Eledon Pharmaceuticals, Inc. (ELDN) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Eledon Pharmaceuticals Data Presentation Conference Call. [Operator Instructions] This call is being recorded on Thursday, November 2, 2023. I would now like to turn the conference over to Paul Little. Please go ahead.

Good afternoon, everyone, and thank you for joining Eledon's Phase Ib Data Update Conference Call. I'm joined on today's call by David-Alexandre Gros, Chief Executive Officer; Steve Perrin, our President and Chief Scientific Officer; an outside guest, Dr. Jean Tchervenkov, in kidney transplantation, and one of the principal investigators in our Phase Ib trial. Earlier today, Eledon issued a press release detailing the updated results we presented at Kidney Week from our ongoing Phase Ib trial in kidney transplantation. You may access the release under the Investors tab on our company's website in eledon.com. I would like to remind everyone that statements made during this conference call relating to Eledon's expected future performance, future business prospects or future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from these forecasts due to the impact of many factors beyond the control of Eledon. Eledon expressly disclaims any duty to provide updates to its forward-looking statements whether as a result of new information, future events or otherwise. Participants are directed to the risk factors set forth in Eledon's reports filed with the U.S. Securities and Exchange Commission. Now it is my pleasure to pass the call to Eledon's CEO, Dr. David-Alexandre Gros. DA?

Thank you, Paul, and thank you all for joining us today. I'm happy to be joined on this call by our President and CSO, Dr. Steve Perrin, as well by Dr. Jean Tchervenkov. Dr. Tchervenkov is a Professor in the Department of Surgery in the Faculty of Medicine Health Sciences in McGill University. And he is a renowned surgeon and expert in transplant surgery, as well as, like Paul just mentioned, one of the principal investigators in our ongoing Phase Ib trial. In terms of agenda for the call, I'll start by talking about Eledon's history in kidney transplantation and the current transplant market, after which I will turn over the discussion to Steve to review tegoprubart's biology before turning to Dr. Tchervenkov to talk about tacrolimus, calcineurin inhibitors and the unmet need for newer immunosuppressive medicines in transplant. We will then return the call to Steve to discuss the data we presented today before ending the call with Q&A. The data we presented is particularly exciting in light of why we originally formed what is now Eledon in September 2020. At that time, while explaining the strategy for the new company, I said that our strategy would be to focus on areas where tegoprubart may provide a potentially life-saving treatment option and that we would start with kidney transplant in particular for 5 reasons. One, there is an important and immediate need to replace tacrolimus as the immunosuppressive backbone and transplant medicine. There are about 90,000 Americans on the kidney transplant waiting list. And while approximately 25,000 Americans undergo kidney transplant per year, another 5,000 die while waiting for a kidney. The average age of a transplant patient is only 50 years old. But the average function of life of a kidney is often only 10 to 12 years. So that individuals will require return to dialysis where the average 5-year survival remains less than 50%, or if they are fortunate, they may receive one or more other transplants in order to live a regular life span, although that uses up kidneys that could otherwise go to first-time patients. The second reason was that a key reason for the shorter-than-desired life of transplanted kidneys is the current standard of care, tacrolimus, which is both directly toxic to the kidneys as well as indirectly toxic since, over time, it can cause both diabetes and hypertension, which are ironically the 2 leading causes why Americans need a kidney transplant in the first place. Three, some of the best transplant data across preclinical models of transplantation has been seen using an anti-CD40 Ligand. This is true in both allo transplantation where the same species is used, as well as xenotransplantation, where an organ from one species is transplanted into another. Four, there is a clear regulatory path in transplantation with potential upside. And five, the potential market is large dollar-wise. But from a population perspective, it is compact and that it's more like a rare disease since there are relatively few patients concentrated across a limited number of transplant surgery centers. As such, transplantation was an indication where smaller biotech can execute and compete. Now 3 years later, the rationale behind our strategy has been reinforced by both the market potential as well as our achievements to date. In terms of the market, the need for better transplant immunosuppression and the scale of the commercial opportunity continues, since the number of kidney transplants being performed is growing as is the number of patients with end-stage renal disease that may ultimately need a transplant. To get a sense of the potential from a dollar perspective, when we look at Astellas, the company that originated tacrolimus. Tacrolimus was approved in 1994, and yet Astellas reported approximately $1.5 billion in revenues in their fiscal year 2022 from that now generic drug. Next, we published data evaluating tegoprubart in nonhuman primate models of both kidney and islet cell transplantation. And we published a meta-analysis demonstrating the advantages of using an anti-CD40 Ligand in kidney transplantation. We have reported safety data from over 100 subjects on tegoprubart, with multiple subjects on treatment for over a year, including a patient with kidney transplant in our Phase Ib who is out 380 days at the time of the data cut. We even have experience using tegoprubart in cardiac xenotransplantation, which is probably one of the toughest use cases. And finally, we are executing and have 2 clinical trials in kidney transplantation running in parallel together with an open-label extension study. These 2 trials include that the single arm Phase Ib, which we're discussing, and a Phase II study with a control arm, where we are evaluating the superiority of tegoprubart versus standard of care in terms of kidney function at 12 months as measured by the estimated glomerular filtration rate, or eGFR. Today, we reported updated data from our ongoing Phase Ib trial evaluating tegoprubart for the prevention of rejection in patients undergoing kidney transplantation at the American Society of Nephrology Kidney Week in Philadelphia. These data are very encouraging and that they demonstrate that tegoprubart's safety in this indication was in line with or better than what would typically be seen with the standard of care, and that from the perspective of efficacy measured in terms of kidney function, the eGFR outcomes that we saw were arguably unprecedented in a clinical trial. With that, let me turn over the call to Steve to go -- to walk through tegoprubart's mechanism of action and why we believe the MOA of an anti-CD40 Ligand will be beneficial specifically in organ transplantation. Steve?

