Quince Therapeutics, Inc. (QNCX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Quince Therapeutics Virtual KOL event. [Operator Instructions] As a reminder, this call is being recorded, and a replay will be available on the company website following the conclusion of the event. I will now turn the call over to Dr. Brigette Roberts, Chief Corporate Affairs Officer and Board member at Quince Therapeutics. Please go ahead, Brigette.

Thank you, Wilson. So good afternoon, everyone, and thank you for joining Quince's KOL event. For those of you who are not yet familiar with this story -- let me turn to Slide 3, please. Our company is focused on a proprietary once-daily inhaled formulation of rapamycin called LAM-001 that we're studying across 3 pulmonary conditions. The first is PH in the setting of interstitial lung disease estimated to affect about 200,000 patients between the U.S. and Europe. Based on promising Phase IIa data that Dr. Paul Yu presented at ATS this year, we have moved forward into a Phase IIb study in PH-ILD with expected data in the first quarter of 2028. The second indication is bronchiolitis obliterans syndrome post lung transplant estimated to affect about 30,000 patients between the U.S. and Europe by the early 2030s. And this is a very severe complication post lung transplant, unfortunately, the leading cause of death in the majority of patients. We are currently in an investigator-sponsored study being run at UCSF by Dr. Steve Hays, and that data is expected in the first quarter of 2027. And then finally, we're also studying the drug in a third indication, sarcoidosis associated pulmonary hypertension estimated to affect about 60,000 patients between the U.S. and Europe. Another very severe disease, complicating about 15% of patients with underlying pulmonary sarcoidosis. And we'll be starting a Phase II study toward the end of this year, with the readout expected approximately 2 years thereafter. So next slide. The entire premise behind this drug was -- the goal is to try to find a safe and well-tolerated means of delivering rapamycin to patients' lungs in disease settings where the mTOR pathway was known to be truly implicated. And so what we created here is a product where we are delivering [ 1/20th ] of that standard oral dose, 100 micrograms is being delivered daily via this DPI delivered directly to the pulmonary tissues. That is 1/20th of the typical oral dose. And because of that, what we are seeing in humans is a less than 1 nanogram per mL systemic level, which is less than 1/5 to 1/15th the systemic level seen with oral delivery. And thus far, that has translated into a very benign profile in patients. And importantly, at least so far in our initial studies, efficacy as well. Next slide, please. Next slide. Sorry. So on that prior slide, it just highlighted our upcoming time lines for data sets. We -- as mentioned, we'll have that PH-ILD data in Q1 '28. We'll be delivering this BOS data in the first quarter of 2027 and that [ SAPH ] data toward the end of 2028. So it's now my pleasure to introduce our 3 KOLs who are going to be presenting today. So for the PH-ILD discussion, we're joined by Dr. Aaron Waxman and Dr. Paul Yu. Dr. Waxman is the Director of Preliminary Vascular Disease Program at the Brigham and Women's Hospital, and he is Professor of Medicine at Harvard Medical School. Notably, he's been the lead PI on numerous PH clinical studies, including the Phase II SPECTRA study for sotatercept and a Phase III [ INCREASE ] study for Tyvaso, which led to the first approved agent to treat patients with PH-ILD. He holds an MD from Yale University, a PhD and anatomy in neuroscience from Albany Medical College. He completed his residency in internal medicine at Yale and his fellowship in pulmonary and critical care medicine at Yale. And he's board-certified in pulmonary disease, critical care medicine and internal medicine. Dr. Waxman was the lead PI for our Phase IIa study of LAM that was just presented at ATS, and he's the lead investigator our ongoing Phase IIb study in PH-ILD. Turning to Dr. Paul Yu. He is the Director of Cardiovascular Research Center at the Massachusetts General Hospital and an Associate Professor of Medicine at Harvard Medical School. He holds an MD from Duke University and a PhD in immunology from Duke. He completed his residency in internal medicine at UCSF, a clinical and research fellowship in cardiovascular disease at MGH and a post-doctoral fellowship in cardiovascular biology with Dr. [ Kenneth Block ] at MGH. He's board-certified in cardiovascular medicine. Dr. Yu has made a significant impact in pulmonary hypertension through his translational work, including the study of [ BNP ] and TGF-beta signaling and cardiovascular homeostasis, repair and disease. Among his many contributions to the field, his work helped to elucidate the vascular remodeling activity of sotatercept, the first agent approved for PAH with a disease-modifying mechanism of action. So turning -- third to Dr. Steve Hays, who will be leading our BOS discussion. Dr. Hays is the Medical Director of the UCSF Advanced Lung Disease and Lung Transplant program and a Professor of Medicine at UCSF. He holds an MD from the University of Kansas and completed his residency there in internal medicine. He held -- he completed his fellowship in pulmonary and critical care medicine at UCSF and in lung transplant at Stanford University. Dr. Hays is board-certified in critical care medicine and pulmonary disease. His clinical focus is the treatment of advanced lung diseases, and his research focus includes lung transplant immunology and airway remodeling, chronic lung allograft dysfunction, infectious disease and transplant digital health. Dr. Hays is the principal investigator for the ongoing investigator-sponsored Phase II study of LAM-001 in BOS patients. So before starting, just to note, we're going to be breaking today's presentation into 2 sessions. The first will be in PH-ILD. The second one will cover BOS. And at the end of each session, we'll be opening it up for a 10- to 15-minute Q&A. And questions will be taken in the order in which they are received. So with that, I'll turn it over to Dr. Waxman and Dr. Yu to discuss pulmonary hypertension.

