aTyr Pharma, Inc. (ATYR) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to aTyr Pharma's Key Opinion Leader Call on Current Treatment Options for Pulmonary Sarcoidosis. I'm Sanjay Shukla, CEO of aTyr. And today, I'm in Cleveland, Ohio with Dr. Daniel Culver, Chair of the Department of Pulmonary Medicine and Director of Diffuse Parenchymal Lung Disease at the Cleveland Clinic. Dr. Culver is a leading KOL in the area of pulmonary sarcoidosis. And we're here today to discuss a little bit about treatment options etiology, potential new needs for new treatments and talk about steroid burden also in patients. I'll also be discussing aTyr's lead therapeutic candidate, ATYR1923, which is currently being evaluated in a Phase Ib/IIa study for the treatment of pulmonary sarcoidosis. Enrollment in this trial has been completed and data from this important study is expected in the third quarter of this year. We've invited Dr. Culver to provide a bit of a refresher on sarcoidosis to help get everyone up to speed. And as I said, what the current treatment landscape looks like and certainly thinking about what maybe a potential meaningful outcome from the study with ATYR1923 as it reads out here shortly. I'll begin by providing a brief overview of aTyr, our biology, background on 1923. I'll also provide an overview on our study protocol. Dr. Culver will talk a bit more about sarcoidosis etiology, disease epidemiology, current treatments with a focus, as I mentioned, on the burden of steroids and the need for alternative options. Then Dr. Culver will provide some comments and his thoughts on how we may view potential outcomes from the Phase Ib/IIa study. After the presentation, we'll open up the call to Q&A. We invite our analysts to come on and ask some questions. I want to remind everyone that this call is being recorded and will be available for replay on the aTyr website following the event. Also, as a reminder, we will be making certain forward-looking statements, including statements regarding future development and potential benefits of 1923. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. So let's get started. At aTyr, our mission is to develop a new class of medicines based on a novel platform biology -- biology platform coming out of the work of Dr. Paul Schimmel at the Scripps Institute. Our job is to chart new pathways and develop new medicines from this new class of protein therapeutics coming out of the tRNA synthetases biology world. 1923 is an immunomodulator for severe parenchymal lung disease. And as I mentioned, we're reading out here in Q3, our trial results for pulmonary sarcoidosis. Those will be upcoming in the next quarter. We also have a preclinical program of testing neuropilin antibodies. It's a program in which we have advanced lung candidate called ATYR2810, which is a lead candidate targeting a subdomain of neuropilin-2. This is currently an IND-enabling work, testing for very solid tumor models, and we expect to be in the clinic next year. Then finally, we have a discovery platform that continues to identify new receptors and new biologic pathways related to tRNA synthetase biology, having found some functional effects recently with 2 additional targets on natural killer cells, which we announced earlier this year. Our financial position there as of the end of March was just over $50 million in cash. Next slide. This is our development pipeline, again, to highlight here, 1923 is our most [ advanced ] opportunity. We are one of the furthest along in the ILD space in -- for any company in biopharma. This is a program that has been partnered already during the pharmaceuticals, and they have recently completed or are nearing completion, a healthy volunteer trial. Kyorin, we're fortunate to have Kyorin as a partner to aTyr where we have brought in already $10 million of milestone payments on a license deal that we announced a few years ago. But down at the bottom of our development pipeline, you see 2810 currently in preclinical testing with solid tumors, and we have a number of discovery projects looking at cancer, inflammation and fibrosis. Let's spend a minute on the biology in which the company was founded. tRNA synthetases may have novel functions, extracellularly. These are enzymes that help us make proteins. They are basic building blocks to -- in all of our bodies that help catalyze the reaction between amino acid and the tRNA. What Dr. Schimmel and his colleagues discovered is, for some reason, these enzymes break apart into fragments and splice variants. And there, we are learning that they play a powerful role in controlling our immune physiology, implicated in a number of disease areas, inflammatory disorders, cancer, neurology. We're learning quite a bit. One of these fragments, a fragment of histidyl tRNA synthetase, had some particularly novel immunomodulatory function around of impacting lung -- immune cells in the lung. We followed that signal, and that's how we basically developed 1923. Next slide. 1923, one of the first experiments we looked at in animals was this gold standard bleomycin-induced lung fibrosis model. We presented this at American Thoracic Society back in 2018. And here, you see healthy lungs of these rodents are injured with this toxic agent, bleomycin, which is known to cause quite a bit of interstitial and inflammatory damage. 