Thank you, DA. So the slide shown here shows a schematic or a cartoon, if you will, of CD40 Ligand and its receptor CD40. These are not new targets. These receptors were discovered and characterized initially back in the '80s as being cell surface receptors on immune cells. And initially CD40 Ligand was characterized as being expressed on activated T cells, and its receptor was being expressed on cells of the monocyte lineage, including B cells and other types of antigen presenting cells. It became apparent biologically that the activation of this receptor pair occurs right downstream of foreign antigen presentation between MHC cell surface receptors on antigen-presenting cells and the T cell receptor on T cells. And when that activation of CD40 Ligand/CD40 occurs, it results in a potent inflammatory response with proliferation of both T cells and B cells that they can recognize those foreign antigens to fight infection. As antibodies that block the mirroring version of these receptors became available, it became apparent that if you block the activation of CD40 and CD40 Ligand, it had profound effects on the ability to decrease multiple different types of autoimmune disease in rodents, including T cell-mediated diseases like rheumatoid arthritis and multiple sclerosis, as well as more auto antibody mediated autoimmune diseases like lupus nephritis and Sjögren's syndrome. In addition, in the mirroring models, we got the first hints that blocking this receptor pair was quite potent at preventing transplant rejection. Subsequently, as primatized antibodies were developed, antibodies that could be used in nonhuman primates, it became very apparent that blocking CD40/CD40 Ligand access was probably the most potent way to prevent transplant rejection, and that statement holds true to today. The other thing that became apparent over that period of time is that blocking CD40 Ligand appears to be more potent in those species compared to blocking the receptor. And that's because these are different targets with very different biologies. And we think that there's 3 major reasons why blocking the ligand has been more potent than blocking the receptor. The first is that the ligand that's expressed on activated T cells is only there for a short period of time after antigen presentation. And then there's negative feedback loops that gets it off the cell surface to prevent the overactivation of immune responses. Contrast the CD40 receptor is constitutively on the cell surface. It's always on the surface of the cells in the monocyte lineage. And therefore, when you think about receptor occupancy and biodistribution of antibodies to these targets, there's going to be differences between trying to block the ligand versus blocking the receptor. The second component is that, when you think about CD40 Ligand activation, it actually activates co-stimulatory signaling on B cells in antigen-presenting cells, not only via interactions with CD40, but it binds to multiple other receptors on antigen-presenting cells that activates their functions, including, as an example, CD11 in the MAC complex to inhibit the activation of CD8-positive cytotoxic T cells. So when you block the ligand, you're actually blocking multiple different co-stimulatory pathways. And then third and finally, probably the most intriguing that makes blocking CD40 Ligand very unique, is that when you block CD40 Ligand on T cells, not only does it block their proliferation and expansion of cytotoxic CD4-positive cells, but it actually converts CD4-positive T cells into regulatory T cells, which creates a tolerogenic environment. And this is really what's important in the context of preventing transplant rejection. So that's a brief summary of why we have focused on the ligand therapeutically with tegoprubart and the history of why blocking the ligand has been more potent than blocking the receptor.

