Sol-Gel Technologies Ltd. (SLGL) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Sol-Gel Technologies KOL event. At this time, all attendees are in a listen-only mode. A question-and-answer session will follow the formal presentations. [Operator Instructions] As a reminder, this call is being recorded and a replay will be made available on the Sol-Gel website following the conclusion of the event. I'd now like to turn the call over to Alon Seri-Levy, Chief Executive Officer of Sol-Gel Technologies. Let's please go ahead, Alon.

Thank you, Tara. Thank you all for joining us today to learn about Gorlin syndrome and about [indiscernible] candidate SGT-610, patidegib gel, 2%. If approved, our SGT-610 has the potential to be the first drug for the prevention of new basal cell carcinoma, or BCC, in Gorlin syndrome patients. Before talking about SGT-610 and the hope we are dedicated to bring to all people with Gorlin syndrome, a few words about the situation in Israel and its impact on us. Even though we had at Sol-Gel are devastated and pained following the Hamas crimes against Israeli citizens on October 7, and extremely worried about the Israeli children, women and the men that were kidnapped to Gaza and about our soldiers, we are more than ever committed not to allow the situation to sabotage our mission to continue harnessing innovation for the benefit of patients with dermatological diseases. In this regard, we are completely engaged in meeting our objectives on time, regardless of the war in Gaza. Indeed, at the beginning of this year, we licensed patidegib from PellePharm and we said that we would initiate Phase III trial before the end of this year, which is exactly what we have done. A bit of background on our company. Sol-Gel successfully developed TWYNEO and EPSOLAY and has managed to partner with market leaders for their commercialization. As of last year, both drugs are available in the U.S. and we are advancing their approvals in Canada and Europe. These products validate our ability to get complex, difficult-to-formulate drugs to market and to identify and secure the strongest commercial partner in this space. Given our progress with SGT-610, we thought that this was the right time to provide you with more insight regarding its importance to Gorlin syndrome patients, the rationale behind our Phase III trial design and the drug's market potential. I'm very pleased to welcome and introduce our 2 expert speakers joining us today. Our first expert speaker is Ms. Julie Breneiser. Julie is the Executive Director of the Gorlin Syndrome Alliance. The work that Julie does with the Gorlin Syndrome Alliance focuses on collaboration with the industry to bring new potential treatments to clinical trials. In November 2021, Julie was honored with an appointment to the patient engagement collaborative at the FDA. Julie and her 2 adult children are affected with Gorlin syndrome. Our second expert speaker is Dr. Ervin Epstein. Dr. Epstein is a practicing dermatologist and a co-founder of PellePharm. He directed an NIH-supported lab for 45 years, 35 of which were at UCSF and 10 of which were at Children's Hospital Oakland Research Institute. Dr. Epstein and his colleagues conducted the first randomized trials evaluating chemoprevention of basal cell carcinomas in people with Gorlin syndrome. And he was the codiscoverer of the finding the PTCH1 gene is the site of the mutations that underlie Gorlin syndrome. He is also a lead author on papers that have appeared in the New England Journal of Medicine, Nature and Science. Today's agenda will be as follows. First, Julie will share with us what it means to be a Gorlin syndrome patient and Dr. Epstein will provide us with his perspective on why treating Gorlin syndrome patients with SGT-610 should prevent new BCCs. I will then explain the rationale for 2 factors that we've implemented to increase the likelihood of a successful outcome in our ongoing Phase III trial. And I will also provide an overview of the market potential in Gorlin syndrome. Lastly, we will hold the questions-and-answers session. Kindly be reminded that we may make forward-looking statements in our presentations and in the following Q&A session, and I therefore refer you to our disclaimer related to these statements. Julie, please?