1923 did a really nice job here of resolving that inflammation, restoring that normal architecture. This was presented to over 2 dozen of leading pulmonologists back in 2018. Their view was 1923 could be a novel mechanism to treat inflammation. Next slide. Our mechanism of action, let's talk a little bit about that. Our drug binds to a receptor called neuropilin-2. This is upregulated on immune cells during an inflammatory response. We have also observed neuropilin expression and shown this in a poster last year at ATS that is enriched in human sarcoidosis samples and looking at both lung and skin granulomatous. From a safety perspective, we have really nice supportive evidence in a Phase I study and even in our current trial, looking at patients with 2 independent drug safety monitoring board evaluations thus far, finding really nice tolerability. So 1923 is also setting up rather well here from a safety perspective. When you look at the efficacy, we've looked at it in animals. We see a significant downregulation of inflammatory and profibrotic cytokines and chemokines, presented this multiple posters over the last several years at major medical conferences. We also have observed a reduction in inflammatory cytokines in a recent mechanistic trial we ran in COVID pneumona patients. Next slide. This is just a slide of some of these models that we looked at. It really gave us the confidence to move into the clinic. What I can tell you here is in various animal lung injury models, no matter if we use a direct agent, indirect agent, experimental agents, we started to see a consistent downregulation of pro-inflammatory cytokines. This really derisks this program. And this was a poster presented at American Thoracic Society in Dallas. And this is what compelled our partner, Kyorin, to join us on this journey. Next slide. [ Our basic ] mechanism of action. Disease triggers, sometimes organic, sometimes infectious, sometimes there's an autoimmune disease, like RAS Scleroderma. In some patients, you may have an aberrant immune response. And it's an aberrant immune response that can sometimes become chronic, leads to long-term inflammation and eventually may kick off a cascade of fibrotic damage. 1923 dampens the immune response by interacting with these activated and inflamed immune cells by binding to neuropilin which we know is expressed on their cell surface, thereby creating less inflammation and leading to what we think is a much more stabilized lung. I'll talk for a minute on interstitial lung disease. 4 major types: IPF, connective tissue disease related-ILD, chronic hypersensitivity pneumonitis and pulmonary sarcoidosis. What they all share in common, even though they present differently, is a common immune pathology. Inflammation and fibrosis is a key component to all of these diseases, but progression of fibrosis is really the key driver of morbidity and mortality. We think our drug, by targeting that aberrant immune response driving fibrosis, really has the potential to improve outcomes for patients in all of these ILDs but in particular, sarcoidosis is where we're starting. Market opportunity. Just as a reminder, a large body of inflammatory lung disease needs new therapies. IPF has 2 drugs that produce that are on the market, nintedanib and pirfenidone. These generate almost $3 billion in sales. Our view is there's a large market opportunity in these other 3 inflammatory forms of interstitial lung disease, equally potentially a $3 billion market opportunity. Let's talk a minute about sarcoidosis. Dr. Culver is going to go into more details here, but it's inflammatory disease. While we don't know the etiology, it is characterized by a formation of granulomas. About 200,000 patients in the U.S. have sarcoidosis, come down with sarcoidosis. A large number of these patients require some form of systemic therapy. The treatment options are limited. Most often, you see sarcoidosis present in the lungs. And the real concern here is, of course, the chronic progression to fibrosis. Lastly, I want to highlight our study, real quick here. We have enrolled -- enrollment is complete. 37 patients will be read out here in Q3 2021. We took patients stably managed on anywhere between 10 to 25 milligrams of prednisone. We administered 6 doses -- IV doses of 1923, either 1, 3 or 5 milligrams in a randomized double-blind placebo-controlled trial. This trial had a unique component in the -- it incorporated a 4 steroid taper. This is going to be one of the key end points we look at after proving that this drug has good safety and tolerability. The next slide goes into that study schema where you can see 12 patients were enrolled in each cohort, 8 received our drug, 4 received placebo. There you see in the first 7 to 8 weeks of the trial, where there is a 4 steroid taper. And our view is our drug will do a better job of maintaining that subclinical 5-milligram dose in these patients, whereas placebo patients will flare or exacerbate. This is how we're going to, in our mind, find the most clinically meaningful end point to determine activity for ATYR1923. So with that, I'm going to turn it over to Dr. Culver as he talks a little bit more about sarcoidosis.

