Sagimet Biosciences Inc. (SGMT) Earnings Call Transcript & Summary

Greetings, and welcome to the Sagimet Biosciences key opinion leader call. [Operator Instructions] As a reminder, this conference is being recorded and will be available for the replay on the Investors section of the Sagimet website following today's call. Before we begin, I would like to remind our listeners that our comments today will include some forward-looking statements. These statements include statements regarding the presentation of the data from our clinical trials our clinical development plans and related and anticipated development milestones as well as Sagimet's cash and financial resources, financing and partnering plans, expected cash runway and related and anticipated development milestones. These statements involve a number of risks and uncertainties, which are outlined in the press release for this event and on Slide 2 of this presentation. Actual events or results may differ materially from those projected in the forward-looking statements, which contain known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. I would now like to turn the conference over to your host, Dave Happel. Thank you. You may now begin.

Thank you, Tara, and good morning, afternoon, everyone. We are delighted to have you join us today. During today's call, we plan to review the positive 52-week data from our license partner, Ascletis Phase III open-label extension clinical trial of denifastat in moderate to severe acne vulgaris that was conducted in China. We will also provide an update on Sagimet's planned U.S. Phase III AURORA clinical trial of denifastat, or Deni, for short, for the treatment of moderate to severe acne. For today's presentation, I will provide a brief overview of Sagimet highlighting our fasten inhibitor development programs and the significant market opportunity for a novel oral [indiscernible] inhibitor in moderate to severe acne. Dr. Harper, an internationally recognized dermatologist and thought leader in acne and rosacea will then review Deni's mechanism of action in the positive 52-week data from the Phase III open-label extension clinical trial of Deni in moderate to severe acne vulgaris. Dr. Andreas Grauer, our Chief Medical Officer, will then discuss our planned clinical development programs, focusing on our U.S. Phase III AURORA clinical trial of Deni for the treatment of moderate to severe acne followed by a Q&A session with our panel. We are delighted to have with us today Dr. Julie Harper a board-certified dermatologist practicing in Birmingham, Alabama. Dr. Harper is the Founding Director and past President of the American Pain Unitization Society, a fellow of the American Academy of Dermatology and recently served on the AAD acne Work Group and was also the former President of the Alabama Dermatological Society. As we get started today, next slide, please. As we get started today, I'll take a moment to give you a quick company snapshot. In April of 2026, we announced a strategic decision to advance Deni and to moderate to severe acne where we see a significant opportunity to make this product with its novel mechanism of action available to patients with families living with acne. Acne impacts about 50 million people in the U.S. with an approximately 10 million suffers from moderate to severe acne. And we believe that patients are underserved by the currently approved treatments. If approved for the treatment of acne, Deni could be a convenient once-daily oral medication and the first innovative oral treatment approved for acne in more than 40 years. With Deni, we are now moving into a registrational U.S. Phase III study, building upon the recent successful Phase III clinical trial conducted by our license partner, Ascletis, for Deni and moderate to severe acne in which Deni met all primary and secondary endpoints. We also have a second oral [indiscernible] inhibitor, TB 367 currently in Phase I study. We are about to complete the single and ascending dose and the food effect portion of this Phase I and are moving into the PD biomarker phase of the study. We anticipate starting a Phase II dose-ranging proof-of-concept study with 3567 by the end of this year. Also earlier today, we announced a $150 million financing, which further strengthens our balance sheet and extends our runway through the middle of 2020. As noted, we are planning to take Deny into a Phase III trial in moderate operating with patient screening expected to begin next month in October and one of the first patient is expected shortly thereafter. We also plan to continue the development of 3567 with a Phase II trial expected to start by the end of this year. In addition, and in parallel, we plan to advance a topical formulation [indiscernible] inhibitor into IND submission. As we move forward, we have the fundamentals in place to support the execution of our programs. Our IP is strong with composition of matter protection for Deni to 2032 plus potential BT extended to 2037 and for both [indiscernible], we are exploring pathways to extend protection into the 2040s. Next thing I'm going to walk you through the acne landscape. Next slide, please. The global acne market is significant forecasted to reach $20 billion globally by 2034, and currently within the U.S. has noted, there are approximately 50 million people with acne on an annual basis, of which approximately 10 million or more have moderate to severe acne. The target patient population for Deni. Annually, 5 million to 6 million moderate to severe acne patients are actively seeking professional treatment generally in the dermatology study, underscoring this potentially large underserved population largely due to the fact that currently our available trends have profiles that potentially limit their effectiveness to treat iterate to severe acting. Next slide, please. In mild disease, treatment consists primarily of topical agents alone or in fixed-dose combinations. At the end of the spectrum, severe cystic acne is treated with oral isotretinoin an effective option with significant prescribing limitations under the FDA required [indiscernible] program. For patients with moderate to severe acne, dermatologists will typically add oral treatments to topical agents. These oral treatments are typically tetracycline class antibiotics which could have undesirable side effects and raise concerns about long-term antibiotic resistance with overuse. Across the treatment spectrum, skincare routines are deployed routinely to address dryness and irritation associated with actual therapies. We anticipate that Deni 50 milligrams once daily, if approved, will be prescribed to treat patients with moderate to severe acne. And as noted, we are also developing a topical fasten inhibitor, which we anticipate could be used to treat more mild to severe forms of acne. I will now invite Dr. Harper to share her thoughts on the therapeutic space, including the potential role of an ORLEN pan inhibitor such as Danny in the treatment of moderate to severe act. Dr. Harper?