Great. Thank you, Steve. Dr. Tchervenkov, I would now like to turn over the call to you with a few questions, please. The first is, since this is our first time hosting you on an investor call, would you please introduce yourself, including your background and your practice?

Yes. So I'm a transplant surgeon. And I've been a transplant surgeon at McGill for 33 years. So I have the benefit of having seen the introduction of calcineurin inhibitors in my lifetime as a resident when cyclosporine became the standard of care in transplantation back in 1983. And then I was a fellow in Cincinnati when tacrolimus became the standard of care in the late 1980s and was actually introduced in 1992 as I began my career at McGill. And I set up the liver transplant program here at McGill. And now 33 years later, I've been waiting to replace the calcineurin inhibitors because we grew to love them and hate them at the same time. Because they were great the first year, they reduced the rejection rates tremendously, I lived through the years when just about everybody had a rejection in the first 6 months, to now not having that many people having rejection, but they -- invariably all get the calcineurin toxicity. And then we see these patients return to dialysis a decade later. And once they return to dialysis, they often get reduced immunosuppression because, once they're on dialysis, they don't need these medications, and they invariably develop antibodies, and they become extremely difficult to re-transplant. And even though 30-plus percent of patients on dialysis are what we call sensitized, only 5% of these 30% eventually get re-transplanted. So this is a devastating thing that we need to eliminate.

Sure. Thank you. Maybe we could dive a little bit more into what you just spoke about. Perhaps, would you mind talking a little bit more about the origin and the evolution of the use of calcineurin inhibitors, including which one is being primarily used today?

So you're quite correct. Calcineurin inhibitors started in the late 1970s. We didn't really know the mechanism, but we knew they were preventing rejection. So the first one was cyclosporine, and the next one was tacrolimus. So today, we use tacrolimus because it's much more effective, eventually turned out to be more effective at preventing rejection. So that's the one we use today. And there've been tweaks on it. There've been like twice a day down to once a day sort of formulations. But that's the main -- tacrolimus is the main calcineurin inhibitor. And they invariably prevent rejection by inhibiting T cell activation. But it's not precise enough and they have unwanted side effects, particularly kidney injury. I just transplanted a patient who was a liver recipient. And within 2, 3 years of being on tacrolimus, his kidney failed and now he needs the kidney transplant. So that's a common occurrence, not just in transplantation of the kidney, but also in other organs where the kidneys fail due to tacrolimus.

Are there any other areas of unmet need with regards to calcineurin inhibitors in terms of side effects that are seen from...

Yes. For example, calcineurins, particularly tacrolimus, are associated with a higher rate of type 2 diabetes. Type 2 diabetes is extremely problematic. Itself, it induces kidney injury and kidney inflammation, not to mention all the other side effects to the heart, to the vasculature, to the [ ops ] to the retina. And we often see the need for insulin and other drugs related to diabetes go up. High blood pressure is a little bit more difficult to control. So we need to increase the blood pressure medications as well on calcineurin inhibitors. Tremors, people always report to me, doc, I can't stop shaking. And sometimes GI side effects like increased diarrhea. And maybe I'm forgetting a few, but these are some of the main ones that we have to deal with. And so if we could avoid them, this would be tremendous. Anyways. Yes.

You brought up your patients. Are patients overall happy to be on tacrolimus or -- how would a patient view it?

They're happy to have a kidney and not be on dialysis. That's a fact. But in general, they report more headaches, they report more tremors. They often have, associated with the other medications, more diarrhea. So they don't see the creatinines, et cetera, but they're always worried when they're going up the creatinines and sometimes we need to do a biopsy, and that's another side effect of the drugs. So we need to do repeated biopsies because we're not sure if the creatinine increase is due to toxicity or rejection or what. So we have these unmet needs right now that we would like to see calcineurin replaced if possible.

Maybe a last question, which is how important is following kidney function for you in patients after transplant?

Well, the first year, it's quite frequent. We bring the patients quite frequently. And so the one thing I got to say, and I have quite a bit of knowledge in that area and we've published is that, you're quite correct, the creatinine or the renal function in the first 90 days, and particularly in the first year, really predicts the long-term outcome. We have some published data that, if you have an excellent creatinine in the first 90 days, you keep that kidney for 2 decades, as opposed to somebody with reduced renal function. And there is older data from the early 2000s that, if you have an excellent creatinine in the first year, your attrition curve down afterwards is much reduced. So having a good creatinine and a good renal function in the first year, the first even few months, is crucial.