Thank you, Sanjay. Thank you for the opportunity to -- Okay. That's hopefully better. Great. Thanks for the opportunity to talk about this. I'm always excited to talk about sarcoidosis because it's been an understudied and under medicated disease in terms of the options that we have. Next slide, please. Some refreshers. Sarcoidosis has been known for about 150 years, but there are still many things about it that we don't understand. People have focused for a long time on what triggers the disease. We think of this as an inflammatory disease. It can affect any organ in the body. And it's generally triggered by some spark or trigger that's depicted here. There's an emerging notion that the exact trigger may be more than 1 thing and perhaps it doesn't matter so much what the trigger is. Maybe it matters what your risk factors are when you see a trigger. So the genes, the epigenetic changes, host factors like obesity, and modifier exposures like photocopier toner is one that's been shown in a study in Michigan. And then that trigger happens, sarcoidosis develops. And then the same sorts of things, genes, epigenetic changes, host factors and modifier exposures leads to different pathways and different courses. So a lot of work is happening around these green boxes to understand why patients get this and why things turn out the way they do. Next slide, please. The fundamental lesion in sarcoidosis is the granuloma. That's depicted here on the right. This is a clump of cells. And I think you can hallucinate the blue cells with the brown center part are clumped together. It's like a rugby scrum. And they're trying to surround something that they've seen that they don't like. This is how we deal with TB. This is how we deal with foreign bodies. And this is how we deal with whatever triggers sarcoidosis. The immunology of this is complex. And in fact, many of the medications that we use are capable of hitting multiple targets. And so most of the successful medications will be able to do that around this granuloma as it gets going, some scar tissue can form and, in fact, that causes a lot of the problems. What we're actually seeing here in this picture is immunostaining for phospho-STAT1, which is really the dominant immune pathway that's seen in sarcoidosis. And this form of signaling, which is through T cells activation, is something that I think has a cross-talk with neuropilin receptor biology. And in fact, many of the mediators that are important in the soup of inflammatory mediators in sarcoidosis are ones that are targeted by 1923. The next slide, please. On the left is a picture of a lung. And you can just see balls that are in a lung, and lung [indiscernible]. It should look like a [ waste curve ] where gas exchange can happen. And you can see all these purple balls crowding into the lung. You can imagine if you have this, that your lung would be stiff and it wouldn't exchange gas very well. And so in fact, you might develop a good bit of shortness of breath, just like I'm sure this patient did. On the right is a PET scan. This is showing inflammation in the body. And you can see similar to many other patients that this patient has sarcoidosis all over his body. He's a walking granuloma. Next slide, please. Epidemiologically, sarcoidosis occurs around the country. It's always been thought to be more common in the Southeast. But really, in this kind of insurance database analysis from about 5 years ago now, the incidence and the prevalence are very similar in all the regions of the U.S., except for in the West. We could speculate about why that is, maybe it's because of heredity, because of the more arid environment there. But in any event, it's not common in the West. And similar to what we already knew across all these regions, there's more sarcoidosis in African-Americans than there is in Caucasians. It's, in fact, maybe even a little bit less risk in Asian and Hispanic population. Next slide, please. There is a slight female predilection. This is maintained across all racial groups in this particular analysis. And in fact, females act a little bit different. There is a bimodal incident. So older females sometimes gets sarcoidosis as well as -- whereas for men, it tends to be something that happens when you're less than 50 years of age. Next slide, please. Sarcoidosis does cause death. And I think that, that's a very important part of it, but that's not the whole story. Here's an epidemiologic study from Sweden. Looking at the risk of death after diagnosis with sarcoidosis across the entire population. And you can see that the risk of death has significantly increased with a hazard ratio of 1.6 for mortality. But I think sarcoidosis has gotten a little bit of [ short stretch ] in the past because if you only focus on death, you lose a lot of the real issues that affect patients who were really getting this disease in the prime of life when they're trying to raise their family, develop their careers, spend time with their kids, all those sorts of things we'd like to do in the prime of our life. Next slide, please. Here's another look at mortality. This is specific to the U.S. This is just in men, but there is a similar curve in women. And this is showing that despite the use of more and more medications and the recognition of sarcoidosis earlier and earlier, we're seeing increasing mortality in both black and white patients. Next slide, please. So as Sanjay said, not all sarcoidosis cause other some troubles. This is another reason why the disease has not gotten as much attention as it merits. And in fact, if you take everybody with sarcoidosis, sometimes it's very difficult to know at the outset which patient is likely to have a real problem at the end. So we think that about 50% to 60% of all sarcoidosis patients were bothersome disease, and about 30% to 50% of those, which is an overlapping group, will have persistent disease. Of those, or of the total, 20% to 30% of the total people with sarcoidosis will develop progressive disease. And of the total number of sarcoidosis patients, between 10% and 30% will develop some degree of fibrosis. So you can have progressive bothersome disease without any fibrosis. And I think that, that's a key point here as well. At the end of the day, 5% to 10% of people will have significant impairment, like they need oxygen or a lung transplant or they die from their disease. But even more important than that, many of them will be affected before they get to that point, and they will develop comorbidities because of their treatment. Next slide, please. One of the things that we've noted is that hospitalizations related to sarcoidosis appear to be rising over time. Again, this is probably because the epidemiology of sarcoidosis is changing. But we also think that some of it is because of more aggressive therapies primarily with steroids. Next slide, please. Here is the study we did several years ago using a database from the Foundation for Sarcoidosis Research. And we just asked about risk factors for hospitalization. And I'll just turn your attention here to the image on the right, which is the independent predictor is using a random forest model for whether patients requiring hospitalization for sarcoidosis. Some of these things we can't change, age and cardiac involvement. But the next 2 strongest drivers [indiscernible] to the right are the new for medication and whether or not a new comorbidity developed after the development of sarcoidosis. And again, we think that many of these things may be relatable to the current therapies that we have for sarcoidosis. Next slide, please. Of course, fibrosis is another important target when we think