Thank you, Alon. My name is Julie Breneiser and I'm the Executive Director of the Gorlin Syndrome Alliance. My young adult children are affected with Gorlin syndrome. And we've made a choice to educate them on the syndrome and let them live their live. This has led us -- our son to be a four-time [ parent ] and our daughter to be an avid mountain biker. Brief history of the Gorlin Syndrome Alliance. We were founded 23 years ago, and our mission is as stated there, to aggressively -- to thoughtfully support and comprehensively educate and aggressively seek the best treatments and a cure for those affected by Gorlin syndrome. There are 3 pillars to our work, providing [ information ], support and being involved in research by assisting companies like Sol-Gel with clinical trials, and we also fund research on our own. We have 4 staff members. We live on a very tight shoestring budget, but consider ourselves small and mighty, as are many people with Gorlin syndrome. We have to be. We have an 11-member fully engaged Board of Directors and a [ 10-member ] Medical and Scientific Advisory Committee, and their combined years in practice are over 200 [ years ]. Brief fact sheet about Gorlin syndrome. The incidence is 1 in 27,000. It is an autosomal dominant rare genetic disorder, with about 31% of us having it through a de novo mutation or a spontaneous mutation. Autosomal dominant means that there's a 50-50 chance that each offspring can develop -- can have -- be born with Gorlin syndrome. We did a global survey back in 2019 and the start of 2020. One of the startling facts that came out of this for me is that Gorlin -- patients with Gorlin syndrome, and keep in mind, parents, family members as well lose almost 25 days per year of life to appointments, procedures and recovery. The syndrome can affect every organ some, and the 2 most prominent and symptomatic manifestations are basal cell carcinomas, some of us will have over 1,000 in our lifetime, and odontogenic keratocysts, which are benign tumors of the upper and lower jawbone, but they have a very high recurrence rate so they have to be treated aggressively. Other manifestations may include medulloblastoma, which is a malignant brain tumor in little children; hydrocephalus, cardiac and ovarian fibromas; the list really go then on. These are some images of children and people with various manifestations of Gorlin syndrome. I'll briefly run through a few of them. On the left, upper left, third-generation young man with multiple basal cells, hydrocephalus, he has a shunt for that. He's had [ multi processes ], he is death, he is a savant. It's an interesting combination. The next little guy lying in ICU is undergoing chemotherapy for medulloblastoma. Prior to this, he had surgery, and you'll see in a little bit why it's important, if possible, to avoid radiation therapy. The image of the twins are from a mom affected, and they were -- obviously, the one with the large head has Gorlin syndrome. The little guy on the right is recovering from a jaw cyst surgery, I should say, 3 jaw cyst removals in 1 surgery. And below that are 2 individuals, father, daughter, both affected with Gorlin syndrome. The father has passed away from metastatic basal cell carcinoma to the lungs. And on the bottom left, a guy with a cranial synostosis. The plates and the skull have grown together prematurely, and he had multiple surgeries to correct this. These are some images of children with -- affected with Gorlin syndrome. Upper left, it's very hard to see, these little tiny bumps are basal cells. The only other slide I'll bring -- 2 others I'll bring your attention to. The one in the center top is a 9-year-old who is blanketed with pigmented basal cells. He had a malignant medulloblastoma that was treated with radiation therapy. This is the result of the radiation therapy. It causes BCCs to grow like wildfire. And the little guy on the upper right is waking up from surgery for 2 things. One is pretty obvious, multiple basal cells were treated with laser. The other was that he had jaw cyst surgery while under anesthesia. Let's -- I'm going to show you now some adults with Gorlin syndrome. And the issues here are pretty obvious. And the one that I'll spend a moment on is in the right. This individual has chosen to live her life awake at night and asleep during the day in order to avoid radiation and UV rays. The other individuals are obviously severely affected with Gorlin syndrome and BCCs. That's what you see. And this image of the ear is an image where the original lesion was just 3 millimeters. And [indiscernible] this was the image taken before a skin graft was applied. Next are more people with Gorlin syndrome. Obviously, a significant burden of disease. The upper right has been holding her son. She has chosen to not have any treatment of her BCCs because she is hoping to have another child. As I mentioned, this is an all-in-the-family affair, unfortunately. This is my son on the bottom left after a graft was placed over a BCC on the tip of his nose. And on the right is my [indiscernible] about almost 1.5 years ago after 13 weeks of Efudex cream to treat a bunch of basal cells. I've already mentioned a gentleman that it is a -- can be a deadly disease. The man on the left and right and the husband of the gray-haired woman are examples of people who died from metastatic BCCs to the lungs. The younger woman in the center has passed away, but we do not know if her cause of death was related to Gorlin syndrome. As I mentioned, we did a global survey 2019, 2020 and I'm going to show you some results briefly right now. When was your first BCC diagnosed, you can see here that the largest percentage was in the 11- to 20-year-old range, but somewhere as early as the first 2 years of life. Let me take a moment to its slide. The bar graph on the left shows BCCs on the face, neck and scalp in the individual's [indiscernible]. The set of bar graphs on the right are BCCs on other parts of the body. This was asked in 2 separate questions. So when talking about the graphs on the left, 45% of the respondents have had over 50 BCCs on their face, neck and scalp in their lifetime. When we talk about those on the right, 42% of the respondents have had 50 BCCs on other parts of their body; 5% have had over 1,000. We have a lot of different treatment options. Many of them are considered to be barbaric, and this is the list. And you've seen it is already of some of the results and some of the people who need to start to initiate some of these therapies. This slide is quite easy, but I just wanted to point out to you the different treatment options. We have none that are specifically approved for Gorlin syndrome by the FDA, for the prevention or treatment of BCCs or any of our other manifestations. So there's surgical treatments, topical immunotherapy and oral hedgehog inhibitor medication. They all come with significant downsides, some of them life [ altering ] and permanent. Obviously, pain and scarring, disfiguration is the most common one from the surgical and topical therapies, though the risk of scarring is less there than with surgical therapy. All of these treatments are burdensome, particularly with the volume of BCCs that we have. They can result in scarring disfiguration pain, sleep interruption, [ thinning ] and bleeding, muscle cramps, loss of hair, loss of the ability to taste food, anxiety, isolation. The list goes on and on. There are an estimated 11,000 of us in the United States with Gorlin syndrome. We are born soldiers, finding lifelong battles that we did not intend. We are not nor will we ever be cancer survivors. We live with it every day. We are considered never cancer-free and we can never -- and we will never be in remission. We can never ring the bell when our treatments are done the way people do after chemotherapy and radiation therapy. I'm going to read this quote now in closing and try not to get choked up while I do this. A mother of a teenager in Austin wrote this. In my mind, I see my daughter [indiscernible] open face, transformed into with shining scars, sprinkled like leprosy spots, her nose and eyelids twisted and torqued by scar tissue. The ache of knowing the future I cannot shield her from is deep and penetrating. It comes with the [ moored ] assurance of constancy. There will never be a time when she won't have to worry about cancer, when she can pause the marks across the body. How do I prepare for that? My breath is stolen by my own impotence. She is already in the mouth of the tiger. The bite is coming and there will be many. I will soothe her with -- my child with embrace for as long as she'll let me, but she doesn't just need a mother to hold her, she needs something that can sedate the disease that has its jaws locked on her. Please help us keep smiles in these unscarred faces. Thank you very much.