Okay. Thank you, Brigette, and hello, everyone. We can go to the next slide. So I always like to start out with a general statement of the problem and really just pointing out, which probably isn't that necessary anymore, that Group III PH is something we encounter increasingly as people recognize the disease state and now that we actually have a treatment for it. I'd like to show these -- the histopathologic slides that are on the right of this slide. Just to illustrate, for so long, we kind of ignored the idea of PH in the setting of Group III disease and especially in Group III ILD. But these are all from patients with Group III, except one. And if I were to challenge someone to tell me which one is the PAH patient, I think you would have a hard time doing that. The point is that vascular remodeling is a big deal when it comes to advanced lung disease and something we shouldn't have ignored for the many years that we did. Next slide, please. This is just a summary of the prevalence and epidemiology of the disease state. I actually think that we underestimate how much is out there. I think part of the problem has been that because we had no treatments until recently, people didn't get right [ heart cath ]. They didn't get a diagnosis and were pretty much ignored. But I think there's no question that when we do have pulmonary hypertension in the setting of interstitial lung disease, we see a significant decline in the pulmonary function itself. And we can go to the next slide. This is, again, restating some of the prevalence of the disease and showing what happens as far as mortality when we add pulmonary hypertension on to interstitial lung disease. And generally, there's about a threefold increase in mortality once patients develop pulmonary hypertension. And it's always been kind of siloed into ILD clinics, but more and more as people recognize that pulmonary hypertension is a significant component, it's overlapping with the pulmonary vascular clinic. But in spite of that, I think there's still very significant delays in diagnosis. And as more treatments are coming to trial, I think we'll get better at finding the disease earlier in the disease process. You can go to the next slide. So this is just the algorithm for diagnosis of PH-ILD because it is now putting 2 bad diseases into 1 patient. I think the things we start looking for and what we're reaching out to the audience of pulmonologists, cardiologists, rheumatologists, is that as patients start to become increasingly short of breath or out of proportion to any changes in their pulmonary function or maybe their CT scan, it's time to start thinking about pulmonary hypertension. There are some subtle findings on other tests like EKG. Echo is still an important screen, but Echo becomes much less reliable when patients have advanced lung disease. So we start to look for other clues in the pulmonary function testing realm. If that DLCO, the diffusing capacity, which for those not familiar, is a measure of the surface area of the lung involved in gas exchange, as that starts to fall at a proportion to the forced vital capacity, that's the time to be thinking about pulmonary hypertension. Certainly, if the patients exercise tolerance is on the decline, but one function is not, then we start thinking about it. Echo still remains the important screening tool, but really a low bar to take a patient to [ write heart cath ] is key. And I think that is starting to change as treatments become available. But this is the general algorithm. And no, you can go on to that next slide. So this is just looking at the track record, and I think this raises a couple of important questions. I think we know [ endothelin ] receptor antagonists have now got themselves a black box warning, which I think is unfortunate because it's probably related to clinical trial design, more than any harmful effect of the drug itself. But so far to date, trials have not shown any consistent benefit and do raise the question of harm. The data right now does not support their use in PH associated with ILD. If we think about the PD5 inhibitors, [ sildenafil ] and [ tadalafil ], some studies have shown improved hemodynamics. Some have shown some improved quality of life or preserved exercise capacity. But really, the functional benefits to date have been inconsistent. There is always concern that these drugs can worsen gas exchange in patients, especially with COPD, but also ILD. The [ prostacyclins ] have been studied to some limited approach. They may improve some pulmonary hemodynamics and right heart function but have also been found to worsen ventilation perfusion matching and worsen hypoxemia. The inhaled prostacyclins are -- preferentially treat those well-ventilated lung regions. Although [ Iloprost ], which is really not used in the U.S. much anymore, has shown mixed effects on exercise tolerance and oxygenation. And the recent [ PERFECT ] trial, which is [ PH-COPD ], also raised some concerns with the drug. But I think that, too, gets to the importance of phenotyping our patients. Overall, the data suggests uncertain benefits of PH-specific therapies in Group III with no clear improvement in mortality or clinical worsening and need for larger long-term trials. You can go to the next slide. I think there are a number of reasons as we analyze these, and it really comes down to phenotyping these patients properly. There's been biologic mismatch such as with the STEP-IPF and simtuzumab studies that really didn't look to engage the dominant driver of progressive fibrotic disease. So the clinical readouts remained poor in spite of what seemed good clinical rationale. There are some harmful hemodynamic physiologic aspects, as I mentioned, with the ERAs and now also with [ Riociguat ], really suggested that systemic vasodilator strategies can worsen gas exchange and worsen outcomes in fibrotic lung disease. Especially when the lung is trying, it's very best to redistribute to -- from poorly ventilated regions to better ventilate it and make those better perfused. There's also some late heterogeneous populations. I think what PERFECT showed us is that patients with advanced [ PH-COPD ] have a higher comorbidity burden and that can erase the benefit of a pulmonary vasodilator. And one thing we also learned with the PERFECT trial is that patients who have a diffusing capacity that is too low, which was the real fundamental finding in that study, there just may not be enough vasculature to target. And really, endpoint dilution has also been a big problem with a lot of these clinical trials. Most of the programs were judged by broad functional decline in diffuse fibronic disease rather than by a vascular endpoint linked to any treatment mechanism. And you can go to the next slide. And I think one of the big things that changed with INCREASE was the use of the inhaled route. [ Treprostinil ], by giving it as an inhaled drug, was delivered to those ventilated lung units, which were preserved and likely improved vascular tone while minimizing ventilation perfusion mismatch with what we saw with systemic vasodilators. Also, importantly, the right phenotype might have been kind of stumbled upon, if you will. Patients had established PH-ILD, and the treatment was targeting the pulmonary vascular problem rather than assuming an antifibrotic benefit alone, although as it turned out, there