Aclaris Therapeutics, Inc. (ACRS) Earnings Call Transcript & Summary

Awesome. Well, thanks so much, everyone, for joining us here for the last session of the day, and thanks to the team from Aclaris. Maybe I'll turn it over to you guys to introduce yourself and give us a brief overview of the company.

Great. Let's start with Kevin.

Yes. Kevin Balthaser, CFO. I've been into Aclaris now for 6 years. The first 5 of that predominantly spent running finance accounting operations for our former CFO, and I took over for him in January.

And Joe Monahan, CSO of the company. Started with Aclaris in 2017 when they bought the company that I started back in 2010 called Confluence Life Sciences.

And Doug Manion, CEO. I joined as COO in July of last year with the intent of having an orderly transition of Neal Walker, our Founder to become Chairman, and that occurred in January. So a quick story about us. So Neal and Frank Ruffo, who is Kevin's predecessor founded the company in 2012 to be kind of a spec derm play, and they have a long history of launching companies, finding products that they can sell and then being taken out. So that was Plan A for version 1.0 of Aclaris. They actually did acquire a couple of assets that were being sold in the mid-2010. During that time, they actually were looking to have a topical JAK to develop. They actually reached out to Joe and his friends at Confluence to begin developing that as a edge. They bought Confluence in 2017, and then by 2019, we realized that the derm products were just not selling well enough. So they were divested. Of course, Joe brought with him not just unbelievable discovery prowess, both biology and chemistry, but also a stable of assets, the topical JAK, as well as others, including ATI-450, our lead MK2 inhibitor. So we pivoted from being a derm company to an I&I company, focusing on clever ways to impact the human kinome to impact serious disease with serious unmet medical need. Our lead asset, the MK2 ATI-450 is in Phase IIb testing for rheumatoid arthritis after a successful Phase IIa that read out last year, then our topical soft Jack, ATI-1777 is in Phase IIb research for atopic dermatitis, and that should read out in the second half of this year. A novel approach to blocking ITK/JAK3, drug called ATI-2138 is completing a healthy volunteer MAD study, and we'll have PK/PD data on it in the coming month or so. And then lastly, our backup MK2 ATI-2231 is initially being validated in solid tumors. So in partnership with an academic institution, we're about to have first patient dosed in an all-comer Phase IIa solid tumor study. But the goal of it in cancer would be metastatic breast cancer or pancreatic cancer, but ATI-2231, we're also fast-tracking to get an INI -- IND. So it could actually be tested for other indications in line with what we do with 450. So extremely busy year. I think we punch way above our weight class in terms of discovery and development.

Great. Maybe we'll start with ATI-450 or zunsemetinib. First, let's just start with the structure of the drug. It inhibits MK2, that's been traditionally pretty difficult to target. So what are the challenges that you had to overcome, as a discovery team? And could you walk us through some of those features?

