Shattuck Labs, Inc. (STTK) Earnings Call Transcript & Summary

Okay. Good morning, everybody. Thank you for joining us today. This is Wednesday, October 8. This is the first of what we hope to be many installments in the Wedbush Rewind series in which we review key highlights from conferences in our sector. The first installment will focus on the UEGW conference in Berlin. This was a very exciting conference with many updates in the IBD space. Joining me today is David Nierengarten, Managing Director of the Healthcare Equity Research team at Wedbush, along with Dr. Marla Dubinsky, Director of the Susan and Leonard Feinstein Inflammatory Bowel Disease Clinical Center at Mount Sinai. We are also joined by David De Vries M. Phil, CEO of Tr1X Bio; as well as Taylor Schreiber, MD, PhD and CEO of Shattuck Labs. For the audience, we encourage you to participate in our discussion with Q&A. There is a chat feature in the bottom of your window. Please ask questions to us and we will try to address them during the session and also a Q&A session at the end. With that, I'll turn it over to our -- I will begin speaking with Dr. Marla Dubinsky, of Mount Sinai. Marla, thank you so much for joining us today. We really appreciate it.

No problem. Your timing cannot be better. I just landed from UEGW. So I'll be able to give you live right away what the impressions are in the room of all this great science that was presented over the last couple of days.

That is wonderful. We look forward to it. So, if we could start, could you please tell us about your professional background, your qualifications, history and professional appointments?

Sure. So as Martin mentioned, I am the Director -- Clinical Director of the Inflammatory Bowel Disease Center at Mount Sinai. Fun fact Crohn's disease was discovered at Mount Sinai in 1932. So it really has been and continues to be the largest IBD center in the world clinically with a huge research portfolio. So I personally have been in the space almost 30 years, just focused on inflammatory bowel disease, do a lot of clinical trial design as well as focus on women's health within inflammation and just sort of building IBD centers. And I came from Cedars-Sinai, where the TL1A story first started with Steph Targan. So I was -- I ran the IBD -- pediatric IBD program there and worked with Steph for 16 years. So very familiar with a lot of what's going on in the space and look forward to sharing some updates and Martin and I will have some good discussions about the interpretation of all the data from [ last meeting ] yes.

[ Pharma ] used to everything then. And before we get started, if you could describe for us any financial interest or ongoing conversation.

Yes. So I'm essentially a paid consultant for many of the assets that are currently -- that we're going to talk about today as well as being part of steering committees. But again, all we're going to talk about today is publicly available information. So we're going to focus on what everyone knows and what was just presented.

Perfect. All right. With that, let's go ahead and dive into obefazimod. This is the one that I believe is the highlight for many people at this conference. There were two presentations. If you could share with us your opinion on both presentations, efficacy among patients, refractory to advanced therapies as well as the full data set that was presented at the UEGW conference.

Yes. So at UEGW, we presented two different talks actually, as noted. One was the overall data set, but there's two studies within it. So ABTECT-1 and ABTECT-2. So I'm going to stick to like overall high-level clinical remission rates that were reported, focusing on really, as we all do, is sort of the delta between the drug dose and the placebo because that's really where we should be focused our thought process, not the height of the bars. So what we saw is that 50-milligram, which was compared versus placebo as well as 25. And overall, the delta between placebo and 50 milligrams was about 16% when we combine both the ABTECT-1 and 2 data. So that's sort of the benchmark of the difference between drug and placebo, and it was a delta of about 13% in the lower dose. And the 50-milligram dose actually data exceeded the previous Phase IIb results, but the 25-milligram results were very comparable to what we saw in the IIb. So at a high level, met its endpoint with a very refractory population. I do have to talk a lot about that because just a reminder to everybody that this was really -- when you come out to market later, you're at the mercy of also having a lot of JAK inhibitor failures because in the clinic, we use JAK inhibitors as sort of like surgery versus JAK inhibitor by the time they get to many of us in the space because they will have failed a lot of drugs. So the fact that this was quite a refractory population that was presented in the second population, which I'll get into in just a sec, was really what was exciting about this data in that we have based on early results and obviously, we need to see the full registration trial, including maintenance. But what it looks like is that even in four-plus refractory patients, meaning they've failed four different MOAs potentially, including a JAK, that you saw a delta from placebo. But the reason why you see such a low placebo rate tells you how refractory the population is. So I do want to have that little education around it because we saw a lot of high placebo rates at UEGW, and there's a lot of question around some of the other assets like Morphic and even the TL1A from Sanofi had a very high placebo rate. The lower the placebo rate, the more stringent the criteria for inclusion, and it tells you how refractory the population is. So I did want to leave that educational point. So at a high level, [indiscernible] was met its p-value by less than 0.001 across both doses actually. And then when we divide it into the excitement of Silvio Danese's presentation, which was the breaking them out into advanced therapy and adequate responders versus those that have not, I just want to claim to everybody that absolutely, no matter what drug you look at, our patients do better when they haven't failed a ton of other stuff by the time they get any drug. That's in the clinic. That doesn't -- that happens in the clinic as well as it does in obviously a clinical trial. So my point being is that regardless, with the 50-milligram dose, really performed well in both the advanced therapy exposed or failures as well as those that didn't. So the fact that endpoints such as clinical remission, symptomatic remission, clinical response as well as the deeper endpoints, endoscopic remission -- or sorry, endoscopic improvement, we saw that in both subgroups. So what does this mean for the clinic right now based on eight weeks of data? It means that we may, at this point, have a drug that can be used across the moderate to severe spectrum. A drug that works in refractory because just as a reminder, the day after a drug is approved, all of the clinicians are waiting for the next thing to offer a patient. And the fact that we can offer this potentially on day one, obviously, we'll wait for the long-term data. But based on the induction data, we could offer this to a refractory patient the day after it comes to market is something that clinicians are really looking forward to. But at the same time, we will have an oral molecule that outside of headache, and we'll get to headache in just a second because it really is explained away by the metabolism of the drug. But other than having a headache, which we do see with even mesalamine, our 5-ASA therapy, the #1 side effect profile is a headache. So I don't want to get too wrapped up in headache actually. But the fact that we have a drug that we can use across the spectrum from moderate in advanced therapy naive population as well as advanced therapy exposed. That means in the clinic, we have variety in terms of what type of patients this drug could help. So I just did want to set the stage that the data, the overall population great, it makes good sense for a registration trial. But the day that the drug is approved, I have two types of patients in front of me, the therapy refractory patient or the new patient, right? And now I have an oral once-a-day option that, in theory, could apply across the population. So I'll stop there, David, Martin and see if you have any questions. And then I was going to address the safety effect just so that we get that off the -- anything else you want me to clarify in terms of the data with regards to naive versus exposed in the overall?

That would be a great segue because one of the questions that we've been getting a lot has been where do you see positioning of the drug, right? So they did have a nice breakdown of patients who are naive versus first line, second line, third or fourth and beyond as well as JAK inhibitor refractory. So if you could tell us where would you anticipate putting this? And then also in your experience, what percentage of patients are refractory to JAK inhibitors?

Yes. So let's start with where do you position, and I was starting to sort of get to it that in a clinical practice, there's two scenarios. The GI docs that are on the front line, remember, about 90% of IBD patients are diagnosed by a general gastroenterologist in the community, right? These big private practice groups, they're going -- someone's going with diarrhea pain and they get a colonoscopy, they get referred to a gastroenterologist in the community. Typically, the other 10% of IBD patients, let's say, are managed at specialized expert IBD centers, right? So I always like to explain that the market is the folks that are naive to and are presenting either as a new diagnosis or they failed at least TNF. That's what's classically in first line. I just want to remind like how GI works because it's really interesting that the patients that present to someone like me are the four-plus JAK inhibitor failures, right? Or I'm the one that I'm facing, do I start a JAK or do I start obe, right? That will be the situation that faces me when or if the drug when it gets approved. So the folks in the community are looking for a safe oral option, right, for somebody who may have already been on infliximab or adalimumab, the two most commonly first prescribed drugs, although the 23s are gaining a lot of momentum as first-line advanced therapy, right, for patients with both UC and Crohn's, SKYRIZI and TREMFYA or Omvoh, all of those are gaining us momentum in the naive patient. But often patients would like a pill, right? They would be, is there a pill option for me who is the first drug or maybe the second drug I'm going to get and the fact that JAK inhibitors are only approved for after at least one TNF failure and there's a safety concern by a lot of patients and a lot of gastroenterologists out there who are making this decision, the fact that I would have a small molecule that at the moment may not carry any warning or I'm not forced to use it after a TNF, I think, Martin, that really tells you that this is a very good option for patients as their first advanced therapy and for providers to feel comfortable with prescribing it as a first advanced therapy. So, I think, hopefully, I made that clear that there's a distinguishing group of gastroenterologists that whereby they may use this is first line. And then there's people like me who a person comes in, someone is failing -- has failed typically TNF, I'll take you UC, TNF, ENTYVIO and maybe not STELARA, just in this general environment. And I'm like, oh, do I use a JAK inhibitor, right? Because you failed pretty well, most of it. There is an IL-23, but we know from the IL-23 data that it's not as strong in refractory as much as it is in naive, right? There's a position to try and move TREMFYA, SKY and Omvoh really into the naive first advanced therapy. I now have potentially an option in someone who's failed all of those to say, do you want a JAK inhibitor? Or do you want obefazimod. And the fact that if it does continue, whether or not there's a black box warning or a higher infection rate or a malignancy tied to it at all, that will definitely help patients and other providers make a decision that if the safety profile continues based on the IIb and anything in the III, I think people will be very comfortable with the safety profile and may prefer that. Don't know. It all depends on the patient and the physician and their comfort level. Do they have other risk factors like cardiovascular risk factors that may limit our use of JAK. There's just -- the clinic is so hard to explain on a call like this because it's so individual to the patient. So I just wanted to set the stage that it's now an option for refractory for those of us who see patients after two, three failures and are coming to us JAK versus obe, that's one scenario or they failed a TNF and someone said, you should go on JAK and they have questions and they want a second opinion. And if there's some pushback, I could say, all right, we can now have another oral that we can use and that looked good in refractory. So that's the clinic. I don't know if I'm clear. It's just the nuance of IBD is so crazy. So it's really hard to like pinpoint a binary discussion there. So hopefully, I was somewhat clear on decision-making process that happened across the spectrum of referrals.

Yes. No, I think what I gather from this is it sounds like any line of therapy, it may be a viable option depending on individual patient profile. Is that correct?

