Sun Pharma Advanced Research Company Limited (SPARC.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sun Pharma Advanced Research Company Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jaydeep Issrani from SPARC. Thank you, and over to you.

Thank you, Yash. Good evening, ladies and gentlemen. My name is Jaydeep Issrani. I head the Business Development and Investor Relations at SPARC. On behalf of SPARC, I welcome you to SPARC's yearly update on strategy and program updates. I'm joined by our CEO, Mr. Anil Raghavan; and members of SPARC's senior management team for the call today. The format for today's discussion will be similar to our previous presentations, that is SPARC presenters will walk you through the slides, after which the call will be opened for questions and discussions. The presentation for today's discussion was shared earlier. We hope you have received it. Before we start today's discussion, I would like to remind you that our discussion today includes forward-looking statements that are subject to risks and uncertainties associated with our business. Hence, actual results may be different from those projected in today's presentation. I'll now hand it over to Mr. Anil Raghavan for his presentation. Over to you, Anil.

Thank you, Jaydeep, for the introduction, and good evening, everyone. It gives me great pleasure to welcome you to SPARC's 14th Annual Portfolio Update. Thanks so much for your continued engagement and continued trust. We couldn't have reached where we have reached without your steadfast support every step of the way. Thanks again, and thank you for taking the time to be with us today. As Jaydeep said, we will follow our regular discussion flow, starting with a commentary on our strategy and operational priorities, followed by a report on the progress of key programs. My intent is to capture the most important elements of our post-PROSEEK plan and set expectations for the short to medium term. I will also touch upon several programs, which we do not plan to cover in the program update. On that part of the presentation, we will focus on reviewing the progress made on 2 specific programs, which is super important for SPARC going forward. I'm delighted to introduce Dr. Mudgal Kothekar and Dr. Sandeep Inamdar, who recently moved to therapeutic leadership roles for immunology and oncology. Mudgal and Sandeep have been with SPARC for many years and will play important leadership roles in shaping our portfolio in their respective therapeutic domains. Mudgal will discuss our SCD-153 program for alopecia areata and potentially other dermatology autoimmune conditions. Sandeep will go over the MUC1 ADC program, that's SBO-154 with us. So with that, let's start where we have left off in our last call. Slide 4, please. This is an overview of the PROSEEK pool results. As we mentioned during the interim analysis call, we've closed the study at 491 patients, almost immediately after the interim analysis results were out. We have also discontinued the long-term extension study with roughly maybe under 100 patients completing that leg of the program. We have now completed the full analysis, including the planned biomarkers, and we've also completed several post-hoc questions we had. Unfortunately, the results from the full analysis closely matches the interim analysis trends that we shared with you. The MDS-UPDRS Part 3 trends are shown here in the graphs below, mean of the change from baseline was the primary endpoint, which also showed a similar trajectory without adjusting for TROP. That's not on the chart here. But in a model-based analysis adjusted for TROP during drug arm marginally deteriorated and underperformed the placebo. The placebo performance in the study has been a clear outlier with a modest improvement in MDS-UPDRS Part III versus both natural history and trends that we have seen from other trials in early Parkinson's disease. And on biomarkers, while most markers mirrored the clinical trend, a key mechanistic marker that's alpha-synuclein in CSF bugs that trend and demonstrated a reduction in the high dose arm, a result that actually supported the SEA binding hypothesis. Pharmacokinetics PK from both plasma and CSF were consistent with prior studies and expectations. In fact, in the CSF, even at the lower dose, we had multifold coverage for the SEA IC50. We also analyzed the LTE trends, which was not controlled part of the study. So we didn't have a placebo. All placebo patients transitioned to high dose post week 40, in line with the LTE study design. Patients who remained on the drug continue to deteriorate slightly when we adjust for TROP-2 using a statistical model. We will use something called MMRM, a widely used statistical technique for making collections for random-reducing data. While it is difficult to draw a firm conclusion without a placebo arm, it appears that these patients deteriorated slower than expectations based on natural history studies even in the long-term extension arm. We plan to review the full results with our Scientific Advisory Board later this month and looking forward to publishing the study formally as soon as possible. That's all what I wanted to say about PROSEEK at this point. We will revisit PROSEEK during the Q&A if you have questions, I'm sure some of you may have. Let's move to Slide 5, please. Understandably, PROSEEK was a significant turn for us. Now as we pivot from that chapter, we have to address the important top-of-the-mind questions that ourselves and our investors have regarding the value of the residual portfolio and how do you resolve them. We spent a lot of time after PROSEEK data