was also an antifibrotic component there. And we also designed it around the right endpoint at the time where INCREASE showed a 31-meter placebo-corrected improvement in that 6-minute [ walk ] distance, also saw improvement in NT-proBNP and also fewer clinical worsening events. All of these would be consistent with a true vascular efficacy. Next slide, please. So I think what we've learned from [ treprostinil ] and maybe from [ PDE5s ] is that we have 1 positive trial in this area in PH-ILD, a lot of cautionary history. I think the real clinical reality is that we're balancing symptom burden, oxygenation, RV function and uncertainty. I think INCREASE was a landmark trial, but it certainly did not solve PH-ILD. I think what it taught us was that treating the label helped some patients, but not all, and that it has allowed us to continue, I think, with a better approach overall. We can go to the next. This is just showing you the recent data from the TETON studies, which were the subsequent studies after we did INCREASE where we saw a preservation of the FVC percent in ILD, suggesting that [ TrepRoSIL ] truly does have an antifibrotic effect. I think importantly it, like all the other antifibrotics, simply slowed progression. They did not reverse anything. I think the 1 positive here is that [ treprostinil ] not only had a little better preservation than what's out there, but also was better tolerated. Next slide. So I think the real rationale came down to the inhaled therapy. And treatment with systemic pulmonary vasodilate, as I've already suggested, often results in worsening VQ or ventilation perfusing imbalance, and that leads to worsening oxygenation and can certainly make patients feel worse. Using an inhaled targeted therapy really optimizes ventilation perfusion and allows for drug delivery where it's needed the most and may have the best efficacy. And I think inhaled approaches really are -- have the most potential for increased efficacy and decreased systemic side effects. Next slide, please. So now kind of switching gears to the mTOR pathway, and this is some of the preclinical data. On the left of this slide is a paper that was published by [ Goncharov ] and colleagues. Looking at [ mTOR 2 ] drives abnormal vascular smooth muscle growth and survival in PAH. This was a study looking at pulmonary artery smooth muscle cells that were obtained from patients with idiopathic pulmonary arterial hypertension. And this -- and also complemented by a study of chronic hypoxia in a rat model. The key findings here are that both mTOR 1 and 2 promoted proliferation, and mTOR 2 additionally supported glycolytic energy production and resistance to apoptosis. The treatment effects of an inhibitor where the dual mTOR 1/2 inhibitor -- here, they used [ PP242 ] -- induced smooth muscle cell apoptosis and reverse pulmonary vascular remodeling in rats. And this study had supported a targeting the mTOR pathway to address vascular remodeling. Obviously, clinical efficacy was not evaluated in this study. The minimal -- sorry, minimal -- the middle panel is a paper by [ Husseni ], et al entitled The Rapamycin Suppresses Abnormal Smooth Muscle Proliferation in Experimental PH. In this study, oral rapamycin at 5-milligram per kilo per day was evaluated in the [ monocritilinin ] model of pulmonary hypertension. And they looked at both prevention and treatment in this study. The key findings were that reduced pulmonary arterial pressure, improved right ventricular hypertrophy and pulmonary vascular muscularization were all noted. The mechanistic findings, there was a normalized exaggerated smooth muscle cell growth associated with suppression of mTOR1 and mTOR2 signaling. Selective mTOR1 inhibition at low concentrations, though, was not sufficient. So I think that's also suggesting a limitation of systemic delivery. The implication here was that preclinical evidence for treating established pulmonary vascular disease with effects dependent on dose and pathway inhibition were the final findings. And the last study on this slide on the right is by [ Cato et al ] and looked at rapamycin enhancing endothelial autophagy and attenuation of severe experimental PH. Here, they use the [ sugen ] hypoxia model. Rats were given rapamycin at 5-milligram per kilogram via [ intra peritoneal ] injection. This was given 3x weekly over weeks 3 to 8, which allows for establishment of pulmonary hypertension after the treatment of the model. The key findings here were that they saw reduced right ventricular systolic pressure and improved obstructive pulmonary vascular remodeling. This suggested that increased endothelial autophagy markers. The markers have reduced proliferation and increased apoptosis, accompanied by fewer endothelial cells with DNA damage, all a result of blocking the mTOR pathway. And this study, I think, also supports endothelial autophagy as a potential therapeutic target. And benefits remain preclinical in this study. And we can go to the next slide, please. And this is the last preclinical study that I'll show. This is a study looking by [ Yoshazaki et al ], looking at rapamycin attenuating fibrosis into mouse models of systemic sclerosis. Here, rapamycin was given at 1.5 milligrams per kilo per day for 28 days. In these 2 models, one a skin tightening model, and the other, a bleomycin-induced model. Reduced hypodermal thickness and skin collagen content with the mTOR inhibition was about 38% in those skin tightening model mice. And then reduced skin and lung fibrosis in the bleomycin treated mice was also noted. They also saw that a lot of the pro-fibrotic cytokines and inflammatory infiltration was suppressed, as well as fibroblast migration and proliferation. And this study really also supports mTOR inhibition as an antifibrotic strategy. But again, this is all animal data, not human. And we can go to the next slide, please. So I think to summarize, what I've shown you so far is to ask the question, why should inhaled [ ceralimis ] work. I think, one, we have a lot of preclinical data that targeting the mTOR pathway makes sense mechanistically. And it's above and beyond any vasodilating approaches. mTOR is upstream of remodeling, and [ sirolimus ] can suppress proliferative inflammatory and pro fibrotic signaling, which is all relevant to the pulmonary vascular bed and pulmonary vascular smooth muscle and endothelial dysfunction as well as fibrotic mechanisms involving fibroblast activation and migration. I think the compartment targeting matters. I think as we've seen with pulmonary vasodilators, it makes sense to target drug into the lung at the disease site, which -- so that inhaled delivery is really designed to maximize drug delivery to epithelial, interstitial and vascular elements of the disease while reducing systemic immunosuppression in any off-target toxicity. I think the potential also of differentiation from pure vasodilators, [ sirolimus ] could modify the remodeling biology so that this could provide us with a second disease-modifying drug, potentially with even less side effect potential. I think the most defensible development path as you replicate the INCREASE playbook. By targeting PH-ILD patients, it preserves the inhaled lung selectivity, and we use the same endpoints of exercise tolerance, biomarkers, hemodynamics and disease progression. And I'll hand it over to Paul at that point.