Correct. And they're moderate to severe. And they're -- what how labels are a reminder that labels are made based on a point in time, disease activity based on a regulatory decision that based on endoscopy and your clinical symptoms. That doesn't take into account the severity of a patient. It doesn't take into account things like urgency, believe it or not, wearing diapers or some sort of protective garment for urgency or an accident in UC in particular. So the burden of disease when a drug comes to market, it's on us as clinicians to say, forget maybe even what endo says or forget endoscopy and forget what you have like one stool with blood, but you're wearing a diaper because you have an accident. We, of course, consider that to be a moderate to severely active IBD patient. So remember, even the notion of activity is a very strong regulatory -- it's for regulatory endpoints because activity does not equate to severity or burden of the disease on a patient. So the way we use drugs even post market is also based on the patient sitting in front of us, the urgency to get things quickly. We use ultrasound in the clinic to be able to tell us whether there's still disease activity, like it is a whole different ballgame now. So you're right, it's dependent on the patient and the overall burden of the disease, the way we apply drugs in the real world.

Fantastic. And while we were on that topic of against JAK inhibitors and safety as well, why don't we go ahead and address the headaches?

Yes. And I want to explain the headaches, which I've learned because I love learning from the pharmacology folks is that the headaches, they happen, and it looks like it's dose dependent. 50 milligram was more than 25, very important. However, the fact that, that's driven because of the parent drug and not the metabolite. Why is that important? Because the parent drug is sort of out within like a couple of days. That's why the headache duration was only about two days. And that's because the metabolite takes over. There's sort of a crossover between the parent drug and the metabolite of obe. And what happens is that the metabolite doesn't cross the blood-brain barrier. So that's why you see actually very clear from the data, specifically headache because there's nothing really else to see is that the time to onset was about day one, and that makes sense because that's the parent drug that goes in. It was seven days for placebo, but for those who did get a headache on placebo, but it was about seven days into the trial, one day because of the parent drug. And perfectly the duration of the headache was about two to three days. And guess what happens after two to three days, the parent drug is sort of going out and the metabolite is taking over. And that's why there's a crossover of how long the headache lasts. I hope that made sense that there's actually a pharmacokinetic and clearance reason for the headache. But again, the discontinuation rate because of headaches, as you know, was 1% in the 50 and less than 0.5% in the 25. So how we look at things is, one, headache, yes, no. Okay. How we'll communicate to the patient? You may see it for the first day, you may have a headache. But by day two, the headache is pretty well gone. And so I think that will help us communicate to patients that you may get a headache because X percentage got a headache. But the good news is that it looks like it will be -- it won't lead to discontinuation. Honestly, that is all that there was really to see there. There was -- they reported on things that had at least 1%, so the laundry list of things that were at least evidence of prevalence, sorry, of 1% and also more than placebo. And so the only thing that came up, there was this question about lipase that because they put it in as at least 1% that they published and greater than placebo, again, there was no increased rate of pancreatitis. There was no increased pain, nausea or vomiting associated with a lipase elevation. And truthfully, it still runs less than what is acceptable or reported in other trials. So I don't know why that rose to the top of anybody -- by the way, there was a question about it or why that I get to ask that question. But when digging in, again, it's just greater than 1% and more than placebo is why the list of everything that could have happened or did happen was put out there in the public domain. So that's what we know today. The key, as you know, for differentiation from JAKs, for example, or TNFs or anybody else's concern is really about infection rate, right? Because everybody with any of these meds, our first go-to sort of default is all about serious infections and opportunistic. And the fact that the infection rate was or serious infections, including opportunistic or severe greater than at least grade 3 was 0.6%. Four people in the entire 50-milligram dose had a serious infection or opportunistic and one in the 25 and the placebo rate, there was one. So I hope that gives some reassurance around -- as of now, again, this is early induction days. We will absolutely have to wait for the week 44 data. Nobody is sitting here going like, oh, this is amazing. There's nothing to see here. Of course, with caution and fair and balance that eight weeks. And so the good news is that early days and early signals show us that this could be a nice option for patients, and we'll follow the safety to see whether or not there's any warnings that come along with it. No anticipated at the moment based on IIb and what was shown. But of course, we will continue to follow. So those are sort of the high level of obe. I mean it's fresh off the -- because we had -- there was two -- we saw both presentations. So sorry if I took long, but that's sort of what's in our visible right now for everybody, and everybody wants to know how obe is going to come into the market. So hopefully, that gave you some insights.

Absolutely. Yes. No, we are more than happy to spend most, if not all the conversation because this has been by far one of the main highlights of the conference. That being said, we probably should move on to some of the other ones that were also highlights for the conference. So icotrokinra, formerly known as JNJ-2113. This is an oral IL-23 receptor antagonist being developed by Protagonist. We were first wondering if you could talk a little bit about -- since these are both oral agents, what's been your experience in terms of patient preference? How much does that factor in for oral drugs versus injected biologics?

Sure. So we all go in thinking every patient wants a pill. And then you get in front of the patient and they're like, I don't want a daily pill for the rest of my life. It's really fascinating. Like I thought for sure, and I think the S1P story does tell you that not every patient wants a pill, right, because we also have that as an option sort of for first-line patients as well. The difference between, let's say, obe and etrasimod or VELSIPITY because I get asked that a lot just to tell you about pills, right, because you're asking me about the pill thing, is that what happened with BMS first and then Pfizer, the perception, I say not reality because the safety of the S1Ps are rock solid into four years. But the idea that you needed to do a skin check, an eye check and an EKG or rhythm strip for some reason, led, I think, perception around safety down, unfortunately, the wrong direction because when you look at the four-year safety data, you're like, why isn't everybody on this pill, right? So I think the opportunity just for pills is that if there is an oral that doesn't come with a physician needing to do this, that or the other, and we call it the easy button, first getting through the provider easy button is number one because we have to be able to feel comfortable that I don't have to do all this extra work to prescribe a pill. I did want to -- you can never dismiss that because I always get asked and before even way back when VELSIPITY was about to come out, a lot of folks banked on the fact that everybody is going to want a once-a-day pill. So I do want to very much hone in that optionality is amazing because not everybody wants a daily pill. Remember, this isn't take eight weeks of Prevacid and call me when you're done, right? This is a commitment to a daily pill. So I would say convenience is an option for patients, and they love the idea that I had to do a subcu, I can do an IV or I can do an oral, I can switch from one. Sure. optionality gives you more control. So the ability to have a patient have different options is really critical in IBD because it's a lifelong, and we're dealing with young people most of the time. These are 21, 24-year olds. The idea of remembering a pill may not be on the top, but at the same time, getting an injection or an infusion, they don't want to do that as well. So there's optionality. That's number one. Number two is the patient perception also about safety. So, again, if we're -- I'm trying to sort of hone in on why maybe S1P didn't give a good example of an orally available that is perceived as easy button and no safety tied to it, so which is why I was bringing up JAK versus obe for that example, and now I'll bring up ico. So when we ask patients, it really oral is not the driver of a choice of treatment. What is the driver of choice of treatment is safety and long-term durability. So I want to set the stage for everyone here that a patient would rather take something any way. It doesn't matter if it's oral and injection or infusible as long as I know I'm not going to be off it in six months, and I'm going to respond. So it's really the durable remission data, not just getting you into remission induction, but what does it look like at the end of a year, two years, three years is very important to a patient. Okay. The second is safety. Because, again, people are making decisions on newer drugs to market. The one benefit of ico, for example, is we have a halo of STELARA, then we have a halo of TREMFYA, Omvoh and SKY, right? So that alone, when it's not a new MOA regardless of how it's given or maybe work completely different because it's going after the receptor, that will get lost in terms of making a decision, right? What people not want to know is, oh, the 23s are really durable based on -- there's not a lot of -- even on the -- I'm talking on the available ones today. You don't develop antidrug antibodies. It's a very durable drug. It's different than T -- I'm giving you all these perceptions when we present at meetings about how people are viewing and safe. Safety is better than placebo. Because placebo, the highest safety risk in a trial is worsening disease. I hate to -- like I always tell my patients. They're like, what's the risk? Well, the risk is that your disease is more risky than anything I'm about to give you, including Rinvoq, right? That's the conversation that we always go down with patients. But -- so the ability to have a safety halo of IL-23 is amazing. I do believe that, that gives a really nice advantage. The oral version of it, I'm not sure that's the hook line -- the hook in terms of I think it's going to be an option, and it will be a very good option based on some of the data. We've only sort of overall population. It looks like it could be -- the deltas are not that dissimilar overall from what I just talked about for obe. And so I think the advantage would just be -- what does it look like, obviously, in the Phase III because it was a Phase II. But still, we make good assumptions and J&J obviously has a feeling about what it would do in Phase III. But overall, I think it's yet another great option for patients. And what we'll have to see is whether disease severity makes a difference, right? And I think that will play out just like what we talked about obe, how does that play out in the Phase III, and we'll see from there. And I think though, it's exciting time, by the way, these two orals, and we'll talk about the other ones as well in just a second. But you could see this revolution of orals with the idea that drug development assumes that everyone wants an oral, which is not always the case, but optionality is really good. So I think that's really what we're going to see over the next five years. And remember, the TL1As are after obe, if that gets -- when, hopefully, or if that gets to market and meets all of the endpoints it needs to and at the end of maintenance, we're going to have a little bit of wait until the TL1As, right? That's the next revolution. I'd say there was TNF, then there was JAK and then there was a mini S1P and then there was IL-23 all over the place. And now we're going to have a little obe as a new MOA and then blockbusters of big pharma bringing out TL1A. And those are three new pharma to us in a way, right? We've not been -- we haven't -- it's not J&J, it's not AbbVie, it's not Takeda. So you could see there's a very different movement as to what's going to happen in big pharma as well. So hopefully, I made sense that it's not -- it's great and pills are absolutely important and optionality is more important. And how we will make the decision is based on, hey, do you have extra intestinal manifestations? Does this drug also go after joint disease? So a lot of these companies are also going to have to show that they just don't work on the bowel, very important. So we know from what's happening with ico in skin, right? And joint -- so we will have some additional extraintestinal manifestation insights as well to help us make treatment decisions. So I do want to explain that if these drugs also work in other organs, that helps position drugs differently as well because up to 50% of IBD patients actually have an extraintestinal manifestation, not always at diagnosis, but some shortly thereafter. And guess what the #1 extraintestinal manifestation is it is joint and skin. So the idea that there may be some overlap is extremely exciting as well. So you could see and you can hear from my tone that this is like amazing for someone who's been in this almost 30 years, the idea that there's so much science and so much future precision medicine and IBD in particular, immunology, like future pipelines is amazing. So I think that this is like an amazing first step for optionality for patients.