Great. Thank you, Dave, and thank you for the opportunity to be part of this again. This is a very interesting molecule to less in dermatology and in the acne world in particular. And I like that last slide where we break acne down into mild, moderate and severe. That certainly is the case. But I will tell you, regardless of the severity of acne, we are always trying when we have that patient sitting in front of us in a clinical setting, like I mean right now, always trying to target as many of these 4 drivers are pathogenic factors in acne as we can. So we have follicular hyperproliferation, so plugging of the follicle, that's one. cutibacterium acnes, which is a bacteria involved in acne, that's another one of our key drivers. Inflammation is a third. And then the fourth and probably historically the hardest one to target is this increased CBM and really a change in composition at sebum. It is historically the hard one for us to target. Until very, very recently, we had nothing topically that would work for sebum at all. We now have [ clascoterone ] or win levy, which can help topically. I will tell you that it's slow and it has to be used twice a day, and it is topical. Now we can do some things orally that will address sebum as well. Some of those were on the last slide. So that would include things like spironolactone and oral contraceptives. But those 2 right there are systemic antiandrogens. So we cannot use those in men at all. The 3 that I've just talked about, the topical class [ godarone, ] the oral contraceptives and pronelactane are all working through the same pathway. They're trying to block sebum by blocking androgen. The fourth option here are the third oral would be oral isotretinoin a drug that known by the name of Accutane, been around for a long time since 1982. And it really is FDA-approved for severe nodules [indiscernible] and scoring acne. So we reserve it for the most severe patients with acne. The other group of people who can benefit from oral isotretinoin are people who have just been really resistant to other treatments. So it is not often put in as a first-line treatment. So often, it's going to be a rescue treatment in someone who has not responded well to other treatments. The way isotretinoin works is also different. It causes really just cell death of the sebaceous gland. And so when we look at a drug like [indiscernible] and I love that I get to call it Deni today, we've decided that may shorten my presentation by a little bit. But when we look at a drug like Deni, it has a whole different mechanism of action here. So that important role of sebum in acne, 80% of the sebum the lipid in sebum comes through this de novo lipogenesis pathway. So if we can look over on the right, we'll see fast in there that's fatty acid synthase -- that's the enzyme in this pathway that's towards the end before we get the formation of palmitate and [indiscernible] Sapionic acid, in particular, being pretty specific to sebum. But if we can take Deni and put a big X over that fast and right there, it is a fatty acid synthase inhibitor. So it is going to block the end game there. It's going to help block sapianic acid in palmitate and therefore, block lipid synthesis. And there are some things about this that I think are really unique and I'll try to call those out to you when we actually look at the clinical results with this. So where do we really expect this is going to work in these 4 key drivers of acne? Well, certainly see them, but probably also should be anti-inflammatory. And then I would add just as an acne thought leader that I think it also stands to reason that if you decrease oil enough, oil or sebum is the food source for C acnes will probably indirectly have an impact on sacs. And we're also learning more and more about the fact that it's changes in sebum that might really promote some of this follicular hyper-curation. When we look at lesions in a little bit, we're going to look at inflammatory lesions and then noninflammatory lesions or comes. Those [indiscernible] comedone going to come from that follicular [ hypercritiization. ] So we want to see if with a drug like Deni, which is really targeting sebum and inflammation, can we have an impact even on the follicular [ hypercurotinization. ] So kind of watch for that as we go through. Okay. So we already have some data. Of course, in the lab, we have data that Dinyfans that would have an impact on sebum-reducing sebum. We also have some data from a Phase I oncology clinical trial, now this was not a study for acne. The dosages used here are higher than you're going to see in the acne studies. But still, what we see is when people are on this medication, they have measurements of sebum lipids from the forehead subtypes were placed on the forehead and then we were able to see both the quantity and the type of lipid that are present. Look at the graph at the bottom there. On the Y axis, we're looking at that sapienic acid in triglycerides. So one of the fatty acid change in triglyceride. And then across the x-axis, we're looking at time. So we see people at day 1 day 2, there's not really any change here. By day 8, we're starting to see a decrease in [indiscernible] acid and by day 15, a big decrease. And in fact, it's more than 90% reduced from baseline. And it doesn't bump right back up. This stays low throughout the entire study, and we go out here today 93. So we do have some evidence that this works. Now let's talk about working in acne, not just specifically for sebum, but we're trying to treat acne. So let's look at that. There's a lot of information on this slide, and I like to divide slides up. Okay. So vertically, we're going to look at the left half first. You'll see that vertical line. It's not really at the halfway mark, but hang with me on this. So on the left, we're looking at the Phase III clinical trials with Deni. So these