Thanks, Aaron, for presenting the rationale for our first study. I'm going to provide top line results from an open-label Phase IIa study of dry powdered inhaled or DPI formulation of rapamycin called LAM-001. This was tested with -- in Group I PAH and Group III PH ILD patients with the goal of enrolling 10 of either patient category. All of these patients were on maximal background therapy for pulmonary arterial hypertension or PH-ILD or antifibrotic therapy for ILD at the time of enrollment, and all of them had functional Class III disease. This was an invasive cardiopulmonary exercise testing study with the primary endpoint of peak oxygen uptake or [ VO2 MAX ] at 24 weeks versus baseline as well as safety and tolerability endpoints. This -- the secondary endpoints included hemodynamics based on pulmonary vascular resistance. Also, exercise function and NT-proBNP was an exploratory endpoint. Next slide, please. There were 5 Group I PAH patients and 5 PH-ILD patients enrolled in the study. The demographics were very similar to other contemporary PAH or PH-ILD trials. All Group I PAH patients were on stable regimens of 2 or more standard of care PAH drugs at the time of enrollment and throughout the study. And importantly, all the PH-ILD patients received [ treprostinil ] therapy in some form at baseline and also antifibrotic therapy, if appropriate. And this was consistent with maximal medical therapy. All of our patients who completed the study were seen to improve across several functional hemodynamic and biomarker endpoints. There were 4 early terminations that were not attributable to study drug, but due to unrelated hospitalizations and complications, including acute coronary syndrome in 1 subject and a classic vaping induced lung injury in another subject. So the 6 patients completing the protocol had improvements across most, if not all of the primary and secondary endpoints shown on the table on the left and by forest plot on the right. And what we saw was a highly consistent effect in directionality for each of the endpoint [ 6-minute walk ] distance, [ VO2 MAX ] percentage change of forced vital capacity, pulmonary vascular resistance, measured both under exercise loading conditions and under supine static conditions, as well as NT-proBNP. And these improvements were seen whether we looked at the population as a whole or with PAH or PH-ILD. You can see that there was a median increase in 6-minute [ walk ] distance of 60.1 meters. That was true among the overall population in the PH-ILD group. And there was an improvement in [ VO2 MAX ] of 5% predicted among the overall group, slightly higher in the PH-ILD group. There was a reduction in the PH-ILD group in the pulmonary vascular resistance of 38.6% under exercise and minus 43.7% under supine conditions and approximately a 28% drop in NT-proBNP. The force vital capacity improved across the whole cohort, 3.5% as a whole and 1% within the PH-ILD group. So with the caveat of this being a very small cohort, the magnitude of these changes compares favorably with other modern Phase II and Phase III studies in PAH and PH ILD. These include the INCREASE study that Aaron just told you about, as well as PAH studies such as [ PULSAR ] and [ STELLAR ] for sotatercept. Next slide, please. Okay. Consistent with those objective endpoints, the functional classes were also seen to improve, with 100% of completers improving from their baseline functional Class III to at least functional Class II by week 24. And in fact, 2 of the patients improved to functional Class I. Next slide. In this trial, LAM-001 was well tolerated with few Grade I or II adverse events involving either cough, productive cough or gingivitis. There were no dose interruptions or discontinuations due to drug, and there were no drug-related serious adverse events. So to summarize, this open-label study, LAM-001, demonstrated favorable tolerability improvement or stabilization in multiple cardiopulmonary exercise capacity, hemodynamic and functional status endpoints, suggesting physiologic benefit. And these provide our rationale for the new randomized control study, this Phase IIb study of LAM-001 in PH-ILD. This will involve 2 doses of LAM-001, the dose that was tested in the open label, as well as a higher dose to explore whether there's greater efficacy. And the similar endpoints, except that the primary endpoint for this Phase IIb trial, will be pulmonary vascular resistance. So in looking at the therapeutic landscape, mTOR is known to be a master integrator of metabolic state, environmental stress, and lies at sort of the intersection of many growth factor, cytokine and hypoxic stress signals. And this results in the ability to influence a lot of downstream processes important to PAH and ILD, including cell growth, sulfate and metabolic adaptation. So while many of the other investigational approved drugs in this space can, in theory, affect these processes, including pulmonary arterial smooth muscle cell proliferation, fibrosis and inflammatory cell recruitment, mTOR lies really in a central position in many of these pathways. And by virtue of its long-standing clinical experience as an anti-vascular proliferative drug in cardiovascular indications as well as being an established immunosuppressive agent in transplant medicine, it has really a clinically known ability to target many of these drivers of obstructive vasculopathy and fibrosis in PAH and ILD. And so I think it makes a lot of sense based on both the mechanistic understanding of how mTOR inhibition works as well as the clinical track record of this particular agent and its potency. With that, we can open this up to questions.