Yes. No, it's fantastic to hear the enthusiasm in your voice. Just to hear about all these different new mechanisms coming out and the degree to which you and other KOLs are excited about it. It is incredible. We have five minutes left. So I want to have some quick -- hear your quick thoughts on the last agent we were interested in, roflumilast. What were your thoughts on PDE4 as a mechanism prior to that presentation?

Yes. So we have roflumilast like Otezla, right? And unfortunately, that program got stopped because of change of ownership. It wasn't because it didn't work. And we were very excited, by the way, about this in IBD because it was a pill. We had seen the psoriasis data, and we were sort of -- so this is not a new -- it's a new story in this company, and it's a new asset, of course, but the idea of it and the safety we knew from psoriasis and we knew from the early days of IBD, I think that, obviously, there was a placebo arm, which is great, but it was early days. And also there were 5-ASA failures allowed. I did want to make a note actually now that I think about it. In the S1P and in this one, 5-ASA failures alone could have come in. For obe and ico, that wasn't the case, right? We were going after conventional, a little bit more refractory, right? So S1 -- I did -- I always like to remember to educate around populations do merit, some scrutiny and looking at when you're looking at, is it moderate, moderate? Or is it medium, moderate to severe? Or is it high, severe, right, on that scale. That's why understanding this artificial endpoints of activity are very not translate to the clinic is there's moderate, then there's moderate to severe and then there's the severe end of moderate to severe. And therefore, 5-ASA failures fall on the lighter side of moderate to severe, say moderate to severe light for the purpose of this discussion, especially a huge amount of people were on 5-ASAs or have been exposed. So all I say is early days, we have comfort from prior. The data looked wow, it was pretty dramatic, the delta between placebo and drug, especially for the higher dosing, obviously, because it didn't meet its p-value for clinical remission for 26%. That could be a size problem. I mean, for 45 milligrams, I'm sorry, but it met good delta and p-value for the 60 milligrams. So I think, to me, all of it is exciting because it's one step closer to having optionality, but also one of the things I know everyone on this call often is engaging discussions around combination therapy. What we are also evaluating in our brains as we see these orals come to market is, is there a combo play? Because I'll be honest to everybody, we are already. We're waiting for the DUET study, of course, which is golimumab, J&J's, guselkumab and golimumab or Simponi plus TREMFYA, and we're excited to see in Crohn's and you see what that means in a TNF failure population. VGA, their early study, which was in naive looked great for the combo, and we're very excited about next steps. But imagine oral co-formulations and things that are going to happen. So like I'm more -- I'm as excited for mono, but today, we're already using combo in the clinic because we have so many people that are refractory. So I know everybody has followed the combo story, and that I look forward to talking maybe after DUET comes out and updating on that to see where we're going to position combo and share a little bit more about real-world practice today. But for me, excited as well to know what's going on and see how we can move these drugs closer to patients who are suffering and really get them some orals if they're really nervous about IVs or subcu to have confidence that we've got something for the moderate patient who doesn't want to go quite yet to an injectable or an infusible and doesn't have a black box warning and I can take once a day and the whole story about optionality based on patient preferences.

Fantastic. Well, thank you so much, Dr. Marla Dubinsky of Mount Sinai. I really appreciate your time here. And a quick reminder to the audience. She will be back for the Q&A at the end of the session. So please any questions that you want to ask that we do not address in this session, submit them in the chat button below. Thank you, Dr. Dubinsky.

Thank you. I'll see you soon.

Okay. Next up, we have David De Vries, CEO of T-R-1-X Bio, also called Tr1X Bio. David, thank you so much for joining us today.

Thanks for having me. Good morning.

Good morning. Okay. So why don't you give us a quick introduction on Tr1X Bio and what the concept is around something called a Tr1 cell.

Sure. So we are an allogeneic cell therapy company focused on the development of off-the-shelf Tregs and specifically a subset of Tregs called type 1 regulatory T cells. So related science to the Nobel Prize winning work that was awarded this week. And really, the immune system has two major tolerance programs that prevent it from attacking us. One is the canonical FOXP3 positive Tregs, which are sort of hardwired in the thymus in early life to recognize cell and maintain central tolerance. And then there are the type 1 Tregs that we work on, which are induced later in the periphery to maintain what's called peripheral tolerance, the process that teaches the immune system not to overreact to everyday antigens that are foreign, but really harmless. And so mechanistically, the Tr1 cells work a little bit on a different axis than the FOXP3 Tregs. They secrete high levels of the suppressive cytokine IL-10 and TGF-beta. They act mainly through this cytokine-driven reprogramming of both dendritic and effector T cells. And they're really enriched in specific tissues like the gut, the lung, the skin. And so we think that those represent a great therapeutic scaffold onto which we build our programs. So our first program is in the clinic for both stem cell transplant and prevention of transplant-related complications and then more germane to today's discussion, ultra-refractory Crohn's disease in patients that have failed two or more advanced therapies. So that's what we're working on. Our second program is more focused on B cell-mediated diseases, but still takes advantage of the Tr1 chassis and adds on a CD19 CAR to do both B cell depletion and T cell suppression. So that's a little bit about what we're working on.

Fantastic. And so that lead program, TRX103, could you tell us a little bit more about what the composition of it is? So it's a polyclonal allogeneic candidate. What are some of the characteristics? How do you make it? What are some of the advantages that are of it?

Yes. So we start by isolating CD4 positive T cells from healthy third-party donors. We transduce those T cells with the lentiviral vector that encodes for the IL-10 gene, which is the master driver of the TR1 phenotype as well as a marker gene that we use for two purposes. The first is during manufacturing to purify the product, which means that sort of at the end of our process, we have a product that's more than 95% pure. And the second purpose of that marker gene is to do really, really precise pharmacokinetic studies post administration. So we're able to track the cells with a clinical-grade antibody after we infuse them. in our patients and really understand what these cells are doing. So over about a three-week process, starting with those isolated CD4 positive T cells that are then transduced, we really reprogram not just at the sort of transcriptomic level, but really at the protein level, the CD4 cells and turn them into Tr1-like regulators that end up secreting IL-10, TGF-beta, they end up with a series of chemokines and chemokine receptors on their surface that make them fantastic homers to inflamed tissues and draining lymph nodes and ultimately result in a very low allo reactivity and a persistence and metabolic fitness advantage in these cells where we can give an allogeneic cell product. It won't be immediately cleared by the immune system. It will not induce any GvHD, and it will persist long enough to do its job sort of across three axes. The first is dampening of inflammation, which happens quite quickly. The second is sort of your classical Treg effect where you're suppressing the proliferation of pathogenic T cells. And then third, and we think most interestingly for sort of a long tail of effect, like Dr. Dubinsky was just talking about durability is we're really trying to teach the patient's own immune system to reset itself and generate its own regulatory T cells that are antigen-specific to the antigen that's causing disease. So the idea is that our cells will be cleared over time over a matter of weeks or months that the patient's own cells will come up and take care of the disease long term or at least that's our goal.

Great. And this is an allogeneic candidate, correct?

Correct.

Could you tell us a little bit more about the origin of the cells where they come from?

Yes. So, I mean, in healthy individuals, Tr1 cells mostly reside in sort of your lymphatic organs and specifically in the mucosa of the gut as well. And over 30 years, our scientific founders sort of characterized how they work and what they do. And so she found these cells for the first time in patients that became tolerant post stem cell transplant, naked stem cell transplant back in the day and sort of worked over the last 30 years in Europe and then at Stanford more recently to sort of characterize how they work and what they do and when they show up. So these represent a very, very small population of your overall CD4-positive T cells, but they're absolutely instrumental in inducing and maintaining tolerance to things even like malaria or other diseases and sort of pathogenic drivers. And there's a number of publications that have been shown about how they work and sort of their effect. On the flip side, if you're born sort of without the IL-10 or IL-10 receptor gene, these very rare cases, patients get fulminant early onset IBD frequently lethal. And so there's nice experiments of nature to show the role that Tr1 cells play in immune homeostasis, and they're involved in a number of diseases beyond IBD, including things like multiple sclerosis, rheumatoid arthritis, autoimmune uveitis and others.

Great. All right. Let's start to move on to the clinic then. So you started here with a proof-of-concept trial in GvHD, followed by development in Crohn's disease. Could you tell us first about the GvHD trial and then also what led to your decision to pursue multi-refractory Crohn's disease?

Yes. So for GvHD, which is really a stem cell transplant setting for mismatched stem cell donor recipients, so either haploidentical or mismatched unrelated donors. There were a number of reasons we chose that as a lead indication. This is a prevention trial. And the first of the reasons is that there was proof of concept and proof of principle with autologous Tr1 cell therapy. So there's a number of academic trials that have investigated the role that autologous Tr1 cells can play in the prevention of these transplant-related complications that ultimately at sort of the one-year mark result in either graft-versus-host disease or relapse or mortality. And so that showed that Tr1 cells can play a role, not just that they're safe, but that they have efficacy. And so the first jump we wanted to make was can we mirror the data that's in the autologous setting with our allo product. The second reason is that it's a highly controlled setting. These patients are receiving a stem cell transplant. That means that they're in the hospital setting. We can do the PK sampling that we need to do because the patients are not home and they don't have to come in as much for their appointment since they're already there. The third is that it's a physician community that is by default, very familiar with cell therapy, a little bit different to the IBD community, which is getting more and more comfortable. But certainly, we wanted to show safety. We wanted to demonstrate the pharmacokinetic and pharmacodynamic effects before transposing the same program onto a setting of active disease like refractory Crohn's. The reason we picked refractory Crohn's is that there's a tremendous amount of evidence to suggest that impaired Tr1 function or impaired IL-10 signaling is a driver of pathology in Crohn's. And so the biology really fit with both preclinical work that shows that you can prevent colitis or improve symptoms of induced colitis with adoptive transfer of Tr1 cells nearing Tr1 cells as well as previous clinical work with autologous Tr1 cell therapy that showed some transient efficacy with sort of a rudimentary product in the setting of refractory Crohn's. And obviously, the third leg is that we feel there's still tremendous unmet medical need despite the exciting advances in the armamentarium of products that are available to patients. So that's a little bit of the why refractory Crohn's.

Great. And then with cell therapies in Crohn's, this is certainly a new angle for the IBD space. We did see one presentation at UEGW for a single case study of a patient receiving a CD19 CAR-T. So there is excitement growing for the modality in the space. Curious on your progress so far with the Crohn's disease trial, how has the physician outreach been going? And what's the feedback you've been getting from the investigators?