about treating sarcoidosis. Here is a French series just looking at patients with fibrosis versus patients who don't have fibrosis, making the point that fibrosis is also an important driver about [ these ] patients and the patients with Stage IV sarcoidosis, which is the fibrotic form, you can see do worse than the ones who do not. Next slide, please. So Sanjay mentioned, not everybody needs to be treated. There are certain organs that require treatment more often. The heart muscles, and you can see the lungs -- please go back. The heart, the lungs certainly do need to be treated quite a bit. And because the lungs are the most common organ involved about 90% of people that actually drives most of the treatment in the U.S. for sarcoidosis. Next slide, please. Another key aspect of prognosis and, therefore, the drive for treatment is really the number of involved organs. And this is an old study, but it's the only one that's been done in this question. And I think it's a really good one showing that if you have more than 4 -- 3 organs involved, 4 or more organs, there is a very high chance that you will have a significant functional impairment or require assistance with your activities in day-to-day living. So again, we're going to treat the lungs, but we're looking at the whole patient. And in fact, treatment decisions in sarcoidosis revolve around the entire patient. Next slide, please. Here are the options we have today. You can see in 1869, we used a lot of medications that maybe they're not even called medications nowadays. We certainly would like to avoid them. And I suspect that in another 150 years, we're going to think that some of the things that we use today might be just as toxic as those ones listed over there on the left. The one that we like to use most in our clinic are circled in red here. Only things the FDA approved for sarcoidosis is prednisone and repository corticotropin. Those are the 2 medications that are approved for it. So everything else here is used off label. There are a significant problems with all of these. Nobody is happy with the therapies that we have available right now. Next slide, please. Everybody writes in their chapters that steroids are the first line of therapy, and that's because we've used them for a long time. We've gotten into a habit, and yet everybody recognizes that these are particularly problematic for our patients. They cause plenty of side effects. These are severe abdominal striae from steroid use. And when you talk to patients about what they didn't like most about sarcoidosis, it's commonly the use of steroids. Next slide, please. We looked at patients that we're seeing here at the Cleveland Clinic several years ago. This is now [indiscernible]. [ He just talked ] that 154 patients from the time of diagnosis and looked at patients who have been followed entirely with every single medical encountered in our system. And what he found is that after developing sarcoidosis, on average, patients got 2 new metabolic complications. And you can see the frequency of them listed here. [ I can fill clinics with this ]. Obese patients who need a knee replacement and now have sleep apnea and uncontrolled diabetes and got their cataracts done because of the steroids they've been treated with for years. Next slide, please. Here's more analysis from this. This again is a Kaplan-Meier plot. The light gray line is patients who just started steroids even if they stopped them early. And in fact, the average duration of this is 6 months. The black are patients who were not treated with steroids, and this is controlled for confounding risk factors. And you can see that those curves continue to separate, even as you go out here to 8 years, again suggesting that steroids changed the metabolic [indiscernible] of patients with a hazard ratio of about 2.4 [indiscernible] disease or other risk factors, but it's really the duration of steroids. It's a cumulative dose. And in fact, based on this analysis, we've come to the conclusion at Cleveland Clinic that there is no safe maintenance dose of corticosteroids in patients with sarcoidosis. Next slide, please. Here are some -- another form of analysis from a rheumatology database. Just looking at the risk of side effects of steroids and toxicity of steroids based on quartiles of dosing. And you can see that there's a dose response for things that you might consider not a big deal, like acne or skin bruising but also for very important things, like high blood pressure, weight gain and risk of bone density and bone fractures. And you can see the hazard ratio is there, 2.2 and 1.8 for a couple of these. So again, we think that there's no real safe dose of steroids, and that there's a dose effect -- dose response effect to the risks of them. We're always looking for ways to get patients down or off steroids. Next slide, please. One more form of analysis, just to beat up on steroids a little bit more. This is an old analysis done by Marc Judson and Kris Cox at MUSC looking at 2 ways of measuring quality of life. And they adjust these for baseline severity, whether you had lung disease, what your age was, what your race was, how bad your lungs were. And if you look at St. George's Respiratory Questionnaire, which is the top line, or SF-36, which is the bottom one, there is a clinically significant and statistically significant difference with worse quality of life in patients treated with corticosteroids. And although these numbers are [ growing in offset ] ways that's because these 2 quality of life metrics actually measure quality of life in opposite directions. And if you talk to patients, this is obvious. The patient will tell you, "I was feeling better till you started me on this medicine, doc." Next slide, please. Here's kind of a schematic of this. Of course, death is important, but that's really not the only thing with a burden of sarcoidosis. There's damage to organs which causes somatic burden. There's a psychosocial burden and finally, an economic burden. This is related to both the disease and the treatment. Next slide, please. Here is the data from the Foundation for Sarcoidosis Registry, just looking at the respondent reported rate of comorbidities that developed after the diagnosis of sarcoidosis and some that are directly or very easily related to steroids are circled here in red. There are some other ones that probably are related to steroids, but don't have quite a strong relationship. So you can see that the prevalence of steroid-related side effects in these patients with sarcoidosis is very high. So we have [ several ] hypothesis. We have shown that steroids are associated with all of these things. And in fact, a lot of the data on hospitalizations and on risk of things like cardiovascular mortality in sarcoidosis all line up and point to the same story, and that is that we're poisoning our patients. One of my patients called steroids the devil's drug. I think that's completely accurate. It's a two-edged sword for sure. Next slide, please. Here is a way of looking at this numerically. This is from 2 places, Poland and Spain. In Poland, they looked at the number of comorbidities their sarcoidosis patients had, and they just looked at the rate of death. And you can see that the number of comorbidities adds up to 3 or 4 or more, the patients die much more quickly. In Spain, they use something called the Charleston Comorbidity Index, either adjusted or unadjusted for baseline variables. And you can see again that the survival was greatly impacted by the comorbidities that patients develop. Next slide, please. Okay that's the end of my slides. I'll pass it back to Sanjay. Thank you, Sanjay.

