings of Claris makes with the SEC from time to time.

Kevin Balthaser: These documents are available under the SEC filings page of the investors section of our website at Www Dot Clarus, TX Dot com.

Operator: All the information we provide on this conference call is provided as of today, and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events, or others. Please be advised that today's call is being recorded and webcast. A link to the webcast can be accessed on the Events page of the Investors section of our website.

Kevin Balthaser: The information we provide on this conference call is provided as of today and we undertake no obligation to update any forward looking statements. We may make on this call on account of new information future events or otherwise.

Kevin Balthaser: Please be advised that today's call is being recorded and webcast link.

Kevin Balthaser: A link to the webcast can be accessed under the events page of the investors section of our website.

Kevin Balthaser: I'll now turn the call over to... Thank you, Kevin. Good afternoon, everyone.

Kevin Balthaser: I'll now turn the call over to Neil.

Neil Walker: Last quarter, we announced that, in addition to various cost-cutting measures and an overall review of our business strategy, we were also re-evaluating the indication selection for ATI 2138, which is our oral small molecule ITK JAK3 antigen. Today, I'm pleased to announce that we have decided to move ATI-2138 forward in a proof-of-concept study in moderate to severe atopic dermatitis. Atopic dermatitis is a Th2 cell-driven disease, and ITK inhibition blocks T-cell differentiation, activation, and production of IL-4 and IL-13.

Neil: Thank you Kevin good afternoon, everyone.

Neil: Last quarter, we announced that in addition to various cost cutting measures and then overall review of our business strategy. We are also reevaluating the indication selection for ATI 2138, which is our oral small molecule ITK JAK <unk> inhibitor today I am pleased to announce that we have decided to move hei 20, or 38, 4% and the proof.

Neil: A concept study in moderate to severe atopic dermatitis.

Neil: Dermatitis teach to sell driven disease, and ITK inhibition blocks T cell differentiation activation and production of IL four IL 13. In fact, there is an extensive literature on the role that ITK plays in regulating the signalling pathways that are central to the production of various cytokines.

Neil Walker: In fact, there is extensive literature on the role that ITK plays in regulating the signaling pathways that are central to the production of various cytokines by both Th2 cells and mast cells. Today, we will provide an overview of ATI-2138 and the data we have generated thus far. Joe?

Neil: By both th two cells in Marcellus.

Speaker Change: Today, we will provide an overview of ATI 2138, and the data we have generated thus far Joe.

Joseph Monahan: Thank you, Neil. ATI-2138 is a covalent inhibitor that targets the T-cell kinase ITK as well as JAK3. ITK is a kinase downstream of the T cell receptor and is important for the regulation of T cell function, while JAK3 is required for the signaling of cytokines that utilize the gamma common receptors such as IL-2, IL-4, and IL-15. ATI-2138, through effective targeting of these two critical T-cell and cytokine-associated pathways, has the potential to treat a broad set of autoimmune diseases.

Joseph Monahan: Thank you Neil.

Speaker Change: <unk> thousand 138 is a covalent inhibitor that targets T cell kinase ITK as well as Jack III.

Joseph Monahan: Teekay has a kinase downstream of the T cell receptor and is important for the regulation of T cell function well Jack <unk> required for the signaling of cytokines that utilized the gamma common receptors, such as IL, two IL four and IL 15.

Joseph Monahan: <unk> thousand 138 through effective targeting of these two critical T cell and cytokines associated pathways.

Joseph Monahan: <unk> has the potential to treat a broad set of autoimmune diseases.

Joseph Monahan: ATI-2138 was generated from a proprietary Connect drug discovery platform using structure-based drug design, focusing on molecules with high reversible affinity containing electrophiles that target the ATP site cysteine positioned similarly in ITK and JAK3. As shown in slide 5, covalency and engagement of CIS442 were demonstrated from the proprietary crystal structure of the ATI 2138 ITK complex.

Joseph Monahan: ATI 2138 was generated from our proprietary connect drug discovery platform using structure based drug design focusing on molecules with high reversible affinity containing electric <unk> the target the ATP side 15 positioned similarly, an ITK injector.

Kevin Balthaser: As shown on slide five covalent see an engagement a fifth cohort two was demonstrated from the proprietary crystal structure of the ATI 2138 ITK complex.

Joseph Monahan: ATI-2138 also binds to and engages CIS-909 in JAK3, the only JAK isoform with this residue in the ATP site. This cysteine in JAK3 has also been effectively targeted by the drug ritlicitinib, which is Pfizer's recently approved therapy for alopecia areata. ATI-2138 differentiates from both ritlicitinib and reversible JAK inhibitors, thereby demonstrating unique pharmacology and best-in-class potential. As shown on slide 6, ATI-2138 has similar high potency for inhibiting both ITK and JAK3 signaling in contrast to ritlicitinib, which is less potent on both pathways and demonstrates JAK3 biased pharmacology. ATI-2138 is selected for JAK3 with no meaningful crossover to other JAK isoforms.

Kevin Balthaser: 21, 38 also binds to and engages says 909 in Jack <unk>, the only JAK isoform with this residue in the ATP site.

Kevin Balthaser: This 15, Jack III has also been effectively targeted by the drug <unk>, which is pfizer's recently approved therapy for alopecia Areata.

Kevin Balthaser: ATI 21, 38 differentiate from both fitness and reversible JAK inhibitors, thereby demonstrating unique pharmacology and best in class potential.

Kevin Balthaser: Shown on slide six ATI 2138 has similar high potency for inhibiting both ITK inject three signaling in contrast to route with fitness, which is less potent on both pathways and demonstrates JAK three biased pharmacology.

Kevin Balthaser: ATI 2138 select selective JAK three with no meaningful crossover to other JAK isoforms, the restricted expression of JAK three to hematopoietic cells, coupled with the lack of crossover to other Jack's may result in an improved safety profile for ATI 2138 relative to grow it.

Joseph Monahan: The restricted expression of JAK3 to hematopoietic cells, coupled with the lack of crossover to other JAKs, may result in an improved safety profile for ATI-2138 relative to broad-spectrum reversible JAK infection. Clear differentiation from the covalent inhibitor ritlicitinib is demonstrated in human whole blood studies shown on slide 7. The panel on the left compares ATI-2138 and ritlicitinib in ITK-dependent anti-CD3-stimulated interferon gamma production, while the right-hand panel compares the two compounds in JAK3-dependent IL-2-stimulated interferon gamma release.

Kevin Balthaser: Spectrum reversible JAK inhibitors.

Kevin Balthaser: Clear differentiation from the covalent inhibitor.

Kevin Balthaser: As demonstrated in human whole blood studies shown on slide seven the panel on the left compares ATI 2138, and witless fitness and ITK dependent anti CD three stimulated interferon gamma production, while the right hand panel compares to two compounds and Jack III dependent Iot stimulated.

Kevin Balthaser: If youre on gamma release.

Joseph Monahan: ATI-2138 is 44.4 times more potent than ritlicitinib in blocking ITK-dependent cytokine production and 5.4-fold more potent in the JAK3-dependent readout. The comparable whole blood potencies of 2138 on ITK and JAK3 translated to similar impact on the respective PD readouts in the human SAD and MAD studies.

Kevin Balthaser: <unk> 21, 38 to 44, four times more potent than route with fitness and blocking ITK dependent cytokine production and five four fold more potent than the Jack III dependent readout.

Kevin Balthaser: The comparable whole blood potencies of $21 38 on ITK and Jack III translated to similar impact on the respective PD readouts in the human Sad and Mad studies.

Joseph Monahan: In contrast, at the FDA-recommended 50 milligram QG dose of ritlicidinib for alopecia areata, exposures would be expected to inhibit JAK3 but have little impact on the ITK pathway. Now, why is ITK an important target? Slide 8 demonstrates the current understanding of the role of ITK in T helper cell differentiation and activation. Of the TET kinases, ITK alone is required for the differentiation and activation of Th2 and Th17 cells.

Kevin Balthaser: In contrast at the FDA recommended 50 milligram QD dose of <unk> sitting in for alopecia Areata and <unk>.

Kevin Balthaser: <unk> would be expected to inhibit Jack III, but have little impact on the ITK pathway.

Kevin Balthaser: Now why is ITK and important target <unk>.

Kevin Balthaser: Slide eight demonstrates the current understanding of the role of ITK in T helper cell differentiation and activation of the Tech kinases ITK alone is required for the differentiation and activation of th two and th 17 cells and ITK knockdown of inhibition results in skewing of T helper cells.

Joseph Monahan: An ITK knockdown or inhibition results in the skewing of T helper cells from the Th2 Th17 phenotypes to the Th1 Treg phenotypes. ITK inhibitors have the potential as effective oral drugs to treat diseases driven by Th2 and or Th17 cells, such as atopic dermatitis. AQI 2138 has demonstrated activity in a number of preclinical immune-inflammatory disease models. Oral activity at various doses of ATI-2138 in adjuvant-induced arthritis is shown on slide nine. Evaluating ankle swelling on the left and histology on the right.

Kevin Balthaser: From the th two th 17 phenotypes to the th one T Reg Cana types.

Kevin Balthaser: <unk> inhibitors have the potential as effective oral drugs to treat diseases, driven by th two <unk> th 17 cells, such as atopic dermatitis.

Kevin Balthaser: ATI 2138 has demonstrated activity in a number of preclinical immune inflammatory disease models oral activity at various doses of ATI 2138, and rat adjuvant induced arthritis as shown on slide nine evaluating ankle swelling on the left and histology on the right similar strong <unk>.

Joseph Monahan: Similar strong activity was observed with doses of 5 and 15 milligrams per kilogram BID, as well as 30 milligrams per kilogram QD. Activity was also observed in the adoptive T-cell transfer model of colitis in the mouse, as shown on slide 10. ATI-2138 formulated in chow protected the proximal and distal colon, as well as the ileum, from inflammation to a greater extent than the anti-IL-12 P40 antibody. Preclinical studies supported the advancement of ATI-2138 into Phase I SAD and MAD clinical studies, as summarized on slide 11. The drug was generally well-tolerated, had favorable PK characteristics, and demonstrated dose-dependent modulation of ITK in JAK3 pharmacodynamic redox. Slide 12 shows the PK characteristics of ATI-2138 from the MAD Study.

Kevin Balthaser: Activity is observed with doses at five and 15 milligram per kilogram VIP as well as 30 milligram per kilogram Qt.

Kevin Balthaser: Activity was also observed in the adoptive T cell transfer model of colitis in the mouth as shown on slide 10.

Kevin Balthaser: ATI 2138, formulated and Chow protected optimal and distal colon as well as the Liam from inflammation to a greater extent than the anti IL <unk> antibody.

Kevin Balthaser: Preclinical studies supported the advancement of ATI 2138 into phase, one sad and Mad clinical studies as summarized on slide 11.

Kevin Balthaser: The drug was generally well tolerated at favorable PK characteristics and demonstrated dose dependent modulation of ITK and Jack III Pharmacodynamic Readouts.

Kevin Balthaser: Slide 12 shows the PK characteristics of ATI 2138 from the Mad study.

Joseph Monahan: Exposures following the final dose on day 15 of the MAD study are shown on the left, and dose proportionality is shown on the right. Linear PK is observed with ATI-2138 following two weeks of dosing, with steady-state dose proportionality observed for both CMAQ and AUC. Slide 13 shows the pharmacodynamic results across the two-week dosing period in the MAD study. The left panel measures the inhibition of ITK-dependent IL-2 mRNA following ex vivo stimulation in blood. The middle panel shows JAK3-dependent interferon gamma production, and the right panel shows interferon gamma production following dual stimulation of the TCR and JAK3 pathway.

Kevin Balthaser: Exposures following the final dose on day 15 of the Mezz 30 as shown on the left and dose proportionality as shown on the right.

Kevin Balthaser: PK as observed with ATI 2138, following two weeks of dosing with steady state dose proportionality observed for both <unk> and AUC.

Kevin Balthaser: Slide 13 shows the Pharmacodynamic results across the two week dosing period in the Mad study.

Kevin Balthaser: The left panel is measuring the inhibition of ITK dependent I O. Two mrna following ex vivo stimulation in blood the middle panel, Jack III dependent interferon gamma production and the right panel interferon gamma production following dual stimulation of the TCR injectors pathways.

Joseph Monahan: API 2138 demonstrated dose and time-dependent inhibition under all stimulation conditions. 50 to 90% inhibition of the PD readouts was observed with doses from 5 to 40 milligrams BIT. Slide 14 shows exposure response analysis from the three PD readouts and compares the translation from preclinical human whole blood analysis. These data demonstrate a strong concentration-dependent correspondence between EC50s from both the FAD and MAD clinical studies and in vitro human whole blood studies across the three stimuli.