Thank you, Dr. Waxman and Dr. Yu. [Operator Instructions] So our first question comes from Mazi Alimohamed at Oppenheimer.

So as we think about the BOS trial -- and maybe this is 1 for Dr. Hays mostly. How are we thinking about the potential for advancement as we think about a Phase III and as we think about kind of -- as we think about investors, how should we think about the Phase II readout? And how should we think about that as it determines the potential registrational path forward for a Phase III? And what endpoints do you think would be most useful here and thinking through with the FDA as we align on a Phase III?

And that's specific to the BOS study? So I think...

Yes, specific to the BOS study.

Because I think Dr. Hays is going to be talking about the BOS data, and that would probably be a better time.

Oh, I see. I didn't realize -- so then I can flip that for this 1 as we think about PH-ILD. So then maybe I'll switch to thinking about -- as the readout. So as we think about even the BOS readout coming up, as we digest that and we think about PH-ILD moving forward. And I think the 2 things that I was thinking about for the PH-ILD is how should we think about target engagement and safety profile in the upcoming readout? And how does that de-risk or add risk to the possible future in PH-ILD?

I guess the issue of risk, are we talking about the potential adverse effects of the drug?

Yes. And how we should think about the safety profile as it relates to PH-ILD would be in that landscape?

I think as we've seen it and as Brigette pointed out in the very beginning, the dosing of this drug is orders of magnitude less than what we would do normally with this drug as a systemic drug. And at least our limited experience would suggest that it's extremely well tolerated. And the benefits that we're seeing, again, in small numbers but are impressive, especially in comparison to other drugs that are out there since not much else has worked in this target space. I mean, Paul, do you want to?

Yes. I think what we want to see in our Phase IIb RCT as continued evidence of that same really promising open-label experience. There's no substitute for an RCT, as we all have learned in this area. But I think with more patient exposure, especially in that population, we'll get an even stronger sense of the tolerability. We know that the approved medication are limited in their tolerability due to the frequency of cough. And hopefully, that advantage that we think might be present with this in terms of tolerability and lack of cough, which is specific to different agents even with the inhaled modality will bear out and that we'll hopefully see a similarly low frequency of adverse events, I think, afforded by that therapeutic index of having really good tissue delivery without exposing systemically, our patients to this drug.

Our next question comes from Joe Schwartz at Leerink.

Great. Thanks for hosting this great event and taking my questions. One for Dr. Waxman and one for Dr. Yu. Dr. Waxman, you ran [ SPECTRA ], and the LAM-001 Phase IIa used a similar open-label [ CPET ] design. So -- and I guess having seen how SPECTRA carried into controlled trials, how does this signal that you're seeing here compare at the same stage and -- for sotatercept? And what part of it do you expect to hold up under blinding?

I think great question, obviously comparing 2 different or very different populations of patients. I think the important things that we saw with these patients on LAM, the improvement in the [ VO2 MAX ] was really impressive. And that says that exercise tolerance is clearly improving on a physiologic basis purely because of the drug because these patients did not exercise and did not go into physical therapy or really have any other training exercises. And even though those numbers seem small, I think when you do a lot of exercise physiology -- and this was actually a little bit better than what we saw with SPECTRA -- that percentage improvement is impressive. I also think the 6-minute walk distance goes along with that. So I think I would probably characterize it -- and again, stressing that these are very different patient populations, pretty comparable positive findings that we saw with this approach.

And then if I could just ask Dr. Yu, given we saw the ILD patients improved a functional class in some cases, really early, I was just wondering based on the mechanism here, what could explain that speed? And how does it influence your view of how the drug works, be it through inflammation, blood vessel lining or right heart unloading? What do you think drove some of the impressive early responses we saw in functional class?

That's a great question. It always has surprised us when we looked at recent trials such as with sotatercept, how quickly we're starting to see symptomatic benefit. With drugs that are trying to correct the situation, we think that developed over years, if not decades. And the answer might lie in sort of what is causing a lot of that chronic disease state physiology. We think -- we now know that sotatercept has probably some very early hemodynamic effects when people look very closely using a continuous invasive telemetry devices, and it seems like that possibility could exist here. We would have to look, but there may be more rapid improvements in symptoms and functional class due to acute effects on smooth muscle cell function is what I would predict. But I couldn't rule out anti-inflammatory effects. We expect that antifibrotic effects would probably take more time for the extracellular matrix to remodel and change. But my best bet is that there's a very potent effect on smooth muscle cell biology.

Our next question comes from Sam Slutsky at LifeSci Capital.

I guess as we think about PH-ILD and the potential future treatment approaches, how do you envision combo therapy advancing here? Do you see potential synergy with LAM-001 in inhaled [ treprostinil ] standard of care? And then just any thoughts on how [ Revance ] monthly could have an impact on development paths, if any?