readout, analyzing our other active programs and potential options and settled on 3 important priorities for SPARC going forward. First pillar is having an optimized portfolio with a narrow therapeutic area focus and SCD-153 and SBO-154 as anchor assets, that's Itaconate and MUC1 ADC. On -- secondly, we have to adopt a more flexible business model for resourcing and encashing our assets and capabilities. This means, for example, a willingness to partner key assets much earlier than we have been traditionally exploring or we were comfortable exploring. Finally, we need to have a sharper focus on execution of short-term cash-generating opportunities. And we have several milestones with varying degrees of likely impact, varying probabilities of success and time to even horizon. Now, let me take -- we are going to talk to all of these pillars in a bit more detail in the rest of the presentation. So let's start with Slide 7 on portfolio optimization. Let's first look at what is not here, neither degenerative diseases is missing. While our challenges with vodobatinib, we're truly multifactorial. A couple of key ones stood out on reflection. Reliability of animal models and variability of appropriate clinical trial design in terms of duration of the study, number of patients needed, availability of reliable biomarkers, et cetera. These were 2 of the most important ones. We have several programs in the neurodegenerative diseases area going into the PROSEEK data event, pursuing similar or complementary hypothesis. Since the outcome of PROSEEK, which was the real downer for these programs, pending our review of ways to main of our portfolio, and they are somewhat natural choices for us, both from an opportunity attractiveness standpoint and capability maturity perspective. Oncology represents significant [indiscernible] disease burden and pricing support in spite of intense competition. We will focus on 2 key themes, which enjoyed a lot of success of late, smart delivery of cancer drugs mediated either through an antibody or small molecule ligand. We will look to deliver a variety of payloads, including chemotherapeutics, immune activators and other targeted therapies. And as a team, we are excited about is new synthetic locality target, which can work in the SPARC resistance or in new synthetic lethality players. We have a couple of interesting ideas there that we are currently pursuing. So one key element of this approach, especially the smart therapeutics part is its modular nature. Many of the components, we're targeting was linkers or payloads can work in multiple combinations and permutations. This gives us significant efficiencies in terms of discovery and early preclinical development. Immunology is a bit more nuance picture. The autoimmune field has seen a significant level of success, moving the standard of care substantially in recent past, mostly on the back of resounding successes antibodies blocking see cytokines with IL-23 and IL-17 in psoriasis and 4 and 13 in atopic dermatitis. The field really has suboptimally added need sort of safe oral or topical alternative for biologics, depending on disease severity. JAK inhibitors, which provides an effective alternatives have their own liabilities on safety, that's where SPARC is trying to position in immunology. Novel mechanisms, which can lead to safe topical alternatives to biologics and JAK. We believe it will also make another key [indiscernible] need in the space. That's a combination, which can improve efficacy and therapeutic window, and we will have more to say on that later on. Now, let's move to Slide 8, please. So we have a bit more on 154 and 153 program. We've introduced these programs in our earlier calls last year. Let me give you a few recap of these programs as a refresher. SBO-154 is an antibody drug conjugate which targets a novel combinatorial lipid of the tumor-associated antigen called MUC1. As you know, we in-licensed these unique antibodies from the University of California startup called Biomodifying. 154 is the first product on the platform, and it leverages a robustly validated linker and payload that's MMAE using a [indiscernible] linker. We've already achieved preclinical validation for several key aspects of the hypothesis, which we will go over in the next slide. SBO-153 on the right side here is a product of an analog of an endogenous immunosuppressive metabolite called itaconate, which is originally developed by a team at John Hopkins. We have built the 153 program on multiple topical formulations of this itaconate analog, which we believe can be effective intervention in autoimmune disorders like alopecia areata and vitiligo. The program was completed its first in human, single ascending dose recently and multiple ascending dose study in alopecia areata patients is expected to start in early part of 2025. Mudgal will walk us through the program in a bit more detail. As I mentioned earlier, we are really excited about the platform nature of both these assets. Upon clinical validation, both assets can deliver multiple indications and products in the monotherapy setting as well as in combination. And I want to talk a bit more about the promise of these 2 opportunities in the next couple of slides before I move on from the portfolio optimization priority, starting with Slide 9. The ADC field has been on fire recently on the back of the sectors of products like HER2 and TROP-2 and in fact, a lot more is in the work, making ADC as one of the hottest busiest areas for innovation and oncology and hopefully, even beyond, particularly in immunology in the future. What is making the search