Kevin Balthaser: 21, 38 demonstrated dose and time dependent inhibition under all stimulation conditions, 50% to 90% inhibition of the PD Readouts was observed with doses from five to 40 milligrams B I D.

Kevin Balthaser: Slide 14 shows exposure response analysis from the <unk> PD Readouts and compares the translation from preclinical human whole blood analysis.

Kevin Balthaser: These data demonstrated strong concentration dependent correspondence between EC <unk> from both the sad and Mad clinical studies and in vitro human whole blood studies across the three stimuli.

Joseph Monahan: As expected, similar potency is observed for the ITK pathway, JAK3, and dual-stimulation inhibition. Finally, exposures generated from the 5mg to 40mg BID dosing were sufficient to provide meaningful blockade of both pathways. The successful completion of the Phase 1 studies effectively positioned ATI-2138 to advance into Phase 2. The first indication for which ATI-2138 will be evaluated is atopic dermatitis. The rationale for this is shown on slide 15.

Kevin Balthaser: As expected similar potency as observed for the ITK pathway, Jack III and dual stimulation inhibition.

Kevin Balthaser: Finally exposures generated from the five milligrams to 40 milligrams PID dosing were sufficient to provide meaning blockade of both pathways.

Kevin Balthaser: Successful completion of the phase one studies effectively positioned ATI 2138 to advance into phase III.

Kevin Balthaser: The first indication in which ATI 2138 will be evaluated as atopic dermatitis, the rationale for which is shown on slide 15.

Neil Walker: The dual TCR JAK3 specificity of ATI2138 effectively positions it for treatment of atopic dermatitis. The important role of ITK and Th2 cell differentiation and activation, coupled with the efficacy observed with biologics targeting the Th2 cytokines IL-4 and IL-13, supports the potential for ATI-2138 as an oral alternative to these biologics. Additionally, inhibiting JAK3 should add complementary efficacy through blockade of IL-2 and IL-4 signaling, as evidenced by the efficacy of a number of JAK inhibitors in atopic dermatitis.

Kevin Balthaser: Dual TCR, Jack III specificity of ATI 2138, effectively positions it for treatment of atopic dermatitis.

Kevin Balthaser: <unk> role of ITK th, two cell differentiation and activation coupled with the efficacy observed with the biologics targeting the th two cytokines IL four and IL 13 supports the potential for ATI 2138, as an oral alternative to these biologics. Additionally.

Kevin Balthaser: Additionally, inhibiting Jack III should add complementary efficacy through blockade of IL, two and IL four signaling as evidenced by the efficacy of a number of JAK inhibitors in atopic dermatitis.

Neil Walker: The design of the atopic dermatitis study is summarized on slide 16. This study will be an open-label, 12-week, 15-patient study to examine the safety, PK, and early signs of efficacy of ATI-2138 in patients with moderate to severe atopic dermatitis. In addition to the clinical readouts, there will be a heavy emphasis on PD markers of pathways and disease in this study.

Kevin Balthaser: The design of the atopic dermatitis study is summarized on slide 16. This study will be an open label 12 week 15 patient study to examine the safety PK and early signs of efficacy of ATI 2138 in patients with moderate to severe atopic dermatitis and.

Kevin Balthaser: In addition to the clinical Readouts, there will be a heavy emphasis on PD markers of pathways and disease in this study.

Neil Walker: Moreover, we plan to demonstrate the importance of ITK inhibition as a differentiating feature of our model. In summary, as shown on slide 17, ATI-2138 is a potential best-in-class dual inhibitor of ITK and JAK3. Non-clinical potency, activity, ADME, and safety studies support moving the compound into clinical development. The positive data from the SAD and MADD Phase 1 studies provided clinical support to advance ATI-2138 into a proof-of-concept Phase 2 study in moderate to severe atopic dermatitis.

Kevin Balthaser: Moreover, we plan to demonstrate the importance of ITK inhibition as a differentiating feature of our molecule.

Kevin Balthaser: In summary, as shown on slide 17, ATI 2138, as a potential best in class dual inhibitor of ITK and Jack III.

Kevin Balthaser: Non clinical potency activity add me and safety studies supported moving the compound into clinical development.

Kevin Balthaser: Positive data from the sad and Mad Phase one studies, providing clinical support to advance ATI 20, 138 into a proof of concept phase II study in moderate to severe atopic dermatitis.

Neil Walker: Aclaris is expanding its efforts in the ITK pathway beyond API 2138 with discovery efforts focused on next-generation ITK inhibitors. While ITK has been of interest to pharmaceutical companies for over 20 years, it has proven to be a difficult-to-drug kinase, as evidenced by the efforts outlined on slide 19. The research described on this slide focused on ATP-competitive inhibitors, and due to their poor biochemical efficiency and pharmaceutical properties, they have not advanced in clinical development.

Kevin Balthaser: Claris is expanding our referenced in the ITK pathway beyond ATI 21, 38 with discovery efforts focused on next generation ITK inhibitors.

Kevin Balthaser: <unk> has been of interest of pharmaceutical companies for over 20 years has proven to be a difficult to drug kinase as evidenced by the efforts outlined on slide 19.

Kevin Balthaser: The research described on this slide have focused on ATP competitive inhibitors, and due to poor biochemical efficiency and pharmaceutical properties. They are not as advanced in clinical development.

Kevin Balthaser: More recently, covalent inhibitors of IPK have been described with the Corvus CPI-818 in early clinical development. Our next generation efforts are focusing on selective inhibition of ITK and eliminating crossover on JAK kinases, as shown on slide 20. Selective targeting of ITK should provide effective modulation of both Th2 and Th17 cell functions with the potential to treat atopic and Th17-driven diseases, as summarized on slide 21. Human and mouse genetic data, as well as pharmacological inhibition, strongly support a role for ITK in T cell biology and pathophysiology.

Kevin Balthaser: More recently covalent inhibitors of ITK has been described with Corvus CPI <unk> hundred eight in early clinical development on.

Kevin Balthaser: On next generation efforts are focusing on selective inhibition of ITK and eliminating crossover on JAK kinases as shown on slide 20.

Kevin Balthaser: Selective targeting of ITK should provide effective modulation of both th two and th 17 cell functions with the potential of treating atopic in th 17, driven diseases as summarized on slide 21.

Kevin Balthaser: In mouse genetic data well as pharmacological inhibition strongly supports a role for ITK in T cell biology and pathophysiology.

Kevin Balthaser: This, coupled with the fact that dysregulated T cells are involved in a number of immune inflammatory diseases, validates selective inhibitors of ITK as an approach to treat a broad range of indications. Thank you, Joe. I'll now turn it over to Kevin to discuss our financial highlights for the year. Thank you, Neil. We continue to maintain a strong balance sheet with a robust cash balance and zero outstanding debt. We ended the first quarter with cash, cash equivalents, and marketable securities of $161 million, which was compared to $182 million at year end.

Kevin Balthaser: This coupled with the fact that this regulated T cells are involved in a number of immune inflammatory diseases validate selective inhibitors of ITK as an approach to treat a broad range of indications.

Kevin Balthaser: Thank you Joe I will now turn it over to Kevin to discuss our financial highlights for the quarter.

Kevin: Thank you Neil.

Kevin: We continue to maintain a strong balance sheet with a robust cash balance and zero outstanding debt.

Kevin: We ended the first quarter with cash cash equivalents and marketable securities of $161 million, which was compared to $182 million at year end.

Neil Walker: Our cost containment initiatives are on track and progressing nicely. Of our total cash expenditures in the first quarter, approximately $14 million was related to non-recurring payments, including discontinued research and development programs, severance benefits for individuals impacted by the reduction in force announced in December, and payments owed to third parties related to the upfront amount received under the Sun Licensing Agreement. Activities associated with discontinued programs and the reduction in force are expected to be substantially completed by the second quarter of 2024.

Kevin: Our cost containment initiatives are on track and progressing nicely.

Kevin: Of our total cash expenditures in the first quarter approximately $14 million was related to nonrecurring payments, including discontinued research and development programs.

Kevin: Severance benefits for individuals impacted by the reduction in force announced in December.

Kevin Balthaser: And payments to third parties related to the upfront amount received under the <unk> licensing agreement.

Kevin Balthaser: Activities associated with discontinued programs and the reduction in force are expected to be substantially completed by the second quarter of 2024.

Neil Walker: As a result, we expect our cash expenditures on a quarterly basis for the remainder of the year to be significantly reduced when compared with the first quarter without giving effect to any potential business development transactions. We continue to evaluate business development opportunities across our portfolio of assets to be a source of non-dilutive capital. With that, I will now turn the call back over to Neil for his closing remarks. Thank you, Kevin. We are pleased to provide you with a portfolio update on our decision to shift to atopic dermatitis as the first proof-of-concept indication for HAI 2138.

Kevin Balthaser: We continue to evaluate business development opportunities across our portfolio of assets can be a source of non dilutive capital in the near term.

Kevin Balthaser: With that I will now turn the call back over to Neil for closing remarks.

Neil Walker: Thank you Kevin we are pleased to provide you with the pro forma portfolio update on our decision to shift to atopic dermatitis is the first proof of concept indications for ATI 2138.

Neil Walker: As a reminder, we are still in the process of reviewing various strategic options moving forward and look forward to providing additional updates in the near future. Kyle, we would now like to poll for questions. Thank you, and as a reminder, to ask a question, please press star one one on your telephone and wait for a name to be announced. Once again, please press star 1 1 on your telephone keypad.

Neil Walker: As a reminder, we are still in the process of reviewing various strategic options moving forward and look forward to providing additional updates in the near term.

Speaker Change: We would now like to poll for questions.

Operator: And to withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. And for our first question, it comes from the line of Roger Song from Jeff.

Speaker Change: Thank you and as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced once again. Please press star one on your telephone keypad and so rich a question. Please press star one again.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: And for our first question comes from the line of projects Thong from Jeff.

Roger Song: Great. Thanks for the update and taking our questions. Maybe start with the biology question.

Speaker Change: Great.

Projects Thong: Thanks for the update and taking our questions maybe.

Projects Thong: Starting with the biology question, so for <unk> III and the spending.

Neil Walker: So, for the ITK and the JAK3, understanding you're compared to the PEN-JAK inhibitor has a lot of advantages. Just curious, how do you think about the ITK and JAK3 in terms of their having synergistic or additive effects when you inhibit both in those preclinical models? Just curious if you see any, you know, have you compared just JAK3 or ITK alone kind of in the preclinical model? And then I have a follow-up for the clinical question. Thank you. Yeah, thank you, Roger. I'll start with Joe and or Wally.

Projects Thong: Yes.

Projects Thong: <unk> Pan JAK inhibitor has been a lot of the advantages just curious how do you think about those I can Jack soon in terms of that having synergistic or additive.

Projects Thong: And when you submit both for those preclinical models.

Projects Thong: Just curious what you're seeing.

Projects Thong: Have you compare just that Jack <unk>.

Projects Thong: ITK along kind of in the preclinical model.

Speaker Change: The format for their clinical question. Thank you.

Neil Walker: But yeah, that's one of the attractive things about the molecule and was one of our original hypotheses about it that if we could, you know, inhibit JAK3 and then layer on maybe the hyperboost with ITK, particularly in an indication like atopic where ITK really targets the Th2 effect, we ought to see a more robust effect there. And so we certainly tested that hypothesis out in preclinical models. And actually, I know you didn't ask this, but going forward, in this initial proof of concept study, we'll endeavor to tease out that differential effect through looking at various pharmacodynamic markers to definitively prove out the ITK contribution from that molecule. And maybe Joe, if you want to add anything there.

Speaker Change: Yes, Thank you Roger I'll start.

Speaker Change: Joe or Wally.

Speaker Change: But yes, that's one of the attractive things about the molecule was one of our original hypotheses about it that if we could inhibit Jack III and then layer on maybe the hyper boost with ITK, particularly in an indication like a topic, where ITK really targets the th two.

Speaker Change: We ought to see a more robust effect there and so we certainly tested that hypothesis out in preclinical models and actually I know you didn't ask this but going forward.

Speaker Change: And this initial proof of concept study.

Speaker Change: Ill endeavor to tease out that differential effect through looking at various pharmacodynamic markers to just definitively prove out the ITK contribution from that molecule.

Speaker Change: And maybe Joe if you want to add anything there.