Yes. So I think we're very fortunate to be working with a fantastic group of investigators across the United States for this Phase I/IIa trial. Trial is recruiting very well. We're working primarily in the academic setting to start. But given the safety profile we demonstrated in the first two cohorts of patients, the FDA has actually granted us the ability to start dosing this outpatient, which we know makes a huge difference in terms of getting into the community setting and getting out of sort of these academic settings that are a little bit more complex when you think about what the product needs to do to compete down the line, right, with some of these biologics or even these oral agents that we heard about earlier. We're very excited about the early data. What I can comment on right now, we'll probably publish some data in the first part of next year, is that with a single infusion without any lymphodepletion, and I want to circle back to that when it comes to the CD19 CAR-T data in UC in the case study that was presented, but no lymphodepletion, we see cell persistence. There's absolute safety. There's no allo reactivity of the cell product itself. No DLTs or severe adverse events related to the cells. And it's early days. We're going after sort of safety and tolerability as our primary endpoint. But for efficacy, we're going after three things: one, endoscopy, which is sort of the gold standard, and we know that in the population we're treating, the placebo rate of endoscopic response, let alone remission tends to zero. And we're also looking, of course, at CDAI and then the biomarker set of calprotectin and CRP. And what I can tell you is that in the first sort of cohort at a half that we have some longer-term data on. We're pretty excited about what we're seeing and that the patients report feeling pretty good after the infusion. And so it's not been QC-ed yet, but we'll present something probably in the first quarter of next year as to the results of the dose escalation portion of the trial, which we're sort of in the middle in right now.

Okay. First quarter of next year, we will put that on our calendars to watch for. Great. And then in terms of the preclinical data that's been supporting this clinical trial. Could you tell us any preclinical data or other clinical precedent that you've been able to find that would support the mechanism of action here?

Yes. So we did a number of preclinical studies. Our base model when you look at regulatory T cell therapies is the xeno-GvHD mouse model, whereby you induce lethal graft-versus-host-disease by essentially transferring third-party human CD4 positive or PBMC cells to a humanized mouse. And therefore, you induce fulminant aggressive GvHD that is lethal to the mouse. What we showed with our cell product is a dose-dependent protection from the induction of that GvHD. And what we were also able to do was show that our cells through histology and then quantification by a PCR of the mouse gut are trafficking to all five components of the intestinal tract and the bowel of these mice localizing there and preventing the massive infiltration of these third-party CD4 positive or PBMC cells and therefore, reducing the lesions and the inflammation that's associated with that. So we know that our cells get to the gut. We also know that they secrete high levels of IL-10 upon activation. We know that they dampen pro-inflammatory cytokines like TNF alpha, IL-6, IL-1 beta, so they're potent NLRP3 inhibitors at the same time. So we really validated the multiple mechanisms of action that we saw in the literature with the autologous or the murine versions with the TRX103 cell product. The other thing we're starting to be able to demonstrate in GvH in the human setting is the third leg of the stool, which is this induction of the de novo Tregs. So what we're showing in the GvHD study, and this is data that will be presented at ASTCT in February, is that you do have a dose-dependent increase in both FOXP3 and Tr1 Tregs depending on the dose of TRX103 that you're giving, which is a very tough thing to show in the mouse, but we chose to show that in human, and we're hoping to have sort of a similar data flow through in our Crohn's disease study.

Okay. And that February data to clarify, that is going to be purely on the pharmacodynamic effect and not on efficacy. Is that correct?

For the HSCT study, correct.

For the HSCT study. Thank you. Okay. Great. And we were also curious if you had a chance yet to look at the trial that we have been mentioning the single case study that was presented at UEGW with the CAR-T.

Yes. And as a reminder, we have a second product that is, again, an allogeneic CAR Tr1 Treg that combines CD19 with this Treg chassis that hopefully can shut off inflammation while also depleting B cells. I think it's an exciting time for autologous CD19 CAR-T. It seems like they can have broad applicability across a range of diseases. A reminder that these patients are getting aggressive Flu/Cy conditioning as part of the administration of the CD19 CAR T cell therapy. And at least from our discussions, and I'll be curious to hear Dr. Dubinsky's perspective, but her colleagues at Mount Sinai and some of whom are on our clinical steering committee have suggested that if you're really giving this aggressive lymphodepleting regimen ahead of the therapy, you're going to have a real challenge for patients who have a broad selection of agents that they can choose to try before they get to a situation where they might require cell therapy. And so that's something that's top of mind for us. The data is super exciting. The fact that there's a B cell interplay with the T cells. I think every immunologist knows this better than I do, is very, very interesting in the UC setting. I think from our perspective, we're thinking about scale, right? So we're thinking about a product that can be given once or twice, maybe even only once a year if we need to. have durable efficacy and be given in an outpatient infusion setting. And I think that, that's a very different product profile to a repurposed oncology agent that still requires the spacemaking and the expansion profile of an effector CAR T cell. But it's really exciting, right? I think for patients that are staring down bowel resection surgery or stem cell transplant even for ultra-refractory disease, it's exciting that there are all of these novel modalities coming into play. Frankly, Martin, I'm going to push to see if we can do our second product in UC in a non-lymphodepleted setting to see if we can show the same thing, right? I think that's the next step for the patients.

Great. If we could follow up also on the lymphodepletion. Tell us how the product is able to be administered without lymphodepletion. And then also, you mentioned redosing potential, if you could comment on that.

Yes. So we -- it's a Treg. It's not a CAR-T. So you don't need this space-making massive expansion to really drive efficacy in order to -- as we talked about with the CD19s drive this robust and profound B-cell depletion. So our product persists long enough to do its job because it's got a series of shielding mechanisms, including the constitutive production of IL-10, which shields it from immune clearance as well as the downregulation of Class I and some other alloreactivity components. And what that means is that these cells can persist and traffic to the localized sites of inflammation and do their job there without needing this massive expansion and the niches to expand. So they don't hit the sort of homeostatic ceiling that a lot of these cell therapies do otherwise when you don't give preconditioning. That being said, we're still going through our dose escalation, right? So we have to see how high we can go before we hit a homeostatic balance. We haven't seen it so far. And so that's why we think it's really important to try at least to get to efficacy without the need for lymphodepletion, which, by the way, is also confounding for all the reasons we said, right? If you're giving a massive slug of a cell depleting agent, untangling what the effect of your cell therapy versus that agent is becomes even more complicated in a disease, at least in our situation as heterogeneous and as sort of wildly different in terms of patient-to-patient variability as refractory Crohn's.

Got it. And then if we could start talking about the second product. So you've been mentioning this one for some time now. Tell us go over the differentiation from the first product and then also why you see for this candidate in Crohn's disease?

Yes. So I think for TRX319, which is the second product, it's taking advantage of this drivetrain that we have, right, the ability to turn a CD4-positive T cell into a regulatory cell at the end of the day. And Tr1 cells have embedded cytolytic machinery, which is unique to them. FOXP3s don't have that. And so the CD19 CAR that we're adding is a little bit different to the CAR that some of the other Treg friends and colleagues are adding to their products because in their situation, it's intended to hone the cells to where they want them to go because polyclonal FOXP3s are terrible homers. They get stuck. They don't go where they need to go, and that's been proven sort of in the polyclonal setting. And so their antigen specificity is really driven towards trafficking. Our antigen specificity is functional. So it's really driven to take advantage of the cytolytic machinery that's embedded in the cells. The cells when activated through the CAR can secrete perforin and granzyme B while still doing their anti-inflammatory job, all in the local environment. So you're not sort of doing this broad immune suppression and putting patients at risk of infection and complications. The first application of that product will actually be in multiple sclerosis, where we think the biology fits very, very well, particularly for progressive forms. But given the data out of Germany and some of the other conversations that we've been having with KOLs around the role that B cells have maybe play in UC specifically in these refractory UC subpopulations, there's interest there in working with a group of investigators to trial this product in that setting and see if we can do it in a way that, to us, at least makes more sense from both a safety and a scalability perspective.

Great. And then let's talk about scalability. So what is the manufacturing process here? What are the costs are associated, distribution, logistics, all that good stuff?

Yes. So our dream or ambition when we started the company was can we make this as easy to kind of deal with on the provider side as a complex biologic, which means can we make tens of billions of these cells from a single run so that the cost of goods represents something that's closer to a bispecific or trispecific antibody as opposed to a cell therapy that costs hundreds of thousands of dollars to make. And that, of course, comes with purity, safety, viability of the cells. So we do all process development in-house, and then we work with our CDMO to generate the actual clinical product. We can generate over about a three-week period anywhere from 12 billion to 15 billion cells depending on the product. And what that means is that with the two clinical runs we've done to date, actually now three clinical runs we've done to date, we have enough doses on hand to get all the way through Phase II. And what that represents from a COGS perspective, I don't want to say too much yet as we go through dose escalation and then we'll have to pick the dose and the dosing regimen. But what I can say is that it looks much more like an antibody than a cell therapy. And so we think that, that bodes well for how broadly we want this to go if the programs read out from the efficacy and safety perspective the way we hope they do.

Great. And then remind me for the second part, 319, was this one also able to be administered without lymphodepletion, also redosing potential?

Well, we're in discussions right now. We've got an IND filing that's underway. Our ambition is in the clinical protocol design to start without any lymphodepletion. We'll do an interim analysis after the first dose -- first couple of dose cohorts, I should say, to see if we need to add a very light pulse of bendamustine as part of the conditioning here given the slightly different mechanism of action to sort of our suppressive Treg cell. But we're going to start with that because the biology, we think, carries through from 103 to 319 in terms of their ability to persist their metabolic fitness advantage and their lack of clearance, at least immediately for a nonedited, I should add, allogeneic cell therapy product.

Great. And then, David, audience, if anybody wishes to chime in with any additional questions, please feel free to do. So David Nierengarten was curious if you had any other questions for the [indiscernible].

Yes. Just a couple. Just back to the thoughts on durability and things like that with -- relevant to the CD19 depleting CAR-T from UEGW that was the case report. But just -- is there a more straightforward way to determine durability or dosing frequency when you get into the clinic or expand the clinical study. Obviously, with the autologous CAR T, the hope is for lifelong cure because you don't want to do repeated lymphodepletions, obviously, for patients, things like that. But is there -- your thoughts on dosing, I mean, less frequent is optimal, of course. But if we're talking once every five years, I don't know how you run that study. So, yes, maybe let's chat a little bit about that. And I have a couple of other follow-ups.