Thanks, Dan, for that really excellent overview. A lot of material in there that you've covered. Before we open it up to Q&A, I just want to summarize what we discussed today about ATYR1923. As I mentioned, we're leveraging a proprietary biology platform and have a maturity candidate that has a novel MOA for inflammatory lung disease. We've demonstrated effects in multiple animal lung injury models. Thus far, safe and well tolerated in Phase I and Phase II studies. Recently, put out a proof of mechanism from biomarker data from the Phase II study in COVID pneumonia patients. These Phase I/IIa results will be expected here in Q3 2021. Now I want to move a little bit more to invite questions from the analysts. I know we probably didn't cover everything that many questions about. So we would like to get [indiscernible] and ask Dr. Culver some questions.

Let's get started with our first question, which will come from Zegbeh Jallah of ROTH Capital Partners.

Very, very nice presentation here. I think my first question is just trying to understand what clinicians may want to see in terms of steroid reduction because that's the [ color you noted that no amount there for a long period of time was actually acceptable ]. So what could be a nice exciting signal up on the data that we're expecting in the third quarter?

Thanks for the question. So really the question is [indiscernible] and since you asked about this. And I think the first thing is that I'm really looking at this primarily as a safety study, and that's the first thing we're going over here. But of course, we want to see some difference between placebo and treated arm. And what we know is that the placebo group, probably [ we're working over the last -- working over the first 3 weeks ]. I think that [ what we're likely to see is closer ] to the 24-week time frame is that [ reporting of placebo patients using of those steroids ]. And I think that's a little hard to predict right now. But I'd say, over half of them, I think we'll have [indiscernible] there. So we opened that portion. It's greater than the placebo group. We hope to see that the total amount steroids given the [ original trial is lasting in the peer group ]. I think the [ exact numbers are a little bit ready to get into, it's the size of the study going to be pretty wide ].

And then just another follow-up here regarding a potential Phase III study. I was just wondering what are some end points that you think are going to be important to clinicians or to get clinicians excited as well?

Well, I think that sarcoidosis conventionally [indiscernible] as an endpoint. But there is a growing sentiment that that's not the best endpoint. And we're really looking at this as a chronic inflammatory disease that needs better long-term management. And so [ the sorts of ] endpoints that we're thinking about are things that would be more relevant with diseases like asthma or rheumatoid arthritis [ as steroid-sparing ], quality of life. And of course, we want to see some evidence that [ we're ] impacting granuloma biology. So are you doing something with the biomarker? Or are you doing something with imaging? And of course, those are not -- those can't be the primary endpoints because those are not relevant to how the patient feels, functions or survives. But if you can show that you're doing something with granuloma biology and doing something that's directly relevant to how the patient feels, functions or survives, then I think there will be real excitement.

Okay. It looks like we have a hand raise from Hartaj.

Just had a couple of questions -- and thank you for that presentation. One is, you mentioned you view this study as primarily a safety study. You presented a lot of data in your slides showing the various side effects, approach near term and long term, especially your cortical usage. Dr. Culver, what sort of -- would you like to see some differences in safety also meaning that not just efficacy, but would you like to see changes in the side effect profile of the patients on the experimental arms versus the placebo arms? And what sort of -- how would that look like if you expected that?

Yes. It's a great question. I don't think in a trial of this duration that you're likely to see differences that you can attribute to steroids -- to a difference in the steroids between the treated group and the placebo group. It's just too short of a time. The side effects and consequences of steroids are sneaky, and they take a long time to come up. So that's why they're underestimated, I think. So when I say it's a safety thing, what we really want to see is that there's no downside to the therapeutic compound. If we see no downside to the therapeutic compound, to me, that's the main thing and then the rest of it is to try and figure out what you're doing next.

Yes. No, that helps a lot. Actually, that was my follow-up question, you kind of guessed it, which is that, is 24 weeks going to be enough? And if you see a sort of -- even with small patient numbers, how much longer would you like to see a follow-up on this kind of trial to start making you certain that the experimental arm is really performing?

That's a great question. I think that it's a little speculative to talk about that. I think that the extent of the effect, the effect size will -- and how many of the endpoints, the secondary endpoints would be hit would really influence my thinking. And so we know that, that placebo arm, if we were to follow them out another 24 weeks, let's say, and get out to a year that there would be an even higher number of people who will relapse or get worse. So a longer trial would potentially unmask the bigger difference between placebo and an effective medication. But I'm not convinced right now that you have to have a longer trial because I think a high proportion of the placebo patients who are going to relapse will do so in the first 24 weeks. And I think we just have to look at the data and see what the message is.