Thank you, Julie. Ervin, please.

Alon, thank you very much for introducing me. I'd like to speak first a few moments about basal cell carcinomas. They are the most common of human cancer. There's maybe 3 million of them in the United States alone each year. And for those of us who are of European descent, probably 30% of us will get at least 1 or 2, or sometimes more. Essentially, all of them now in the United States are removed surgically, and there are 2 [ forbs ] of susceptibility. The first is sporadic, which is 99.9% of the people who get basal cell carcinomas, one or a few tumors starting first in the 50s, 60s or 70s, by far the most commonly on sun-exposed areas, especially the face. But as Julie just movingly pointed out, there is a rare heritable disorder where people get many BCCs, not just 1 or 2 or 3, and starting in -- by teenage years, and it is obviously quite devastating hearing this. I want to take you back 30 or 40 years to the '80s and '90s, which was a golden age of asking and then answering the question, what is the gene or genes whose mutations cause -- here cause, as shown at the top, what is the genes' mutations underlying basal cell carcinomas. Our lab and a number of other labs around the country took on that challenge back in the '80s. And the question was how to do that. Today's tools were not available, but familial linkage analysis worked. In other words, it allowed us to identify mutations cause Huntington's disease, cystic fibrosis, et cetera, et cetera, and these filled the front pages of the New York Times as they were identified one by one. So the idea was that since we had no other way of doing it, we might use the heritable version of susceptibility basal cell carcinomas, i.e. Gorlin syndrome, find that gene, hope that, that gene would shed light on the far more common sporadic type, and we could develop a drug that has anti-BCC efficacy, and to channel Shakespeare, we could then kill the surgeons. As shown at the top then, the question was, what is the genius mutations underlying Gorlin syndrome? This was the large effort, 3 continents, a dozen labs, perhaps including ours, and the answer found by the global village in 1996 was the PTCH gene was inside of these mutations. So that was very lucky because of 2 particular reasons. The first is that the function of the PTCH gene was known at that time, i.e., the protein that it codes inhibits hedgehog signaling. What is hedgehog signaling? Here is a cartoon, and this is the outside of the cell. This is a cell membrane and this is the inside of the cell. The PTCH protein sits in this cell membrane and left to its own resources, what it does is inhibit signaling by another cell membrane protein, called Smoothened. When it senses it's bound to hedgehog ligand in the outside piece of it that sits outside into the surroundings, it aggregates that binding aggregates the ability of patch to inhibit Smoothened. And the signaling then goes to the brain of the cell, A.K.A. the nucleus, with new and more target gene, messenger RNAs expressed, changes the cell behavior according to what is appropriate for when hedgehog is found in the outside environment, and it allows the cell to sense and then behave appropriately based on what's going on outside of itself. The second reason that was so lucky is that PTCH actually is mutated in sporadic BCCs very commonly, and all basal cell carcinomas, all basic cell carcinomas are driven by excessive hedgehog signaling that drives the cell to continue to multiply instead in the body and form in the top player of the skin or perhaps the hair. Therefore, in order to change basal cell carcinomas from a surgical to a medical problem, the answer was obvious, make a drug that inhibits hedgehog signaling. Now was that possible? And indeed, pharma showed it was possible. Approximately a decade ago, there we go, both Genentech and a few years later, Novartis, their project now turned over to Sun systems, showed that an oral hedgehog inhibitor was active against basal cell carcinomas. The FDA approved both of these for the treatment of advanced basal cell carcinomas. What's an advanced basal cell carcinoma? Fundamentally, it should be -- it's a BCC that is not amenable to surgery. And this is used off-label for Gorlin patients with too many BCCs to cut off. It is used a lot and is very successful. So actually, these drugs are -- replace the function of the PTCH protein and inhibit Smoothened, just as the defective PTCH protein would have done if it weren't mutated. We were fortunate enough to get from Genentech access during their Phase II trials that led to approval of some oral vismodegib to treat patients with Gorlin syndrome. On the right is a spider plot. Each line is a different individual patient, and the y-axis is the number of new surgically-eligible BCCs that develop during the next 3, 4, 5, 12 months. And you can see that even those way down here at the bottom, by 6 or 5 or 6 months, had 10 or 15 or 20 new BCCs, let alone the few who are kind of outliers, how many they develop. So it -- these patients very commonly develop new surgically-eligible BCCs, meaning they needed to have those cut off. By contrast, the patients on the left in Group A were treated with vismodegib, and you can see that actually, there were no -- essentially no new surgically-eligible BCCs that developed during the course of the trial when patients were using vismodegib. And it was not only prevention that we saw, but also startling treatment effects, efficacy, treatment efficacy of existing surgically-eligible BCCs. This is a man with multiple facial BCCs. Each bump that you see marked by a sticky note and some of them by a Sharpie inked around the outside. Is it individual cancer, individual clone and mutant cells that if left alone eventually will require perhaps mutilating surgery. Maybe 15 on that side and probably 15 on the other side. On the right side is the same patient, 1 pill a day, 3 months later, essentially completely free of tumors. Another picture, quite similar. The back of the patient. I put a Sharpie ink around each of the ones on the back, and you can see that there are many of them. On the right, 1 pill a day for 5 months on drug and essentially nothing left to see. And were you to biopsy the sites where the lesions had been at baseline, you would see no histologic abnormality. So the remission is complete, both histologically as well as clinical. And here are the data that was for the whole trial. You can see that in the left-hand sort of orangish, light orange data that by 3 months, 50% of the patients had a 50% reduction in the number of visible BCCs. And by 15 months, half of the patients were completely clear. But as Julie said, treatment is not without its problems, and there's no free lunch here either. Specifically, in 3 months, as shown in the upper left corner, half the patients have hair loss. This is not the chemotherapy hair loss. This is the hair losses due to the fact that the cycling from the resting to the active growing phase of the hair follicle requires hedgehog stimulant. Lower right, by 1 month, half the patients