Yes. I think it's a fair point, David, and it's something we think about a lot, right? It's sort of how do you determine what the optimal dose schedule is? I think the first place you have to start is safety, right? And so, one, for us is the allo CAR Treg and the allo Tr1 Treg, no anti-HLA antibodies down the line, which is something we've proven in HSCT is the first step. So we can redose. At least from a safety perspective, you're not sort of at risk of additional HLA-mediated rejection of the cell product. So that's part one. Part 2 is do the COGS, at least in our case, support this idea that if we have to give multiple doses, we can. So that has also been derisked to a certain extent. What we need to find out now is how long of a tail do you get with each dose of this product that we're giving, right? And I think it's a little bit easier for us in the TRX103 setting in these ultra-refractory patients that we're treating. These are patients that have failed on average in our first two cohorts five classes of therapy, including the TL1As in some cases, right? So we're trying to see the long tail across CDAI, across calprotectin, across CRP and really blending all of those things to inform a redosing schedule for 103. For 319, which is really the B-cell depletion mechanism, it remains to be seen a little bit. We have to do some trial design here around robustness of B-cell depletion, which I think is something that's coming to the forefront, particularly in a lot of the lupus studies with the CD19 CAR-T products. There are companies that are going out there with NKs, T cells, gamma delta cells and all sorts of with different lymphodepleting regimens and the efficacy data is starting to read out. So we're tracking that very, very closely. But I think what's clear is that you do need the depth of B-cell depletion. You don't necessarily need the long tail of B-cell depletion. So depending on the repertoire that's coming back, you have a long-term efficacy that is measured closer to years than months. And so that's something that we're tracking. So the ability to give the cell product, again, is there for us. The design as to when we will need to do that has to be teased out during Phase I/IIa and different dosing regimens that are being explored.

When you -- also when you think about future trial designs with all the therapies and admittedly therapies that maybe are not where we want them to be. But is there a concern that you lose or you'd have some confounding effect if you wait in the intervening period between cell doses perhaps you have these other therapies being used and things like that. Like is there a way to control or you -- or do you think it's sufficient for, like, say, a one-year endpoint or six-month endpoint, what relapses and if people want to go on other medications, they can, kind of how you're thinking about that, especially given what might be a price differential and reimbursement questions and things like that.

Yes. So, it's a good question. I'll answer in the context of the 103 product in IBD because I think that's sort of our flagship program right now. I think that what we have embedded in our clinical trial design is the ability to redose the product when we see these markers tick up, right? And so that's the metric that we're using in conjunction with our clinical steering committee to make the decision, okay, what does tick up actually mean because we know there's variability in your stool frequency and in your CRP is super sensitive and a specific and then calprotectin is not sensitive at all, very specific. And so you have to sort of triangulate across those three dimensions. And then, of course, how the patient is feeling, right? And that is all anecdotal and in conversations with them. What I can tell you is that we are able to give these cells pretty quickly and pretty easily should a patient wish to redose. And on the flip side, we wash them out of their other agents. So they are not on any other concomitant meds in our clinical trial. They're allowed to be on a background of 20 milligrams of prednisone that we taper off over time, but the rest is super clean. So these are patients with very, very active moderate to severe Crohn's disease. Most of our patients are in the 300s on CDI. Their calprotectin is well north of 1,000 and their CRP is well north of 5, just to give you a sense of the IE criteria. They failed at least two advanced therapeutic classes. We thought we'd get some 3s and 4s because we know the response rates go down sort of pretty linearly as you fail additional classes, of course, as is the world of clinical trials, we've gotten five and six, and that's just fine because those are the patients really at the end of the day that are left without a choice, and that's where we want to start. So I think for us, we are washing them out. We're getting a very clean look. We're looking endoscopically at how their mucosa is responding. And then we're making some decisions based on those three data points after that 12-week induction scope to then decide longer term if they need a second dose.

And when we talk about repeat dosing, just to circle back on that. So there have been -- I mean it's a different cell type, of course, but natural killer cell repeat dosing. And what you've seen, and I think, too, with other cells that you don't need to match, you've seen a decreased amplitude of effect, let's call it, over time, diminishing sign wave essentially of benefit. Is that a concern? Or is that a possibility here when you think about repeat dosing that you'd have a challenge to achieve the same benefit as the first therapeutic dose?

We don't think so. And then I think with the NKs, it's been shown in really the realm of B-cell depletion again, right? I think it's sort of this land of diminishing returns with the more doses they give. But remember, NK cells, you have to give billions of these things because they don't persist, right? You've got basically a 24-, 48-hour window in which these cells need to do their job. But if they're not getting in the tissues and they're not getting in the lymph nodes, which is the work that -- she has shown, you're not going to get what you need from a clinical remission standpoint. And so our perspective is that our cells persist much longer than an NK cell. It's a Treg, it's tallow, but you're talking about persistence of weeks to a month as opposed to days. And that's a nice difference. It's not quite an autologous CAR-T that sticks around for two, three months, but it's somewhere in between, and we think that's long enough to get the depth of depletion that you're going to need to really drive this remission, at least initial remission. And again, this idea that you can hit it again, and I'll quote some of the work with the autologous mRNA CAR-T and really drive a robust T cell depletion with the dosing regimen, if you get it right, is something that we're exploring. Now for TRX103, which is the polyclonal Treg, it's a little bit of a different story because we're just trying to extend the tail, right? We're not watching B cells tick up and then hammering them again. We're just trying to extend low daily stool frequency, low abdominal pain, low calprotectin, low C-reactive protein. And so figuring out exactly how to do that will depend a little bit on the data that we see in dose escalation. Do we get a longer tail from our dose level two than we do from our dose level one and so on and so forth? And how do we make that decision down the line.

For the TRX103, I wanted to follow up on the question of persistence. With the Tregs that you're inducing with the therapy, is there any good way to track them? Or are you simply looking at the percentage of FOXP3 positive cells and then looking for when that returns to baseline?

No, it's a great question. So when we started the company, we drew a very simple graph, which is sort of what we'd like our cells to do, which is kind of tick up over the first couple of days and then have a tail that lasts out to about a month and then see what we call naturally occurring Tregs ticking up over time, even super baseline, right? I think that's the goal is let's see how high we can get these to really drive therapeutic effect. And so we track ourselves with the CD271 antibody that I mentioned earlier that's tied to that delta NGFR marker that we have on our cells. And so we can easily see when those are coming out of circulation, out of persistence. We're actually even looking in the gut through biopsies and other mechanisms to see how long they last locally versus peripherally, which I think is another important consideration for cell therapy, particularly for IBD. And then we use a series of markers to track what we call natural Tregs. So it's not just CD25, FOXP3 high, but CD127 low. And so we have some panels that we're doing to track both FOXP3s and then a series of markers, which are CD49b LAG-3 for Tr1 cells that are these canonical markers of these Treg cell lineages. So we should be able to plot out those curves pretty consistently. Hopefully, that's something that you'll see at the ASTCT publication, especially, but that's how we're tracking the Martin sort of the decrease of ours and the increase of the naturally patient-induced Tregs over time.

And these patient-induced Tregs, are they circulating in the circulation? Or are they tissue resident? I'm assuming they have to be circulating right, that way you're able to monitor them.

Yes. We're looking at them in peripheral blood. We know that most of them are residing in the lymph nodes in the spleen and the tissues, but we're not going to go biopsy these patients too much. We'd love to as often as possible, but doing things like getting interim colonoscopies every four weeks is impractical. And so we're very grateful to the few patients who have offered to do that, and we really love that because they're committed to not just their well-being, but the research that we're doing, but we recognize that sort of getting these localized biopsies in IBD is a real challenge. So I think we have to be careful with the sampling plan that we have, and so we're looking mostly in the periphery for these Tregs.

Got it. And then one last question I have about those Tregs before I turn it back over to David Nierengarten. The baseline levels of, I'm assuming it's zero? Or is there a baseline level? How much variability is there before administering these cells?

In the baseline level of the natural occurring Tregs?

Right.

Yes. So it is highly variable. Obviously, in the stem cell transplant setting, it's very close to 0 because those patients are getting immunoablated before they receive their stem cell transplant. So that is zero in that setting. In the Crohn's setting, we've seen some variability because it's not just about the number of these cells, but it's about their function. So in Crohn's, the Tregs have impaired suppressive capacity. This has been shown by Rich Flavell and Vijay Kuchroo and others in the academic setting where if you take these Treg cells out of patients who suffer from IBD, they are no longer functional. So they might be there and trying to do their job, but they're either exhausted or they're, for some reason, not working the way they're supposed to. So we've seen variability in the baseline levels. But what we want to see is a tick up from baseline over time or at least a maintenance of baseline at an extended period of time. So that's sort of what we're looking for.

Great. I'll turn it back over to David in case there's any last minute questions. Otherwise, we can end the session.

I think we covered most, and I won't try to squeeze in another question in the last few seconds here, but I really appreciate it. And I think a lot of folks were talking about the CD19 targeted CAR-T at UEGW as maybe reviving some interest in targeting B cells, never minding Tregs and your approach too, but just kind of providing maybe a new landscape for targets in the future for both cell therapy and antibodies or small molecules, too. So it's interesting to see that. And I think folks are going to be poking around the area with more enthusiasm in the near future.

Yes. I think there's an exciting movement to try to get at the underlying cause of disease, right, as opposed to shutting off different inflammatory circuits and not really addressing the underlying problem. So that's the exciting part, and that's what we love to work on every day.

Great.

Wonderful. David De Vries, thank you so much for joining. This is David De Vries, CEO of Tr1X Bio. We are very excited to see how the cell therapy space proceeds in the context of IBD, both in Crohn's disease and ulcerative colitis. Thank you so much for joining.

Thank you.

Okay. Our next session is with Taylor Schreiber, MD, PhD, CEO of Shattuck Labs. Dr. Schreiber is leading the efforts to advance a new target in IBD known as DR3. I say new target even though the pathway itself is a very prominent one that we're all familiar with TL1A. And so Dr. Schreiber, if you'd like to say a couple of introductory remarks on Shattuck Labs and TL1A.

Sure. Well, thanks, Martin and David, for hosting the session today. Shattuck, as you mentioned, is focused on developing what is the first in clinic and potentially first-in-class death receptor 3 blocking antibody. DR3 is the sole signaling receptor for TL1A. As you mentioned, Martin, is a well-known target to probably most people who are listening in today. And there are a number of reasons, we believe, why targeting DR3 may provide superior efficacy to what has already been super exciting data seen to date from multiple TL1A blocking antibodies, and I suspect we'll get into that.

Fantastic. And so DR3, any reason to believe that targeting the receptor for TL1A could be substantially different from targeting the cytokine itself?