Great question. And I think there's no question that combination therapy in this disease state will be standard of care. Just right now, we don't have that option. And I think that last slide that Paul showed really suggests some of the potential overlap and synergy that one could expect with combination therapy. I think importantly, [ MosleSewide ], even though the data was really good in regards to 6-minute walk and time to clinical worsening in NT-proBNP, it is a pure pulmonary vasodilator. It is not an antifibrotic. I think where 1 could envision combination therapy working really well and also, I think, really importantly, simplifying the patients' daily need for drug is a combination of this LAM-001 with something like [ TPIP ], if it should get approved, or even [ treprostinil ], even though it's 4 times a day. But sotatercept and the TGF beta signaling pathway could also make sense, but I'm not aware of anyone who's going to study that yet. But one could really simplify our patient's care by adding something like treprostinil plus LAM-001. The other drugs in on that list, I think as pure pulmonary vasodilator, it's hard to say. Combination with [ neuroandemolast ] could even be synergistic there as well.

And I would just add real quick to what Aaron said is that the combination therapy is the opportunity. And yes, a once-a-day therapy based on treprostinil, like the prodrug, [ TPIP ], could be a great match for this agent, LAM-001. But we're in an era now where we have to demonstrate efficacy on top of inhaled treprostinil. And in this open-label experience and in our randomized controlled trial, I think we're going to make every effort to maintain that as we did in the open-label. So it's very hard to understand how mostly [ Sega ] being primarily a vasodilator would compound or build efficacy on top of that. If they're -- in the current trial, the rate of inhaled treprostinil was a bit lower, closer to 25%, I believe. So not only is it an opportunity, but it is a new high bar that I think all these drugs will have to meet.

Thank you for your question, Sam. Our next question comes from Olivia Saunders at Cantor. Olivia, you may be on mute. Okay. I'm going to take the next question. Please hold. All right. Thank you for your questions. To our analysts and speakers, this is all we have time for this first Q&A session. But as a reminder, there will be a second Q&A session after Dr. Hays' presentation. I will now turn it over to Dr. Hays. Please go ahead. Dr. Hays, you may be on mute.