Yes. And just last question for me before hopping back into the queue, which is that, based on the profile of ATYR1923 right now, you're assuming it hits some of the marks you're looking for in Phase I/II. So what percentage of the patients that you treat with sarcoidosis could you see as being sort of patients you would treat in the initial group, let's say, if the drug is ever approved with that profile?

Well, first of all, not everybody with sarcoidosis needs to be treated, and I don't think that's what you're asking about. But if you have bothersome disease that's likely to need substantial treatment over a time period, then I think you have to see what the medication does, how it's tolerated and the speed of effect before you decide that. So if it's a wonderful medication that does everything really well, there's no reason why this couldn't be way up in the treatment algorithm even before steroids. For example, in rheumatoid arthritis, we don't treat with steroids unless the joints flare up. We start off with methotrexate, for example. On the other hand, if it takes a while for the effect to build up and it's not quite as powerful, then maybe it's something a little bit later in the algorithm. So I think it really depends on what the medication looks like. But I think the notion that steroids have to be first line has really been challenged right now. And I think as a [ feel ] we are casting about to try to find something that's a better first line and a better second line agent, frankly. The second line agents have their own set of problems. They need to be monitored. They're effective maybe in about 60% or 65% of people, and they have some serious contraindications. So where it exactly goes in the algorithm, I think time would tell.

Okay. Great. Let's move over. I see Joe's hand is raised.

Great. Can you hear me okay? Awesome. And I just wanted to maybe dive in a little deeper on a couple of the points that have been raised. But first, I wanted to focus on the safety profile of 1923. Obviously, it's shown a good profile thus far. And I was just curious, from -- pardon me. Sorry about that. Okay. I apologize for that. It's like an old recording that was still on there. So from an immunomodulatory standpoint, the drug has obviously shown safety in the severe hospitalized COVID patients. And we appear it's going to be safe in this study as well. So I'm just curious whether anything stand out as you look to the drug in other indications based on its immunomodulatory properties?

I guess I don't have a good biologic argument for why the safety profile would be different in other diseases, but I think about that it would be in sarcoidosis. I treat a lot of interstitial lung diseases and, as Sanjay said, there's a mix of inflammation and fibrosis in many of those. I think something that can target both inflammation and fibrosis is [ prima facie ] very attractive because we'd like to dichotomize it into inflammation and fibrosis. But in reality, these things quite often go together. And so for example, this is one of the reasons why a drug like mycophenolate is sometimes used for some of the rheumatic lung disease patients. Not a very effective drug for sarcoidosis, by the way. People make hand-waving arguments that pirfenidone has anti-inflammatory effects. And so maybe if there's inflammation, we should use pirfenidone instead of nintedanib. I don't know if there is any truth to that. That's not really been investigated, of course. But I think that when I think about my diseases, I don't think about differential safety profile between them with regards to this. Of course, each of those diseases has its own set of issues and opportunities. But by and large, almost everything that's used in our space is off-label, hasn't really been carefully studied, and there's certainly a need in several of these diseases for better options.

Got it. And then I'll ask for your forgiveness ahead of time for this question, but I'm going to pressure you with regard to some of the earlier discussion around steroid tapering and what would be meaningful. So I guess as you look towards the sarcoidosis to start, and even potentially other ILDs, maybe just a broader answer in saying that would the broader physician community like to see a certain percentage of steroid reduction? Or would you need to see complete removal to believe in the drug fully? And do you have any data to point to saying, even if you reduce your steroids by 25% or 50% that you can impact those long-term even survival curves that you were referring to earlier?

So the latter question about the data about how much you have to reduce the steroids to move those survival curves, I'm not aware of any. If you know something, please send it my way because I'd love to know what that cut point is. But I think in reality, just like everything in life, there's probably not a bright line where if you get below 7, then it's great. And if you only get to 8, then it's useless, right? This will be something where there's a gradient. And so I think that by and large, the expectation in the community, both in the academic community and in the general practitioner community, will not be that we have to get to 0. I don't think that's probably perceived as a realistic or a necessary goal. There has been a notion out there in the past that 10 milligrams is a safe dose. And over the last 5 to 10 years, that's really come under -- that's been challenged. And I think now people believe that there really is not a safe dose. But of course, many of these side effects are dose-dependent. So I think if you can get below 5, a lot of people would be quite happy. Whether that's truth or perception, you'll have to do your study to tell me the answer to that.

Okay. Let's move on to [indiscernible]. He has some questions for Dr. Culver.

Yes. So my first question is, how important and realistic is it to show benefit on some of the functional endpoints that we see in a proof of concept trial at 24 weeks? Even if there is no FVC improvement, would that concern you at this stage of development? And I had a few follow-ups, please.

I think FVC is highly unlikely to be different. Between the 2 treatment arms, it would be unbelievable result if there's a change in FVC in the positive direction for the treatment group. I think FVC, in many ways, is in there as a safety signal and as an exploratory signal, but I have no expectation with this duration or with the sample size that we'll see a significant change in the FVC whatsoever. I don't expect that at all.