are the ones that were performed by Ascletis. That's the Sagimet license partner in China. So this study was done in China, 480 patients with moderate to severe acne. Right there, what that means on an IGA scale investigator's global assessment. I'm going to go ahead and tell you the numbers, I'm sure you already know these 0 would be clear, no acne. One would be almost clear, 2 would be mild 3 would be moderate and 4 would be severe. Now even to be severe here, there's a limit on severity. You can only have up to 2 nodules on the face. So there are people with way more severe acne than that. that would still not qualify for this. So we're looking at the 3s and the 4s with the limit on how many modules a patient could have. This is a very well-designed study. It is double-blinded. It is multicenter, placebo-controlled, randomized 1:1. So 480 people come into the study 240 in the Deni arm 240 in the placebo arm. The Deni dose here is 50 milligrams QD. Now always in our studies for acne, we're looking at the same primary endpoints. And our endpoint time is going to be 12 weeks. And so at 12 weeks, we want to know how many of those people who started out as 3s and 4s are now 0s and 1s. So it's -- treatment success is not just who got a little bit better. It's -- who got all the way down to clear or almost clear. That's 1 of the 2 primary endpoints. The other primary endpoint is lesion count reduction. So we're going to count both inflamed lesions. We're going to count comedones, which are the smaller black heads and whiteheads. We're going to add that together and look at total lesion count. So the 2 things we're looking at are global assessment, which is like from an arm's length, that's the way that we're assessing that and then we'll look at lesion count as well. To the right of that vertical line, this is the exciting new part. This is the open-label extension. So any time we have a new drug like this, we need 52 weeks of safety data. And some people will start over and do a 52-week open-label study. Others will do a 50-week open-label extension right on the tail of that. We don't need 480 people now in this. We need 240. So it will be basically the first 240, first come first serve. But we want to buy equal numbers to come in from the Deni arm from Phase III trial and from the placebo arm. So we're going to filter in about half and half from those 2 and then extend the study for an additional 40 weeks. You will notice now that there's no control group here. And that's really because these are safety studies. So we want everyone exposed to the drug so that we get all of the safety information that we can have. But we also don't mind a little bit of efficacy data here to, and that's the exciting thing I get to show us today. I think maybe for the first time, we're going to get to see what the efficacy looks like at the end of the 12 weeks as well. This is our baseline demographic. So who is in the study. The columns there, you'll see the 50-milligram Deni arm, you'll see the placebo arm. And then at the end, it's the total. The average age here was close to 3 not surprisingly, always in acne studies, there's more females than males. And then if you look about halfway down, most of the people in the study in every arm, 85%, 86% of people have moderate acne and IgA 3 and 14% or so half severe. The total lesion count across the board here is over 100. It's 102 lesions. Just about 40 of them are going to be inflammatory and about 60 are going to be noninflammatory. And if I was talking to a bunch of dermatologists, I'm going to go ahead and say what I would say, I always want us to step away a little bit from numbers and remember that we don't treat numbers, we treat people, how many hits on our face, does it take to mess up our day a little bit. The answer is, one, these people have over 100 lesions of acne on their face. So this is significant acne. Okay. So what happens at week 12 have we improved this acne. So let's look first at the last column. I just want to go ahead and get this out of the way. Every number I'm going to show you Denifanstat is statistically superior to placebo, okay, just across the board. But let's start at the top. So what is our treatment success? If everybody started as 3s and 4s at the end of the study, what percentage of people are 0s or 1s. 33% so 1/3 of people. I have no head-to-head studies here. I don't even know if I'm supposed to say this, but I'm going to tell you that for oral antibiotics like this tetracycline antibiotics, that were mentioned earlier. Oftentimes, the treatment success in those trials is closer to 17% to 22%. So this is a good number. If you look at lesion count, when we look at total lesions together, our lesion count reduction in the Deni arm is 57.4% and versus 3 with placebo. If you look at inflammatory lesion counts, which is really where this drug should shine at least early on [Audio Gap] We know from the clinical trials. We tell our patients in clinic. These may take 8 to 12 weeks to kick in. That's because in the trials, they take 8 weeks to separate from vehicle. And here, we see statistical separation on statistical separation as early as week 4. So we don't just want that week 12 data. We want to look back at week 8 and we want to look back at week 4, and we have strong data at those time points as well. Now any time we're talking about efficacy, we always want to marry that to a discussion of adverse events. Deni was well tolerated during the 12-week clinical trials. In fact, the incidence of AEs was comparable between the Deni arms and the placebo arm. There were only 2 categories of treatment-related adverse events that had an incidence rate of more than 5%. They were dry eye and 10.9% of those treated with Deni. Remember that number, by the way, 10.9%, and they were 8% in the placebo group. So definitely a little background noise with this anyway. The