Sure. So, as I just mentioned, one consideration you always have to be mindful of when picking to block a ligand in this case, a soluble cytokine like TL1A versus a receptor is one of them promiscuous, i.e., does one side of the axis bind to multiple targets and does the other side only bind a single target. There's many examples of receptor ligand pairs where one end is promiscuous and the other end is not. And so it can be very obvious to go after the receptor or the ligand. In the case of TL1A and DR3, this is a monogamous receptor ligand pair. TL1A only binds to DR3 and DR3 has no other signaling ligands. So from a safety and specificity standpoint, there is no reason to believe that what has been learned in the clinic so far to date regarding the safety profile of TL1A blockade will not predict the safety profile of DR3 blocking antibodies so long as your DR3 blocking antibody lacks the ability to engage with Fc gamma receptors, which ours does not. And so then what are the reasons to believe that there could be differential safety and efficacy or efficacy profiles and tolerability profiles between the two. There's two prongs to that answer. And one relates to efficacy, the other relates to immunogenicity. So I'll answer first by giving our perspective on why the efficacy could be different. And what that relates to are significant differences in how and where TL1A is expressed versus DR3. So TL1A is not a constitutively expressed ligand. It gets turned on in short waves, and it only gets turned on in response to different innate immune stimuli. So if you were to take a biopsy of any -- of someone's gut who doesn't have inflammatory bowel disease, you would find that there would be little to no expression of TL1A in that biopsy. And if you do the same thing, you take biopsies from a patient that does have, let's say, Crohn's disease, and you biopsy the actively inflamed part of a Crohn's disease patient's bowel, what you'll find is that about 8% to 10% of the cells in that biopsy will be expressing TL1A. And in that same patient, if you move 2 centimeters down the bowel, so you remember Crohn's disease is a discontinuous inflammatory disease. So you have inflamed followed by neighboring uninflamed followed by downstream inflamed tissue. If you biopsy the uninflamed tissue, you'll find that TL1A is not upregulated just as in the case in a patient without inflammatory bowel disease. In those same -- in that same patient, though, if you look for DR3, what you'll find is that about 18% to 20% of the cells in the actively inflamed biopsy will be positive for DR3, so about double the amount of cells that are positive for TL1A. And that same proportion of cells will be expressing DR3 in the neighboring uninvolved tissue. Now the reason for -- and so DR3 is both more -- it has a broader pattern of expression and is more abundant in patients with IBD. Now the reason for that is that the cells that express DR3 are primarily lymphocytes and innate-like lymphoid cells. And when a lymphocyte has decided that it is going to express DR3, it expresses it for as long as that cell lives. The amount of DR3 on the surface can fluctuate over time, but those cells generally don't turn DR3 off. So it represents a stable target. TL1A gets turned on, as I mentioned, in response to innate immune stimuli in short pulses. So it gets turned on for 12 to 24 hours at a time and then it gets turned off again. And then if there's another inflammatory stimulus, it can go up again and come down again. And so you're constantly chasing these waves of inflammatory ligand with TL1A and you're not fighting that sort of kinetic battle if you're instead blocking DR3. So this is analogous to a number of other receptor ligand pairs. And for those folks who have followed oncology, as an example, you're probably familiar with the fact that there are both PD-1 and PD-L1 blocking antibodies. And the efficacy of PD-1 blocking antibodies is generally higher than the efficacy of PD-L1 blocking antibodies. And one potential reason for that is that with that receptor ligand pair, PD-1 represents the more stable side of the axis. Just like TL1A, PD-L1 is an inflammatory ligand that achieves pulsatile expression patterns just within the affected tissue in that case tumors. So just to summarize, we think DR3 is a much more stable target than TL1A, and that could lead to higher efficacy.

Great. And one point that we also want to know about TL1A is because of that transient expression, you could potentially have high local concentrations whereas the DR3, you would be able to suppress across the board broadly in all tissue locations, the binding, would that be a correct way of assessing it?

Yes. I think what we have modeled and what our data are showing is that because DR3 is more abundant, your first dose target-mediated clearance effect is higher than what you see with TL1A as the less abundant target. But then with our antibody, once it binds DR3, it doesn't cause DR3 to internalize and binding is highly durable. So what that means is that by the time you give that second dose, there is no free DR3 left. So you have rapidly decreasing clearance with DR3 blocking antibodies with repeat dosing, whereas with the TL1A blocking antibodies, because TL1A is rapidly turned over, you see more steady clearance with each dose.

Great. And we were hoping you could also talk about that free versus bound concept. So with the DR3 it being bound, does this prompt any additional receptor to be expressed on the surface? And then with TL1A, as that gets bound, how does that affect the concentration of TL1A total concentration?

Sure. So with DR3, we don't see changes in the per cell expression pattern of DR3 when that cell is fully occupied with our antibody 325. So it seems to be essentially inert other than blocking the ability of DR3 to interact with TL1A. And there is no shed form of DR3. So our antibody does not bind any soluble proteins that we can detect. Just as a note for those that are familiar with the axis, there is another member of this axis, which is called decoy receptor 3. That is a soluble protein. But decoy receptor 3 is encoded by a separate gene than DR3. It's not a shed form of DR3. And our antibody does not cross-bind decoy receptor 3. So that remains untouched. Now decoy receptor 3 doesn't exist in rodents. It evolved in primates. And whenever you see new evolutionary changes like that, you have to ask yourself why. So what decoy receptor 3 does is it binds to and facilitates the clearance of soluble TL1A light and fast ligands. Those are all TNF ligands that can be shed. So when TL1A is expressed, it's initially anchored to the membrane, but then there's a membrane proximal protease cleavage site that leads to shedding of the extracellular domain of TL1A. And that is still capable of signaling. So it's likely that humans evolve decoy receptor 3 to rapidly get rid of shed TL1A. So that tells you a little bit about how important this axis might be in driving different inflammatory processes. Now when a patient is treated with a TL1A blocking antibody, those antibodies, depending on whose antibody we're talking about, can bind either trimers of TL1A or trimers and monomers of TL1A, both when that TL1A is expressed on cell membranes as well as the shed forms of TL1A. And so what all of the developers of the TL1A blocking antibodies have shown is that within a week or so of getting the first dose of the TL1A blocking antibody, the total concentration of TL1A in the blood increases by two to three logs. So it goes from folks pre-dose from about 100 picogram per ml into the microgram per ml range. And what is actually being measured in that case are immune complexes between the shed TL1A and the anti-TL1A antibodies. And so your total concentration of TL1A goes way up. Now immune complexes are a dominant generator of immunogenicity. And so when immune complex is formed, they often are internalized, processed and presented on MHC and that results in the generation of antidrug antibodies against whatever the protein components are in that immune complex. And this is the reason why every TL1A blocking antibody developed to date has seen rates of antidrug antibody formation in excess of 65% of patients. In some cases, it has been 100% of patients. And so this is a concern. With the Pfizer antibody that Roche is now developing, they recently published a paper in The Lancet that demonstrated that even though there wasn't a particularly high rate of neutralizing antidrug antibodies, that high rate of ADA led to accelerated clearance of [indiscernible] over time, and that accelerated clearance was associated with loss of response. So this is something that IBD clinicians are very used to from their experience with TNF alpha directed agents that cause the same sorts of immune complex related immunogenicity. It's the reason why patients often cycle from one anti-TNF agent to another, and it's the reason for loss of response. So with DR3, you don't have to worry about immune complex formation.

Great. So if I could summarize the three differentiators that we are hearing so far in terms of targeting DR3 versus TL1A. First one would be increased broad expression of DR3 allows you to intercept the signal before you start to have that inflammatory spike that you would with TL1A. The second one would be that you are able to shut down -- you were able to allow decoy receptor 3 to continue performing its natural inhibitory functional TL1A. And the third would be reduced immunogenicity potential because you're not generating those soluble immune complexes. Would that be correct? Would there be any other differentiators that we're missing?

Those are the key things, Martin.

Fantastic. Okay. So that is the background on the TL1A versus DR3. Let's talk a little bit about what you're doing here. So SL-325, tell us a little bit about this antibody development history and why has nobody else done a DR3 blocking antibody.

Yes. So 325, as I've alluded to, this is a human DR3 blocking antibody. It's a very high affinity antibody measured at less than 2 picomolar. And this antibody lacks any Fc gamma receptor binding activity. So it is completely null from an Fc binding perspective. It does still find the neonatal Fc receptor. And the major concern when you're developing a TNF receptor targeted antibody as opposed to a TNF ligand targeted antibody is that a TNF ligand targeted antibody like the anti-TL1As, all -- your only design consideration really is to find an epitope that interferes with TL1A binding to DR3. There are other small design tweaks that certain folks have applied about whether they bind trimers and monomers and whether they bind a site that also interferes with decoy receptor 3 binding or not. But really, the major objective is just to find an epitope that blocks DR3 binding. When you're going after the receptor side of the axis, the -- in our opinion, the design goals are to pick an epitope that interferes with trimerization of the receptor, an epitope that also interferes with TL1A binding to DR3, pick an epitope that is not shared with decoy receptor 3. And fourth and perhaps most importantly, and this represents the biggest challenge, find an epitope and overall antibody characteristics that do not cause residual agonism of DR3. This is the principal challenge, and I would assert the principal reason why we are the first to develop a DR3 blocking antibody is because many antibodies that bind TNF receptors, all antibodies that bind TNF receptors will at a minimum be able to bring together two subunits of DR3 in this case. And whenever you are clustering multiple subunits of the TNF receptor, there's always the risk that those cytoplasmic domains come into an appropriate configuration where you can trigger residual signaling. And so you can inadvertently end up with an agonist when you're trying to develop an antagonist. This is something that you can study and make yourself aware of with very sensitive preclinical assays, which we did. And many of the antibodies that we developed ended up having residual agonist activity and were triaged at various points in development. We found several candidates that did not have those activities that we chose to bring into nonhuman primate studies. And if you were to have a DR3 agonist, the way that you would see that in vivo in primates, meaning both nonhuman primates and humans is that within five to eight days after administering your DR3 targeted antibody, you would see proliferation of various T cell subsets. And you might see increases in cytokines, you might see changes in activation markers on T cell surfaces. And so our data confirmed that none of those signs were seen with 325 in primates either. So we have a pure DR3 antagonist on our hands. And you can look at -- this is not the first time that this challenge has been encountered in the industry. If you look at another TNF receptor ligand pair is BAFF and BAFF receptor, right? Benlysta is an anti-BAFF antibody that has been commercially available for over a decade. worked in some indications, didn't work in others. Now you have companies like Novartis and Jade who are coming very late to the scene with BAFF receptor targeted antibodies. And those antibodies seem to be active in Novartis' case in Sjogren's, for example, where Benlysta previously failed, right? You can look at OX40 and OX40 ligand where you have rocatinlimab that is the OX40 targeted antibody that we'll see may have a differentiated profile from some of the OX40 ligand targeted antibodies. And in general, the receptor-targeted antibodies come a little bit later than the ligand targeted antibodies, but there is a pattern emerging that they can be more efficacious.