Great. Thank you. Before turning over the call back to Steve, maybe I'll build on what you just said, and I'll spend a minute just talking about eGFR and kidney function since that is one of our endpoints and the -- one of our primary endpoints in the Phase II. So the estimated glomerular filtration rate or eGFR measures the filtration of the kidney. In other words, how well the kidney is doing its job, how well it's functioning. And it is, as a result, the most common measure of kidney graft function. A normal eGFR is considered above an 80, with kidney disease being considered at less than a 60. Typically end-stage renal disease is an eGFR of less than 15. And those are the groups of patients that will require dialysis or transplants in order to have sufficient kidney function to live. From large retrospective studies conducted in transplant recipients taking calcineurin inhibitors such as the data we're looking at on this slide, and this has been seen in prior clinical trials as well, we see that a median or an average 50th percentile eGFR generally falls around 50 or the low 50s during the first year post-transplant. As Dr. Tchervenkov just mentioned, a 12-month eGFR has been shown to be the most significant single predictive factor with regards to future graft failure. And as eGFR values decrease, the risk of graft failure and actually hospitalizations as well increases. One sees that on this slide, where, as the eGFR transplanted patients decrease, there is an exponential increase in the risk of that transplanted kidney failing. Steve, I will now turn the call over to you to talk about our 2 studies and the data that we presented today.