other was dry skin, and it was 6.3% in the Deni treated subjects and 2.9% in the placebo group. But even when we did have some AEs, all of them were rated as mild or moderate. There were no grade 3 or grade 4, there were no serious AEs thought to be related to Deni and no deaths were reported Okay. Let's move on now to the open-label extension. So what you're looking at here is just to show the arms of the people who are going to come into this open-label extension. So if you look under Deni, okay, so those are the people who started and did the 12 weeks on Denifanstat, and then they came into the open-label trial and stayed on it. So those are going to be our 52-weekers. And then the second column are those who were on placebo for the first 12 weeks, but then filtered over into danifanstat. So really, they're exposed to the drug for 40 weeks. But we want to look at them at week 0 to see if there's anything about this group that stands apart from the third column, okay? So the third column is our entire data set, all 480 patients who were in the Phase III clinical trial. If you look at these other 2 arms, now we're down to 240 total, but just go down about halfway to IGA moderate. And you can see as you look across the columns, we're about the same, IGA severe, we're about the same and even on lease counts as we go across, we are about the same on those. So the long-term studies are really all about safety. So let's look at safety first. Again, Deni was generally well tolerated even over time. And what we're looking at here is we want to see with a new molecule like this is well, maybe the longer somebody is on this may be -- maybe we have a cumulative effect and now we have more adverse events. So we're looking for that. But again, in this case, all of the treatment-related AEs were mild or moderate. There were no danifanstat-related Grade 3 or Grade 4 AEs, again, 2 categories of treatment-related AEs that have an incidence rate of 5% or more in the Denifanstat treated patients. And this first part, these first numbers are over the whole 52-weeks. So the 12 weeks plus the 40 weeks, there were 2 again, dry eye in 5.9% and dry skin in 7.1%. But if you look at just the 40-week group there, then the numbers look even lower, dry skin at 2.5% and dry eye at 2.1%. Now importantly, even though there are some AEs like this, there were no permanent discontinuations related to AEs. There was one Grade one hair thinning in the long-term extension study or the open-label extension study. It was experienced by 1 patient being treated with Deni. It did resolve within 8 weeks while staying in the study and not changing the dose of Deni, that person though did receive topical minoxidil. In the Phase III, by the way, back to the 12-week study, there was also 1 grade 1 hair thinning, but it was in somebody who was on the placebo. As far as serious AEs, there were none that were thought to be related to drug, there were 2, but they were unrelated, both of those resolved and there were no deaths that were reported. Okay. This is very exciting now. This is the efficacy at week 52. So first of all, I want you to look at the legend kind of right at the top of the graph. We are -- when we look at week 12 here, we're not going to include the whole original data set. We're just going to include the people who also ended up in the open-label extension. So we're looking at 240 people in the first week -- first 12 weeks and that same 240 people in the 52-week long-term study. So this is how many people again had success. They were clear or almost clear. At the end of week 12, it was 37% in this group. But if you wait until week 52, it is now 57.8%. And even if you were the unlucky ones who had to do 12 weeks of placebo first you still basically caught up and at the end of 52 weeks, 55.6% of people are clear or almost clear. Let's look at total lesion count reduction. So at week 12, a 9.1% in total lesions. That's inflammatory, noninflammatory together. But if you give it a little more time, we can do even better. 73% reduction in the Deni arm and even close to 71% if you had been in placebo first. How about inflammatory lesions. Again, this is where I would expect that this drug would really do great and it really does. It did great fast. Actually, in 12 weeks, we were already down 66.7% for inflammatory lesions. But at the end of week 52, we're down closer to 80%, 78% reduction and that placebo first arm does well to getting all the way down to 75.8%. Now noninflammatory lesions, okay? This is the 1 I've kind of been -- I was interested in seeing this, again, because in my clinical practice, a drug that works on sebum, I'm going to think, well, I better use a topical retinoid with it so that I can get the impact for the noninflammatory lesions. And yet with this drug even by itself at week 12, we have a 50 -- almost 53% reduction in noninflammatory lesions. And by end of week 52, 68.3% reduction. And you do well again. the placebo arm catches up with the double act of the Deni. So in summary with this, in the Phase III clinical trials, patients dosed with Deni 50 milligrams a day over 12 weeks demonstrated statistically significant improvement in the overall IGA success rate also in inflammatory, noninflammatory and total lesion counts. And they did this fast. Not only did they do it at week 12, but we had statistical effect that was statistically significant as early as week 4. During the long-term open-label extension, patients also showed further improvement in IGA success and lesion count reductions compared to baseline. And in all of these clinical trials, Denifanstat was generally well tolerated the Denifanstat-related AEs were all mild to moderate, and there were no Deni related serious adverse events. So that's kind of a quick run-through. I will be on the call for questions, and I'm going to pass it back over to, I think, Andreas?