Okay. And my second question is on steroid tapering. Are there specific guidelines that you or other institutions follow? Is there a lot of variability on these protocols between different institutions? And related to that, what are the key symptoms that will, ultimately, lead to steroid dose escalations?

Yes. So there are some suggestions for how to take your steroids, but I don't think there's any one community accepted way to do it. If you go around the different sarcoidosis centers, there's a different variety or a different favor in every single center. And in fact, even in my center, I think we all do it a little bit differently. And part of it is a feel thing. And frankly, I think there's a conversation with the patient about how to do it as well. So I don't think that there's an [indiscernible] specific guideline for how to do it. And I'm sorry, I think the second part of your question was about symptoms from steroids?

So just to get a sense of what will drive the dose escalation on steroids. What are the key symptoms that you see in a patient that will ultimately drive that decision?

Yes. So as the patient deescalates their steroids for pulmonary sarcoidosis, shortness of breath and cough are the 2 most common ones that we'll see. Of course, we'd like to try to couple that with data like radiographs or pulmonary function testing, but shortness of breath, cough, sometimes wheezing and then sometimes some systemic symptoms. In general, when we're faced with nonspecific symptoms that aren't related to the lungs, like "I'm tired or I'm achy," we try to look around for other data to really show that this is worsening lung disease before we reescalate the steroids. And in fact, in this trial, and Sanjay can give us some nuance on it because I'm sure I won't remember the details perfectly, but we are capturing cough, we are capturing shortness of breath. If the patient goes down or escalates, we're going to measure all those things. They're being measured.

Okay. It looks like Zegbeh may be raising here. Actually, let's go to Yale, if, Yale, you do have any questions before we go back into the queue.

Sure. I appreciate that, and thanks for offering this KOL call. My first question to Dr. Culver is that you mentioned that you could use this potentially in the -- as a first line in some selected cases of patients. Could you elaborate a little bit more in terms of what type of patients and under what circumstances do you consider this could be used -- the drug could be used as a first line if it gets approved?

Yes. Thanks for the question. I don't know for sure if this would become first line. Again, it depends on the performance characteristics of the medication. It depends on the tolerability, the ease of use, the accessibility and the efficacy. There are -- I think there are 3 kinds of patients that I have in my mind broadly. There are patients who have relatively modest disease that's not organ-threatening, but it's bothersome to quality of life and perhaps self-resolving. And those are patients that I'm thinking about a short-term management. And I don't worry so much about the long-term toxicity of medications. On the other end of the spectrum, there are patients who have prognostic signs that tell me there's going to be problems down the road, and they're going to need long-term aggressive treatment. And for those patients, I think many of us now use several medications right up front. We want to control the disease, and we want to maintain control. And then finally, there are -- in the middle, there are patients who have progressive disease, bothersome disease, usually persistent disease that need a strategy. I can identify many of those people really earlier on in their disease. And so when those people show up, the conversation usually is around, are we going to try to take a strategy that will be maintained over a period of time? Or are we going to just put steroids on board because I can get an effect within several weeks? And quite often, patients will say, no, just give me the long-term strategy. I don't need this to go away in 3 weeks. And so I think, again, this will depend on the operating characteristics of the medication and all the other factors I said. But I think an effective and tolerable medication that is accessible would be embraced for some people upfront.

Okay. Great. That's very helpful. And one more question here is that given the target for the 1923 is known as NRP2, could this -- obviously, there's more data to be -- needed to confirm this. But could this drug potentially be considered to be disease-modifying instead of just simple relieving -- relieve the symptoms?

I think that this will be more than symptomatic relief. So when we think about organs that are under threat, lung is deteriorating, gas exchange is impaired, airways are becoming closed off, fibrosis is setting in, and we can either stop that or reverse that, I would characterize that as disease modifying. So I'd say that's much more than symptomatic. And I would draw a distinction between disease modifying and cure. Cure means you give the medicine and the disease goes away forever. Whether or not that's the case, who knows. Certainly, all the therapies we have right now are disease modifying insofar as they can make granulomas [ get erased ]. Whether or not they cure the disease is controversial.

Okay. Looks like we have another question from Zegbeh.

I think this is one is also for Dr. Culver. Just [ following up on ] benchmarking in terms of what do you think might be an acceptable time to respond. I thought it was interesting that you also mentioned what you guys [ do with ] methotrexate for other indications. And so I was just wondering what will be attractive in terms of the time to respond? And then the second one is for Sanjay. Sanjay, can you just comment a little bit on the patient population because I thought this was an interesting part of the study design in terms of selecting patients that aren't very fibrotic and are more likely to respond based on the mechanism of action of the drug. And then can you also comment a little bit on the [indiscernible] guidelines because I think that's important for kind of appreciating, again, the study design and how it's likely to lead to more consistent results because of those guidelines.