possible is the evolving maturity of linker-payload technologies. That's a big factor, and also the opening of several key technology elements such as linker systems, again, giving broad freedom to operate from an IP perspective. The field is also learning from the growing clinical experience, both optimal bars, drug antibody ratio as effective ways of management of typical adverse events and viable dosing regimen and so on and so forth. SBO-154 looks to leverage some of these key learnings from the field's recent success, with a potentially novel targeting [indiscernible] that we see a domain of MUC1. Why is that important? Let's go to Slide 10, please. As you can see, a lot of interim activity that we are currently witnessing in the ADC space is driven by classic HER2 mentality. Take a look at the antigen's targets. A lion's share of these programs target less than 10 cancer specific antigens. Even within that distribution, 2 antigens HER-2 and TROP-2 account for a vast majority of current active programs. In our view, HER-2 and TROP-2 both have already failed the classic ADC with chemotherapeutic payload, which is what almost all of these programs are trying to do. So there's a real dearth of potentially high-impact targeting agents, and that's what we believe will achieve MUC1 ACA at distinctive edge. MUC1 and Alpha has been and continues to be a target of active interest for ADCs and even other approaches like cancer vaccines. All of these programs need to swim against substantial blood levels of cleaved alpha, which makes tumor targeting difficult. 154 overcomes that issue by focusing on the FCA combinatorial epitope, which improves the tumor specificity significantly. We now have, as I said, validation with 2 key elements of this idea. That's the relatively low levels of floating SAE compared to the floating alpha in-patient plasma. And appreciable serves the expression of the epitopes of our interest in highly prevalent tumor types. Sandeep will later in the presentation talk to both the elements of data validating our hypothesis. As I said earlier, if we successfully reproduced these outcomes in the clinical setting, that gives us a new viable targeting entity, which can be used extensively with other types of modalities such as other cytotoxins, immuno-activator and T cell engagers and that's certainly exciting. Now, for a brief update on 153, Slide 11, please. This slide particularly builds on a couple of points I mentioned earlier, in spite of its enormous commercial success, the clinical impact of biologics is limited to more advanced stations quite severe manifestations in certain businesses like atopic dermatitis, psoriasis or IBD, rheumatoid arthritis, et cetera. The number of lives impacted, it's far fewer than patients who have managed the small molecule orals or topical. The real issue here is the stagnation in nonbiologic standards of care, both in terms of safety and efficacy. So moving in the therapeutic -- so moving the therapeutic needle will require new approaches with the expanse choice for physicians and patients fighting these difficult diseases, either a stand-alone agent or potential combination partners. That's the real promise of SCD-153. We have learned so much about the pathway and the new chemical entity itself in our productive collaboration with JHU and we're really looking forward to the second phases of clinical development. We will review our signs and other early clinical outcomes that we had from the Phase I so far later in the presentation and MUC1 concern. So let me leave the segment with 2 or 3 key messages. SPARC will pursue select team in oncology and immunology for the portfolio build going forward. That's leveraging tumor-specific delivery options and synthetic lethality in oncology, and normal pathways, which can become topical options in certain dermatology autoimmune conditions. SCD-153 and SBO-154 of potentially high value options an ideal vehicle to test this approach with great upside if successful. And we will direct our resources preferentially in developing these programs to its clinical inflection points and this will remain the primary focus of our 12 to 6 SPARC. Now, let me quickly go over the next few slides -- Sorry. Let me go over the next 2 tenets of our strategy going forward, starting with a key shift on our partnering approach and I will use the SBO-155 program, we listed the change we are trying to highlight. Slide #13, please. Clearly, one of the challenges we have coming out of a costly clinical data setback is the resource constraints that we have to navigate. Committing to continued developing the prioritized assets, and consumer significant share of resources that we have access to, that leaves several important programs in our portfolio were very difficult choices. Historically, our intent has been to stay onto the program, at least till we obtain a clinical proof of concept and a late-stage clinical development. We need to reexamine that concept, and that's what we are intending to do. We will look for partnerships at an earlier stage of development. In addition, we will also look for alternative structure like asset-specific NewCo creation. We have a specific example for this shift in network coming out of our work with UCSF. And I want to go over the program and the construct in a bit more detail in the coming slides. But before I do that, let me also make a brief comment on another business model opportunity, which we have shied away from in the past, that's leveraging our discovery and translation capabilities in a services model to derisk SPARC. Even though there are really strong tailwinds