Well, thank you so much, Julie, and good morning, good afternoon to everybody. Next slide, please. It will be my pleasure today to review our AURORA Phase III clinical trial. As you're aware, Sagimet received the IND clearance and the FDA study may proceed later in July, to enable development of Denifanstat for moderate to severe acne in the U.S. Our plant Phase III clinical trial would enroll approximately 800 patients, as you see here, 12 years and older into a double-blind, placebo-controlled 12-week trial, which then similar to what you've seen before, will be followed by a 40-week long-term extension. The patient screening here is expected to begin in October. So pretty imminently with enrollment of the first patient expected shortly thereafter. Next slide. And now let me turn it over to our focus on our second FASTEN inhibitor, TBB, 3567 or 3567 for short which is currently in its first-in-human Phase I clinical trial. This Phase I clinical trial, as you would expect, is a double-blind, randomized, placebo-controlled trial, investigating single ascending doses and multiple ascending doses, food effect and also will investigate in a small cohort of acne patients, pharmacodynamic parameters of sebum. And as you see here on the slide, we will measure sebum quantity with placebo meter and see the quality with a sebum tape so that we can characterize what this molecule does in more detail. Next slide. and just sort of give you an impression on the time line, the ongoing Phase I trial is will determine the doses that we will carry forward into our Phase II trial, which we're planning to start towards the end of 2026. We're currently planning to conduct this Phase II trial in moderate to severe acne patients, which would be treated for 12 weeks, and we would utilize similar end points what has been done in the Steti Phase II trial. So looking at total inflammatory lesion counts and explore improvements in acne global assessment scores. And with that, I would like to turn it back to Dave to close the presentation.