have taste loss. They can't taste their food, and that goes on to most everybody. And not only does it sometimes go not only to loss of taste, but it's also the taste is dysgeusic, meaning that food tastes horrible. And so they lose weight, as showed in the upper right-hand corner. In the middle on the left is muscle cramp. So by 2 months, half the patients are awakened 1, 2, 3, sometimes 5 times a night by severe cramps in the muscles that are painful, that causes them to lose sleep to walk around, and as shown in the bottom, this combination leads to people stopping the use of vismodegib and the others. And this patient, as an example, after stopping the drug, as you can see on the lower left corner, they all come back. So despite the fact that there was apparent clinical and histologic fewer or remission, they do come back, as Julie has pointed out. So the scene switches to a very nice summer's day of the Stanford campus when I and 2 friends, both professors at Stanford, Jean Tang, a Professor of Dermatology, and Phil Beachy, a professor -- basically a [indiscernible] on basic biology. We're having coffee and the conversation turned to how could we make a hedgehog inhibitor drug with some of the efficacy with far less of the side effects that occur with oral hedgehog inhibitors. And most of you, thinking that 2 out of the 3 of us were dermatologists, would correctly predict that all we had to do was put it on the skin [ in tan ] instead of taking it by mouth. Because after all, that's what dermatologists primarily do is provide [ for ] topical drugs. And really, we wanted to make a Goldilocks drug. A Goldilocks drug? Yes, a drug that has a -- that is a topical hedgehog inhibitor with percutaneous penetration that is just right, causing enough skin accumulation to have local anti-BCC efficacy but little enough to get in to have minimal systemic exposure and no systemic adverse effects, which is necessary for something that is going to have to have lifelong use because patients with Gorlin syndrome continue to get new BCCs and if you stop the drug, they can die. So the first thing we did was out-license from patidegib, a hedgehog inhibitor that is a cyclopamine derivative from a company named Infinity on the banks of the Charles River. This is shown to be active against human advanced BCCs in sporadic and Gorlin syndrome patients. In other words, it has the efficacy of the 2 approved drugs, and in multiple Phase II oncology trials with some hundreds of patients lasting over a year and have the typical hedgehog side effects, inhibitor side effects. So that's what we wanted to make into a topical drug. And fortunately, this is a paper that came out that showed -- that tested the ability of a number of anti-hedgehog small molecules that have been developed, including on the right, the Odomzo, the second market, and the first to market, the Erivedge on the left. And in the middle was our drug, now called SGT-610. The light colored bars are the amount that was found in the skin after topical application to mouse skin, topical application of different drugs to mouse skin and then taking the skin and the plasma and measuring the amount of drug in the skin and the plasma. And you can see in the middle that there's a huge increase in the amount in the skin as compared to the amount in the blood, as compared to the one on the right, where there's actually a higher concentration of the blood as opposed to the skin and the one immediately to the left, the Erivedge, which has very little absorption, period. And that's been found by several people with vismodegib. So we took that drug and developed a very stable topical gel with good preclinical characteristics. Specifically, we found that it will shrink murine BCC, mouse BCCs and inhibits hedgehog signaling as shown by a reduced Gle1 messenger RNA in patched heterozygous mouse BCCs. PTCH heterozygosity is the genetic abnormality that underlies Gorlin syndrome in most of the patients, and this was a mouse model that we made to show the same thing. Specifically, in this slide on the left is the change in the amount of hedgehog signaling as measured by the hedgehog target gene messenger, Gle1, 100%, of course, with the placebo, this is in mouse skin, after topical use and 85% inhibition by 4% [indiscernible] gel. 85% inhibition of hedgehog signaling by topical application of the gel in mice. On the right is a result of our study of the growth of these small tumors in mice. You can see that by 3 weeks after seating, 21 days after seating, in the placebo, there's a 5x increase in the size of the BCCs. With 0.1%, there's a 350% increase -- 3.5%, 3.5% increase. In the green is 0.75% and they can see that it -- they don't really grow, it stabilizes them. And with 4%, there is not only no growth, but there's actual shrinkage, very promising. So we then proceeded, of course, to Phase II trials. And we did find the topical hedgehog signaling inhibitor, patidegib, patidegib drug gel would inhibit human BCCs and inhibits hedgehog signaling just as it does in mouse skin, and this specifically in patients with Gorlin syndrome. Here are the data. In this case, the patients are grouped according to whether they got on the left, in gray, dark gray, placebo in the middle, 2% gel, but on the right, 4% gel. These are so-called waterfall plots. Each line is an individual basal cell carcinoma. These were monitoring only surgically-eligible BCCs, and they're grouped -- they're clustered according to patients. So you can see that there are very few of the tumors in the placebo that shrunk by even 50%. By contrast, there were 2, 4, 6, 7 tumors that completely disappeared in the 2% and 5 that disappeared in the 4%, as shown in blue. So the reds are 2%, the blues are 4%. And then reshuffled to show that the group on the right -- well, to be more specific, we've studied 5 surgically eligible BCCs in each of these patients, and we had them apply it twice a day in the United Kingdom, 2 sites, twice a day through 6 months to look at shrinkage of existing BCCs. One of the tumors, we biopsied a little tiny piece of it at baseline and measured how much Gle1 activity there was, how much hedgehog activity there was, and then at 6 weeks, we took off the whole thing and measured Gle activity again. On the right are the patients who had less than 20% inhibition of Gle1, less than 20% inhibition of Hedgehog signal. On the left, the larger group are the ones who had at least 20% inhibition of hedgehog signal. And you can see there's a marked difference, arguing that indeed the treatment has shrunk the tumors by inhibiting hedgehog signal, that it's working the way we think it's working. So that was the end of that. We found again that we out-licensed a drug that was active orally against human BCCs. We developed a stable topical gel. We found that it shrunk and inhibited hedgehog signaling in a mouse model when applied topically. We found that it shrunk human BCC and inhibited hedgehog signaling in humans with [ bad ] Gorlin syndrome. And now I ask you, in a Phase III trial, how could it not work? Thank you very much. Alon, you tell them how.