in terms of market forces supporting India, India-based service deliveries and India-based servicing businesses and a real need to derisk part for downside protection, we continue to stay on the sidelines for several reasons that we have spoken about in many of our past calls. While that remains the case, we will continue to review our options and risk carefully and take a final position on this opportunity in the coming year. Now to get back to your collaboration with UCSF, Slide 14. This slide captures the broad time lines of our relationship with UCSF. UCSF was one of our earlier strategic collaboration with the master collaboration agreements taking shape in 2017. The program that led to SCO-155 was conceived in 2020, and we could identify a lead candidate with preclinical validation, 2 years flat. We are proud of the quality of collaboration we have in UCSF and the accelerated nature of the early development. We've explored setting up at NewCo for advancing this asset, and that's all related to the formation of Tiller Therapeutics. The company founded by a team of UCSF investigator, SPARC and UCSF itself. Earlier this week, we announced the successful closure of the letter of intent between SPARC and UCSF to go ahead with this construct. SPARC and UCSF will license the rights to this joint IP, to Tiller Therapeutics and Tiller will raise external dollars to fast-track SCO-155 to the clinic. We believe this is an exciting business model option, which we can explore with many other programs in our early stage pipeline, which in the broader scheme of things, allows more shots in the golf and certain level of risk mitigations at the portfolio level. Slide 15 has more color on the program per se. PSMA has been targeted for tumor-specific delivery of chemotherapeutics for a long time. The field had its first major breakthrough with the radioligand therapy called Pluvicto, which uses a small molecule ligand of PSMA to deliver radiotherapy. In spite of this impressive data early on, the RLD field faces many challenges, leaving alternatives to come in and the improved outcomes. There is a significant opportunity to reduce the availability of therapeutic benefits, plus improved overall safety profile, particularly reducing the bone marrow toxicity. Alternatives can also help overcome limitations in terms of lifetime hard cast in addition to all the logistical challenges in putting together and distributing radiotherapy. SCO-155 provides a differentiated approach you think a synthetic PSMA ligand we're targeting, but delivering alternative payloads. We believe this approach helps to overcome some of the limitations of the radioligand therapy, as well as PSMA targeted ADC is tested so far. In an indication where, unfortunately, there is progression with tragic quality of life and survival implications, SCO-155, we believe can offer a very useful statement options. Let's please move to Slide 16, which discusses some illustrative data on this program. The graph on the left highlights efficacy in an in vitro system. The chart floors PC3 prostate cancer cells to both PSMA over-expressing with PIP cells and PSMA null PC3-FLU cells. SCO-155 efficiently inhibits the PIP cells at less than a picomolar IC50 and another 1,000 fold advantages over the null FLU cells. And over on the right side of the chart, we have an in vivo proof of concept to PC3 Xenograft model. Our small molecule drug conjugate, a 60-microgram plus kilogram dose. It is tested in both people with xenograft against the vehicle, while SCO-155 in the FLU xenograft and vehicles in both xenograft, did not make any impact look at the chart curve on the over-expressing PIP model. It leads to a complete regression of the tumor. These and other critical pieces of data validating this asset, has paved this way to a set of IND-enabling studies, which are currently going on, setting up its clinical entry in the short to medium term. Slide 17, please. As I said earlier, Tiller Therapeutics was formed between SPARC at UCSF and its scientific founders. SPARC will receive 55% of Tiller's initial shares in 2 tranches. This equity will be issued can fall within 6 months of signing the definitive agreement. Tiller plans to build this pipeline, focusing on the small molecule drug conjugate modality with additional targeting ligands and payloads in a wide variety of solid tumor million. We are super excited about many things here. Firstly, SCO-155 as an asset, and its potential to emerge as a true alternative to other PSMA-targeted approaches, and that is for most. We are working with a very high profile and potentially high-impact team of scientific founders at Tiller. We believe in their ability to follow through and develop a pipeline using this approach. And finally, this experiment offers a viable alternative, as I said earlier, to advancing interesting programs, particularly in the phase of resource constraints. That's very promising as we continue to build differentiated preclinical programs, all fighting to find a way to clinic sooner than later. That takes me to the final set of slides on my part of the presentation, which aims to cover further short-term cash catalysts with the track -- which we are tracking very closely. Let's move to Slide 19, please. In the next few slides, I want to focus on 2 things. On the left bucket here, we have a bunch of short-term milestones with potential cash even. They come with a mix of probabilities, which will be difficult to estimate accurately at this point, but they all offer a definitive path to adding additional resources to support the prioritized programs and beyond. And therefore, very