Thank you, Andreas, and thank you, Dr. Harper. To wrap up, there is a significant opportunity for the novel and differentiated therapy addressing the sizable moderation population. And as Dr. Harper review, Deni, with its novel mechanism of action has demonstrated significant clinical efficacy quickly and with deepening positive effects for moderate to severe acne patients. The IP state for our development portfolio is strong. and our development path is clearly laid out. We have the fundamentals for success in place, strong IP, capital from our existing cash balance and recent financing to reach our next milestones and the cash runway that takes us through the middle of 2029 and beyond and a disciplined path forward supported by an experienced team who knows how to execute. We look forward to working with the dermatology community and updating all of you as we progress through the next stages of development. With that, I would like to thank Dr. Harper and all of you for joining the call. Tara, we're open now for Q&A.

Great. Thank you, Dave. [Operator Instructions] So our first question comes from Nat [indiscernible] Leerink.

I did snapshot on for Tom Smith. Thank you for the presentation. So first is a clarification question. So how can the open label portion already include approximately half of the participants in the double-blind portion of the trial? Did you simply limit the enrollment to 240 subjects and I have a follow-up.

Yes, Nat, thanks for the question, and I'll turn it over to Andreas for that. I'll offer a brief thought on it. The 240 patients that rolled over into the open-label extension was the number agreed upon with the NMPA, the Chinese regulatory agency to support the safety tolerability database and the NDA application. Andreas, if you have additional?

I think you kind of answered the question here. That was the reason for that lower number. Again, the focus of the open-label extension was safety and the requirement of the Chinese regulatory authority was to establish that long-term safety in approximately 240 patients. But one of the things that was important is to demonstrate to make sure that the efficacy data have internal validity, as Dr. Harper was presenting is to show that the patients that were moved over or were invited into the long-term extension were representative of the original population.

That makes sense. And for a follow-up, how do you expect the planned or US population will be compared to the excluded Phase III population in terms of late? Do you see severe need, demographics or trial treatment history.

Yes. Well, let me start with what will be the biggest difference. The biggest difference will be that we will be including adolescents into that study based on the suggestion of the FDA, and as [indiscernible] Had performed that study in adults only, i.e., 18 years and older. . That's the biggest difference. Apart from that, we will have the same inclusion criteria, patients with moderate to severe acne based on a global assessment score of 3 to 4 and 30 to 75 inflammatory lesions and 30 to 100 non-inflammatory lesions as a requirement for inclusion. So very similar population just including the adolescents.

Our next question comes from Ritu Baral at TD Cowen.

My question is actually for Dr. Harper. Dr. Harper, how would you -- how do you think of the data for Deni, as presented comparative to either Accutane or Cabrio on relative efficacy, on relative safety. And my follow-up is actually pretty straightforward. You noted the decline in dry eye rates and dry skin with the extension data, do you think that's biological accommodation? Or do you think that, that is just patients being able to have sort of OTC support, like heavier cream or eye drops or something like that.

Okay. I hope -- I always hope I can remember the second part of the question after I answered the first. So the first is relative to compare this with like oral isotretinoin or the topical triple fixed dose capture.

Yes.