Joseph Monahan: The only thing I would add is that we have profiled a JAK3, more selective inhibitor, ritlicitinib versus ATI-2138 in the adoptive T-cell transfer model of colitis, and at equivalent doses and exposures, we did see a boost in anti-inflammatory activity with 2138 compared to ritlicitinib. That, yeah, that makes sense.

Joseph Monahan: Yes, the only thing I would add is that we have profiled.

Joseph Monahan: Jack III.

Joseph Monahan: More selective inhibitor <unk> versus ATI 21, 38 in the.

Joseph Monahan: Adoptive T cell transfer model of colitis and debt.

Joseph Monahan: Equivalent doses and exposures, we did see a boost in anti inflammatory activity with 21 38 compared to <unk>.

Roger Song: And compared to GX3, a more selective compound, maybe that's the ITK component, but you're curious to see the PD marker in phase two, for sure. And then, in terms of phase 2a, the plan phase 2a, you're selecting the 10 meg CID as the dose, understanding you want to be more capital efficient to test the one dose. Just curious, you know; do you think that dose is the best dose you can tell from the preclinical studies?

Speaker Change: Got it yeah that makes sense, then compared to <unk>.

Joseph Monahan: <unk> more selective compounds may be that that's ITK component, but yet correct.

Joseph Monahan: The PD marker in the phase II for sure and then in terms of the.

Joseph Monahan: Phase Iia the plan the phase Iia.

Joseph Monahan: <unk>.

Joseph Monahan: No 10 Meg.

Joseph Monahan: At the dose and the thing you wanted to be more capital efficient to test the windows just curious.

Roger Song: And also, what the other potential dose, if that dose sees some signal, but, you know, what the other potential dose that you will test in the future clinical trial? And then also for phase 2a, any powering for efficacy, what is the ultimate kind of efficacy goal for phase 2a in order to move forward? Thank you. Yeah, so it is open label.

Joseph Monahan: Do you think that that dose is the best dose you can tell us on the preclinical.

Speaker Change: Also what the other potential dose.

Speaker Change: Does some signal.

Speaker Change: What the how that those potential that youre well test in the future.

Speaker Change: Sure.

Speaker Change: Clinical trial, and then also for the Phase Iia and.

Speaker Change: And empowering for dose efficacy.

Speaker Change: It is.

Speaker Change: The ultimate kind of efficacy for the phase two in order to move forward. Thank you.

Speaker Change: Yes.

Neil Walker: So, you know, our main objective is to show the absolute treatment effect. And I think, you know, to be fair in this indication, we want to see something north of some of the standard, you know, in the market JAK inhibitors. I mean, from my perspective, they've set the bar in AD, you know, from an efficacy perspective. And historically, we kind of understand the placebo rate. And then the second or the first question: Joe, do you want to tackle that one?

Speaker Change: Yes, so for.

Speaker Change: So it is it is open label.

Speaker Change: So our main objective is to show the absolute treatment effect and I think it would be fair in this indication we want to see something north of some of the standard.

Speaker Change: In market JAK inhibitors, I mean from my perspective, they've set the bar.

Speaker Change: From an efficacy perspective, historically, we kind of understand the.

Speaker Change: The placebo rate.

Speaker Change: And then the second for the first question, Joe do you want to tackle that one.

Joseph Monahan: Yeah. So, with regard to the dosing, first of all, we do have the ability to go higher than 10 milligrams BID if we choose to. We identified 10 milligrams BID as our dose in this study based on exposures in the various preclinical disease models that we looked at, coupled with the data with ritlicitinib in the clinical exposure that they had. I think with this mechanism, it doesn't seem to be driven by C-max. It doesn't seem to be driven by C-trough.

Joseph Monahan: Yes, so with regard to the dosing first of all we do have the ability to go higher than 10 milligrams PID. If we choose to we identified 10 milligrams PID is our dose in this study based on exposures in the various preclinical disease models that we looked at coupled with.

Speaker Change: The data in with Rick with fitness in the clinical exposure that they had.

Speaker Change: I think with this mechanism.

Speaker Change: It doesn't seem to be driven by C. Max that doesn't seem to be driven by C. Trough. It more likely is driven by a C average and at the 10 milligrams PID we have equivalent.

Joseph Monahan: It more likely is driven by a C-average. And at 10 milligrams BID, we have equivalent potency at CMAX as Ritla Cytnyb does against JAK3, significantly more exposure and potency at against ITK as we described. And at C average, we have higher levels of inhibition of both ITK and JAK3 at this 10 milligram BID dose. So based on the preclinical model and based on comparison to ritlicidinib, that's how we chose the dose. Excellent. Yeah, that answers all the questions I have now.

Speaker Change: Potency at C. Max as really sit and it does against Jack <unk>.

Speaker Change: Significantly more.

Speaker Change: Exposure in potency against ITK as we described.

Speaker Change: And at Sea average, we have higher level of inhibition of both.

Speaker Change: K and Jack tree at this 10 milligram dose so based on the preclinical models and based on a comparison to really sit in it that's how we chose the dose.

Speaker Change: Excellent yeah that answer other questions that have now thank you.

Roger Song: Thank you. Thank you, Roger. Thank you, and once again, if you'd like to ask a question, please press star 11 on your telephone keypad. And for your next question, it comes from the line of Thomas Smith from Learing Partners. Please go ahead. Hey, guys. Good afternoon.

Speaker Change: Thank you Rob.

Thomas Jonathan Smith: Thank you and once again, if you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: And sorry next question. It comes from the line of Thomas Smith from Leerink Partners. Please go ahead.

Speaker Change: Yes.

Thomas Jonathan Smith: Hey, guys. Good afternoon, thanks for the updates and thanks for taking our questions just on the preclinical data.

Thomas Jonathan Smith: Thanks for the updates, and thanks for taking our questions. Just on the preclinical data, I appreciate all the models and comparisons to real sitinib. I'm just curious if you generated any data comparing 2138 versus upatacitinib and selected JAK1 inhibition preclinically and any thoughts on how 2138 is likely to stack up in an indication like atopic dermatitis versus upatacitinib. Yeah, thanks for that question.

Thomas Jonathan Smith: I appreciate all the models and comparisons to real sitting there, but I'm just curious if you've generated any data.

Thomas Jonathan Smith: <unk> 2138 versus <unk> and selective JAK, one inhibition pre clinically and any thoughts on how 'twenty 138.

Thomas Jonathan Smith: The stack up in an indication like atopic dermatitis versus <unk>.

Neil Walker: You know, I think the X factor here is ITK inhibition. And when you look at the literature on ITK inhibition in general, it really skews to inhibiting the Th2 cytokine, so it directly acts on IL-4, IL-5, etc. And so, you know, we really think that that is going to give the JAK3 side a boost. Joe, Wally, I'm not aware of direct comparisons between a pure covalent JAK3 versus JAK1, specifically in AD.

Speaker Change: Yes. Thanks for that question I think it's.

Speaker Change: I think the X factor here is the ITK inhibition.

Speaker Change: When you look at the literature.

Neil Walker: On ITK inhibition in general it really skews to inhibiting the th two cytokines so directly acts on IL four IL five et cetera.

Neil Walker: So we really think that that is going to give Jack III side a boost.

Speaker Change: Joe I'm not aware of direct comparisons between.

Neil Walker: Pure covalent Gen three versus JAK, one specifically in E D.

Neil Walker: But I think, you know, our hypothesis is when you have a dual mechanism that, you know, and we've demonstrated synergy, you know, we ought to have an additive effect. So that would be the goal, to outperform.

Speaker Change: I think.

Neil Walker: Our hypothesis when you have a dual mechanism that.

Speaker Change: And we've demonstrated synergy.

Neil Walker: We ought to have an additive effect.

Speaker Change: That would be the goal is to outperform.

Sure.

Speaker Change: You visit.

Speaker Change: Understood that's helpful and just.

Thomas Jonathan Smith: On the Phase 2a trial design, can you talk about the rationale a little bit, I guess specifically the choice of an open-label design versus maybe a slightly larger placebo-controlled design? It sounds like you have some interesting biomarkers identified that you'd like to take a look at here in terms of signal finding. But I'm just curious in terms of maybe definitively teasing out the clinical signal here, and the choice of the open-label trial design.

Speaker Change: On the Phase Iia trial design can.

Thomas Jonathan Smith: Can you talk about the rationale a little bit I guess, specifically the choice of an open label design versus maybe a slightly larger placebo controlled design. It sounds like you are.

Thomas Jonathan Smith: You have some interest in biomarkers identified that that you'd like to take a look at here in terms of signal finding but I'm just curious in terms of.

Thomas Jonathan Smith: Maybe more definitively teasing out the clinical signal here the source of the open label trial design.

Thomas Jonathan Smith: Well, I think, you know, it's a couple of things. One is that, these days, in a relatively competitive environment, it's a lot easier to enroll studies that have just an active arm. And, you know, when we're looking for signal finding, I think our goal is speed. And, you know, this study was a very cost-efficient way to get a lot of answers.

Speaker Change: Well I think.

Thomas Jonathan Smith: It's a couple of things one is that.

Thomas Jonathan Smith: It's a lot easier these days in a relatively competitive environment to enroll studies.

Speaker Change: Hubs, just an active arm.

Thomas Jonathan Smith: Yes.

Thomas Jonathan Smith: When we're looking for a signal finding I think are our goal is speed in this study was.

Neil Walker: And I think we know what these molecules and different kinds of surrogates can do. Like, if we just compare ritlicitinib, bupacitinib, all these other drug categories, I think we have a good understanding of what the absolute responder rate needs to be across these measures. And so, I think that was the balance here, you know, trying to get data as quickly as we can.

Speaker Change: Very cost efficient way to get a lot of answers and I think we know what the.

Neil Walker: What these molecules in different kind of surrogates can do like if we just compare.

Neil Walker: <unk> all these other.

Drug categories, I think we don't have a good understanding of what the absolute responder rate needs to be across these measures and so I think that was the balance here trying to get data as quickly as we can.

Neil Walker: If it works out the way, we hope and expect.

Neil Walker: And, you know, if it works out the way we hope and expect, you know, we would certainly be interested in progressing in a little bit larger AD study. But also, importantly, looking at some of the indications that ritlicitinib has already started to break ground on, you know, looking at vitiligo, looking at alopecia areata. So, I think there are a couple of different ways to go post this initial AD study. But I think, you know, just to go back to the original premise of your question, I don't think that we lose too much in not having a placebo group. We enhance the enrollment cadence; we get data quicker, which I think is important for us given where we're at. Yeah, that makes sense. And just, um..., along those lines.

Neil Walker: We would certainly be interested in progressing.

Neil Walker: Lee.

Neil Walker: Little bit larger study, but also importantly, looking at some of the indications.

Neil Walker: <unk> has already started to blaze the ground on.

Neil Walker: Looking at <unk> looking at <unk>.

Neil Walker: So I think Theres a couple of a couple of different.

Neil Walker: Ways to go post this initial <unk> study, but I think just to go back to the original premise of your question I think I don't think that we lose too much and not having a placebo group, we enhance the enrollment cadence when we get data quicker with which I think is important for us given where we're at at the moment.

Speaker Change: Got it that makes sense and just.

Speaker Change: Along those lines Neil with respect to study start like I understand where.

Thomas Jonathan Smith: Neil, with respect to Study Start, I understand we're putting together the protocol, and the operational preparations are underway. Do you have an early sense of when we might be able to expect some top-line data from Phase IIa? I don't think we're giving guidance just yet, Tom, but it's going to be, you know, it's definitely going to be within a year of this call. Right.

Thomas Jonathan Smith: Putting together the protocol and the operational preparations are underway.

Thomas Jonathan Smith: Do you have an early I guess early sense of when we might be able to expect some top line data from the phase III.

Neil Walker: So it's, I'll give you that as a back end marker. But, you know, we'll give more color on that once we get the first patient. Got it. Makes sense.

Thomas Jonathan Smith: I think we're giving guidance just yet Tom, but it's going to be.

Neil Walker: It's definitely going to be within a year of this call right. So it's I'll.

Neil Walker: Ill give you that.

Neil Walker: As her back end marker.

Neil Walker: But we will give more color on that once we get the first patient in.

Thomas Jonathan Smith: All right, guys. Thanks for taking the question. Thank you. And for your next question, it comes from the line of Corinne Johnson from Goldman Sachs. Please go ahead. Good evening. This is Omari on behalf of Corinne.

Speaker Change: Got it makes sense alright, guys. Thanks for taking the questions.