Fantastic. And so far, are you aware of any other developments in progress for DR3 antagonist, barring any surprises from China, but any other competitors that you are aware of that are looking at the same mechanism?

Yes. Nobody has a disclosed program. And we are not aware of anybody going around and talking about it. We are aware of one highly experienced antibody development pharma company that did prioritize DR3 over TL1A for the same reasons that we have. And the antibody that they developed ultimately had some of the agonist issues that I was speaking about earlier in the same assays where our antibody does not. So there are efforts, no doubt, ongoing at multiple companies, but I think evidence that one of the world's most experienced antibody developers encountered that issue, it gives us some degree of confidence that this isn't going to be a simple follow fast follower story.

Great. And speaking about fast followers, so you are now -- tell us about your time line. So when can we expect to see first clinical data from this program? When can we expect to see it starting to advance into IBD? What are your thoughts on IBD advancement in terms of selecting between UC and Crohn's disease?

Yes. So the key questions that we have to answer are, number one, is it true or not true that targeting DR3 has a superior immunogenicity profile than targeting TL1A. Our Phase I study is moving along swiftly right now, which is great. And our Phase I data will definitively answer that superior immunogenicity question. We expect this Phase I study to be complete in the first half of next year. And we are prepared to move immediately into multiple placebo-controlled Phase II trials. The second question, obviously, is how does the efficacy of DR3 targeting stack up to anti-TL1As. And we'll get into the other areas where other indications that are exploring the activity of anti-TL1As. But today, the only clinically validated place for anti-TL1A is in ulcerative colitis and Crohn's disease. So one of our placebo-controlled Phase II studies will be in IBD. And we will use that data to definitively answer the comparative efficacy question. Folks will have to do cross-trial comparisons, but we're going to size and design our study in such a way that hopefully, that is not a challenge for folks who are looking at the data. So it will be at least one study in IBD and then one study in another indication.

Got it. Okay. So first half of '26, we will keep an eye out for that data. And then this does follow along with what Dr. Dubinsky was saying in terms of comorbidities. The more indications that a drug is allowed in or is useful in the more attractive it becomes to clinicians. What are your thoughts on the most promising new indications for TL1A? And do you have any reason to believe that in certain indications, DR3 might be more efficacious than TL1A?

Yes. So the reasons why development of TL1A blocking antibodies began in IBD and asthma, which a lot of people forget, but are related to the fact that there is a well-known risk of developing Crohn's disease, not so much ulcerative colitis, if you are born with specific single nucleotide polymorphisms in TL1A that lead to aberrant expression of TL1A throughout your life. And there are other autoimmune diseases where there is also a known risk with those same single nucleotide polymorphisms. That includes things like psoriatic arthritis and psoriasis. It includes things like primary biliary cirrhosis and a number of other diseases. And when you look -- and so that sort of is one filtering criteria is where are these TL1A SNPs driving -- potentially driving pathology. If you just look at the difference between Crohn's and UC, though, and the knowledge that anti-TL1A works in both Crohn's and UC, UC doesn't have an association -- a risk association with TL1A SNPs. What it does have is patients are known to have elevated serum concentrations of TL1A at the time of diagnosis relative to non-IBD patients. And so that elevated serum TL1A is a second filtering criteria. And you can find elevated serum TL1A in a pretty wide range of autoimmune diseases. It includes asthma, UC, Crohn's disease, psoriatic arthritis, psoriasis, rheumatoid arthritis, again, primary biliary cirrhosis and a number of other diseases, axial spondyloarthritis. And so you can use that, too. And then you can look at where are their preclinical data that interfering with TL1A DR3 signaling is protective from disease. And again, of those diseases, there's strong preclinical data in mouse models of inflammatory bowel disease, asthma, multiple sclerosis, interestingly, and also the arthritis. And so those are all criteria you can look at. You can also ask, okay, where of all of these diseases do the downstream effector cytokines, where are they clinically validated because TL1A/DR3 signaling is upstream of the production of multiple inflammatory cytokines, including IL-17 and IL-23. And so you can look at the places where those antibodies are already clinically validated and hypothesize that the risk of success or the chance of success for TL1A DR3 blocking antibody are high. And so when you do all of that, you end up with a long list of diseases where, in many instances, there remains very high unmet medical need. So when you look at the fact that Merck and Roche and Spire have all chosen to go and begin Phase II studies in rheumatoid arthritis, I agree. Those are -- that is a good choice of a disease to go into. TL1A DR3 is also known to play a role in the development of fibrosis, right? So there's a number of diseases there. Merck going into their SSc-ILD study is probably the first chance we'll have to really look at data that might speak to the fibrotic aspect of this access. Atopic derm is another -- this is another place where Roche is going. And that is another disease which ranks highly on the list based on the criteria that I went through, but so does asthma, right? And that's why Teva started in asthma before they went into IBD. I would urge caution, more caution in thinking about something like asthma because one of the commonalities between diseases like asthma and atopic derm is that the antigens which drive disease are not ever present, right? In IBD, and RA and psoriatic arthritis, they are. And I think interfering with this access in diseases that have a more seasonal or relapsing remitting course is less of a sure bet than going into diseases where tolerance to a either self or endogenous microbial antigen has been broken and that, that antigen is perennial in the patient.

Fantastic. Well, thank you so much for sharing your thoughts on this, Dr. Schreiber. And David, I do apologize, we're out of time for this session. However, we are running out into our Q&A. And so there will be plenty of chance to ask questions on Shattuck, TR3 or any other topic that we wish for the next 20 or so minutes. We do again encourage the audience to submit any questions that they have in the chat button below. We'll go ahead and start with one quick question that bridges a couple of therapeutic areas. This one has to do with turning back to the concept of some of the oral presentations that we were looking at UEGW, specifically comparing icotrokinra versus obefazimod, any thoughts there in terms of the trial design, the patients that were recruited, how that may feed into interpretation of the efficacy between those two agents as what will be addressed primarily to Dr. Dubinsky.

Sure. So when you look -- I was sort of mentioning before whether or not at the naive group, whether 5-ASAs were part of the allowable patient population, and that was the case for PDE4. But the population for ico also similarly, they had to have failed steroids and immunomodulators to be in the naive group. So it's not dissimilar in that sense in terms of baseline population. I think as we get into understanding how the endoscopy scores look like sort of how many were Mayo 3 versus Mayo 2, there's a little bit of nuances that we look at to determine severity. At face value, based on a Phase II, again, which is different than a Phase III sort of mindset of a patient and randomization to different arms, et cetera, that it looks like PD4 had a little bit of a mild or moderate, as I was trying to get at before because the minute you allow 5As in, you're sort of looking at a mild or moderate population. Moderate light, moderate to severe light, as I noted before, this is good for [indiscernible] to also hear in terms of when we talk about moderate light. But ico looks like not too dissimilar. So I think as we -- in the Phase III, that's where it will become important to look at how many JAK failures versus non-JAK failures because that's the new bar for refractory for us. So I think it will evolve as we dig into subset analysis of ico as well, and we see what the Phase III looks like. So I think you're looking at a similar -- more severe of the moderate to severe in that population like obe was.

Got you. And then we have one question that will bridge over with Chad. So the question here is, I can address to Dr. Dubinsky. When you are enrolling patients into a trial and you're considering enrolling them into a TL1A trial specifically, what are the considerations here? How do you choose among the different agents? And does the process differ in UC versus CD?

Yes, it does actually great question. And again, hear what this is what I'm saying about TL1A may be interesting is that for small -- we, in our minds, believe that TL1A has a potential huge play in Crohn's disease. Not that it's not very effective in you see, but hear me out why I think TL1A versus 23 for just a minute in Crohn's, particularly small bowel Crohn's or isolated small bowel. Isolated small bowel is a very fibrotic potentiating area of the gut. We don't operate on structures in the colon very often, I'll be honest with you. It really is the ilium has this propensity for fibrostenosis, which is where when we talk about TL1A in general, we're very excited in this. We feel isolated Crohn's disease, ileal Crohn's is a different kind of Crohn's. So I do want to let you know that biologically, we are thinking of them as a unique type of disease, whereby addressing fibroblast or preventing them from trying to get to further collagen deposition and further bowel wall damage, we are excited. So just to let everyone know, we are excited about small bowel Crohn's disease and TL1A. So what's going to happen when we have all of these assets, and we believe 23 oral, I would tell you, IV or subcu 23 is great for Crohn's as well as it is you see. But in isolated small bowel, we're particularly very fascinated about TL1A. That's like a science thing we're all very excited about. So it could be that age, disease location, prior surgery. So in a post-op setting, Taylor, again, we are super excited about the possibility of preventing fibrosis again in someone who went to the OR for fibrostenotic Crohn's. So I hope you're hearing me that the patient, again, I go back to what you solidified, Martin, is that the patient in front of us, we're going to have various algorithms in our brain around disease location, prior surgery, extent, pancolitis, depth of ulceration. That is going to help us determine where we deploy our various assets. So it's not as easy as, oh, I'm going to use it in this Crohn's only or this UC patient. There are nuances, some with extraintestinal manifestations. Hey, if TL1A is amazing at joint progression as well and then fibrosis in arthritis, which I know are any other EIM or if it's psoriasis and why not IL-23. You see what I'm saying that the biology of the individual and everything else is going to determine where we deploy which drug. And so I really want to emphasize that if we're going to have all these incredible assets, including all the future builds that are happening, all the Phase Ibs and IIas that are also out there, we're going to need a playbook because nobody, that 90% that I talked about that are making treatment decisions, if it's not super clear, they're going to default to the very tried and tested their back pocket, they know TNF, they know 23 IV subcu. We're going to have to educate on patient precision in terms of personalization based on a lot of factors. in play. Pregnancy, by the way, is another important piece that we are not using orals in the first trimester. So if there's a female patient sitting in front of me who wants to get pregnant, the biologics such as subcu and IVs, which don't cross the placenta in the first trimester, which is when small molecules do start crossing, that will influence our treatment choices since 50% of our IV patients are women and most are diagnosed and/or I'm seeing during their childbearing years, that will make a difference as to which drug we pull out as well. So I hope everyone understands that it is not as simple as the delta that you see the second a drug gets to market. Decision-making is very precise at that moment.