Well, just as somebody in the clinic, I think they're all pretty distinct drugs really when I think about a drug like Deni, my patients do love oral medications. And I really think of this as a drug that will more likely come in and replace the use of an oral antibiotic, for example, oral isotretinoin is a very, very effective drug. But as you know, I think we're comparing apples and oranges if we try to compare those to oral asset at known has been around since 1982, and we've had oral antibiotics, and we've had topical, and we don't treat every single patient with oral [indiscernible] we use all of those other things. So I think those 2 are definitely apples and oranges. The topical Cap Trio product is -- has a very, very good efficacy data when you look at the clinical trials, it can have some issues with tolerability as any topical product can -- and so there are times -- I really like to use topicals when I can. And oftentimes, what I would really say is I can't wait to use [indiscernible] together with Deni. But if you're asking me to compare those to -- there are times that have patients who come to clinic. This just happened very recently. Someone is so irritated from the topical that we can't use them at all right now. And so it's not just looking at numbers and trying to decide which one works better. It's how am I actually going to be able to use these in clinic and a topical is quite different than an oral and isotretinoin I have to just be honest, kind of stands in a lane all by itself. Second question, I just remember -- did you have a follow-up to that first?

I know, it was the roll-off of the side effect rate and whether that was accommodation. I really -- I don't know the answer to that. We'll see if Andreas has more to say about that. I don't know. But I think from my standpoint, it's just nice when we see that, that's not something that seems to be getting worse as we go through the studies. It did get better. You did hear that correctly. And I don't know if that is because people were accommodating by using external products or if perhaps they just got used to the product and the side effect goes away. I don't know the answer to that.

Yes. And I think you already -- your guess is right, Julie. I think that's exactly what it is that when you look at the -- if you restart the clock in the open-label extension and just count the side effects from week 40, then it's only like 2.5% and 2.1% of patients who have dry eye dry skin side effects. And that is probably accommodation that they've just -- and it's a very small number to start with. -- and they've just learned to deal with that very effectively. All of these are mild, right, Ritu. I think that's also -- or nearly all of them are mild. That's also important to remember, and they usually respond extremely well to trivial measures like eye drops.

Our next question comes from Evan Wang at Guggenheim.

Great. This is Evan Wang on for Shamus Fernandez. Two questions from us. One for Dr. Harper and one for Andreas. For Dr. Harper, now in April, we discussed the shifting guidelines around organ antibiotics, a potential for Deni to be used ahead of antibiotics. Can you just talk about your conviction in both usage of Deni as a chronic therapy and also around the treatment paradigm shifting to improve without utilization of oral antibiotics now that we have the longer-term efficacy data and for Andreas, excited to see the Phase III kickoff shortly. Can you walk through some of the details on how you're operationally designing the traffic success? If you could touch on patient selection, like training adherence and other critical aspects of acne trials. So for as long as I've practiced, which is now over 25 years, the way we have treated moderate to severe acne is oral antibiotic along with topical agents because, again, we really are trying to hit as many of those 4 factors as we can, and we do better when we do combinations of therapy. But there are reasons that we don't want to use those oral antibiotics. There's reasons why patients don't want to, and there's reasons that we are trying to get away from them. So we've already started to limit them. We don't want them longer than 3 or 4 months. That's what the AAD guidelines even say, try to limit the duration of those. And really, if we can treat acting without them, why not? That would be great. We know in dermatology that we are some of the biggest prescribers of oral antibiotics, and we are keenly aware of that, and we don't really want it to be part of the antibiotic resistance that is a big problem. So we have a little bit of a target on oral antibiotics right now, and I think that's very appropriate. So when I look at a drug like this that already would come into the topical and hit a whole different piece of the pathogenesis because oftentimes, even with those other combos, we were missing sebum. If we were doing something like a retinoid benzyl proxy clindamycin oral antibiotic, which would be very common. We were missing Sebum with that. So now if I kept those topicals on board, but my oral medication became something like Deni, I can do that. There's no reason I wouldn't do that. I'm not worried about resistance because I'm not even working through that mechanism of action. And yes, I like having the long-term data. I do expect that this would be a long-term treatment for most people. I will be interested to see, and this will be way down the pike, I guess, but it would be interesting to see if we have any kind of a remit effect with this. I don't know that. Those will be things that we learn as we go. But there is no signal from a safety standpoint, and there's certainly nothing like antibiotic resistance that would make me in a hurry to get somebody off of this. I think this looks like a very safe alternative and taking a once-a-day pill is pretty darn easy for my patients.