Omari: Thank you Andrew next question. It comes from the line of current Johnson from Goldman Sachs. Please go ahead.

Corinne Jenkins: So we had a couple of questions. One is, are you funded to complete the proof of concept study? And then two, on strategy, where do you see a met need in a topic?

Omari: Good evening. This is omar on for Kirk. So I had a couple of questions. One is are you funded to complete the proof of concept study and then to our strategy, where do you see the unmet need in atopic dermatitis.

Neil Walker: We're certainly funded to complete the study. This is an exceedingly cost-efficient study, which was kind of by design, and so we're trying to generate data very quickly. This is in contrast to what we had originally proposed at the tail end of last year, which was a study in California, which was a lot more expensive and would take a lot more time. So, you know, we have a robust balance sheet, and as Kevin alluded to in his comments, that balance sheet's not going to change too appreciably through the end of the year. And so we feel very comfortable with a very small amount of burn while we continue to review various strategic options. Sorry, what was the second question?

Omari: We're certainly funded to complete the study this is exceedingly cost efficient study, which was kind of by design.

Neil Walker: And so we're trying to generate data very quickly. This is in contrast to what we had originally proposed at the tail end of last year.

Neil Walker: Which was.

Neil Walker: Study in UC, which was a lot more expensive going to take a lot more time so.

Neil Walker: We have a robust balance sheet and as Kevin alluded to in his comments.

Neil Walker: The balance sheet is not going to change to appreciably.

Neil Walker: Through the end of the year.

Neil Walker: And so we feel very comfortable to very small amount of burn.

Neil Walker: We continue to review various strategic.

Speaker Change: Options and what.

Speaker Change: Sorry, what was the first and the second question.

Neil Walker: Yeah, where do you see the unmet need in atopic dermatitis? Yeah, we're at the front end of the atopic market. You know, this is where psoriasis was years ago.

Neil Walker: Yes, where did you see unmet need in atopic dermatitis, so kind of whatever strategy.

Neil Walker: Yes.

Neil Walker: The front end of the atopic market. This.

Neil Walker: Is worse rise. This was years ago, we certainly I don't think anybody could claim that we've maxed out efficacy in this space, obviously diplomat is wildly successful drugs.

Neil Walker: You know, we certainly, I don't think anybody could claim that we've maxed out efficacy in this space. Obviously, Dupilumab is a wildly successful drug, you know, but in 60% of the patients, we aren't even getting clear or nearly clear by week 16. And then 50% of those patients get a suboptimal response. So, that's on the biological side. On the JAK inhibitor side, you know, we have much better efficacy, but there's still a lot of headroom in this space.

Neil Walker: 60% of the patients we aren't even getting clearer near clear by week 16, and then 50% of those patients.

Neil Walker: Get a sub optimal response, so and that's on the biologic side on the JAK inhibitor side.

Neil Walker: We have much better efficacy, but theres still a lot of headroom in the space and what we're trying to do here is tease out the ITK effect. We really think this is a strong mechanistic approach to this category.

Neil Walker: And what we're trying to do here is tease out the ITK effect. We really think this is a strong mechanistic approach to this category. And, you know, the competitive landscape in AD is, as you can see by clintrout.gov, still in its infancy.

Neil Walker: Sure.

Neil Walker: The competitive landscape.

Neil Walker: It's continuing to evolve. A lot of people are starting to look at that space because they're, you know, we aren't where we are with psoriasis where we're talking about POSI 100s. Thanks, Chris.

Neil Walker: As you can see by Clint trials Dot Gov is still in its infancy, it's continuing to evolve a lot of people are starting to look at that space because they're.

Neil Walker: We arent where were at with psoriasis, where we're talking about policy one hundreds.

Chris: Thanks for answering our questions.

Neil Walker: Yeah.

Neil Walker: Okay.

Neil Walker: Kyle, are there any other questions in the queue? Our next question or comment comes from the line of Julian Harrison from Big TIG. Your line is, Hi, thank you for taking my question and for hosting this call. I got on a few minutes late, so apologies if this has already been covered, but I'm wondering if you can remind us of the scope of your IP portfolio related to the use of JAK inhibitors for alopecia and how we should be thinking about that opportunity going forward. Thanks, Julian.

Speaker Change: Is there any other questions in the queue.

Neil Walker: Yeah.

Julian Reed Harrison: Our next question or comment comes from the line.

Neil Walker: Julian Harrison from <unk> Your line is open.

Neil Walker: Hi, Thank you for taking my question for hosting this call I got on a few minutes late so apologies. If this has already been covered but I'm wondering if you could remind us of the scope of your IP portfolio related to the use of JAK inhibitors for alopecia and how we should be thinking about that opportunity going forward.

Julian Reed Harrison: So, yeah, we had a long time ago back in 2015, 2016 or so executed a transaction with Columbia securing the rights to the method of use IP around utilizing various JAK inhibitors for the treatment of alopecia areata and actually various other types of alopecia. And thus far, to date, we have announced two royalty deals. One is with Lily for the use of baricitinib for alopecia areata, and the other is with Sun Pharma, who acquired CONCERT, which had a deuterated ruxolinib, and that was also executed late last year. And so, those are the two current molecules that we have granted access to utilizing our IP. So we think it's we think it's a very valuable estate.

Julian Reed Harrison: Sure. Thanks, Julien so yes.

Julian Reed Harrison: Yes, we had.

Julian Reed Harrison: Long time ago back in 2015, 2016, or so executed transaction with Columbia, securing the rights to the method of use IP around utilizing various JAK inhibitors for the treatment of alopecia areata and actually various other types of alopecia.

Julian Reed Harrison: So thus far to date, we've announced two royalty deals one is with.

Julian Reed Harrison: Lilly for the use of bear sitting up for LP Sherry order and the other is with some.

Julian Reed Harrison: Pharma, who had acquired concert.

Julian Reed Harrison: Which had a due to rated <unk> nib.

Julian Reed Harrison: And that.

Julian Reed Harrison: <unk> also executed late last year.

Julian Reed Harrison: So those are the two current.

Julian Reed Harrison: The molecules that we have granted access to utilizing our IP.

Julian Reed Harrison: So we think it's we think it's a very valuable as state.

Neil Walker: Clearly, we've done two deals, and, you know, we'll constantly be looking at ways to, you know, enhance the value of that portfolio. Thank you. Thank you. Our next question or comment comes from the line of Alex Thompson from.

Julian Reed Harrison: Clearly we've done two deals in.

Neil Walker: We will constantly be looking at ways to.

Neil Walker: And enhance the value of that portfolio.

Alexander Thompson: Thank you.

Alexander Thompson: Thank you our next question or comment comes from the line of Alex Thomson from.

Alexander Thompson: Mr. Thompson, your line is now open. For Alex, I guess you could just talk a little bit more about how this drug differs from the Pfizer compound and then, you know, is there any case for differentiation on the black box warning? Do you guys still expect a black box warning? Sure. Thanks, Alex. I mean, until you get through an actual NDA approval process and have those conversations, and whenever you're tickling a jack at this stage, you always have to think about going and think that you'll have a black box.

Alexander Thompson: Stifel. Mr. Thompson Your line is now open.

Alexander Thompson: For Alex I guess, if you could just talk a little bit more about how this drug differs from the Pfizer compound.

Alexander Thompson: And then is there any case for differentiation on the Black box warning do you guys still expect a black box warning.

Speaker Change: Sure. Thanks, Alex.

Alexander Thompson: I think until you get through a natural NDA approval process and have those dialogues.

Alexander Thompson: Whenever we're tickling the earth.

Alexander Thompson: Jack at this stage or is that they are thinking about so in thinking that you'll have a black box, but I do think a lot of the black box warnings. If you look at all of the.

Neil Walker: But I do think a lot of the black box warnings, if you look at all of the different jack inhibitors out there, they're all slightly different. You know, RINVOX is different than TOCA, CITNEV, et cetera. So I think data will drive some of that.

Neil Walker: The Brooklyn, JAK inhibitors out there.

Neil Walker: Definitely when boats is different than tofacitinib et cetera. So.

Joseph Monahan: And maybe, Joe, you can handle the question about, you know, what are the different key differentiating features between our drug and CITNEV? Yeah, I mean, they're both covalent inhibitors that target a similar cysteine residue, and they both are potent inhibitors of ZAK3. The key differentiation, the way we see it, is that Ritinib has, while it does hit tenases, is significantly more potent on JAK3 than any other company, including ITK. And in contrast, ATI-2138, depending on which readout you use, has a very similar potency to CAG-3-ITK.

Neil Walker: Data will drive somewhere else.

Joseph Monahan: And maybe Joe you can handle the question about what are the different key differentiating features between our drug and workforce.

Joseph Monahan: Okay.

Joseph Monahan: Yes.

Joseph Monahan: They're both within.

Joseph Monahan: Both inhibitors that target a similar cysteine residue and they both are potent inhibitors of <unk>.

Joe: The key differentiation.

Joseph Monahan: When we see it.

Joseph Monahan: Sure.

Joseph Monahan: Fitness has while it does take time.

Joseph Monahan: <unk> significantly more potent on Jack free than any.

Speaker Change: Excluding ITK.

Joseph Monahan: And in contrast, ATI 138, depending on which <unk> is very similar potency.

Joseph Monahan: Teekay.

Joseph Monahan: And at the clinical exposures and doses that we plan to use and have used, and what Ritla-Fitnit is showing, I think it's pretty clear that we'll have exposures that significantly block IPK and JAK3 criminally, whereas ritlicitinib is more of a JAK3-biased drug with little impact on IPK at the clinical dose and exposure. Got it, thank you.

Joseph Monahan: And it's a critical exposures in doses that we plan to use it.

Joseph Monahan: And what would fit in that this year I think it's pretty clear that we will.

Joseph Monahan: We'll have exposures that criminals lead block ICP and Jack significantly, whereas Rick was fitness is more of a JAK three biased drug with little impact on Teekay clinical dose and exposure.

Joseph Monahan: Yes.

Joseph Monahan: Got it thank you.

Joseph Monahan: Yeah.

Alexander Thompson: Thank you and one moment for your next question. And for our next question, it comes from the line of Gavin Clark Gartner from Evercore ISI. Please go ahead.

Speaker Change: Thank you and one moment for your next question.

Alexander Thompson: Okay.

Speaker Change: And for our next question comes from the line of Kevin Clark Gardner from Evercore ISI. Please go ahead.

Gavin Clark Gartner: Hey, thanks for taking the question. Apart from the black box side of things, I'm just wondering how providers will view the safety profile relative to the other JAK1s. And specifically, I'm wondering if there are any learnings from the alopecia or even rheumatoid arthritis space that may give some early hints into how they may view this.

Speaker Change: Hey, Thanks for taking the question.

Gavin Clark Gartner: Apart from the Black box side of things I'm, just wondering how you believe that providers will view the safety profile relative to the other JAK, one and specifically I'm wondering if there are any learnings from the alopecia or even rheumatoid arthritis space that may give some early hence to how they may view. This thanks.

Neil Walker: Thanks. Yeah, thanks, Gavin. It's a good question because, you know, I think on the face. You look at it and say, well, it's a black box.

Gavin Clark Gartner: Yes.

Speaker Change: Thanks, Kevin It's a good question because.

Speaker Change: On the face you look at it and say well, it's a black box and then.

Neil Walker: And then, I mean, having practiced, you know, oftentimes, it's more of a chore for the physician to explain the laundry list of things that could happen. However, I would say that in talking to various colleagues over the last couple of years, I really don't think, and this is reflected in their sales, I really don't think it's been that big of a hindrance once you explain the issues. And at the end of the day, patients want their disease to be better. And, you know, we know that there really hasn't been much of a tail off at all.

Neil Walker: I can tell you having practice oftentimes.

Neil Walker: It's more of a chore for the physician to explain the laundry list of things that could happen.

Neil Walker: However, I would say that in talking to various colleagues over the last couple of years.

Neil Walker: Really don't think and I think that is reflected in their sales.

Neil Walker: I really don't think its been that big of a hindrance. Once you explained the issues and at the end of the day patients want.

Neil Walker: Their disease to be better and we know that there really hasnt been much tail off at all in fact.

Neil Walker: In fact, you know, baricitinib has been growing in alopecia areata. You know, you've seen nice growth with RINVO and atopic dermatitis. And, you know, there's a reason it provides an order of magnitude benefit over biologics, for sure. So I think, at the end of the day, when patients want relief, and they know they're going to get it very quickly, rather than perhaps waiting 16 weeks for a biologic to kind of take, you know, get to full effect. You know, that's important. Got it.