Sure. Thank you, DA. As DA mentioned previously, we have multiple kidney transplant programs running in parallel. We have a Phase Ib study that has been enrolling in Canada, the U.K. and Australia. We announced our first patient enrolled last summer. This is a study that's going to enroll up to 12 participants undergoing de novo kidney transplant. It's a 52-week endpoint, open-label study, single arm. It has ATG for induction therapy. And plus for maintenance therapy, it has steroids, including a steroid taper, as well as MMF. And what we're doing in the study is we're replacing the CNIs that Dr. Tchervenkov and DA have spoken about, either tacrolimus or cyclosporine, replacing that with tegoprubart for maintenance therapy. So after induction therapy, patients will have steroids tegoprubart and MMF. The primary endpoint of the Phase I study is safety and tolerability, with secondary endpoints of graft function as measured by eGFR, as well as other typical endpoints, including participants in graft survival, biopsy, acute rejection, and other biomarkers of kidney injury and risk of rejection. The Phase II study, which we call the BESTOW study, is a 52-week head-to-head superiority study comparing tegoprubart to tacrolimus. It's 120 participants. It's going to be randomized 1:1, so 60 per arm. That study will be enrolling in the U.S., in North America, as well as other countries in Europe as well. Again, it's a 52-week study with ATG induction therapy. And then for maintenance therapy, we will include steroids down to a steroid taper, as well as MMF, and then either randomized to the tacrolimus arm or the tegoprubart. The big difference here in the end points between the Phase Ib and the Phase II study is that the primary endpoint of the Phase II BESTOW study is actually graft function eGFR. So this is a superiority study where we're going to compare kidney function at 52 weeks between the 2 arms. In addition to graft function, the other primary endpoint is safety and tolerability. And then we're also collecting data on the other endpoints that one would look forward to in subsequent clinical trials, including participant and graft survival, biopsy-proven acute rejection, biomarkers such as immune cell infiltrating to the graft. And then other types of side effects that's commonly seen, which we've discussed on the call related to CNIs, including the incidence of new-onset diabetes, tremors and other markers. In addition to these 2 studies, when a participant reaches 12 months, the 52-week endpoint in these 2 studies, they have the opportunity to roll over to a long-term extension study, a long -- a long-term Phase II study that they could roll over to after completing the 52-week endpoint. DA, can I have the next slide? So this is data from the Phase Ib study. We've enrolled, as you can see, 11 of the 12 patients in that cohort. You can see in the second column that the age and genders of -- the demographics of this cohort are pretty randomized between males and females. The average age is fairly typical for transplant, as you can see. We're enrolling both living and deceased donors in the study. And you can see the underlying cause of disease that has resulted in people's kidney failure is pretty diverse, and it's been discussed on the call to this point. The fourth call -- the second to the last column over is the days post transplant. So you can see we do have patients out past the year, as DA mentioned previously on the call. We have had 2 participants discontinue the study. The first participant discontinued at around 217 days. They are fairly far out in the study, as you can see. They had been unhappy with several side effects that's fairly common in transplant, including fatigue and alopecia. And although fairly common for all types of immunosuppressant protocols for standard of care to prevent transplant rejection, this participant decided to roll over onto tacrolimus' current standard of care. The other participant that discontinued the study was patient #3. They had a very early BK viremia in the study around day 28. The titers were fairly high. And the standard of care to reduce those titers just to reduce immunosuppression, which the investigator did by reducing MMF and those titers fell very quickly. But when it came time for the next infusion of tegoprubart, because we're still very early on in the study, the investigator felt much more comfortable switching the patient over to tac because they were more accustomed to understanding how to utilize tac to manage BK viremia. So they rolled that person on day 54 over to the tac. As you can see, the rest of the participants are still in the study, and we can talk some more about it in subsequent slides. So the next slide is showing the overall treatment emergent adverse events in the study. They're ordered by percentage of appearance. You can see most of the side effects thus far or emerging events have been GI related. They've been very low as far as their grades go, with very transient diarrhea as an example, that resolves itself very quickly. Obviously, we talked a little bit on the call, but very commonly, drugs like MMF, one of their major side effects are GI effects. So this is not uncommon. The other one that has appeared that I've already mentioned is BK viremia. We've had 3 other participants in the study besides that one that stopped the study, show up with BK viremia. In those 3 patients, the titers were much lower. Investigators started treating and reducing immunosuppression with MMF much more quickly. And those titers have decreased and those patients have been managed quite well and they continue to be in the study. We did have one participant experience T cell mediated rejection with the Banff score 1A. The patient has been treated and still remains in the study and on tegoprubart. And we had one patient that experienced a surgically related acute tubular necrosis on day 0. This was prior to administration of our study drug, which has impacted kidney function. But the patient continues to be in the study and is still on tegoprubart. Importantly, there's been none of the side effects that we've talked about on the call that's typically associated with CNI exposures, including no cases of hypoglycemia, no new-onset diabetes, no appearance of tremor, and very importantly, no incidence of CMV infections to this point. DA, can I have the next slide? So this is a summary of the mean eGFR values for these 11 participants that have been on the study so far. The number of participants at any given time is on the bottom, as you can see next to the N. You can see, much like other studies and even standard of care in the first 30 days, eGFR climbs very, very quickly post transplant. We're at eGFR of 60 by day 30. That has continued to climb after day 90, where the mean eGFR is around 70 and continues to be 70 or greater thereafter for this population. As already been mentioned on the call, if you would visualize what a typical CNI tacrolimus population would look like, DA showed it a couple of slides ago, although kidney function increases quite quickly in the first 30 days, it tends to plateau much sooner than what you see here with the mean eGFR for tegoprubart. The mean eGFRs for tac tend to stop in the low 50s. So we're seeing about a 20-point delta between eGFRs that we're seeing in our study of tegoprubart compared to what patient populations would typically see on tac. One person has reached 12 months, as I showed you in the demographics table, and has rolled over to the long-term extension study. And at day 374, that patient's eGFR was at 91, which is incredibly healthy. Actually, most healthy adults have eGFR somewhere in the high 80s or 90s. So a quite exciting result to have somebody roll over [ and go on from ] extension with that high of an eGFR. So in conclusion, so far in the study, in the Phase Ib study, 11 participants have shown that tegoprubart can successfully prevent kidney transplant rejection. And so far, tegoprubart, as we have seen in other patient populations, has been safe and well tolerated. The aggregated mean eGFR is above 70 at time points after day 90. Tegoprubart potentially can better protect organ function compared to CNIs and compared to what's used in current standard of care. And we will continue to report upcoming data from the Phase Ib study at scientific conferences in 2024. Thank you, DA.

Thank you, Steve. So to conclude, preliminary data from our Phase Ib trial indicate that tegoprubart was safe and well tolerated, with the potential to provide superior graft function compared to the current standard of care. We are highly encouraged by these results, which reflects our continued conviction and commitment to the transplant community as we seek to provide a new treatment alternative to a standard of care that has barely changed in almost 3 decades. At the beginning of this year, we increased our focus as a company on kidney transplantation. Since then, we've reported safety and efficacy results from 11 participants now in our ongoing Phase Ib trial, and we initiated an open-label extension study to generate key long-term insights. We also initiated our Phase II BESTOW trial this summer and are making good progress in site activation and enrollments, as we seek to further differentiate tegoprubart from the standard of care tacrolimus. Tegoprubart was also used to prevent rejection in a patient who received the cardiac xenograft. Finally, we have multiple transplant preclinical studies underway in nonhuman primates, including kidney and cardiac xeno as well as liver allograft. In conclusion, Eledon continues to build momentum and to deliver in the transplant space with the goal of bringing tegoprubart to transplant patients in pursuit of our mission of one transplant for life. With that, I will now ask the operator to begin our Q&A session, please. Operator?