important. Equally important is optimizing our cost structure to the demands of our current portfolio and the intent. Not the structural adjustments, though, by finding ways to do more with less constantly. And we've done quite a bit of this since the weak interim analysis itself and may have potential additional adjustments to make in the coming year depending on where this is solved on the first bucket. Let's take a look. Slide 20, please. We have 4 programs which can potentially lead to cash-generating milestones in the short term. Let's go one by one, starting with Sezaby, which is our benzyl alcohol formulation, which got approved in November 2022. There are 2 potential opportunities which we are aggressively pursuing that's finding a way to convince the agency to reconsider the denial of the pediatric rare diseases voucher, which we believe we were eligible for. And secondly, convincing the agency to enforce the orphan drug exclusively that Sezaby was granted. I'll cover both these opportunities in a bit more detail in the next slide. Vodobatinib CMO part is the next one in the set. It has always meant that ahead for the PD program, and I will update you on where we stand at the moment on our efforts to find a development and commercialization partner. PDP-716 is another asset on chart potential access to cash. As you remember, we received a complete response letter, which primarily cited the unacceptable regulatory status of our API partner. Since then, we've replaced the API store and made several changes to the process, primarily moving to the higher volume capacity for the finished product manufacturing. On the partner end, Visiox went through a couple of ownership transitions involving a stack data, which did not conclude and the merger with another pharmaceutical company. We are working very closely with the current management of Visiox, that's a new name. The complete CRL response by the second quarter of the next financial year and ensuring a successful launch once we get the approval, which we hope to get some time in financial year '26 and PDP-716 launch as a significant milestone attached to it. We also made substantial progress with vibozilimod, which is a couple of Phase II studies targeting the MPSOs, I'll talk a little bit. I'll start with Sezaby over to Slide 21. Let me start with the caveat on the potential pediatric rare diseases voucher. This matter is the subject of an active litigation, and there are significant restrictions in terms of how much we can discuss. So I'll limit my comments providing necessary background and the potential impact in case with these possible outcomes. The PRD voucher program was established with an intent to incentivize development of better and safer medications for pediatric rare diseases. The PRDV stature lays down very specific qualifications for a product to meet in order to be eligible for pediatric rare diseases voucher. During the approval of Sezaby in 2022, FDA denied us the voucher and shared with us the agency justification supporting the denials. This is built on certain interpretation on the PD -- PRDV statute. SPARC believes that the agency interpretations led to an unfair denial of the voucher, and we are committed to exploring all available options to collect it. We have been on this path since the approval, including directly presenting our case for reconsideration to the agency. After exhausting all available reasonable options, the approach to cost directions in February 2024, and we expect the court the initial opinion on this matter in the last quarter of this financial year. We hope for a positive turn of events, and if we get a favorable outcome, as you can see from the rest of the slide, PRD is a highly valued tradable device, which has recently been sold for valued in excess of USD 150 million. Unfortunately, we should not go into any more detail on this year, given the active status of this matter, but as things evolve, we will keep you posted. And now on the exclusivity piece, let's see Slide 22. When the agency approved Sezaby, they granted SPARC a 7-year orphan drug exclusivity, which we enforced and will force marketers of unapproved formulations with phenobarbital IV out of the market. FDA follows a long-standing policy of risk-based enforcement of exclusivity. We've been working with the agency through the city to remove unapproved products from the market. We've been in touch with the agency through direct representation and using formal devices with Citizen's Petition. Given the complexity of the case, FDA has indicated to us they need more time to formally respond to our Citizen's Petition. In the meantime, we've been communicating with the marketer to unapproved formulation, making them all aware that they are not -- they cannot continue to be in the market that Sezaby is now formally approved in the U.S. market. And this is done through a formal cease and desist letter. We've also been working to make our supply chain more robust by adding additional external capacity, which is under agency review as we speak. We remain hopeful that the exclusivity will be enforced as it is just not a matter of getting unapproved products out. In addition to being the only approved IV phenobarbital in the U.S., ours is the only product, which does not have potentially a handful of excipient such as benzyl alcohol. FDA has a stated intent to remove products containing benzyl alcohol, especially when it is for significant potential risk to vulnerable population such as neonates. So going into 2025, all hands in the deck and staying helpful. Now, vodobatinib CML, Slide 23, please. Post-trophic