Yes. Thanks. Next slide, please. So today, I'm going to talk to you about the use of LAM-001 for a syndrome that many of you may not be familiar with, but it's 1 of the leading causes of death after transplant, and that's known as bronchiolitis obliterans syndrome. And it is -- it falls into a disease entity which we call chronic allograft dysfunction. That is what we used to refer to as chronic rejection. And bronchiolitis obliterans syndrome is the most common phenotype or endotype of that syndrome. It occurs in 50% of patients by 5 years. And it is -- while rare in the first year, it may affect 40% to 80% of people in the first 5 years and is the leading cause of death by 10 years. 90% of patients either have bronchiolitis obliterans syndrome or have died from their transplant. And ultimately, this is the final [ colon path ] of a dysregulated repair and fibrosis of the small airways, the bronchioles in the lung. And you can see by the histology here, the bronchial tube, which normally might look like this, then becomes fibrotic and essentially included by this fiber proliferative tissue in this more cartoon illustration, you can also demonstrate this. So you could imagine this would cause severe airflow limitation in these patients. Next slide. So how do we define BOS? Bronchiolitis obliterans syndrome, unfortunately, it's very difficult to diagnose by pathology. So it's a clinical diagnosis of exclusion. And it is identified when someone's lung function declines, and it's persistent over the course of 3 weeks. And by a lung function decline, specifically, I mean, the forced expiratory volume in 1 second. So the amount of air somewhat can blow out in 1 second. And when that's sustained over the course of 3 months by 20%, that's considered bronchiolitis obliterans syndrome if you've ruled out other reversible causes such as infections, acute rejection and that kind of thing. So [ FEV1 ], which is the measurement of lung function, really is the primary surveillance tool. And it's important that we're measuring this on a regular basis because oftentimes in the early stages of bronchiolitis obliterans syndrome, patients are asymptomatic. They may not pick up on it. Unfortunately, it carries a very grim prognosis. 3 to 5 year is the median survival after the diagnosis of BOS. The clinical progression is variable. There are patients that progress relatively rapidly, whereas other patients may progress a bit more slowly or a medium term. Next slide. Now there are a lot of risk factors. We don't completely understand the pathophysiology around what causes bronchiolitis obliterans syndrome, other than that we know it's an adherent healing response to a injury to the bronchial tubes. And the injury could be an alloimmune injury such as acute rejection or an antibody meted rejection, but it also may be a more blunt or activation of the innate immune system, as which occurs during infections or gastroesophageal reflux disease with micro aspiration. So there's numerous risk factors for the development of this entity. Next slide. Currently, we don't have any accepted FDA-cleared treatments for BOS, but we have many strategies which we try to employ with limited efficacy. One of the most common is to intensify immunosuppression by increasing corticosteroids and/or [ cell ] inhibitors. That has not been shown to be effective in most patients. One entity I will point out is that there is a group of patients who develop bronchiolitis obliterans syndrome that is responsive to macrolide therapy. This is an [ SD ] now known as neutrophil responsive airway disease. These patients do tend to improve with [ microliter ] at least initially, and they may, at some point in the future develop progression. Treating chronic or recurrent infections is an important mainstream treatment. And then some treatments which have been shown to have some efficacy in some patients, but unfortunately, have not undergone rigorous trials include extracorporeal [ photopheresis ], which is an interesting therapy. Quite arduous, similar on dialysis where patients' blood is removed exposed to [ Soral ], which makes the blood and the white blood cells sensitive to UV light. And that induces apoptosis of leukocytes and stimulates T reg production. And then finally, retransplantation is an option for some patients who have progressive BOS and respiratory failure. Next slide. There is an evolving experimental landscape in bronchiolitis obliterans syndrome. Most of these therapies are still in Phase I and II, including LAM-001, which I'm going to talk to you a bit more about the design. But JAK inhibitors and [ ROCK ] inhibitors are also being trialed currently as a treatment. And most of the foundation of those trials comes out of hematopoietic stem cell transplant-related bronchiolitis obliterans, which has some similarities, but obviously, the underlying disease and causes is different. In terms of Phase III, there is an [ arena ] trial, which is basically like an antioxidant therapy that's nebulized. And liposomal cyclosporine A, which is again an inhaled therapy, which did not meet the primary endpoint. And then finally, as I mentioned, extracorporeal photopheresis is considered to be rescue therapy for BOS. It is not undergone rigorous double-blind [ seli-controlled ] trials, and therefore, is not approved by CMS Medicare. And then antifibrotics are also used as salvage therapy. And there have been -- there are large European-based Phase III studies ongoing. However, I think initially, the readout is that these may not be shown to be effective. Next slide. So what's the rationale for [ MPO ] inhibition and BOS? Similar to what Dr. Waxman pointed out, there are multiple different pathways of potential efficacy in lung [ trust ] on recipients. Immunomodulation may be 1 where there's decreased [indiscernible] of T cells as well as increased regulation of T regs. These drugs are also thought to be renal protective, so they allow us to reduce the amount of [ calcine ] inhibitor therapy to salvage kidney function. There are antiviral effects of mTOR inhibitors, including suppression of particularly herpes virus, namely CMV and antifibrotic effects, which I think we are capitalizing with the treatment in bronchiolitis obliterans syndrome where there's decreased [indiscernible] activation and decrease in extracellular matrix deposition. But finally, anti-oncogenic effects. This is another use case in lung transplantation in patients who have unrelenting skin cancer. We use mTOR inhibitors to decrease the [ calcine ] inhibitor use, which is the most potent cancer drug. And then there are cardioprotective effects in heart transplantation. For example mTORs are considered essential therapy for graft vasculopathy, which is the form of chronic rejection in heart transplant. Next slide. So there are some both animal studies and some sort of preclinical studies that I'll review briefly, but there's really been no significant randomized double placebo-controlled trial in lung transplantation with oral inhibitors. There is a biologic foundation, though, similar to in pulmonary hypertension. There have been some tracheal transplant models in mice. For example, this study exposed -- tracheal transplant is considered to be a sort of biologic correlate bronchiolitis obliterans syndrome, but clearly, there's some differences in that this occurs relatively rapidly after transplantation as opposed to in the actual human transplant. But exposure to rapamycin and mice that have had the tracheal transplant show 2 interesting findings. One, there is a marked reduction in the fibroblastic proliferation in the trachea in those patients who are treated with rapamycin comparable to those rats who had an ISO transplant. The other finding that was interesting was that there was an upregulation by 28 days of both T reg and B reg and anti-inflammatory cytokines. So rapamycin and the tracheal transplant model appears to not only reduce the amount of fibroblastic proliferation in the airway, but also upregulate both T reg and B reg. Next slide. In the humans, there are several case series, retrospective studies, these both coming out of Spain, this -- 1 of the graph on the left shows 57 patients who were treated with everolimus after the diagnosis of bronchiolitis obliterans syndrome. And you can see that the rate of decline pre-everolimus significantly reduced in the post-everolimus group. And the challenge of looking at these data, there is no control group. So there is kind of a natural sort of decrease in the rate of decline in bronchiolitis obliterans syndrome, but it's still a very impressive flattening of this curve. The challenge in both of these trials, the second trial being in rapamycin, a much smaller trial of 11 patients, which also showed a pretty dramatic decrease in the rate of decline of FEV1, the main challenge in both these trials is they had a very high rate of dropout, meaning about 30% to 35% of patients who were treated with oral everolimus and oral rapamycin ended up stopping it a median of 12 months after initiation due to side effects. Next slide. And this has really been 1 of the big limitations in mTOR inhibitors, at least in lung transplantation, has been the incidence of side effects. This is why the inhaled preparation of [ series ] is so exciting to our field. But as we've already heard, oral ulcerations or mucositis, hyperlipidemia, specifically hypertriglyceridemia, some GI side effects and hematologic side effects such as leukopenia and thrombocytopenia are relatively common. The other side effect we oftentimes see in our patients is edema, peripheral edema lymphedema occurring in up to 12% of patients. Next slide. So there are many potential advantages of using inhaled [ sirolimus ] in lung, similar to Dr. Waxman had described really delivering the drug to the site of disease activity, which is the small airways of the lungs, and it provides this potent immunosuppressive and antifibrotic antiproliferative effects by achieving these high concentrations in the lung without having high concentrations in the serum, which are associated with most of the side effects. It's easy to use as a once-a-day dry powder inhaler. And as I mentioned, it reduces the systemic exposure versus oral therapy, which we anticipate would lead to fewer systemic side effects, such as bone marrow suppression nephrotoxicity, which includes proteinuria and the edema and GI side effects. Next slide. So we've designed and are fully enrolled in a Phase II randomized placebo-controlled trial looking at 100 micrograms of LAM-001 versus placebo in a group of patients who have been diagnosed with bronchiolitis obliterans syndrome. The trial extends for 48 weeks, and the patients are able to transition over into an open label extension. We're including all-adult patients over the age of 18, who have newly diagnosed bronchiolitis obliterans syndrome, which is study defined as a persistent drop in lung function from baseline of greater than 15% to 50%. The primary endpoint at 48 weeks is a change in the percent of FEV1 across the 48 weeks of the trial. We have numerous secondary endpoints, which include the absolute change in FEV1 at 48 weeks, as well as a change in the rate of progression in FEV1 at 48 weeks versus pre-enrollment. Progression-free survival, Level 1, which is basically a 10% drop in FEV1 after enrollment, is considered progression. And we have exploratory endpoints, which include some patient-reported outcomes and 6-minute walk distance, in addition to some biologic studies looking at UCSF [ clad ] gene signature profile as well as activation of the mTOR pathway. As I mentioned, the study is currently fully enrolled, and we're anticipating the final 48-week data collection in early December with readout of top line in the first quarter of 2027. Next slide. So what we're hoping to find in this Phase II trial is that the safety and tolerability are equivalent to placebo. I think if we see that there's a 5% to 10% difference between the drug and placebo arms in the change in FEV1 over 48 weeks, that would be clinically meaningful, as well as a decrease in the slope of decline and a trend toward progression-free survival. Next slide. And where do I see this following into the BOS therapeutic landscape? Well, as I mentioned at the very beginning, we currently have 0 FDA-cleared treatments for bronchiolitis obliterans syndrome in transplant. In fact, we've had no randomized placebo-controlled trials that have shown a therapy to be significantly beneficial. So I think this would become the standard of care for patients who have bronchiolitis obliterans syndrome in lung transplantation if this passes through our Phase II with significant top line and we get through Phase III. And I think that's the last slide, and happy to open it up to questions.