Neil Walker: <unk> been growing in alopecia areata.

Neil Walker: No.

Neil Walker: You've seen nice growth with <unk> with <unk>.

Neil Walker: The topic dermatitis.

Neil Walker: There is a reason.

Neil Walker: <unk> order of magnitude benefit over over biologics for sure. So I think at the end of the day when patients won't release and they know they're going to get it very quickly rather than perhaps waiting 16 weeks for a biologic to kind of take.

Neil Walker: Get to Max effect.

Neil Walker: That's important.

Speaker Change: Got it thanks Neel.

Neil Walker: Okay.

Operator: Thanks, Neil. I'm showing no further questions at this time. I would now like to turn the conference back to Neil Walker for closing remarks.

Speaker Change: I am showing no further questions at this time I would now like to.

Speaker Change: France back to Neal Walker for closing remarks.

Neil Walker: Well, thanks everybody for joining our call today. We're excited to provide additional updates in the coming months and appreciate your time. Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect. ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thanks for watching!

Neil Walker: Well, thanks, everybody for joining our call today, we're excited to provide additional updates in the coming months I. Appreciate your time. Thank you.

Neil Walker: This concludes today's conference call. Thank you for participating and you may now disconnect.

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Operator: Good day, and thank you for standing by. Welcome to the Aclaris Therapeutics first quarter 2024 conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day and thank you for standing by welcome today are Clarus Therapeutics first quarter 'twenty 'twenty four conference call.

Operator: At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session, and to ask a question during the session, you will need to press star one on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kevin Balthaser.

Operator: After the speaker's presentation, there will be a question and answer session and to ask a question. During the session you will need to press star one on your telephone and you will then hear an automated message advising or had this waste.

Kevin Balthaser: To withdraw your question. Please press star one one again.

Kevin Balthaser: Please be advised that today's conference is being recorded.

Kevin Balthaser: Please go ahead. Thank you. I am Kevin Balthaser, Chief Financial Officer of Aclaris.

Kevin Balthaser: I would now like to hand, the conference over to your speaker today, Kevin Bothers. There. Please go ahead.

Kevin Balthaser: Thank you.

Kevin Balthaser: <unk> of our website at Www Dot Claris, TX dot com.

Kevin Balthaser: Joining me today for the call are Neal Walker, our interim Chief Executive Officer, and Joe Monahan, Our Chief Scientific Officer.

Kevin Balthaser: Molly Smith, our scientific and business development consultant will also be available for the Q&A portion of the call.

Kevin Balthaser: All the information we provide on this conference call is provided as of today, and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events, or others. Please be advised that today's call is being recorded and webcast. A link to the webcast can be accessed on the Events page of the Investors section of our website.

Kevin Balthaser: Before we begin our prepared remarks, I would like to remind you that various statements. We make during this call about the company's future results of operations and financial position business strategy and plans and objectives for our claris as future operations are considered forward looking statements within the meaning of the federal six.

Kevin Balthaser: <unk> laws.

Kevin Balthaser: These risks are described in the risk factors section of our Claris Form 10-K for the year ended December 31, 2023, and other filings of Claris makes with the SEC from time to time.

Kevin Balthaser: These documents are available under the SEC filings page of the investors section of our website at Www Dot Clarus, TX Dot com.

Kevin Balthaser: All the information we provide on this conference call is provided as of today and we undertake no obligation to update any forward looking statements. We may make on this call on account of new information future events or otherwise.

Kevin Balthaser: Please be advised that today's call is being recorded and webcast a link to the webcast can be accessed under the events page of the investors section of our website.

Kevin Balthaser: I'll now turn the call over to Kevin. Thank you, Kevin. Good afternoon, everyone. Last quarter, we announced that, in addition to various cost-cutting measures and an overall review of our business strategy, we were also re-evaluating the indication selection for ATI 2138, which is our oral small molecule ITK JAK3 antigen. Today, I'm pleased to announce that we have decided to move ATI-2138 forward in a proof-of-concept study in moderate to severe atopic dermatitis. Atopic dermatitis is a Th2 cell-driven disease, and ITK inhibition blocks T-cell differentiation, activation, and production of IL-4 and IL-13.

Kevin Balthaser: I'll now turn the call over to Neil.

Kevin Balthaser: Okay.

Speaker Change: Thank you, Kevin and good afternoon, everyone.

Kevin Balthaser: Last quarter, we announced that in addition to various cost cutting measures and an overall review of our business strategy. We are also reevaluating the indication selection for ATI 2138, which is our oral small molecule ITK JAK <unk> inhibitor today I am pleased to announce that we have decided to move ATI 238, 4%.

Kevin Balthaser: A concept study in moderate to severe atopic dermatitis.

Kevin Balthaser: The topic dermatitis teach to sell driven disease, and ITK inhibition blocks T cell differentiation activation and production of IL four IL 13 in fact, there's an extensive literature on the role that ITK plays in regulating the signalling pathways that are central to the production of various cytokines.

Kevin Balthaser: By both <unk> and myself today, we will provide an overview of ATI 2138, and the data we have generated thus far Joe.

Kevin Balthaser: In fact, there is extensive literature on the role that ITK plays in regulating the signaling pathways that are central to the production of various cytokines by both Th2 cells and mast cells. Today, we will provide an overview of ATI-2138 and the data we have generated thus far. Joe?

Neil Walker: Thank you, Neil. ATI-2138 is a covalent inhibitor that targets the T-cell kinase ITK as well as JAK3. ITK is a kinase downstream of the T-cell receptor and is important for the regulation of T-cell function, while JAK3 is required for the signaling of cytokines that utilize the gamma common receptors such as IL-2, IL-4, and IL-15. ATI-2138, through effective targeting of these two critical T-cell and cytokine-associated pathways, has the potential to treat a broad set of autoimmune diseases.

Joe: Thank you Neil.

Joe: ATI 21, 38 is a covalent inhibitor that targets T cell kinase ITK as well as Jack III.

Neil Walker: At Teekay is a kinase downstream of the T cell receptor and is important for the regulation of T cell function well Jack <unk> required for the signaling of cytokines that utilized the gamma common receptors, such as IL, two IL four and IL 15.

Neil Walker: ATI 2138 through effective targeting of these two critical T cell and cytokines associated pathways provides the potential to treat a broad set of autoimmune diseases.

Neil Walker: ATI-2138 was generated from a proprietary Connect drug discovery platform using structure-based drug design, focusing on molecules with high reversible affinity, containing electrophiles that target the ATP site cysteine positioned similarly in ITK and JAK3. As shown in slide 5, covalency and engagement of CIS442 were demonstrated from the proprietary crystal structure of the ATI 2138 ITK complex.

Neil Walker: ATI 2138 was generated from our proprietary Kinect drug discovery platform using structure based drug design focusing on molecules with high reversible affinity containing electric filed that target. The ATP sites 15 positioned similarly at Teekay inject III.

Neil Walker: As shown in slide five covalent see an engagement a fifth or two was demonstrated from the proprietary crystal structure of the ATI 2138 ITK complex.

Joseph Monahan: ATI-2138 also binds to and engages CIS-909 in JAK3, the only JAK isoform with this residue in the ATP site. This cysteine in JAK3 has also been effectively targeted by the drug ritlicitinib, which is Pfizer's recently approved therapy for alopecia areata. ATI-2138 differentiates from both ritlicitinib and reversible JAK inhibitors, thereby demonstrating unique pharmacology and best-in-class potential. As shown on slide 6, ATI-2138 has similar high potency for inhibiting both ITK and JAK3 signaling in contrast to ritlicitinib, which is less potent on both pathways and demonstrates JAK3 biased pharmacology. ATI-2138 is selected for JAK-3, with no meaningful crossover to other JAK isoforms.

Neil Walker: ATI 2138 also binds to and engages this 909 and Jack III, the only JAK isoforms with this residue in the ATP site.

Joseph Monahan: This 15, Jack III has also been effectively targeted by the drug.

Joseph Monahan: <unk>, which is pfizer's recently approved therapy for alopecia Areata.

Joseph Monahan: ATI 21, 38 differentiate from both fitness and reversible JAK inhibitors, thereby demonstrating unique pharmacology and best in class potential.

Joseph Monahan: Shown on slide six ATI 21, 38 had similar high potency for inhibiting both.

Joseph Monahan: K inject three signaling in contrast to <unk>, which is less potent on both pathways and demonstrates JAK three biased pharmacology.

Joseph Monahan: ATI 2138 select selected project three with no meaningful crossover to other JAK isoforms, the restricted expression of <unk> three to <unk>, coupled with the lack of crossover to other jobs May result in an improved safety profile for ATI 2138 relative to grow it.

Joseph Monahan: The restricted expression of JAK3 to hematopoietic cells, coupled with the lack of crossover to other JAKs, may result in an improved safety profile for ATI-2138 relative to broad-spectrum reversible JAK infection. Clear differentiation from the covalent inhibitor ritlicitinib is demonstrated in human whole blood studies shown on slide seven. The panel on the left compares ATI-2138 and ritlicidinib in ITK-dependent anti-CD3-stimulated interferon gamma production, while the right-hand panel compares the two compounds in JAK3-dependent IL-2-stimulated interferon gamma release.

Joseph Monahan: Spectrum reversible JAK inhibitors.

Joseph Monahan: Clear differentiation from the covalent inhibitor witless fitness is demonstrated in human whole blood studies shown on slide seven the panel on the left compares ATI 21, 38, and witless fitness and ITK dependent anti CD three stimulated interferon gamma production, while the right hand panel compares to comps.

Joseph Monahan: And Jack III dependent <unk> stimulated interferon gamma release.

Joseph Monahan: ATI 21, 38, as $44 four times more potent than <unk> and blocking ITK dependent cytokine production and five four fold more potent than the <unk> III dependent readout.

Joseph Monahan: The comparable whole blood potencies of $21 38 on ITK inject three translated to similar impact on the respective PD readouts in human Sad and Mad studies and.

Joseph Monahan: In contrast, at the FDA-recommended 50-milligram QG dose of ritlicidinib for alopecia areata, exposures would be expected to inhibit JAK3 but have little impact on the ITK pathway. Now, why is ITK an important target? Slide 8 demonstrates the current understanding of the role of ITK in T helper cell differentiation and activation. Of the TET kinases, ITK alone is required for the differentiation and activation of Th2 and Th17 cells.

Joseph Monahan: In contrast at the FDA recommended 50 milligram QD dose of ritalin sitting in for alopecia Areata exposures would be expected to inhibit Jack III, but have little impact on the ITK pathway.

Joseph Monahan: Now why is ITK and important target.

Joseph Monahan: Slide eight demonstrates the current understanding of the role of ITK and T helper cell differentiation and activation of the Tech kinases ITK alone is required for the differentiation and activation of th two and th 17 cells and ITK knockdown of inhibition results in skewing a T helper.

Joseph Monahan: An ITK knockdown or inhibition results in the skewing of T helper cells from the Th2 Th17 phenotypes to the Th1 Treg phenotypes. ITK inhibitors have the potential as effective oral drugs to treat diseases driven by Th2 and or Th17 cells, such as atopic dermatitis. ATI 2138 has demonstrated activity in a number of preclinical immune-inflammatory disease models. Oral activity at various doses of ATI-2138 in adjuvant-induced arthritis is shown on slide 9. Evaluating ankle swelling on the left and histology on the right.

Joseph Monahan: <unk> from the th two th 17 phenotypes to the th one T Reg phenotypes.

Joseph Monahan: Teekay inhibitors have the potential as effective oral drugs to treat diseases, driven by th two <unk> th 17 cells, such as atopic dermatitis.

Joseph Monahan: Similar strong activity was observed with doses of 5 and 15 mg per kg BID, as well as 30 mg per kg QD. Activity was also observed in the adoptive T cell transfer model of colitis in the mouse, as shown on slide 10. ATI-2138 formulated in Chow protected the proximal and distal colon, as well as the ileum, from inflammation to a greater extent than the anti-IL-12 P40 antibody. Preclinical studies supported the advancement of ATI 2138 into Phase I FAD and MAD clinical studies, as summarized on slide 11. The drug was generally well-tolerated, had favorable PK characteristics, and demonstrated dose-dependent modulation of ITK in JAK3 pharmacodynamic redox. Slide 12 shows the PK characteristics of ATI-2138 from the MAD Study.

Joseph Monahan: ATI 21, 38 has demonstrated activity in a number of preclinical immune inflammatory disease models oral activity at various doses of ATI 2138, and rat adjuvant induced arthritis as shown on slide nine evaluating ankle swelling on the left and histology on the right similar strong.