The time to response I think -- I don't think there's one number I can give you, frankly. I mean I would like 5 minutes -- if we can have 5 minutes, I think everybody would be happy with that. And 5 years would be too long. Not to be flip about it. As you know, with steroids, typically, we can get a good response in the lungs within 4 weeks. With the drug like infliximab, we usually think the response is about as good as it is going to get in 2 to 3 months. With a drug like methotrexate, we look at more like 6 months. So if the drug is a home run in efficacy, I'm willing to give it longer. On the other hand, if it's not such a home run, then we want to see something a little bit more quickly as a patient. Remember that in this, we're not really trying to show that the FVC is better. We're trying to show that we can successfully get patients down on their steroids. And in fact, in the foreseeable future, people are still being treated with steroids and you can add a drug that allows you to taper in a rational way. I think that's something that if it happens over several months and it works fine, I think people would embrace that.

And then the questions directed to me, when we started this trial, we brought in experts, like Dr. Culver, to our original advisory panel. And one of the things we did was to hone in on were those patients who had bothersome disease that was persistent, disease that had certainly advanced to a point where they needed day-to-day steroid therapy. You're right in that we didn't necessarily want those more fibrotic patients because we think the mechanism of our drug works better when there's a more inflammatory target. It's one of the reasons why we prioritized sarcoidosis perhaps as the first ILD that we went into as proof of concept. So I do think we looked at the biology, and we also looked at the [ biology ] of our drug and also the need for therapy in this cohort of patients. Dr. Culver will probably agree that we will also [indiscernible] therapies for those patients who have more fibrotic damage. I know there are some experts who use some of more antifibrotics over there. I don't know how successful those drugs are outside of [indiscernible] in the treatment mix. But for our study, we really think we brought in a patient population that was sensitive to our therapy and also a patient population where there is a great amount of need. To your second point, the need also is just to have a better therapy than steroids, which is why we incorporated the steroid taper. And I think we were one of the first studies looking at the interstitial lung disease with a pretty robust steroid taper. But we talked to the experts around would we want to taper in about a month, about 2 months, 3 months. Obviously, we were aiming for a 6-month study. We settled in on about 7 weeks there. We want the folks, by the week 8 visit, to be down to that 5-milligram dose. So we did create a stepwise taper protocol. Depending on whether we came in at 10 or 15 or 20 or 25, the 7 to 8 weeks was used to be a palatable amount of time from the opinion of the experts. We'll have -- this will be an important thing for us to observe in our current trial how successful were we with that taper protocol. And from [indiscernible] point of view, if we already do a trial perhaps longer in the future, [indiscernible] that we want to keep at about 7 or 8 weeks, did we learn anything about the ability for patients to taper? It also allows our drug to get on board. We'll learn how quickly our drug may start to demonstrate efficacy [ in the event ] that we're going to be looking at closely as we map out next steps.

And then speaking of next steps, I was just wondering if you guys have an internal benchmark for what you're looking for from this study to decide on whether or not you've got to go after some additional [indiscernible] and what might the next one be.

I think overall [indiscernible] some of what Dr. Culver is saying here is, we want to first establish that the drug is safe, and that is the primary endpoint. And I think that is no small feat in an area where the current therapies have been described sometimes as poisonous, toxic, devil's drug, things of that nature. But we need to first have a safe therapy. We think we can accomplish that -- accomplish that primary endpoint in the trial. Secondly, as we are also trying to demonstrate some clinically meaningful sign of activity, I think by removing steroids and at least keeping people's quality of life [ half ] or near where they were on that [ constant ] therapy, I think that would be another really nice check box there. The -- seeing more response in our treatment group versus placebo is also something that I would like to see, and I think Dr. Culver will agree with that. And then lastly, I think if there were any of our secondary additional endpoints we're looking at, for example, inflammatory biomarkers, if we saw directionality in some of those markers also go down and saw those inflammatory markers [ trundle ] down as we are also getting people off steroids, that means when you add those 2 findings together, a decrease in your steroid burden and an improvement on your inflammatory markers, I think if those 2 things start to move in the same direction, my guess is Dr. Culver will be very happy with those findings.

Yes, I agree. I think that -- of course, the total steroids and different ways you can look at steroid reduction are important in and of themselves. If you talk to patients, it is the most important thing. But also, by tapering the steroids like this, you're unmasking an active disease in the placebo group that ideally will not be unmasked in the treatment group. And so the need to reescalate or the worsening of the symptoms, I think, is a really important thing to watch for here.

All right. I don't know if you've heard any of it. I just wanted to say thanks for all the great questions today. Very helpful refresher on sarcoidosis. Good discussion. We now head into [indiscernible] for our trial in the third quarter. I really want to thank Dr. Culver for hosting us here today at the Cleveland Clinic. His experience and knowledge related to sarcoidosis is really quite unmatched here, especially and I think he is going to be modest [ in accepting that ], but we really appreciate him [ lending ] his thoughts on the [ burden of ] sarcoidosis steroid treatment, highlighting the real need for a new treatment option of this debilitating disease. If there's something we didn't cover today, anyone from our audience has additional questions, we'll be happy to get them to Dr. Culver in the future. Feel free to send them to us. I want to thank everyone who joined today. Thank you for your interest and your support. We will be in touch. Be well. Thanks, everyone.