Thank you, Dr. Hays. [Operator Instructions] So our first question comes from Olivia Saunders at Cantor.

Hopefully, you guys can hear me okay now. Dr. Hays, given that FEV1 trajectories in BOS patients can be pretty variable, what were the main things that you actually look for when you were selecting patients just to make sure that you enrolled patients with truly progressive disease? And then I've also got a quick follow-up on drug delivery.

Sure. Yes, this is tricky. I mean, I think that inherent in this disease and I think most diseases, there's quite a bit of heterogeneity in terms of disease progression. And because we are using this physiologic metric, we did want to make sure that we were enrolling patients that had evidence of new BOS with progression. And so we have a screening protocol at our institution where we're looking at every FEV1 that's generated by patients. And when patients enter into this point where they've had more than a 10% drop in FEV1, they appear on to our watchlist, so we can follow them more closely over the ensuing months. And when the patients do drop into the inclusion criteria, which means a persistent drop in FEV1 of greater than 15%, that we're able to screen those patients. So how we're ensuring that we're really identifying patients who we think would benefit are, one, we're really trying to identify those patients who have a new decline, so new BOS. We think that enrolling patients early gives us the best chance of making a meaningful impact. And then we're making sure that they have a sustained drop. So it's not a one-off drop, but they have to have repeated measurements that meet criteria that are at least 30 days apart. And so by the time they come in for screening and enrollment, they've had at least 3 FEV1 measurements that meet criteria. And that's the method that we've used. I think that -- there are other trial designs which include looking at the rate of decline as a potential inclusion criteria. And I think that's something that we may consider for larger trials. But for a single center trial where we have pretty good control over the patients that we're enrolling, our methods worked really well.

Okay. Very helpful. And then, yes, on the drug delivery question, BOS, obviously, a small airway disease. So what's your view on whether inhaled plan is actually getting into the affected [ bronchial lease ]? And could that get more difficult as the disease progresses and the obstruction potentially gets worse?

Great question. I think that the preclinical data shows that the -- with both the -- and again, maybe [ Keith Federica ] would like to jump in on this. But I know that the preclinical data suggests that the design of the drug was that it would make it all the way to the [ aviola ] spaces of the lung. I recognize that as the small airways do start to become more narrow, that might theoretically decrease the deposition of the drug in those airways. But again, I think we don't anticipate it necessarily being blocked from the small airways of the lung even in those patients who have some disruption, but it's certainly something that we'll learn over time. [ Keith ], do you want to dive in any more detail about that?

Yes, I think you said it very well. Our drug has been well formulated in a classic DPI configuration or particle size, which is actually measured with an impacter, which kind of [ estimates a line ], clearly shows that the drug is deposited effectively everywhere where the lung will be aerated. And I think at the end of the day, it's going to be our efficacy study from these trials, they're going to eventually gets the right place at the right amounts to perform and as expected.

Our next question comes from Gavin Clark-Gartner at Evercore.

Thanks for all the insights here. This is super helpful. So the 5 of 19 blinded FEV1 decliners is a really interesting data point here, especially since the study is on top of triple background therapy and given what happened in [ Zambon ] previous studies. So maybe you could help us contextualize that data point? And I guess more specifically, based on the patient selection criteria that you just walked through, how are you expecting the placebo arm to perform on FEV1 in this study?

Thanks, Gavin. So great question. I think you're referring to some safety data, looking at just ensuring that we had a sort of an expected number of patients who've had what we call progression. Progression was defined in the trial as a drop in FEV1 of 10% from the enrollment baseline. And in our pre-study planning, we looked at a cohort of patients with bronchiolitis obliterans syndrome over the course of 3 years at UCSF. And we showed that about 50% of patients have a 10% decline or what we would define as progression over the ensuing year following the diagnosis of bronchiolitis obliterans syndrome, and that kind of helped us power our study and also understand what to expect. And so I guess my -- we weren't surprised that we had a certain number of patients develop that endpoint of progression because it was -- it fell in line with what we were estimating from our preclinical data from our cohort.

That's helpful. And this may be a slightly more technical question, but for the patients that did have that over 10% FEV1 decline, was this based on multiple visits? Or was it just at a single point in time they had that drop?