interim analysis results went -- sorry -- we are engaged with the U.S. FDA for CML to have clarity on registration expectations as they agree on key elements of the Phase III design. The schematic here on the top half of this slide captures the expected Phase III program. There are a couple of major elements to note in terms of FDA expectations. First is the population, patients who have failed at least 1 second generation TKI. And we also need to include a smaller gross finding deck. So in this design, we have 20 patients at 200 milligrams and 130 milligram each, and we've kept this an integrated protocol, which can move to the Phase III part of the program post-analysis of the randomized dose-finding part. We have to get an agreement on the Phase III dose with the agencies at this stage before we initiate a fine formal comparative study against 500-milligram drug called bosutinib. Our intent is to keep the program at a state of readiness to launch a registration program, while we finalize the potential development and commercialization partner. We've initiated that process in the second half of this year and have completed our initial outreach. As you can expect, given the niche orphan indication, we are working with a limit theory here. We are working towards identifying a partner by the end of this financial year. And the final program on this list is vibozilimod, that's SCD-44, which is licensed to Sun Pharma on Slide 24, a brief update. As you know, we have 2 active Phase II trials of vibozilimod ongoing in atopic dermatitis and psoriasis. The most important update here is we've achieved enrollment cumulation for both these programs earlier this year. Atopic dermatitis is expected to read-out top line for 16-week part 1 in Q4 of this year, but psoriasis is expected to reach top line read-out in the first quarter of next financial year. At this point, we are really looking forward to seeing the data and looking forward to working with our commercial partner to advance the program to Phase III. Slide 25, please. So coming into this year on the back of PROSEEK outcome, one of the key objectives was find ways to preserve capital without sacrificing the most important portfolio priority. So as you can see, we have prioritized MUC1 ADC and itaconate AA program as our top execution priorities. Plus wanted to continue to shape these programs and its extensions preclinically without losing momentum in addition to exploring some of our more promising discovery programs. So what are the implications of this? We minimized all additional spend on the ongoing CML program and decided to focus on transitioning the asset to a potential partner with the fully conceived development programs safely. We found an alternative model for developing the SCO-155 as you explained. We are really excited about that. And -- even on our high-priority program, we significantly increased the India clinical component to keep the overall cost of the clinical PoC under check. On the organizational side, coming into this year, we were gearing up for a significant vodobatinib Phase III program or even multiple late-stage program. Given the early stage nature of assets, we are assigning higher priority to now. There was a significant mismatch between the scale of our clinical development team and our current scope or even the scope we are expecting in the short term. As you can see here on this chart, we are currently at 324 against the planned FY '25 headcount of 400 plus. This reduction is driven by significant downsizing in the clinical development capability here in India and also substantially in the U.S. Our U.S. headcount dropped from 37 at the beginning of the year to 7 currently. Our resourcing is certainly an evolving situation. We started the year with 15.2 million in operating cash. But with PROSEEK turning out the way it turned out, they had to rely on our smaller operating cash flows and approved debt limits, which are primarily coming from our promoter group companies or from commercial banks with Promoter Group guarantees. This may take us to middle of Q1 next year. As I mentioned, we have several potentially cash-generating capitals in the short term. We will review these and we will review where we stand at the end of the year before finalizing a medium-term resourcing plan for the company, and we will keep you posted. Slide 26, please. Here is a snapshot of a short- to medium-term execution priorities. I've touched on the objectives of the Sezaby, vodobatinib, PDP-716 and vibozilimod in detail in the previous slides, which I don't plan to go over again. And the additional objectives set for SCD-153 and SBO-154 on this slide. But in subsequent sections, Mudgal and Sandeep will give you additional color on the status and plans of these programs. So in closing, let me say, we have tried to turn the base and focus on 2 very promising assets, to have additional shots to start. There are several other interesting ideas preclinically, which involved data milestones coming here for in the short order. While we did this SCO-155 may give us a good template to progress this program without committing additional resources from our end. In the short term, we will stay super focused on achieving potentially cash-generating milestones, which we have listed in this presentation. Once we are through with that, we will take a hard look at where we are at the end of the year, and our options going forward and go from there. So thank you for your time today. I will transition the call now to Dr. Mudgal Kothekar for an update on SCD-153 and looking forward to seeing you back during the Q&A. Thank you.