Thank you very much, Ervin. Let me start with a brief background on SGT-610. In March 2019, PellePharm initiated a global multicenter vehicle-controlled study to improve the efficacy and safety of patidegib topical gel 2% applied twice daily to the face of adult participants with Gorlin syndrome for 12 months. Primary endpoint was a comparison between the active arm and the vehicle placebo arm of the number of new BCCs that developed over the 12-month period. 174 patients were enrolled within 9 months, last patient class visit was in November 2020. But regretfully, PellePharm's study did not meet the primary or secondary endpoints, even though 30% fewer new BCCs on average were observed in the treated patients at the end of the study. Following this failure, Neopharma terminated the license agreement with PellePharm, according to which Pellepharm received $70 million equity financing and was to receive up to additional $690 million on completion of certain regulatory commercial milestones in addition to double-digit royalty payments. As a result, PellePharm -- patidegib was offered for sale. And in January of this year, we acquired this from PellePharm. The key people of PellePharm are consulting us, including the co-founders, Dr. Ervin Epstein and Dr. Jean Tang, so there is continuation between what has been done in the past and what we plan to do, which I find important to increase the probability of success. We dedicated significant efforts to understand the possible reasons for PellePharm's failure, and we believe we have a good understanding of the reasons and ways to overcome them. Our first insight has to do with the baseline number of BCCs in the PellePharm Phase III study. You can see that in PellePharm's study, the participating subjects had anywhere between 2 to 67 BCCs at the baseline, as PellePharm also allowed patients with as low as 2 BCCs at baseline to be included. This is clearly an insufficient BCC by the level to demonstrate prevention of new BCCs after only 12 months of treatment. In order to be able to demonstrate prevention of new BCCs, only subjects with proven tendency to generate multiple BCCs, and not only a few BCCs, should be included. Otherwise, as indeed happened in PellePharm's study, the advantage of the active arm of the vehicle arm will fail to attend statistical significance in a sample size of just 174 patients followed over 12 months prior. Now let's look at how PellePharm's including patients with as low as 2 BCCs in the baseline affected their efficacy results. You can see that PellePharm observed a mean of 2.84 new BCCs in the treated versus a mean of 4.03 BCCs in the vehicle arm, reflecting 30% fewer new BCCs on average in end of the study. You can also see that at the end of the study, PellePharm observed much fewer new BCCs in total in the treated arm versus the vehicle arm, 165 versus 262, namely, almost 100 fewer new BCCs in total. But because of the limited number of enrolled subjects and high variability in the results, the calculated beta in PellePharm's study was not statistically significant. We realized that if you want to demonstrate the prevention effect of SGT-610 but we don't want to enroll hundreds of subjects, then we must increase the severity of the disease at baseline in terms of the number of BCC lesions. Therefore, our Phase III study only includes subjects with at least 10 BCCs present in baseline. Of course, increasing the bar from 2 BCCs at baseline to 10 BCCs makes enrollment more challenging. However, after talking to clinical centers and given PellePharm's experience, we are confident that we can complete enrollment within 12 months. Our second insight has to do with the only specific genetic mutation in hedgehog signaling pathway that is relevant to patidegib. You heard from Dr. Epstein that patidegib is a hedgehog inhibitor that antagonizes a transmembrane protein called Smoothened which under ordinary condition is antagonized by the tumors suppressor gene, PTCH1. When PTCH1 gene is mutated, is most important is excessive [ new release ], and basal cell tumors divide uncontrollably. Patidegib suppresses the Smoothened protein, and it does not act on other gene involved in Gorlin syndrome. Nevertheless, in PellePharm's study, patients were included based on clinical observation without reference to a specific mutation. With this in mind, only subject having PTCH1 mutations are included in our ongoing study. This refined inclusion criteria does not mean that SGT-610s application will be substantially limited, but rather that we still have the ability to help the vast majority