[Operator Instructions] Your first question comes from Pete Stavropoulos with Cantor Fitzgerald.

Congratulations on the data at ASN. Nice to see the data maturing and observing tego's activity in kidney transplant. So first one I have is one subject completed 1 year of treatment. Can you provide some detail as to their eGFR measurement right after transplant through the 1-year mark or sort of how it evolved? And for Dr. Tchervenkov, I hope I pronounced that right, if I'm reading the slides right, the patient out past the year received a kidney from a deceased donor. Are there differences in terms of mean eGFR post transplant from a deceased donor versus a live donor? And how does this patient's eGFR performance sort of shape your perspective on tegoprubart's potential efficacy?

Thank you for the question, Pete. So maybe I'll turn your first question around how that first transplant patients performed to Steve. Steve, do you recall what the initial or the original eGFRs were for that person?

So I don't know it off the top of my head. However, I can tell you that all of these patients had very low eGFR as part of transplant, teens, 20s for the most part. I don't know what this person had off the top of my head.

I recall our first 3 participants of which this is one, had a mean eGFR at 10, at the time of transplant. So it was plus or minus 10. And we reported in March, when we reported on those 3 patients, I believe that this patient was in the high 70s, maybe low 80s, in that range. So the patient has continued to do well. And right now, at a 91 eGFR at a year, as Steve mentioned, has continued to show a little bit of improvement since that time. And maybe Dr. Tchervenkov, I'll turn over the question to you in terms of what this 91 eGFR means from your perspective. And is that perspective difference considering that this is a deceased donor as opposed to living donor?

Well, thank you. And this eGFR at 1 year is exceptional. It's not just great, it's exceptional. We don't see deceased donors perform that well. Living donors, yes, because they almost all have immediate graft function. And we prefer living dollars because of that. And their half-lifes, which is a measure of how long the kidneys will last, is very good, and it approaches 18 or so years. Deceased donors, on the other hand, in some databases, is only 8 to 9 years. In our own database, it's around 12 years. But it's definitely lower than living donors. So you had a question about that particular patient. And so that particular patient, the second patient at 1 year, it's my patient, had basically, within a month, creatinine clearance, as you said, Steve, around 75, 80, but that continues to improve, and currently it's 91. And I've never seen a creatinine clearance for that particular patient, age with one kidney being superior to what she could expect had she had her own 2 kidneys in good health. At 77, most -- the average creatinine clearance is around 70, 75, certainly not 91. So this is really for a transplant surgeon, wow, it's amazing.

Great. Thank you, Dr. Tchervenkov.

Yes. It's very helpful. Another question that I have, if you can just provide a little bit of color around the one case of T cell mediated rejection. How was it treated? And is that patient still on tego?

Steve?

So we really haven't gone into individual patient details on treatment. It was -- the patient was treated with current standard of care for T cell mediated rejection. And yes, they do continue to be in the study.

Okay. I don't know if I can -- one last question. The BESTOW study, you're going to be evaluating if there's a difference between the rate of new offset diabetes after transplant in the tego arm versus CNI arm. So for -- again, for Dr. Tchervenkov, can you just help me understand why there may be a difference in the new onset diabetes after transplant in the tego versus CNI arm? What's the mechanism that drives that new onset diabetes?

Well, we're not sure. But the tacrolimus induces new onset diabetes. Several papers in the literature. And it's in the order of about 20% to 30%. And it's often associated with obesity. And what it does to obesity, our patients on tacrolimus tend to gain weight. Is that the mechanism? Is it some inflammation? Diabetes is an inflammatory disease, and maybe tacrolimus mode of action, which targets type 1 immunity, but it's not very good about type 3 immunity, which tego is much better at, maybe that is potentially the effect it may have. I don't want to speculate too much. But this is something that's well recognized in the transplant community that tacrolimus is associated with an increased de novo type 2 diabetes. And type 2 diabetes is a major indication for kidney disease and kidney transplantation. These are one of the most common group of patients in North America and around the world that require kidney replacement.

Your next question comes from Thomas Smith with Leerink Partners.