Joseph Monahan: Long activity as observed with doses at five and 15 milligram per kilogram VIP as well as 30 milligrams.

Joseph Monahan: Kilogram Qt.

Joseph Monahan: Activity was also observed in the adoptive T cell transfer model of colitis in the mouse is shown on slide 10 eight.

Joseph Monahan: <unk> thousand 138, formulated and Chow protected optimal and distal colon as well as the ileum from inflammation to a greater extent than the anti IL <unk> antibody.

Joseph Monahan: Preclinical studies supported the advancement of ATI 2138 into phase, one sad and Mad clinical studies as summarized on slide 11.

Joseph Monahan: The drug was generally well tolerated at favorable PK characteristics and demonstrated dose dependent modulation of ITK and Jack III Pharmacodynamic Readouts.

Joseph Monahan: Exposures following the final dose on day 15 of the MAD study are shown on the left, and dose proportionality is shown on the right. Linear PK is observed with ATI-2138 following two weeks of dosing, with steady state dose proportionality observed for both CMAX and AUC. Slide 13 shows the pharmacodynamic results across the two-week dosing period in the MAD study. The left panel measures the inhibition of ITK-dependent IL-2 mRNA following ex vivo stimulation in blood. The middle panel shows JAK3-dependent interferon gamma production, and the right panel shows interferon gamma production following dual stimulation of the TCR and JAK3 pathway.

Joseph Monahan: 12 shows the PK characteristics of ATI $21 38 from the Mad study.

Joseph Monahan: Exposures following the final dose on day 15 of the Mad study are shown on the left and dose proportionality as shown on the right.

Joseph Monahan: Linear PK as observed with ATI 21, 38, following two weeks of dosing with steady state dose proportionality observed for both <unk> and AUC.

Joseph Monahan: Slide 13 shows the Pharmacodynamic results across the two week dosing period in the Mad study.

Joseph Monahan: The left panel is measuring the inhibition of ITK dependent <unk> mrna following ex vivo stimulation in blood the middle panel, Jack III dependent interferon gamma production and the right panel interferon gamma production following dual stimulation of the TCR injectors pathways.

Joseph Monahan: ATI-2138 demonstrated dose and time-dependent inhibition under all stimulation conditions. 50 to 90% inhibition of the PD readouts was observed with doses from 5 to 40 milligrams BIT. Slide 14 shows exposure response analysis from the three PD readouts and compares the translation from preclinical human whole blood analysis. These data demonstrate a strong concentration-dependent correspondence between EC50s from both the SAD and MAD clinical studies and in vitro human whole blood studies across the three stimuli.

Joseph Monahan: ATI 2138 demonstrated dose and time dependent inhibition under all stimulation conditions, 50% to 90% inhibition of the PD Readouts was observed with doses from five to 40 milligrams B I D.

Joseph Monahan: Slide 14 shows exposure response analysis from the three PD Readouts and compares to translation from preclinical human whole blood analysis.

Joseph Monahan: These data demonstrated strong concentration dependent correspondence between EC <unk> from both the sad and Mad clinical studies.

Joseph Monahan: And in vitro human whole blood studies across three stimuli as.

Joseph Monahan: As expected, similar potency is observed for the ITK pathway, JAK3, and dual-stimulation inhibition. Finally, exposures generated from the 5mg to 40mg BID dosing were sufficient to provide meaningful blockade of both pathways. The successful completion of the Phase I studies effectively positioned ATI-2138 to advance into Phase II.

Joseph Monahan: As expected similar potency as observed for the ITK pathway, Jack III and dual stimulation inhibition.

Joseph Monahan: Finally exposures generated from five milligrams to 40 milligrams PID dosing were sufficient to provide me blockade of both pathways.

Joseph Monahan: Successful completion of the phase one studies effectively positioned ATI 2138 to advance into phase III.

Neil Walker: The first indication for which ATI-2138 will be evaluated is atopic dermatitis, the rationale for which is shown on slide 15. The dual TCR JAK3 specificity of ATI-2138 effectively positions it for treatment of atopic dermatitis. The important role of ITK and Th2 cell differentiation and activation, coupled with the efficacy observed with biologics targeting the Th2 cytokines IL-4 and IL-13, supports the potential for ATI-2138 as an oral alternative to these biologics.

Joseph Monahan: The first indication in which ATI 2138 will be evaluated as atopic dermatitis, the rationale for which is shown on slide 15.

Neil Walker: The dual TCR, Jack III specificity of ATI 2138, effectively positions it for treatment of atopic dermatitis.

Neil Walker: Important role of ITK th, two cell differentiation and activation coupled with the efficacy observed with the biologics targeting the th two cytokines IL four and IL 13 supports the potential for ATI 2138, as an oral alternative to these biologics.

Neil Walker: Additionally, inhibiting JAK3 should add complementary efficacy through blockade of IL-2 and IL-4 signaling, as evidenced by the efficacy of a number of JAK inhibitors in atopic dermatitis. The design of the atopic dermatitis study is summarized on slide 16. This study will be an open-label, 12-week, 15-patient study to examine the safety, PK, and early signs of efficacy of ATI-2138 in patients with moderate to severe atopic dermatitis. In addition to the clinical readouts, there will be a heavy emphasis on PD markers of pathways and disease in this study.

Neil Walker: Additionally, inhibiting Jack III should add complementary efficacy through blockade of IL, two and IL four signaling as evidenced by the efficacy of a number of JAK inhibitors in atopic dermatitis.

Neil Walker: The design of the atopic dermatitis study is summarized on slide 16. This study will be an open label 12 week 15 patient study to examine the safety PK and early signs of efficacy of ATI 2138 in patients with moderate to severe atopic dermatitis and.

Neil Walker: In addition to the clinical Readouts, there will be a heavy emphasis on PD markers of pathways and disease in this study.

Neil Walker: Moreover, we plan to demonstrate the importance of ITK inhibition as a differentiating feature of our molecule.

Neil Walker: In summary, as shown on slide 17, ATI 21, 38 is a potential best in class dual inhibitor of ITK and Jack III.

Neil Walker: Non clinical potency activity Acme and safety studies supported moving the compound into clinical development.

Neil Walker: Positive data from the sad and Mad Phase one studies provided clinical support to advance ATI 2138 into a proof of concept phase II study in moderate to severe atopic dermatitis.

Neil Walker: Aclaris is expanding its efforts in the ITK pathway beyond ATI-2138 with discovery efforts focused on next-generation ITK inhibitors. While ITK has been of interest to pharmaceutical companies for over 20 years, it has proven to be a difficult-to-drug kinase, as evidenced by the efforts outlined on slide 19. The research described on this slide focused on ATP competitive inhibitors, and due to their poor biochemical efficiency and pharmaceutical properties, they have not advanced in clinical development.

Neil Walker: Claris is expanding our efforts in the ITK pathway beyond ATI 2138, with discovery efforts focused on next generation ITK inhibitors.

Neil Walker: ITK has been of interest of pharmaceutical companies for over 20 years has proven to be a difficult to drug kinase as evidenced by the efforts outlined on slide 19.

Neil Walker: The research described on this slide have focused on ATP competitive inhibitors, and due to poor biochemical efficiency and pharmaceutical properties. They have not advanced in clinical development.

Joseph Monahan: More recently, covalent inhibitors of IPK have been described with the Corvus CPI-818 in early clinical development. Our next generation efforts are focusing on selective inhibition of ITK and limiting crossovers on JAK kinases, as shown on slide 20. Selective targeting of ITK should provide effective modulation of both Th2 and Th17 cell functions with the potential to treat atopic and Th17-driven diseases, as summarized on slide 21. Human and mouse genetic data, as well as pharmacological inhibition, strongly support a role for ITK in T cell biology and pathophysiology.

Neil Walker: More recently covalent inhibitors of ITK has been described with Corvus CPI <unk> hundred eight in early clinical development on.

Joseph Monahan: On next generation efforts are focusing on selective inhibition of ITK and eliminating crossover on JAK kinases as shown on slide 20.

Joseph Monahan: Selective targeting of ITK should provide effective modulation of bolt th two and th 17 cells functions with the potential of treating atopic in th 17, driven diseases as summarized on slide 21.

Joseph Monahan: In mouse genetic data, while it's pharmacological inhibition strongly supports a role for ITK in T cell biology, and pathophysiology. This coupled with the fact that this regulated T cells are involved in a number of immune inflammatory diseases validate selective inhibitors of ITK as an approach to treat a broad range of.

Joseph Monahan: This, coupled with the fact that dysregulated T cells are involved in a number of immune inflammatory diseases, validates selective inhibitors of ITK as an approach to treat a broad range of indications. Thank you, Joe. I'll now turn it over to Kevin to discuss our financial highlights for the year. Thank you, Neil. We continue to maintain a strong balance sheet with a robust cash balance and zero outstanding debt. We ended the first quarter with cash, cash equivalents, and marketable securities of $161 million, which was compared to $182 million at year end.

Joseph Monahan: Indications.

Joseph Monahan: Thank you Joe I will now turn it over to Kevin to discuss our financial highlights for the quarter.

Kevin Balthaser: Thank you Neil.

Kevin Balthaser: We continue to maintain a strong balance sheet with a robust cash balance and zero outstanding debt.

Kevin Balthaser: We ended the first quarter with cash cash equivalents and marketable securities of $161 million.

Kevin Balthaser: It was compared to $182 million at year end.

Kevin Balthaser: Our cost containment initiatives are on track and progressing nicely. Of our total cash expenditures in the first quarter, approximately $14 million was related to non-recurring payments, including discontinued research and development programs, severance benefits for individuals impacted by the reduction in force announced in December, and payments owed to third parties related to the upfront amount received under the Sun licensing agreement. Activities associated with discontinued programs and the reduction in force are expected to be substantially completed by the second quarter of 2024.

Kevin Balthaser: Our cost containment initiatives are on track and progressing nicely.

Kevin Balthaser: Of our total cash expenditures in the first quarter, approximately $14 million, what's related to nonrecurring payments, including discontinued research and development programs severance benefits for individuals impacted by the reduction in force announced in December and payments to third parties related to the <unk>.

Kevin Balthaser: Front amount received under the <unk> licensing agreement.

Kevin Balthaser: Activities associated with discontinued programs and a reduction in force are expected to be substantially completed by the second quarter of 2024.

Kevin Balthaser: As a result, we expect our cash expenditures on a quarterly basis for the remainder of the year to be significantly reduced when compared with the first quarter without giving effect to any potential business development transactions. We continue to evaluate business development opportunities across our portfolio of assets to be a source of non-dilutive capital in the future. With that, I will now turn the call back over to Neil for closing remarks. Thank you, Kevin.

Neil Walker: We continue to evaluate business development opportunities across our portfolio of assets.

Kevin Balthaser: The source of non dilutive capital in the near term.

Kevin Balthaser: With that I will now turn the call back over to Neil for closing remarks.

Kevin Balthaser: We are pleased to provide you with a portfolio update on our decision to shift to atopic dermatitis as the first proof-of-concept indication for ATI 2138. As a reminder, we are still in the process of reviewing various strategic options moving forward and look forward to providing additional updates in the near future. Kyle, we would now like to hold for questions. Thank you, and as a reminder, to ask a question, please press star one one on your telephone and wait for a name to be announced. Once again, please press star 1 1 on your telephone keypad.

Neil Walker: Thank you Kevin.

Neil Walker: We're pleased to provide you with the pro forma portfolio update on our decision to shift to atopic dermatitis is the first proof of concept indications for ATI 2138. As a reminder, we are still in the process of reviewing various strategic options moving forward and look forward to providing additional updates in the near term.

Kevin Balthaser: We would now like to poll for questions.

Neil Walker: And to withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. And for our first question, it comes from the line of Roger Song from Jeff. Great, thanks for the update and taking our questions. Maybe start with the biology question.

Kyle: Thank you and as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced once again. Please press star one on your telephone keypad and so which are a question. Please press star one again.

Neil Walker: Please stand by while we compile the Q&A roster.

Roger Song: And for your first question. It comes from the line of projects Thong from Jeff.

Neil Walker: Great.

Roger Song: Thanks for the update and taking our questions maybe.

Roger Song: Along with the biology question.

Roger Song: So, for the ITK and the JAK3, understanding your compared to the PENJAK inhibitor has a lot of advantages. Just curious, how do you think about these ITK and JAK3 inhibitors in terms of their having synergistic or additive effects when you inhibit both in those preclinical models? Just curious if you see any, have you compared just JAK3 or ITK alone kind of in the preclinical model? And then I have a follow up question for the clinical question. Thank you. Yeah, thank you, Roger. I'll start with Joe and or Wally.