of Gorlin syndrome patients, as it is estimated at 85% to 90% of them have mutated PTCH1 gene. Our insights are supported by [indiscernible] analysis conducted in PellePharm's study subpopulation with PTCH1 mutations and with at least 11 BCC in baseline. Here, we found that at the end of the study, there were 48% fewer new BCCs on average in the treated arm than in the vehicle arm, 3.77 versus 7.24 on average, and the p-value was statistically significant at 0.0098. Please remember this 48% fewer BCCs, as I will refer to it later. As for safety, in PellePharm's study, topical patidegib was found to be as tolerable as the vehicle. So we don't expect any safety issues. It is also clear that the idea of Dr. Epstein and his colleagues of using a topical route of delivery for a hedgehog inhibitor instead of an oral route prevents the significant systemic adverse events we see with oral hedgehog inhibitors. In line with our insights, we have tightened the inclusion criteria in our ongoing Phase III trial to improve the probability of demonstrating efficacy. Our primary endpoint is to assess the number of new BCCs at month 12. We powered the study at 90% to achieve the value of 0.01. Our major secondary endpoint is to assess the number of new surgically-eligible BCCs at month 12, and we powered the study at 90% to achieve the value of 0.05. Surgically-eligible BCCs are defined as any BCC removed during the study or a BCC with a diameter greater than 5 millimeters. Taking into consideration similar discontinuation rates to those of the PellePharm Phase III trial, we have calculated that if we limit ourselves to PTCH1 positive patients having at least 10 PTCH BCCs at baseline, then we will need to screen about 140 subjects, to continue with 125 randomized subjects and to end with 100 completed subjects in order to achieve discrete values at 90% power. Considering PellePharm's quick rate of enrollment, 174 subjects were enrolled within just 9 months. And after talking to clinical centers, we estimate that this trial can be completed in 2 years from first patient's first visit to last patient's last visit at about 40 clinical centers in the U.S., Europe and the U.K. We also introduced some additional improvements to PellePharm's trial design, requiring all clinical sites use a dermatoscope in order to determine if a lesion is BCC or not and mandating the [ central photo radio ] committee to finalize this decision in order to improve reliability, and reducing the number of site visits from monthly to quarterly in order to increase compliance and reduce cases of missing data. For all these reasons, we believe we can successfully develop SGT-610 for Gorlin syndrome patients. As you heard from Julie, there are about 11,000 Gorlin syndrome patients in the U.S. The diagnosed adult Gorlin syndrome population is estimated to be 7,500 in the U.S., 6,100 in the EU and 4,500 in the rest of the world. Therefore, SGT-610 has orphan drug designation status in the U.S. and the EU. It also has breakout therapy designation status in the U.S. as potentially the first and only therapy for Gorlin syndrome to prevent new BCCs. According to the Voice of Patient Report done by the alliance 2 years ago, a clinically meaningful outcome for Gorlin syndrome community -- for the Gorlin syndrome communities, a 30% reduction in BCCs. As you remember, I said earlier, our [indiscernible] analysis indicated 48% fewer BCCs on average in the treated arm than in the vehicle arm. So if achieved, this should result in a profound and meaningful change in the life -- in the quality of life of patients. We expect that at peak, half of the diagnosed Gorlin syndrome population will be treated with patidegib, 4,000 in the U.S., 3,200 in the EU and 2,000 in the rest of the world. With this in mind and assuming a modest orphan drug pricing, SGT-610 is expected to contribute, at peak, $320 million in global net sales, with most of the revenue coming from the U.S. I hope that after hearing Julie, Dr. Epstein and me, you share our viewpoint that Gorlin syndrome patients desperately need a drug like SGT-610 and the potential market opportunity exceeds $300 million; that our topical SGT-610 is safe and has a well-established mechanism of action in Gorlin syndrome; and that the measures we took in our ongoing Phase III trial to increase the likelihood of a successful efficacy outcome are [indiscernible]. Thank you for your attention. I asked our VP of Clinical and Regulatory Affairs, Dr. Ofra Levy-Hacham; and our CFO, Gilad Mamiok, to join us for the Q&A session. And we'll now take your questions.