And let me add my congrats on the updated data. Just one question for Dr. Tchervenkov, and thank you, doc, for sharing your perspective and your experiences here in the field. I was just wondering if I could ask you to comment at a high level on your perspective on the totality of the initial data set here for tegoprubart, and how the experience of the first 11 patients compares versus your expectations versus your experience with CNIs historically?

Well, I don't know about the other 7 patients, but the ones we have taken on here at my institution...

I think -- so just to be clear, Dr. Tchervenkov, so this is all based on the data we presented today. So we haven't expressed individual patients.

All right. So we're not going to go into the details of individual patients. But my impression looking at the data, is that this is really a very, very outstanding data for the initial introduction of this new novel clinical anti-rejection maintenance immunosuppression. And it's better than what I have seen in my last 30 years' experience in terms of creatinine, in terms of kidney function, and the risk of rejection is at par if not better than what I would expect with calcineurin inhibitors.

Got it. That's helpful. And if I could just ask a follow-up question for the company here. I was wondering if you could just elaborate, maybe provide some additional details on where you are with the BESTOW study with respect to site activation. And if you could maybe comment on how the early enrollment is going relative to your expectations?

Sure. Thanks, Tom. So we are -- we're not providing a direct update in terms of number of sites activated or patients enrolled at this time. We are -- as you know, we're looking to finish enrollment in the Phase II BESTOW study at the end of next year, so at the end of 2024. And so far, our experiences opening sites and recruiting patients is it continues to be aligned with that goal. If we go back at the beginning of the year, we had guided that we would do a number of things. We had -- we're going to look to raise financing for the company. We then said that we would look to open up our first sites in the Phase II BESTOW study in June specifically, and that we would bring in our first patients into that study over the summer. And so far, we were able to execute and meet all of those milestones. So we're feeling good. We think that this data should be helpful in helping get researchers and potentially patients interested and onboard in participating in the Phase II BESTOW. And so far, we continue to expect to be able to hit the milestones that we're looking to hit and complete enrollment at the end of next year.

Got it. That makes sense. All right. Congrats on the progress.

Your next question comes from Robert LeBoyer with NOBLE Capital Markets.

First, let me congratulate you on the data. And my question has to do with this patient who had a mild T cell-mediated rejection. There was a mention of the Banff score of 1A and that it was treated, the patient remains in the study. But could you just elaborate a little bit on what the Banff score of 1A really means in terms of severity, the treatment, the inflammation and the extent of the rejection that we've seen?

Sure. So we're not going to go into specific individual patient data. But if you'd like, I'm happy to ask Dr. Tchervenkov in general what a Banff score of 1A means.

Sure, that would be great.

Again, these are mild-to-moderate rejections that are easily treatable with medications that we have on board for the last 25, 30 years. And so this is what we use. And we were able to treat it quite effectively. Yes.

Okay. Now is a score of 1A something that's treated for a week, a month, or just elaborate a little bit on the extent...

It's under 1 week and it quickly reversed, yes. It's not something that -- they usually respond in the majority of cases, the vast majority of cases to the current antirejection medications we have. And this one responded quite effectively, yes.

Your next question comes from Matt Kaplan with Ladenburg.

Nice update to the data. I guess we've spoken about the efficacy or what you're seeing so far in the Phase Ib. I guess maybe, for Dr. Tchervenkov, maybe could you comment on, I guess, the totality of the data with respect to the safety profile that we're seeing so far now that some patients are out for quite a long time on the drug? And the AEs that you're seeing? And how this compares with tacrolimus? And what you typically see in patients on drug this long?

Sure. So Dr. Tchervenkov looking at the totality of the data that are posted today, what -- how would you compare that to...

Yes, these are common side effects. I mean, we need to, in a study report any side effects or adverse events, whether they're due to the medication or not. It's related to being undergoing surgery, transplantation. We see these patients quite often, quite frequently. And we ask them through a standard questionnaire, anything to report. And so these are commonly seen after transplantation in terms of the some of the side effects we saw, the sort of -- I don't have the actual presentation in front of me anymore, but we see quite a bit of these reported side effects. So that's nothing unusual for me.

That's helpful. And then a second question in terms of the Phase IIb study. You're looking for superiority as the primary endpoint in terms of eGFR. What level of difference would we like to see between the 2 arms? And what you power to show there with this -- with the size of the study?

Sure. So Matt, we are 80% powered to show a 9% difference between the 2 arms.