Roger Song: So for the <unk> spending.

Roger Song: Compared to the Pan JAK inhibitor has been a lot of the advantages just curious how do you think about those ITK projects through in terms of that theyre, having synergistic or additive effects.

Speaker Change: Submit both for those preclinical models.

Speaker Change: Curious what do you see any.

Roger Song: Compare.

Roger Song: Yes, Jack Tsui, our ITK, along kind of in a preclinical model.

Speaker Change: For that quarter critical question. Thank you.

Joe: Thank you Roger I'll start there.

Speaker Change: Joe or Wally.

Neil Walker: But yes, that's one of the attractive things about the molecule was one of our original hypotheses about it that if we could.

Neil Walker: Inhibit Jack three and then layer on maybe the hyper boost with ITK, particularly in an indication like a topic, where ITK really targets. The th two effect, we ought to see more robust effect, there and so we certainly tested that hypothesis out in preclinical models.

Neil Walker: And actually I know you didn't ask this but going forward.

Neil Walker: And this initial proof of concept study will endeavor to tease out that differential effect through looking at various pharmacodynamic markers to just definitively prove out the ITK contribution from that molecule.

Neil Walker: And maybe Joe if you want to add anything there.

Joe: Yes, the only thing I would add is that we have profiled.

Joe: Jack III.

Joe: More selective inhibitor.

Joe: <unk> versus ATI 2138 in the.

Joe: Adoptive T T cell transfer model of colitis and debt.

Joe: <unk> doses and exposures, we did see a boost in anti inflammatory activity with 21 38 compared to <unk>.

Roger Song: Yeah, that makes sense. And compared to JAK3, a more selective compound, maybe that's the ITK component. But you're curious to see the PD marker in Phase 2, for sure. And then, in terms of the Phase 2a plan, the Phase 2a, you're selecting the 10 meg BID as the dose. Understanding you want to be more capital efficient to test the one dose, just curious, you know; do you think that dose is the best dose you can tell from the preclinical studies?

Speaker Change: Got it yeah that makes sense, then compared to <unk>.

Roger Song: <unk> more selective compound maybe ikea.

Roger Song: ITK component, but yes correct.

Roger Song: The PD marker in the phase two for sure and then in terms of the phase Iia the plan the phase Iia.

Roger Song: No.

Roger Song: <unk> Iq.

Roger Song: Dose understanding you wanted to be more capital efficient to test the windows just curious.

Roger Song: Do you think that that dose is the best dose you can tell us on the preclinical.

Roger Song: And also, what is the other potential dose, if that dose sees some signal, but you know, what is the other dose potentially you will test in the future clinical trial? And then also for the Phase 2a, any powering for that efficacy?

Roger Song: And also what the other potential dose that dose.

Roger Song: Dose.

Roger Song: Taking all of that.

Roger Song: What's the other does that answer that youre well test in the future.

Roger Song: Sure.

Roger Song: Canadian Court trial, and then also for the Phase Iia.

Neil Walker: What is the ultimate kind of efficacy goal for Phase 2a in order to move forward? Thank you. Yeah, so it is open label.

Neil Walker: And empowering for dose efficacy.

Neil Walker: What is the.

Neil Walker: The ultimate kind of efficacy go for the phase Iia in order to move forward. Thank you.

Neil Walker: Yes.

Neil Walker: So, you know, our main objective is to show the absolute treatment effect. And I think, to be fair in this indication, we want to see something north of some of the standard, you know, in-market JAK inhibitors. I mean, from my perspective, they've set the bar in AD, you know, from an efficacy perspective. And historically, we kind of understand the placebo rate. And then the second or the first question: Joe, do you want to tackle that one?

Speaker Change: Yes, so for.

Speaker Change: So it is it is open label.

Joe: So our main objective is to show the absolute treatment effect and I think it would be fair in this indication we want to see something north of some of the standard.

Joe: And market JAK inhibitors, I mean from my perspective, they've set the bar.

Joe: From an efficacy perspective, historically, we kind of understand the.

Joe: Placebo rate.

Joe: And then the.

Neil Walker: Second for the first question, Joe do you want to tackle that one.

Joe: Yeah, So with regard to the dosing first of all we do have the ability to go higher than 10 milligrams. If we choose to we identified 10 milligrams PID is our dose in this study based on exposures in the various preclinical disease models that we looked at.

Joseph Monahan: With the data in with Rick with fitness in the clinical exposure that they had I think with this mechanism it doesn't seem to be driven by C. Max it doesn't seem to be driven by C. Trough. It more likely is driven by a C average and at the 10 milligram PID we have.

Joseph Monahan: It more likely is driven by a C-average. And at 10 milligrams BID, we have equivalent potency at CMAX as Ritla Cytnyp does against JAK3, significantly more exposure and potency at against ITK as we described. And at C average, we have higher levels of inhibition of both ITK and JAK3 at this 10 milligram VID dose. So based on the preclinical model and based on comparison to ritlicidinib, that's how we chose the dose. Excellent. Yeah, that answers all the questions I have now.

Joseph Monahan: Equivalent.

Joseph Monahan: Potency at C. Max as Rick was sitting hip goes against JAK three.

Speaker Change: Significantly more.

Joseph Monahan: Exposure in potency against ITK as we described.

Joseph Monahan: And that C average, we have higher level of inhibition of both.

Joseph Monahan: K and Jack tree at this 10 milligram tid dose so based on the preclinical models and based on a comparison to rip the Sydney, that's how we chose the dose.

Speaker Change: Excellent Yeah that also other questions that have now thank you.

Thomas Jonathan Smith: Thank you Robin.

Thomas Jonathan Smith: Thank you and once again, if you'd like to ask a question. Please press star one one on your telephone keypad.

Roger Song: Entering next question. It comes from the line of Thomas Smith from Leerink Partners. Please go ahead.

Roger Song: Okay.

Thomas Jonathan Smith: Thanks for the updates, and thanks for taking our questions. Just on the preclinical data, I appreciate all the models and comparisons to rilacitinib. I'm just curious if you've generated any data comparing 2138 versus upatacitinib and selected JAK1 inhibition preclinically, and any thoughts on how 2138 is likely to stack up in an indication like atopic dermatitis versus upatacitinib. Yeah, thanks for that question. You know, I think the X factor here is ITK inhibition.

Thomas Jonathan Smith: Hey, guys. Good afternoon, thanks for the update and thanks for taking our questions just on the preclinical data.

Thomas Jonathan Smith: I appreciate all the models in comparison to real sitting there, but I'm just curious if you've generated any data.

Thomas Jonathan Smith: <unk> 21, 38 versus <unk> and selective JAK, one inhibition pre clinically and any thoughts on how 'twenty 138.

Thomas Jonathan Smith: The likelihood of stack up in an indication like atopic dermatitis versus <unk>.

Speaker Change: Yes, Thanks for that question I think.

Thomas Jonathan Smith: I think the X factor here is the ITK inhibition.

Thomas Jonathan Smith: And when you look at the literature on ITK inhibition in general, it really skews to inhibiting the Th2 cytokine, so it directly acts on IL-4, IL-5, etc. And so, you know, we really think that that is going to give the JAK3 side a boost. Joe, Wally, I'm not aware of direct comparisons between a pure covalent JAK3 versus JAK1, specifically in

Thomas Jonathan Smith: Yeah.

Speaker Change: When you look at the literature.

Thomas Jonathan Smith: On an ITK inhibition in general it really skews to inhibiting the th two cytokines, so directly axon IL four IL five et cetera.

Thomas Jonathan Smith: So we really think that that is going to give Jack III side a boost.

Speaker Change: Joe I'm not aware of direct comparisons between.

Thomas Jonathan Smith: Pure covalent Gen three versus JAK, one specifically in E D.

Thomas Jonathan Smith: I think our hypothesis when you have a dual mechanism that.

Neil Walker: And we've demonstrated synergy.

Neil Walker: We ought to have an additive effect so that would be the goal is to outperform.

Neil Walker: Sure.

Neil Walker: You visit.

Neil Walker: Understood that's helpful and just.

Neil Walker: On the Phase 2a trial design, can you talk about the rationale a little bit, I guess specifically the choice of an open-label design versus maybe a slightly larger placebo-controlled design? It sounds like you have some interesting biomarkers identified that you'd like to take a look at here in terms of signal finding. But I'm just curious in terms of maybe definitively teasing out the clinical signal here, and the choice of the open-label trial design.

Speaker Change: On the Phase Iia trial design can.

Neil Walker: Can you talk about the rationale a little bit I guess, specifically the choice of an open label design versus maybe a slightly larger placebo controlled design. It sounds like you are.

Neil Walker: You have some interest in biomarkers identified that that you'd like to take a look at here in terms of signal finding but I'm just curious in terms of.

Neil Walker: Maybe more definitively teasing out the clinical signal here the source of the open label trial design.

Neil Walker: Well, I think, you know, it's a couple of things. One is that, these days, in a relatively competitive environment, it's a lot easier to enroll studies that have just an active arm. And, you know, when we're looking for signal finding, I think our goal is speed. And, you know, this study was a very cost-efficient way to get a lot of answers.

Speaker Change: Well I think.

Neil Walker: It's a couple of things one is that.

Neil Walker: It's a lot easier these days in a relatively competitive environment to enroll studies.

Neil Walker: Hubs, just an active arm.

Neil Walker: Yes.

Neil Walker: When we're looking for signal finding I think are our goal is speed and this study was.

Neil Walker: Very cost efficient way to get a lot of answers and I think we know what the.

Neil Walker: And I think we know what these molecules and different kinds of surrogates can do. Like, if we just compare ritlicitin and bupacitin, they have all these other drug categories. I think we have a good understanding of what the absolute responder rate needs to be across these measures.

Neil Walker: What these molecules in different kind of surrogates can do like if we just compare.

Neil Walker: <unk> all these other.

Neil Walker: And so I think that was the balance here, you know, trying to get data as quickly as we can. And, you know, if it works out the way we hope and expect, we would certainly be interested in progressing with a little bit larger AD study. But also importantly, looking at some of the indications that Ritlicitin has already started to break ground on, you know, looking at vitiligo, looking at alopecia areata.

Neil Walker: Drug categories, I think we have a good understanding of what the absolute responder rate needs to be across these measures and so I think that was the balance here trying to get data as quickly as we can.

Neil Walker: If it works out the way, we hope and expect.

Neil Walker: We would certainly be interested in progressing.

Neil Walker: A little bit larger study, but also importantly, looking at some of the indications.

Neil Walker: <unk> has already started to blaze the ground on.

Neil Walker: Looking at <unk> looking at <unk>.

Neil Walker: So I think there are a couple of different ways to go post this initial AD study. But I think, you know, just to go back to the original premise of your question, I don't think that we lose too much in not having a placebo group. We enhance the enrollment cadence, and we get data quicker, which I think is important for us, given where we're at. Yeah, that makes sense. And just, um..., along those lines.

Neil Walker: So I think Theres a couple of a couple of different.

Neil Walker: Wait ways to go post this initial <unk> study, but I think just to go back to the original premise of your question I think I don't think that we lose too much and not having a placebo group, we enhance the enrollment cadence when we get data quicker with which I think is important for us given where we're at at the moment.

Speaker Change: Got it that makes sense and just.

Speaker Change: Along those lines Neil with respect to study start like I understand were.

Neil Walker: Neil, with respect to Study Start, as I understand it, we're putting together the protocol, and the operational preparations are underway. Do you have an early, I guess, early sense of when we might be able to expect some top-line data from Phase IIa? I don't think we're giving guidance just yet, Tom, but it's going to be, you know, it's definitely going to be within a year of this call. So it's, I'll give you that as a back end marker. But, you know, we'll give more color on that once we get the first patient. Got it. It makes sense.

Neil Walker: Putting together the protocol and the operational preparations are underway.

Neil Walker: Do you have an early I guess early sense of when we might be able to expect some top line data from the phase II VI.

Neil Walker: I think we're giving guidance just yet Tom, but that's going to be.

Neil Walker: It's definitely going to be within a year of this call right. So it's I'll.

Neil Walker: We'll give you that this is a back end marker.

Neil Walker: But we will give more color on that once we get the first patient in.

Speaker Change: Got it makes sense alright, guys. Thanks for taking the questions.

Speaker Change: Okay. Thank you.