Yes. So the p38 pathway of which MK2 is part of -- has been of interest to drug companies for the last 25 years, particularly focused on p38 as a target, and p38 turns out to be a non-optimal target for 2 main reasons. One is that inhibitors tend to have some safety liabilities in part due to the fact that p38 has over 70 different substrates; and then secondly, in Phase II studies, p38 inhibitors demonstrated a lack of sustained efficacy, particularly in RA studies. So in a 12-week RA study across a number of different companies with a number of different chemo types of p38 inhibitors, they also had the same thing with an additional -- initial reduction in inflammation in RA patients. But after continued dosing after 2 weeks to 4 weeks to 6 weeks, you see that reduction in inflammation come back to baseline levels. So it had transient effect on the anti-inflammatory effect in RA patients. MK2 is one step downstream from p38. It is the kinase that is specifically associated with the pro-inflammatory cytokine modulation of the pathway. So it's a positive impact there. And it's much more selective than a p38 inhibitor that has all these different substrates. The problem is, as you said, p38 -- MK2 inhibitors historically have been very difficult to develop because MK2 is a difficult target to drug. And so for 10 years, a lot of drug companies were involved in MK2 inhibitor development, yet none actually even made it into the clinic much less through the clinic. And so we started the work when we started Confluence back in 2010, and it was based on a co-crystal structure that was published on p38/MK2 complex. So the 2 proteins form a complex prior to p38 [ phosphorylating ] MK2, and there's the interface of that complex that we targeted. And by targeting that interface, we're able to generate molecules that specifically bound to the complex didn't bind to p38 by itself or MK2 by itself and also didn't bind to p38 when in the complex with other substrates. So it's very specific for the p38/MK2 complex, and in binding to this interface, it locked MK2 to an inactive confirmation. So it block the signal transduction at the MK2 level, allowing p38 to continue to do the things that it does, except for regulating these pro-inflammatory cytokines. And so the result of that was ATI-450. And we demonstrated preclinically in a number of different cellular studies that we maintain the ability to dock down these key cytokines such as TNF IL-1, IL-6, IL-8 and IL-17. We had efficacy in a number of different disease models, inflammatory disease models, including those for IBD, RA, CAPS disease, for example. And then, we took it into clinical study, and as Doug said in the Phase IIa RA study, the 2 things we wanted to demonstrate is was -- is ATI-450 safe in RA patients over a 12-week dosing and does it -- or does it have some liabilities similar to p38. We demonstrated that it was safe didn't have the p38 liabilities. And most importantly, does it inhibit inflammation sustained over 12-weeks. And we demonstrated with a number of readouts, including CRP reduction, cytokine reduction, measures of clinical efficacy that we had a reduction in inflammation, that reduction was maintained for 12-weeks. So that's where we are now, and now we're getting the readout later this year in the IIb study.

Great. Maybe let's just quickly do a refresher on the clinical studies we've seen so far, one in rheumatoid arthritis that was successful, another in Hidra -- I'm not even going to try to say it at this time of the day, that didn't pan out. So can you just remind us what we saw and how you interpret that, as it relates to the coming study?

Yes. So as mentioned, the initial kind of drinking indication was already for the reasons that Joe mentioned. The study was very successful, relatively modest in size, but the point estimates for ACR20, 50, and 70 were in line with what you see with JAKs and TNF. And we saw a good safety profile. That was the impetus for us to go into Phase IIb in it, but the -- my predecessors decided to also go into 2 additional indications, psoriatic arthritis, which is another spondyloarthropathy, typically, things that work in RA, work in PSA, but they decide to do that study anyways. But then they took a bit of a flyer going into Hidradenitis Suppurativa...

Nice Job.

I've had way less work than you today. But there, it was all based on the theoretical thinking that we hit TNF, we hit IL-17, we hit IL-1, we hit IL-8. IL-17s and TNFs have been shown to work. IL-1 and IL-8, you would think would be useful in terms of HS. The challenge with HS is that there's no validated efficacy model -- predictive efficacy models. And so unlike RA and IBD, we have a pretty good idea that at least there is a reason to believe it's going to work based on in vivo efficacy models, that is not the case with HS. So they took a bit of a flyer. It turned out that the study was well executed. It's a Phase IIa study of 95 patients that read out in March of this year. And what we saw was minimal activity in terms of the primary outcome, which is a decrease in active nodules from baseline compared to placebo. There's 2 reasons for that. One of them is that placebo had an unbelievably good day. So if we did a single-arm study just with placebo, it would have been the best drug ever in HS even though we know it doesn't work. So comparing to that very high placebo rate, nothing even if we had tested 1,000 people, it would not have mattered. But also, we looked at individual results and compared it to PK and PD results for the people, who are on active drug, and you'd expect if we had any impact that the higher the systemic exposures to our drug and the bigger the decrease in endogenous cytokines, the more activity you would see, but it was a complete flat line. There was 0 correlation. So there's a disconnect between the good effect that we have on cytokine systemically and what's actually going on in the skin of this disease, which we don't fully understand. I don't think anyone really understands this disease. But it's very clear that we don't have enough activity to continue prosecuting for it. The good news though in the study is that the PK was exactly as predicted based on healthy volunteer studies and the Phase IIa RA study. The PD was exactly what we predicted in terms of ex vivo simulation, and Joe collaborate on that, as well as endogenous cytokine knockdown. And most importantly, the safety profile was clean. And we have a very, very clean non-human preclinical tox package, including 6 and 9-month mammal studies that showed no dose-limiting toxicities, which is great. But there's yet to be a signature toxicity that we're worried about in Phase IIb, and I've developed scores of drugs, I have never had a drug with this clean. So all that is kind of positive. We feel read-through for the Phase IIb RA -- and we don't see any negative efficacy read-through from the lack of efficacy. And anything, you want to kind of elaborate on regarding the cytokines.