That's helpful. Great. And again, congrats on the updated results.

Your next question comes from Rami Katkhuda with LifeSci Capital.

Congrats on the update. Just a quick one for me. So can you touch upon the 4 cases of BK viremia? Are doses of tego lowered in these cases as well? Or is it just MMF? And is it purely physician discretion whether to discontinue treatment with tegoprubart?

Sure. Thanks, Rami. Let me turn it over to Steve.

Rami, I'm sorry, I apologize. I actually missed a little bit of your question. You faded out there for a second on my phone. I'm in a hotel room.

All good. I guess I was asking about the 4 cases of BK viremia. Are doses of tego lowered as well? Or is it only MMF? And then the second part of that, is it purely physician discretion whether to discontinue treatment with tegoprubart?

Yes. So in terms of PI, I mean that's an easy one, investigators have a lot of experience in this patient population in treating things and they're very well adept at seeing BK viremia and how to respond to that. The first thing that we've done, which is standard practice, has been to reduce MMF dosing, which is a very common way to reduce BK viremia. And that's been quite effective thus far in our population. We don't play with the doses of tego as far as, I think you specifically said, you lower the dose. We don't play with the dose of tego, that's standard. The protocol does allow an investigator to skip a dose, if they choose to, and that's acceptable as part of the protocol. But for the most part, that has not occurred and these patients continue to be on tego in the study.

Got it. That makes sense. And then I guess with regards to kind of the [ cadetics ] of eGFR benefit and stabilization, it seems like treatment with tacrolimus, patients kind of had their eGFR peak relatively early, whereas with tego you see a continued benefit over time. I mean, it's still early, but is there any kind of indication as to where -- at what time period does the benefit with tego kind of hit, if that makes sense?

I think just right now, the n is small. So we're -- we only have one patient that's gone out to a year. So it's just difficult to know where things are going to land. But overall, the takeaway, in our opinion, is that we're very happy with these eGFRs. And whether it's a 70, let alone an 80 or 90 in 1 year, these are quite high. But it's probably too early to predict whether everybody will look the same and how things can evolve. Steve, do you -- maybe I'll turn it over to you to see if you have some more thoughts.

Yes. I agree with everything DA said. I mean this is very exciting and very encouraging data. Dr. Tchervenkov said that himself, the data was very well received at ASN this morning because the eGFR data is quite compelling. But it's early days, and we only have one patient that's actually gone out a year. Now if you fast forward back, I mean, we've made an incredible amount of progress this year. A year ago, we had submitted data to the Singapore conference, and we only had 3 patients of data, and none of them have gone out even close to that far. So the company continues to make great progress, and we're obviously very excited about where we are today.

Got it. Congrats again.

Next question comes from Pete Stavropoulos with Cantor Fitzgerald.

Just one additional question, I guess, for Paul or DA. Can you just remind us about the financing agreement you entered into earlier this year? And what would trigger the next tranche and sort of expected time line?

Sure. I'll turn that over to Paul.

Sure. As you know, we received $35 million upfront, and then there's an additional $105 million that will come under 2 triggers. Both of those are clinical milestone triggers. The first $47 million when the 10th patient is enrolled in the Phase I, this trial, which we hit; and when the 12th patient is enrolled in the BESTOW trial. There's also share price and volume trading triggers as well for that. But the clinical milestones are clearly set on these 2 trials. And then the second funding of $58 million is set on the 78th patient is enrolled in BESTOW. And so again, as DA has mentioned, our intent -- our goal is to complete enrollment on the BESTOW trial at the end of 2024.

[Operator Instructions] Your next question comes from Vernon Bernardino with H.C. Wainwright.

Congrats on the results. I'm sorry if I don't remember this, but is there an interim look such as a look at 90 days built into the BESTOW trial? And if so, if you have results, for example at 90 days that show that you have an eGFR of 70 or better as compared to what you usually see in those patients of 50, is there a rule that would actually stop the trial early?

Thank you, Vernon. So there is no interim look currently built into our Phase II study. So right now, our plan is to run the study and then flip over that card and see how well patients have done. In the meanwhile, though, we have the opportunity to use our Phase Ib in order to generate data and to report it out. Currently, that first cohort is 12 patients. But in the future, we might be able to add additional cohorts as well, which can help generate data both for the field as well as obviously for investors.

There are no further questions at this time. Please proceed.

Thank you, operator, for your assistance, and thank you all again for joining us on today's call. Operator, you may end the call. Have a great night.

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