And I can answer the second question, how are we operationalizing our Phase III trial. We've selected 55 clinical sites and are in the process of starting those sites up as we had announced. And we're expecting to enroll the trial after first patient in approximately 6 months that is based on a lot of information that we've collected both from the CRO that we are going to be working with. And some of the CROs that wanted to work with us from our site feasibility from feedback from experienced dermatology thought leaders like Dr. Harper and others. And it amounts to a recruitment rate of approximately 2.4 patients per site per month. And we're looking forward to getting started and hopefully getting finished very soon with this drive. SP-23

Next question comes from Chang Lee at Oppenheimer. SP-24

This is Jon on the call for Jay. I guess or questions. First, I'm just wondering any particular patient population benefit more from this longer treatment. I'm wondering if like you for the breakdown the data based on like the severity of the patient. And I guess the follow-up question is just wondering any anecdotal data suggesting will happen to patients once they stop treatment because interstate patient roll over to the OE. So I'm just wondering whether for those on the treatment arm, DG that actually came back after stopping the treatment.

Well, for severity, this, as you could see, was studied in moderate to severe acne, which is pretty typical. But the pathogenesis of acne, again, is the same, whether you're mild or severe. And I can't think it truly, I can't think of any reason or group of patients that I wouldn't use this end, except for someone who is pregnant. I'm not going to use a new drug and a person who's pregnant. But they're -- I would feel comfortable using this in somebody with very severe acting, but that's not really where it's studied, and that's not the place that it's made for -- so we're going to be using this in the clinic in that -- the upside of mild and moderate acne and probably some of the severes that don't need isotretinoin yet or and this happens more than you might imagine or they don't want I treat now in. There are plenty of people that come in that I kind of want them to do [indiscernible] and I get to stop from them. So I think severity, there's no reason to think that there's some severity out there that this drug wouldn't help because I have a good friend. You may have worked with her at some point, Hillary [indiscernible] and Dr. Hilary Baldwin likes to say, no sebum, no acne. And so I don't think there's any acne out there that this would not benefit. And yes. SP-26 Sorry, go ahead.

I want you to take the part about the open label.

Okay. Yes. So the question, what happens if you discontinue the drug. Well, first of all, let's back up and review what the drug does, right? Acne patients have an approximately 20% increase in sebum production over the normal population. And what we're doing with this drug is not eliminating see them -- we're reducing sebum production to normal levels. That is what the Denifanstat inhibition in this particular setting does. It's not like in oncology, where we're trying to eliminate faster. Here, we're just trying to normalize fashion. And if you stop the treatment, then the ASM production is expected to go up again. We have anecdotal data from patients where we see that they have stopped it and their fashion is expected to increase within about 4 to 6 weeks, and so is their acne. Than eventually going to come back. What we're not seeing is a rebound. So it's not getting worse than it was before. But the -- it's not a disease-modifying drug. The -- as soon as you discontinue the drug, the effect will slowly go away.

Our next question comes from Yani [indiscernible] Cannery.

Congrats on the data here pretty outstanding. Just 2 quick ones. I guess one obvious that the placebo-treated patients effectively kind of caught up with those that started on treatment by the 52-week mark. I guess that implies that the full effect kicked in somewhere within that 40-week period, -- could you just give us a sense of where that might have occurred? And just secondarily, also just the overall compliance rate in the oily?

I might pass that to you, Andreas.

Yes, no problem. Yes. Yes, no worries. So what we see is in the patients that are continuously treated with Deni we see that they're sort of approaching this maximum treatment effect somewhere around the 24-week Mark and the placebo group catches up with the 12-week delay. So they're approaching it about 36 weeks and at that point, they are like on average, as you've seen at about an 80% reduction in inflammatory lesions. So it becomes difficult to improve this even further in a large number. But that is, I think, the time when you can expect the sort of -- when you're starting to see peak efficacy and from then you can -- you will maintain it if you stay on track. And was there a second question...