Perfect. Thanks, Alon. So we'll begin our question-and-answer session right now. As a reminder to our audience, if you'd like to submit a question, you may do so by using the Q&A text box at the bottom of the webcast player or by e-mailing your questions to questions@lifesciadvisors.com. So our first question comes from Gary Nachman from Raymond James.

First question is for Dr. Epstein. So what has your experience been with the oral hedgehog inhibitors, specifically for Gorlin syndrome. It sounds like you've been using that a fair amount off label. And how do you manage the efficacy versus the clear tolerability issues that you highlighted there? And then, I guess having this topical hedgehog inhibitor, if Sol-Gel is just doing the studies in the face, would you just use it for the face if that's the indication? Would use it in other parts of the body? And what sort of efficacy would you need to see for that to be considered clinically meaningful relative to what we saw with the PellePharm Phase III?

I would like to talk first about your second question, which is what about using it off the face. And there are 3 reasons really to focus on the face in the clinical trial. Number one, that's the place that the patients hate the most, the surgery, the pain, it's right there where you live as opposed to way out on the toe or some place, and the scarring and the bandages are the most unpleasant. The second is, it's important to have a trial where if you're going to put on a medicine, you could put it on by yourself, you don't have to ask your partner to put it on your back. And the third reason to use the face is it has landmarks. You can go back and find some -- this exact spot that's 3 centimeters to the left to the left eye, whereas on the scalp, it's very difficult to see where you are, and even on the back, it's hard to get back to exactly the same place. So you can see what's happened to the same lesion over the course of the year. So that's why we focused on the face. Do I think it would work elsewhere? Yes. Do I think people will want to put it all over the body? Well, I don't know. Certainly, if they had a lot of lesions on the scalp, that's a hard place to put it on. But if on the arms or the chest, and patients with Gorlin syndrome do seem to have different phenotypes, not only in the sense of how much -- based on how many basal cell carcinomas they get, but also in where they get them. So there are people who get primarily lesions on the scalp, others who get it on the face and others who primarily get it off the face. Our trials in a normal people who put it on every place twice a day -- actually, they came to a clinic and had it put on by staff, so there was -- compliance was not an issue -- every place, from the forehead down to the navel, did not show a significant worrisome increase in the systemic levels in the plasma levels of gel -- of active drugs. So we would think it is likely that putting on all over or over larger areas of the face would not lead to a high enough systemic absorption to cause the typical side effects of hair loss. They saw some muscle cramps. So I do think it would work elsewhere, but we don't have the studies, the data to actually show that. But I think it would work. And I don't -- I think that the confinement confining it to the face is really for the purpose of the clinical trial for the reasons that I suggested earlier. And now I've talked so much that I can't remember the first question. You asked really about handling the side effects.

No, I was talking about what would be clinically meaningful in your mind, what you would hope to see in this new Phase III. Would it be a 30-plus percent reduction in new BCCs, the 48% reduction? What's the bar there? You think that...

Of course, it's not my bar, it's the FDA's bar. Secondly, I would hope for 48%. I would hope that we and Sol-Gel, the PellePharm trial and Sol-Gel trial with some overlapping sites and a very similar protocol would give you the same results. That's what, of course, everybody hopes in science, as you well know. Does it always work? Of course not. But that's why probably 30% -- if the patients say 30% is enough, then that's good enough for me, but I would hope more. And I'd like to also say that my prejudice, but I have no data for this, and the one thing I've learned in 50 years of science is that thinking that things make sense doesn't necessarily carry over into what actually works. But it is my belief that all treatments are easier to have more efficacy in smaller lesions. So when we are treating by putting it all over the face, one cell tumors, and I think we're actually going to kill those. It's not just going to be that they're going to come back when we stop it. But we probably actually also will eventually kill those. And the ones that are not -- we're not killing or that eventually, those are going to be cut off if you can't actually keep them from coming back. So eventually, I think we're going to have higher efficacy the longer we use. That said, I admit that in the quarterly looks at the efficacy that PellePharm had, there was no better efficacy between month 9 and 12 than it was between month 0 and 3. But I think after several years, it's eventually going to be more effective. And that's, I think, the best I can do.

Okay. That's great. And then a follow-up for the company, Alon, maybe you could just talk about the conversations you had with the FDA to ensure that this is the right trial design for this specific patient population? And just your comfort level that you'll be able to identify these patients that have the PTCH1 mutation and also the greater than 10 or 11 BCCs? And maybe, Julie, first, I want to acknowledge your presentation. I thought it was really moving and it's incredible work that you do. So it was tough to watch, but really great to see. So I'm also curious how you're working with the company to try and help facilitate them being able to identify these patients to get them into the study as quickly as possible.