Just with the HS study, similar to the RA study, the ex vivo stimulated cytokines from blood were inhibited by ATI-450 on day 1 and day 84. So the pathway was maintained, as far as the dependence of the pathway -- the cytokines on the pathway. And then the endogenous cytokines, they weren't elevated as much in HS patients, as they were in RA patients. But in both cases, the endogenous cytokines were reduced to healthy donor levels. So very similar systemic effect on cytokines in both studies.

Okay.

So just an important, I think, data point that might contribute to understanding this is, is what we saw with HUMIRA's HS program. So they did a Phase IIb of standard dose HUMIRA versus placebo versus double frequency dosing HUMIRA. And only with double frequency dosing did they see a clinically significant impact. And even then, it was relatively modest compared to the placebo effect. So it probably works. It doesn't work gang busters, but at least for the TNF pathway, you got to hit it with the sledgehammer to have activity. The value proposition behind our approach is that we knock down multiple pathways, including TNF, but some maximally. And we think that there'll be synergy additivity, the synergy from an efficacy perspective, but we think that there'll be enough residual function of each cytokine pathway that hopefully will have a better safety profile. Most importantly, we won't see the issues that you see with TNFs, for instance, in terms of increased incidence of lymphomas or opportunistic infection. So thus far, the safety database in human bears out our value proposition on both fronts, and we're hoping that's going to carry forward.

Yes. You mentioned it's a pretty clean profile. A couple of other things that we've seen are headaches, dizziness, CPK, maybe you could just contextualize those events to help us understand the mechanism.

Yes. So the mechanism is always tough. But so on -- so the one thing that we're seeing that we think is probably drug attributable is a very transient mild headache and dizziness that's seen after the first dose or 2, but which basically goes away. So it was seen in well-controlled healthy volunteer studies, SAD and MAD. So these are patients, who are basically hospitalized for 1 to 14 days. It was seen fairly consistently, and it was seen kind of in a dose-related effect and it's a higher rate than placebo. So that appears to be real, but it is just a nuisance toxicity. So in the MAD, where everybody dosed through, in every instance that appeared and disappear within a day or 2. We did see some headache in the RA Phase IIa study, similarly, it kind of went away. In the HS study, there was an incidence of someone, who had a headache day 1, who actually left the study, and it's unfortunate that they did that because if they had dosed through, they probably would have been fine. So that is the one toxicity that we're aware of, where we have basically instructed the investigators for ongoing studies like the RA and psoriatic arthritis sites to be looking for this, and to pre-warn their patients. And if you -- if there's kind of an anticipatory expectation that they know if it occurs, it's going to be transient and mild, and it may mean, they were randomized to active, as opposed to placebo, we're expecting to see much less drop up because of it, if any. So that's good. CPK is different. So with CPK, we've seen 0 preclinical signals. So in short term and longer term, now 6- to 9-month non-human mammalian tox studies, we've seen 0 impact on muscle. So no symptomatic toxicity of the animals, not ambulating or moving around properly, no indication of about chemical toxicity, so no elevation to CPK or other muscle relevant enzymes, and most importantly, 0 evidence of muscle toxicity on histopath. And so it would be hard to understand if you had that clean profile preclinically had exposures in excess of that seen in humans that you would have an issue in humans. In the RA study, there was no CPK signal. In the HS study, what we saw were blips of CPK, seen both in active and placebo. In fact, if you looked, there were 26 patients, who actually had an increase in CPK at, at least 1 visit, 11 in placebo, 15 on active. In no instance was it symptomatic, so no muscle weakness, no muscle pain. In every instance, where people dosed through it went away at the next study visit. And so all the synthesis of all of this information convinces me that we don't have an issue with CPK. It's bolstered by the fact that we have a DSMB that oversaw the HS study, and it's also the same DSMB overseeing the RA study. So they're looking at ongoing unblinded safety data and they have not raised any concerns. So we did a Q1 earnings call to basically share with everybody more detail on everything we learned from the HS study in terms of PK/PD and safety. And so if you go to our website, there's a very detailed slide deck that kind of goes through this stuff in even more detail. But we think that there's no there on CPK.