Omari: And next question. It comes from the line of Corinne Johnson from Goldman Sachs. Please go ahead.

Omari: Hey, Jamie this is Omar on for Kirk. So I had a couple questions. One is are you funded to complete the proof of concept study and then to our strategy, where do you see unmet need in atopic dermatitis.

Corinne Jenkins: So we had a couple of questions. One is, are you funded to complete the proof of concept study? And then two, on strategy, where do you see a met need in a topic?

Omari: We're certainly funded to complete the study this is exceedingly cost efficient study, which was kind of by design.

Neil Walker: And so we're trying to generate a very.

Neil Walker: Very quickly. This is in contrast to what we had originally proposed at the tail end of last year.

Neil Walker: Which was a study in UC, which was a lot more expensive going to take a lot more time. So we have a robust balance sheet and as Kevin alluded to in his comments.

Neil Walker: The balance sheet is not going to change to appreciably.

Neil Walker: Through the end of the year.

Neil Walker: And so we feel very comfortable to very small amount of burn.

Neil Walker: While we continue to review various strategic.

Neil Walker: Options.

Speaker Change: Sorry, what was the first and the second question.

Neil Walker: Yeah, where do you see the unmet need in atopic dermatitis? Yeah, we're at the front end of the atopic market. You know, this is where psoriasis was years ago.

Speaker Change: Yes, where did you see unmet.

Neil Walker: The unmet need in atopic dermatitis, so kind of whatever strategy.

Neil Walker: Yes, we're at the front end of the atopic market. This.

Neil Walker: Is where psoriasis was years ago, we certainly I don't think anybody who can claim that we've maxed out efficacy in this space. Obviously diplomat is wildly successful drug.

Neil Walker: You know, we certainly, I don't think anybody could claim that we've maxed out efficacy in this space. Obviously, Dupilumab is a wildly successful drug, but in 60% of the patients, we aren't even getting clear or nearly clear by week 16. And then 50% of those patients get a suboptimal response.

Neil Walker: 60% of the patients we aren't even getting clearer near clear by week 16, and then 50% of those patients.

Neil Walker: So, on the biological side. On the JAK inhibitor side, we have much better efficacy, but there's still a lot of headroom in this space. And what we're trying to do here is tease out the ITK effect. We really think this is a strong mechanistic approach to this category. And you know, the competitive landscape in AD is, as you can see by clintrials.gov, still in its infancy.

Neil Walker: Get a sub optimal response, so that's on the biologic side on the JAK inhibitor side.

Neil Walker: We have much better efficacy, but theres still a lot of headroom in the space and what we're trying to do here.

Neil Walker: He's out the ITK effect, we really think this is a strong mechanistic approach to this category.

Neil Walker: Yes.

Neil Walker: The competitive landscape.

Neil Walker: As you can see by Clint trials Dot Gov is still in its infancy, it's continuing to evolve a lot of people are starting to look at that space, because we arent where were at with psoriasis, where we're talking about policy one hundreds.

Neil Walker: It's continuing to evolve. A lot of people are starting to look at that space because they're, you know, we aren't where we're at with psoriasis where we're talking about POSI 100s. Thanks, Chris. Kyle, are there any other questions in the queue?

Neil Walker: Thanks for answering my questions.

Neil Walker: Okay.

Neil Walker: Yeah.

Neil Walker: Okay.

Speaker Change: Kyle this is there any other questions in the queue.

Neil Walker: Okay.

Julian Reed Harrison: Our next question or comment comes from the line of Julian Harrison from Big TIG. Your line is... Hi, thank you for taking my question and for hosting this call. I got on a few minutes late, so apologies if this has already been covered.

Speaker Change: Our next question or comment comes from the line.

Julian Reed Harrison: Julian Harrison from <unk> Your line is open.

Julian Reed Harrison: Hi, Thank you for taking my question for hosting this call I got on a few minutes late so apologies. If this has already been covered but im wondering if you could remind us of the scope of your IP portfolio related to the use of JAK inhibitors for alopecia.

Neil Walker: But I'm wondering if you can remind us of the scope of your IP portfolio related to the use of JAK inhibitors for alopecia and how we should be thinking about that opportunity going forward. Thanks, Julian. So, yeah, we had, a long time ago, back in 2015, 2016 or so, executed a transaction with Columbia securing the rights to the method of use IP around utilizing various JAK inhibitors for the treatment of alopecia areata and actually various other types of alopecia. And thus far, we have announced two royalty deals.

Neil Walker: And how should be thinking about that opportunity going forward.

Speaker Change: Sure. Thanks Julien.

Speaker Change: Yes, we had.

Neil Walker: Long time ago back in 2015, 2016, or so executed transaction with Columbia, securing the rights to the method of use IP around utilizing various JAK inhibitors for the treatment of alopecia area out and actually various other types of alopecia.

Neil Walker: So thus far to date, we've announced two royalty deals one is with.

Neil Walker: One is with Lilly for the use of baricitinib for alopecia areata, and the other is with Sun Pharma, who acquired COTSRT, which had a deuterated ruxolinib, and that was also executed late last year. And so, those are the two current molecules that we have granted access to utilizing our IP. So we think it's a very valuable asset.

Neil Walker: Lilly for the use of <unk> for LP Sherry order and the other is with some <unk>.

Neil Walker: Pharma, who had required concert.

Neil Walker: Which had a <unk> <unk>.

Neil Walker: And that.

Neil Walker: Was also executed late last year.

Neil Walker: And so those are the two current.

Neil Walker: Molecules that we have.

Neil Walker: Granted access to the utilizing our IP.

Neil Walker: So we think it's we think it's a very valuable as state.

Alexander Thompson: Clearly, we've done two deals, and we'll constantly be looking at ways to enhance the value of that portfolio. Thank you. Thank you. Our next question or comment comes from the line of Alex Thompson from.

Neil Walker: Currently we have done two deals.

Alexander Thompson: We'll constantly be looking at ways to.

Alexander Thompson: To enhance the value of that portfolio.

Alexander Thompson: Thank you.

Alexander Thompson: Thank you our next question or comment comes from the line of Alex Thomson from <unk>.

Neil Walker: Mr. Thompson, your line is now open. For Alex, I guess you could just talk a little bit more about how this drug differs from the Pfizer compound and then, you know, is there any case for differentiation on the black box warning? Do you guys still expect a black box warning? Sure. Thanks, Alex. I mean, until you get through an actual NDA approval process and have those conversations, and whenever you're tickling a jack at this stage, you always have to think about, go in thinking that you'll have a black box.

Alexander Thompson: Before Mr. Thompson Your line is now open.

Neil Walker: For Alex I guess, if you could just talk a little bit more about how this drug differs from the Pfizer compound and then is there any case for differentiation on the Black box warning do you guys still expect a black box warning.

Neil Walker: Yes.

Speaker Change: Sure. Thanks, Alex.

Neil Walker: I think until you get through a natural NDA approvals process and have those dialogues.

Neil Walker: We're tickling the curve.

Neil Walker: <unk> at this stage or is that they are thinking about.

Neil Walker: But I do think a lot of the black box warnings, if you look at all of the different jack inhibitors out there, they're all slightly different. You know, RINBOX is different than TOPA, CERDNEV, et cetera. So I think data will drive some of that. And maybe, Joe, you can handle the question about, you know, what are the key differentiating features between our drug and what we're sitting on? Yeah, I mean, they're both covalent inhibitors that target a similar cysteine residue, and they both are potent inhibitors of Flax-3.

Neil Walker: And thinking that Youll have a black box, but I do think a lot of the black box warning is if you look at all of the.

Joe: Brooklyn, JAK inhibitors out there.

Joe: There is definitely wind boats is different than tofacitinib et cetera, So little.

Joe: Data will drive somewhere else.

Neil Walker: And maybe Joe you can handle the question about what are the different key differentiating features between our drug and retrofit.

Neil Walker: Okay.

Neil Walker: Yes.

Joe: They are both within.

Joe: <unk> inhibitors that target a similar cysteine residue and they both are potent inhibitors.

Neil Walker: The key differentiation, the way we see it, is that Ritinib, while it does hit tenases, is significantly more potent on JAK3 than any other company, including ITK. And in contrast, ATI-2138, depending on which readout you use, has a very similar potency to Ritlin-TK. And if the clinical exposures and doses that we plan to use and have used and what Ritlin-Cytinib is showing are any indication, I think it's pretty clear that we'll have exposures that significantly block IPK and JAK3 significantly, whereas Ritlinib is more of a JAK3-biased drug with little impact on IPK at the clinical dose and exposure.

Joe: The key differentiation.

Neil Walker: When do you see that.

Neil Walker: Sure.

Neil Walker: Fitness has while it does hit.

Neil Walker: <unk>.

Neil Walker: Typically more potent on Jack free than any.

Neil Walker: Excluding ITK.

Neil Walker: And in contrast, ATI 138, depending on wood readout gives us is very similar potency.

Neil Walker: Teekay.

Neil Walker: And if the clinical exposures in doses that we plan to use it.

Neil Walker: And what would fit in there.

Neil Walker: I think it's pretty clear that we will.

Neil Walker: We'll have exposures that criminals lead block ICP and Jack III significantly, whereas Rick was fitness is more of a JAK three biased drug with little impact on ITK.

Neil Walker: Dose and exposure.

Speaker Change: Got it thank you.

Speaker Change: Thank you and one moment for your next question.

Neil Walker: Okay.

Joseph Monahan: Got it, thank you. Thank you and one moment for your next question. And for your next question, it comes from the line of Gavin Clark Gartner from Evercore ISI. Please go ahead. Hey, thanks for taking the question. Apart from the black box side of things, I'm just wondering how providers will view the safety profile relative to the other JAK1s.

Speaker Change: And for our next question comes from the line of Kevin Clark Gardner from Evercore ISI. Please go ahead.

Speaker Change: Hey, Thanks for taking the question.

Speaker Change: Apart from the Black box side of things I'm, just wondering how you believe that providers will view the safety profile relative to the other JAK, one and specifically I'm wondering if there are any learnings from the alopecia or even rheumatoid arthritis space that may give some early hence to how they may view. This thanks.

Gavin Clark Gartner: And specifically, I'm wondering if there are any learnings from the alopecia or even rheumatoid arthritis space that may give some early hints into how they may view this. Thank you. Yeah, thanks, Gavin. It's a good question because, you know, I think on the face of it, you look at it and say, well, it's a black box.

Joseph Monahan: Yes.

Speaker Change: Thanks, Kevin It's a good question because I think on the face you looked at it and say well, it's a black box and then.

Neil Walker: I can tell you having practice oftentimes.

Neil Walker: It's more of a chore for the physician to explain the laundry list of things that could happen. However, I would say that in talking to various colleagues over the last couple of years.

Neil Walker: Really don't think and I think that is reflected in their sales.

Neil Walker: I really don't think its been that big of a hindrance. Once you explained the issues and then at the end of the day patients want.

Neil Walker: And at the end of the day, patients want their disease to be better. And, you know, we know that there really hasn't been much of a tail off at all. In fact, you know, baricitinib has been growing in alopecia areata. You know, you've seen nice growth with RINVO and atopic dermatitis. And there's a reason it provides an order of magnitude benefit over biologics, for sure. So I think, you know, at the end of the day, when patients want relief, and they know they're going to get it very quickly, rather than perhaps waiting 16 weeks for a biologic to kind of take, you know, get to full effect, you know, that's important.

Neil Walker: Their disease to be better and we know that there really hasnt been much tail off at all in fact.

Neil Walker: <unk> been growing in alopecia areata.

Neil Walker: No.

Neil Walker: You've seen nice growth with with where invoked.

Neil Walker: The topic dermatitis.

Neil Walker: There is a reason.

Neil Walker: <unk> order of magnitude benefit over over biologics for sure. So I think at the end of the day when patients want relief and they know they're going to get it very quickly rather than perhaps waiting 16 weeks for a biologic to kind of take.

Neil Walker: Get to Max effect.

Neil Walker: That's important.

Neil Walker: Got it. Thanks, Neil. I'm showing no further questions at this time. I would now like to turn the conference back to Neil Walker for closing remarks. Well, thanks, everybody, for joining our call today. We're excited to provide additional updates in the coming months and appreciate your time. Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Speaker Change: Got it thanks Neel.

Neil Walker: Okay.

Neil Walker: I am showing no further questions at this time I would now like to.

Neil Walker: France back to Neal Walker for closing remarks.

Neil Walker: Well, thanks, everybody for joining our call today, we're excited to provide additional updates in the coming months and I. Appreciate your time. Thank you.

Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.

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