So Julie, let's start with you, and then we'll elaborate about our communication with the FDA and we'll address your questions.

Thank you, yes. So the Gorlin Syndrome Alliance is partnering with Sol-Gel and sharing information about the trial with our community in a variety of ways, including our e-mails or including e-mails, website and our social media channels. We did this with PellePharm as well. We also have -- in our database, we have a number of patients really from all over the world, including the European sector. So we'll be with them that way and sharing information.

Thank you, Julie. As for FDA communication, so FDA supports the design that we have proposed. The primary endpoints in the design do support the claims we want to demonstrate within the study, along with the duration that we proposed. As for your second question and third regarding having PTCH1 positive patient and more than 10 BCC patient, According to PellePharm's study, and this is also available in the literature, more than 80% of the Gorlin patients do have the PTCH1 mutation. So we believe that this will not be a hurdle between our enrollment. As for the more than 10 BCC, facial BCC, Julie has demonstrated within the survey, these are easily been available since most of Gorlin patients do tend to have a lot of BCCs on their face. Just for a case, our first patient already have more than 20 [indiscernible] on his face, so we are on the track.

Okay. That's helpful. And actually, just a follow-up. Do you think the indication ultimately will be for Gorlin syndrome broadly? Or will it be very specific to the patient population that you're studying? And I guess once it reaches the market, Dr. Epstein, you would use it in any patient where it made sense, but I'm just curious if you think the FDA is looking for a broad Gorlin approval here or if they're going to be very specific with the patients that you're studying?

It will be specific for the mutation for sure, but not for the severity.

Okay. And Dr. Epstein, you would -- if it's available, you would use it strictly for PTCH1 patients, but you would use it for any severity the way it was just described? Or would you consider using it even for non-PTCH1 patients who are broader BCCs, even if it's effective?

I would think the latter. In other words -- I'm not sure, wait a minute. It's for people who have demonstrable PTCH1 mutations, which is easy to demonstrate, of course, with modern technology, and it would be for any level of severity. The patients would really love to start their children on it before the tiger bites down, as Julie movingly put it. The problem, to be straightforward, is that in mouse models and in humans who have been treated as children with oral hedgehog inhibitors, there is a closing of the efficacies and a short-lived dwarf outcome. So currently, we're only using people over 18 or in the trial and it will require -- we don't know how much is necessary to be in the plasma in order to close the efficacies. Our amounts in the plasma as compared to when the same drug was used orally are orders of the magnitude lower. So we would hope that topical use in children would not be -- have the side effect of closing efficacies, but that remains to be seen after we show for certain that we have 48% inhibition of new tumor growth.

Our next question comes from Ram Selvaraju from H.C. Wainwright.

So firstly, I just wanted to ask a clarificatory question to Dr. Epstein with respect to the difference between application of hedgehog inhibitors orally versus topically. Can you clarify whether the ability to apply patidegib topically is a function of the physicochemical characteristics of the compound itself or the formulation, or a combination of both? And as an adjunct to that, whether you can comment on whether or not you think it might be appropriate or possible to deploy an orally bioavailable hedgehog inhibitor like the 2 that are already approved in conjunction with the topical hedgehog pathway inhibitor like this one in the same patient. Because obviously, if you apply a topical hedgehog pathway inhibitor, you can treat the BCCs, but there are other manifestations of Gorlin syndrome that may not be addressable purely via the topical delivery route.

Good questions. The first, is it a matter of what is the compound itself or is it a matter of the vehicle is what you're asking, I believe. And that is not my expertise. But the people who made up the gel, who were very clever at doing that, said that basically, their vehicle gets it into the top layer of the stratum corneum and through the stratum corneum, which is the main barrier. But after that, it's all the compound itself, not the vehicle. And you can see that the compound itself in similar vehicles in the mouse models partitioned -- our compound partitioned very well with a high amount in the skin at a relatively low amount in the plasma, whereas some of the others had the opposite, a high amount in plasma and a low amount in the skin. So that, I think, is the answer to that question as best I can do. The second question is what about using it in combination. And I hope I won't offend Alon's or Ofra's feelings, but we had long conversations with the makers of vismodegib, Genentech, down the street from us here. And the people who evaluated it were very enthusiastic about it. They thought it was a great idea that in -- with oral use, people are using it for a while and then stopping it for a while until enough comes back and then they start it up again. And those drug holidays for the company are called revenue holidays or revenue deserts. And the people who evaluated this, they had a team of about 2 dozen people looking at us for couple of months, were very enthusiastic about the whole idea of using them in combination. Unfortunately, the senior management said, let's focus on pancreatic cancer. And I can understand that, but nonetheless, it was very disappointing. So I do think you're absolutely right. And in fact, Genentech has an offer on the table for Sol-Gel that if they want, they'd be -- Genentech would be happy to give free drug to a trial to study the 2 of them in combination. I do think that's something we could use in the future, especially with advanced BCCs, which is where Genentech's and Novartis' drugs are approved.