Yes. Great. So as we look ahead to the Phase IIb trial, which I think you just announced completion of enrollment. Maybe remind us what the trial design looks like, any key aspects in terms of inclusion criteria, powering assumptions, et cetera.

Yes. So it's a Phase IIb study, 3 arms, 280 patients, [ so 1:1:1 ] randomization, placebo, 20 milligrams BID, 50 milligrams BID. The 50 milligram BID dose was the one that was used in the successful Phase IIa study. We designed the Phase IIb to be as close to the Phase IIa, as possible with one major exception -- 2 major exceptions. One of them is that we're testing 2 doses. But the second one is, whereas it was an all-comer U.S.-based study in Phase IIa that resulted in half the patients having JAK and/or TNF experience and half being naive to anything but methotrexate. The Phase IIb, we prescribed that there could not be more than 20% of the patients, who had JAK and/or TNF experience and 80% were on methotrexate, but not exposed to other systemics. So that is going to skew obviously towards the naive population that tends to do better. They did do better in our Phase IIa study. But -- so those are the differences. In the U.S., most of the experienced patients came from the U.S. sites. So the experience strata was actually completed a couple of months ago, and then we just completed the naive study with most of the patients coming from Eastern Europe, notably Poland.

Okay. Great. As you think about success scenarios for that study, first of all, like what do you need to show in terms of comparison to JAKs and the antibodies that are already there?

So 3 things we're looking for. One of them would be a replication of the good efficacy we saw in Phase IIa. And if anything, with a skewing towards more naive patients, the point estimate in terms of, for instance, ACR20, which is the primary endpoint on which the study was powered should go up. So I think that you want to be in the ballpark of TNF and JAKs. By the way, on that, if you have read the ACR guidelines in terms of treatment for RA, they're now moving towards a thing called treat to target, which is basically cycling through mechanisms until you find when that gets people down to very, very low active joint count. And so whereas before, you'd put somebody on it for a year, and then kind of look for evidence of, for instance, radiographic improvement. Now the new way to do it is find -- get the symptomatic joint count down as low as possible just by [ trying stuff ]. So having efficacy that's in the range of JAKs and TNF, coupled with good safety, which should put us easily within the [indiscernible] drugs, so that [indiscernible] the cycle through. So number one is competitive efficacy. Number 2 is a continuation of the good safety profile and a reason to believe that we will not have a black box warning. And if you look at our profile currently, it would define logic that we'd have any onerous safety labeling. And third, and people kind of missed this is we'd love to have those clarity coming out of Phase IIb such that unlike the JAKs, we could take a single dose into Phase III. And that would save a lot of money in probably a year in terms of Phase III execution.

Great. That's a great segue to my next question, which is pending good results. What do you view, as the next steps for this program?

So part of bringing me on board, and we've also brought in a rheumatologist Gail Cawkwell, as the CMO last summer, we wanted to be able to design and prosecute Phase III for all of our programs internally. The one caveat with that is that we don't have the cash currently, so we'd have to raise money somehow and our CFO can elaborate on how we're going to do that. But we have all of the internal capability to design and execute our study. So we're in the process of drafting protocols for Phase III for 450. We're not public on where we're going to go. But if we hit as big in RA, as we would like, the obvious thing to do would be to go big in Phase III for spondyloarthropathy. So RA, psoriatic, ankylosing spondylitis, juvenile idiopathic arthritis, all kind of co-migrate, so we could go straight to Phase III with all of those. And then we expand into other areas, where we may need to do additional POC and a dose ranging. So the rheumatologic vascular disease like PAN, as an example, and going into IBD, and we have really good evidence that we work in IBD based on validated predictive animal model. So that would be the hope.