Got it.

Yes. I'll just quickly add, Martin, that I agree. We are as interested in Crohn's as anything else for many of the reasons that Dr. Dubinsky just mentioned. And -- as far as I know, the ongoing Phase III trials and one of the challenges, obviously, in chasing an antifibrotic endpoint in Crohn's disease is that the evaluation measures are not well established. And as far as I know, that is not even a secondary endpoint in any of the ongoing clinical studies. So we're spending a lot of time speaking with folks and trying to be creative about what could be done in the context of a Phase II to start to get a handle on this even if it's an imperfect measure.

Yes. So it also takes years. So when we counsel current TL1A companies, we have two messages. One, unlike the animal model at Steph Targan's lab, which started everything down the road of we can maybe reverse fibrosis in that animal, great. But there's been no human data to say we can reverse fibrosis with the TL1A. So that's an important message. But what Taylor is saying is that to really measure disease modification, which is where we think TL1A may start to differentiate itself by preventing fibroblast maybe from continuing to perpetuate, you're going to have to look at least a 24-month outcome, at least two years to actually differentiate whether TL1A behaves differently than any other -- cytokine therapy or anything else. So that's why I make the point, as he noted, right now, there's no way to include that in a week 52, for sure, not in a week 24 or week 12, right? So we're not going to be able to assess. But reassure everyone, Taylor included, that we are super excited around the possibility of disease modification with TL1A. It's not to say any of these others won't also do it, but because of the particular MOA and it's fibroblastic sort of the ability with the DR3 and the TL1A, that component of our understanding of the MOA, I will say it does excite us. So that's why most of us are looking forward to what happens next in the race for TL1A, I would say.

Dr. Dubinsky, can I ask you a question as it relates to the fibrotic components here. In your clinical practice, what role does sort of the tractability of the bowel when you're doing the scope play in your assessment of how it's going for the patient? Is that sort of what you use in your clinical practice to make the determination that the bowel is more passable and there is less fibrosis? Because I understand that those things come and go as well and they move around scope to scope.

Yes. So dividing UC versus Crohn's. So you see when you go in and you see like a lead pipe, like literally, you've lost all of the haustra, which is what we see, and it looks sort of like juicy more than it does literally like a pipe or when you put your biopsy for step on and it bounces off, that's already starting to have bowel wall damage on fibrosis in UC. So I did want to differentiate in UC versus Crohn's. We also have ultrasound, by the way. So we now are implementing and nobody in this space, if they think they're going to like bypass transmural outcomes moving forward, they'll be missing where we're going in our space, which is the application of transmural remission and healing. So that is the next frontier, which is why we talk a lot about how we're actually going to change the outcomes of IBD is we need transmural. This is not just a mucosal disease. So that's for a later discussion in terms of ultrasound and how we're implementing it in our clinic. But for Crohn's, to be honest, even for fibrostenotic ileal disease, for example, you're right, it could look narrowed and juicy and it looks very ulcerated in a lot of polyps and you're like, is this a scar or is it at the time of endoscopy. If you can't get your regular colonoscopy through, like you're already in a different situation. If we can minimally get it through or take an upper endoscopy, which has a smaller diameter, we know what the diameter of the structure is. But now that we've integrated cross-sectional imaging, we're actually able to look at whether there's proximal dilation. So what determines for ileal, what we'll call critical stenosis or critical narrowing is if on cross-sectional imaging, either MR, CT or ultrasound, there is ballooning of the bowel above this narrow segment. that is the most predictive that you should move on, by the way, and surgery should even be a consideration until we have antifibrotic, which you know there's one asset in particular that is being looked at. So as noted, we don't know how to measure it. We're starting to develop PROs that hopefully the regulatory agencies will accept for stricter Crohn's disease. But everybody on this call should know that we should be developing treatments that prevent scar, not reverse. That's most important today because if we would do our jobs, me, me and you guys on the development side, we should throw away the idea that people progress to fibrosis. So that's my message is like let's prevent it from happening and getting to the biology that drives it.

To that point, you mentioned earlier, you have your new standard -- or the standard, I shouldn't say new really, but the standard for refractory disease is JAK refractory. But when you have -- and I know it's not necessarily the biggest focus of your practice, but for newer patients earlier in the disease, there was some talk at UEGW, of course, of the importance of -- and I think that's been the case for a while, the importance of driving a long, good remission. So how do you judge that? If you're developing drugs in the refractory setting, do you really want to wait all that time? Or what's convincing to you as a practitioner to just use it frontline, whether or not it's the study necessarily looked at those patients? Or do you look at combinations instead of frontline agents that you're used to using?

So in the very refractory, how it's happening today, which is what I mentioned, is that we're already using our #1 combination in the clinic, just so everyone is aware, is Rinvoq plus the 23. Today, when we have a refractory patient or someone who's partially responding to SKY or TREMFYA, Omvoh, like there's this partial like we got you a little bit there, but we're not there yet. Now that we've put ultrasound on everybody's abdomen in the IBD center at Sinai, we're using that in real time to actually dump a JAK. I'll be honest with you. There's absolutely the #1 combination in the clinic in refractory is you're coming in on a platform drug of either ENTYVIO or a 23 or STELARA just because that's what we call platform drugs, meaning we're comfortable with the safety, and we're sort of adding either a TNF, [indiscernible], we'll see what that looks like. But the #1 thing is, look, you may be facing either an ileocecal resection next or a colectomy, you responded sort of to either to [indiscernible] or 23 or ustekinumab, and I'm going to add a JAK and in 12 weeks, you're going to come back for an ultrasound. And if I've gotten zero place, we will talk about surgeries. But now with these incredible like new assets that David and Taylor are talking about as well as what we are seeing now with obe and whatever happens next with TL1As, we're excited because could it be that every company that's out there, [indiscernible], everybody who has two things that they're putting together, what we say to all the investors and to everyone in the monotherapy space before you can get to combo, you have to prove your drug works as a mono is it has to be logical, not just those are the two drugs I have in my company, and therefore, I'm going to put them together. This has like been the message, by the way, to everybody that sits in front of us. We're like we all have -- we're seeing the same song to them. So the question will be is, are we going to, in a regulatory environment, be able to go straight to combo because everybody thinks the most important time is induction. I know not all the regulators agree. Some people may be a bit fearful to do it at the same time at start. But particularly with TL1A and some of the others, I'm very excited about cutting fibrosis off at go on day one and then deescalating to what we think is the safest drug that is going to give me long-term durability without immunogenicity, meaning no drug antibodies safest can be and people will stay in remission. So that's the mindset of the refractory, David. That's what is happening today. So we're already thinking about that in the most refractory. Maybe we'll have new options with all these new assets for the refractory. But in the naive because regulatory and we're not measuring combo upfront in naives yet, VEGA was the first beginning, but that's not the -- we know that's not where we're going right now with the regulators that we're probably going to be just doing it in the clinic before even we have a drug that is available as a co-formulation maybe that's approved, like we're already doing it in co-administration. So the question will be, should we be able to transition easily to co-formulation, and will the payers pay for it? And it depends on pricing at that point. I'm sorry.

Yes. To add to that and what would a disappointing DUET study due to the thoughts around combo biologics and again, either stage upfront or later-stage patients.

Yes. So all of us are thinking that in order for us to get it because it's a refractory population, although 10% may seem like a success, right? Maybe it seems like a success. We're going to have to say, is that number needed to treat that worth it for us to go to surgery and start over, which is always the right answer, by the way, in people who already got fibrosis. I know we're all trying to push things, but I would just start over and give you a better drug after. That would be typically, if it's a short segment, we should start over and stop trying to reverse fibrosis. and try and use a drug that's maybe preventing it from coming back. That's my mindset. So I think that 15% would be amazing. I think everyone would feel that in a refractory TNF population or someone who is a partial responder, if I can add an IL-23 and I get 15% better remission, we will be excited. The payers, I think, 25%. So of course, we're at a completely different what we believe is important for patients. But obviously, if you price it at the same price, you can get whatever -- you know what I mean, like it's all going to be pricing. If you really want to price it better than anything else on the market, show me 25%. So whatever that ends up being. But that's -- I can't control all the payer stuff. But what we can -- what I can tell you is everybody's impression is 10% may be okay and it may be worth it, 15% will be important. That's what I can tell you from a numbers perspective for DUET.

And we have one more audience question here, which has to do with going back to the conversation about small bowel, any reason to think that the oral IL-23 might be more exciting because it would preferentially accumulate there versus the colon?

So I think we have to learn a little bit more about the way that this oral works to be 100% honest. I know there's no systemic bioavailability that was reported, but where does it go? How does it get to the site? And where does it go? I mean we started in UC. And so obviously, people have faith in the colon as well. So I'm not sure. I would say that right now, IL-23 in SKYRIZI, we actually didn't show a difference between placebo and drug for small bowel Crohn's just as ileal-only Crohn's. It's not -- it's only 20% usually in the population in the trial. So I'm not saying it dominates the trial. So I just want to let everybody know. But it didn't as much perform as it did when you had ileal colonic or colonic. So these are the things that why I say there's so much opportunity in -- for small bowel Crohn's disease right now and our excitement around the fibrotic pathways and how we will be using therapies based on their MOA a little bit more strategically moving forward. And the International Organization of Inflammatory Bowel Disease is actually reclassifying Crohn's and isolated Crohn's will be almost its own type of Crohn's disease. So the entire world is moving to reclassifying and looking at what endpoints based on location and disease duration. So there is a movement for everyone in the space to know that we are digging in further to isolated grown small bowel as its own unique phenotype. So development needs to focus a little bit on locations stratify for disease location, not just endoscopy, not just how -- whether you failed advanced therapies, there's a movement that we're trying to generate that location matters for drug development as well. Yes.

Fantastic. Well, thank you so much. Any further questions? Otherwise, we are running up on time here.

And David, if you had -- David had a question, they put his hand up. But if you want to -- if you have a question for me, just get my e-mail and send me whatever, same with Taylor, whatever you need, I'll be able to answer any questions you have.

All right. Well, saying now thank you so much for your time, and thank you, everybody, for joining us this morning. Dr. Dubinsky, pleasure hearing your thoughts on UEGW as well as your experience as a clinician. And then also Dr. De Vries and Dr. Schreiber, thank you so much for your thoughts as well on both UEGW and also your clinical development. We thank you, everybody, for joining, and we wish you a wonderful day.

Thank you.

Thank you all.

Thank you.

Thank you.