Great. Maybe we'll touch on psoriatic arthritis, and we'll also see data for that program in the next couple of months, later this year, early next. So first, you talked about like the rationale for selecting this indication, let's start there?

Purely just validation. It sound like a check-the-box exercise. If you work in RA, you do this. I think the initial idea was that psoriatic was going to read out before the Phase IIb for RA, but that just isn't how things worked out. That was in part because of geopolitics. So when all helper [ crews ] in Ukraine, we are actually going to be in Ukraine big time for both of these programs. We pivoted to Poland. Poland was inundated with similar requests...

You're the only one.

From big -- much bigger companies than us. So I think everyone would be glad to hear we prioritize getting regulatory approval for the Phase IIb RA study over the psoriatic, and that explains the delay. Now we -- I think all of the sites that we plan on having have been initialized. So we're just starting to see screening increase. So we're hoping to be able to refine the delivery of day to date. Right now, we're just saying first half of '24, but we should be refining that in the coming couple of months.

Yes. Where do you see the opportunity for new agents in this particular space?

So psoriatic is different than RA. Methotrexate is not used as much TNF is kind of first line, but there is significant unmet medical need. Psoriatic arthritis is probably not a single disease. It's probably [indiscernible] diseases, where you have a spondyloarthropathy coupled with skin sensitivity. And so the -- it is very different. There's a large unmet medical need. There are drugs that are active in skin. So for instance, the IL-23s and IL-12s that are being tested. It's not clear how much activity they're going to have on the underlining arthritis. So we think mechanistically, it makes a lot of sense for us to be there. And I think that we're going to be a nice foil to the TNFs in that disease.

Great. Maybe we'll spend some time then on the funding side, cash runway today and how you think about funding the large flow of programs you just outlined.

Sure. So we ended the first quarter with $204 million of cash. As some of you may have seen, we did -- do a transaction off our ATM with being capital that brought in an additional $27 million. So think about our end of Q1 cash balance is $230 million. We think that gives us a lot of flexibility to execute on the programs that we currently have running. As Doug mentioned, obviously, we caveat that by saying that cash balance doesn't give us enough to get through a Phase III program for RA or a Phase III program for 1777. So as we approach these data readouts, we will be having discussions and looking best alternatives to provide that funding and that [ they ] be a mix of dilutive and non-dilutive funding. And we'll see what that looks like, as we approach the data readouts.

So just to add, so we -- and this predates me, but we've really been parsimonious in terms of how we spend our investors' money. So our burn rate is about $25 million a quarter. With that low level of spend, we have 3 in [ suite ] and 4 drugs in the clinic in the last 5 years since we acquired Confluence. We're pumping out an IND candidate every year and an IND-enabled drug every 18 months. And so the idea here would be to keep a relatively low burn rate. We have 120 employees. We're not planning on going much bigger than that. And the dream would be that we monetize the Phase IIb drug, so the drug for atopic derm and 450, and then it gets pumped back into the model. So we never intend on being a commercial phase study -- a company rather, we don't want to have a sales and marketing infrastructure. We'll let other people do that. We want to keep discovering clever drugs very cleverly and inexpensively derisk them and then find a partner.

Yes. So let's talk about some of these other drugs. Maybe starting with ATI-1777. It's a soft JAK inhibitor. What does that mean?

So by the way, this is why Aclaris began our relationship with Confluence, [ which result in us ] buying the company. But Joe take it away?

Yes. So ATI-1777 was specifically designed as a topical JAK inhibitor. The 3 things that we wanted to incorporate into that molecule was one JAK1/3 selectivity, so to avoid interaction with JAK2 and inhibition of JAK2 because we don't feel that JAK2 adds anything to the efficacy and could bring in some safety liabilities. Second, the ability of the compound to traverse the skin intact and have a local effect in the skin. And importantly, number 3, when the drug does get into the circulation, the plasma esterases we built in soft spots into the molecule, which means they're metabolically labile spots. So plasma esterases and then liver enzymes would rapidly degrade the molecule. So it gives us the opportunity for a best-in-class type approach, where we would have efficacy locally in the skin, but we have no systemic availability, so efficacy with limited safety liabilities.

Great. What have you seen thus far in terms of systemic exposure?

So in the IIa study that we did in atopic dermatitis, we tested all patients, a number of time points with each patient. And we saw a total of about 6 values out of about 150 values that we looked at that were above the lower limit of quantitation. And these levels were in 3 different patients. It wasn't consistent. It was just a point in time with each of these 3 patients. And the level that we attained there was below the IC50 for JAK1/3 and way below the IC50 for JAK2. So we did clearly achieve this lack of systemic availability to have less than pharmacologically relevant concentrations across that whole study with all the patients.

And just to add, that was with a 2% BID approach for the Phase IIa, in Phase IIb and it's a 240 patients that they'll be reading out later this year, as we just said. There are 4 active arms, the 2% BID, that had almost no exposure, 1% BID, 0.5% BID and 2% QD. So obviously, the 3 [ that are ] 2% BID will have lower exposures. Yet the goal here would basically to have 0 detectable drug in the blood after Phase IIb. We think that's going to be compelling to the U.S. FDA to want to see this [ passing ] Phase III and without the eventual black box warning that you have with topical JAKs.

Right. Can you expand a little bit on design of the Phase IIb? And what you expect to see with respect to -- what's a good outcome here?

Yes. So 6 arms, 40 patients per arm, 3 BID arms with the BID placebo, [ 1% ] QD -- 2% QD arm against the QD placebo. And the goal would be to see a replication of the good results we saw in Phase IIa in terms of efficacy. But as I mentioned, to find one or more doses that had 0 exposure and then we'd make a decision, as to which one we progress to Phase III.

Understood. How do you think about the landscape for topical dermatology products now? I know you obviously pivoted away from this a little while ago. So there's been some progress there. What do you see now?

So then -- and it's too bad that Neal Walker, our Founder, former CEO and Chairman isn't here because he taught me everything I know about this. So topical derm products are tough from a gross to net perspective. And when Incyte launched, they took systemic rux and made a topical formulation with it, and they got it approved and then they had a sales force with only one product in the bag. We were very, very skeptical in terms of what they projected to be their top line sales. I think they're projecting something north of $1.5 billion, but also the gross to net because it just made no sense. The good news is, in fact, those are not hitting the top line revenue that they had projected to, they are actually selling a lot of drug. And even with their, I think, imperfect single product sales force model, they're actually [ conferring ] a decent gross to net, which could only be improved upon if a drug like that or like ours was in the hand of a company that already has a sales force with a bagful of product for derm -- for dermatologists. So they're creating a market that we're going to fit into very nicely. I mean, they're -- I think that they're tracking to hit maybe north of $500 million of peak sales with acceptable gross to net. And so that's going to help us in our discussions with big pharma. Again, we don't intend to commercialize products. So we are looking for someone, who wants to take it off our hands to commercialize. And the sooner that we -- that is kind of nailed down, the sooner then we will know how to finance Phase III. And we can do this through dilutive means, although we think that's unlikely. More likely, we'll look for a partner to pay for it possibly off their P&L, which would be a good way for them to go. And then lastly, we're talking to royalty pharma companies in terms of subsiding it, so where it takes us.

Understood.

It's a very compact Phase III. So unlike RA that could cost north of $500 million. AD would be a small fraction of that. You'd have to do a relatively small sample size from a safety database perspective. So we could easily prosecute this if we had the funding.

Yes. Okay. Great. Maybe we can move on to the ITK/JAK inhibitor. Let's just talk about why that mechanism of action and where you expect it to fit?

Yes. So the 2138 is a covalent inhibitor of ITK and JAK3 takes advantage of a cysteine residue that's in the same place in both ITK and JAK3. JAK3 is the only ISO form of the JAK family that has this cysteine. So this compound is exclusively selective for JAK3 across the JAK family. And so what this compound would be good for is T cell-driven diseases, number of different T cell-driven diseases that we're looking at, but it will block both cytokine production, it will block T cell function. So really excited about the possibility here. Currently, we completed a Phase I single ascending dose study. We're near completion, as Doug said, of a Phase I multiple ascending dose study. We'll pull those data together, look for doses that we want to move into Phase II and rapidly move this into a T cell-driven Phase II disease.

Great. So when should we expect to see the next kind of clinical updates from that program? And what would we look for in terms of success?

So we'll see top line from the MAD in July and final results from the MAD in September. We intend to be initializing Phase II this year with first patient dosed early next year.

Okay. And how are you thinking about indication inflection?

Yes. So it's a great question. So a way to look at this mechanism is it's in the same space as the S1P. So the S1P, S1P basically is a T cell trafficking approach. A bunch of drugs have been approved or being developed among the S1P class, including Etrasimod that was the lead asset for Arena Pharmaceuticals, where I used to work, that was purchased by Pfizer last year. So the S1Ps were initially validated, Ozanimod was initially validated in multiple sclerosis. Ozanimod by the way, is the drug that receptors developed the Celgene part and now BMS is commercializing. It's also being developed -- it was developed for UC. Etrasimod being developed for UC and for AD. But the universe of T cell-driven diseases is really broad. It includes, for instance, asthma and COPD. So I think UC is the right first step for us because it will be a compact Phase IIa, where there's lots of precedent, there's reliable animal models in which we work spectacularly. So it's the right way to go initially, but we'll kind of see where we pivot after that.

Great. You mentioned the kind of pace of INDs and IND-enabling studies, so how should we expect like the focus of those programs?

So mechanistically, I mean, we really -- our expertise is really on [ probating ] the human kinome to impact areas of serious unmet medical need. And if you look at 450, if you look at 1777, 2138, and we haven't mentioned here, but 2231 another MK2, we've been way more clever than the average bear in attacking kinases, including JAKs in a way that should be safer than what others have done. So that's kind of our lifeblood in terms of chemistry. But where we go in terms of diseases is a little bit less constrained. So obviously, I&I indications have been where we are, derm, rheum and soon GI. But 2231 is being initially developed for oncologic applications for mechanistic reasons and financial reasons that make a lot of sense for us. And we don't really want to take anything off the table. I think, again, where we have a secret sauce is in picking robust targets that can be addressed by hitting the human kinome, and in some cases, there will be [ part of ] potential, and we'll kind of figure things out.

Great. So we talked a little bit about cash runway in terms of these programs, as you think about sources of capital for funding the rest of these, I guess, how should we think about cash runway today? And yes, I don't know.

Sure. Yes. So I mean, what I mentioned earlier, we guide to our cash runway being through the end of 2025 with the caveats I mentioned. In terms of capital allocation, I think the way we would describe it is until we see otherwise, 450 is going to get the incremental dollar. So something like 1777, we could use as a funding mechanism for 450, but we will also allocate some capital to these discovery programs to help backfill the pipeline and give us a future beyond 450.

And I'd be remiss not to mention, I mean, I think we're fishing in the right pond. If you look at M&A, in the I&I space [ of late ], there was Pfizer taking out Arena for $6.7 billion; there was Takeda buying the Nimbus TYK2 for ultimately $6 billion; and then, there was just a Prometheus deal with Merck. So there's an awful lot of interest in big pharma. A lot of them have got revenue or IP cliffs, that they need to kind of fill. And I think having an oral non-JAK [ for a ] potential [ INH ] and puts us in a very good place.

Great. Awesome. Well, that takes us to time. Thanks so much for the team for joining us today.

Well, thank you.

Thank you.

It's great meeting as always.