Thank you, Anil. Good afternoon. So I'll just provide an update on the SCD-153 program for the treatment of alopecia areata. So we are on Slide 28. Alopecia areata is an autoimmune disorder that results in patchy hair loss as shown in the diagram on the left side. The disease affects 2% of the global population and the prevalence is increasing. Some patients, mainly those with a mild disease, they do recover spontaneously, but most of the patients need medical intervention for hair growth. The corticosteroids are often used off-label with limited efficacy and they carry a risk of side effects on the long-term use. Even the recently approved JAK inhibitors carry black box warnings for some serious side effects such as cardiovascular events, infections and malignancies. So in terms of the pathogenesis, the hair loss in alopecia areata is because of infiltration of immune cells, such as the CDS-positive T cells around the base of the hair follicles that attack these hair follicles and results in hair loss. Next slide, please. So this SPARC has developed a topical agent called SCD-153 for the treatment of alopecia areata. This is a first-in-class compound that targets the basic pathogenesis of the disease. SCD-153 was evaluated in an animal model of alopecia areata in mice. The pictures on the left side show the animals that were treated in this model. As shown in this diagram, SCD-153 at various doses and dosing regimens resulted in growth of hair in this model, while the animals that were treated with vehicle showed no hair growth. Now the figure on the right-hand side shows the hair growth in terms of hair growth index in these animals. So you can see that SCD-153 at most of the dosing regimens resulted in hair growth over time, but there was no hair growth in the animals that received vehicle R. The Dose 3 regimen one showed the most remarkable hair growth. So this animal model experiment showed that SCD-153 resulted in a dose-dependent increase in hair growth in the animal model of alopecia areata. Next slide. Now in the same study, we evaluated the effect of SCD-153 on the CD8 T cell infiltration around the hair follicles. The figure on the left side shows a reduction in the CD8 T cells at the base of the hair follicle in the animals that received SCD-153 compared to the animals that received the vehicles. As shown on the right side, there was a significant and dose-dependent reduction in CD8-positive and NKG2D positive CD8 cells in the skin of the animals that were treated with SCD-153. Now these NKG2D positive CD8 T cells are a type of CD8 T cells that are specifically implicated in the pathogenesis of alopecia areata. On Slide 31, is an update on the Phase I program. So we have recently completed a Phase I study in healthy volunteers. So in this study, single ascending doses of SCD-153 were evaluated in 5 sequential cores of healthy volunteers with 8 healthy volunteers in each cohort. So in this study, measurable concentrations of SCD-153 were detected in dermis and epidermis of the skin with increase in concentration with increase in dose, indicating that the drug is reaching its site of action. In terms of safety, SCD-153 was well tolerated up to the highest dose that was evaluated in this study. The maximum safe dose was not reached because the higher dose itself was totally safe. No subject in the study experienced any dose-limiting toxicity. Next slide. This slide shows the drug-related adverse events that were reported from the study. One subject at the dose level 4 experienced mild eczema and burning sensation. So at the dose level 5, 2 subjects experienced mild eczema and 1 subject experienced burning sensation. Now, all of these events were mild in severity and resolved without treatment. Next. On the next slide, Slide 33 is an update on the planned study. So we have planned for Phase Ib study in patients with alopecia areata in India. So the protocol of this study has been submitted to the DCGI. So this is a randomized double-blind study to evaluate the safety, efficacy and pharmacokinetics of SCD-153 compared to vehicle in alopecia areata patients. The flow chart shown here describes the overall design of the study that I will describe in short. In this study, patients will be randomly assigned in a 4:1 ratio, to receive SCD-153 or vehicle in sequential course of 4 dose strength of SCD-153. Initially, patients will be enrolled in the first cohort of the dose level 1. So these patients will initially receive a single application of the assigned treatment that is SCD-153 or the vehicle on day 1, which will be followed by safety assessments up to day 8. After the safety assessment following a single dose, these patients will continue to receive once daily treatment from the treatment period. So the patients that are initially randomized to SCD-153 will continue to receive SCD-153 for a total duration of 24 weeks. While the patients that are initially randomized to vehicle, they will be switched to SCD-153 at week 13 and then receive the active treatment for next 12 weeks. Patients will be enrolled in the subsequent higher dose levels after the evaluation of safety data up to day 22 from a previous dose level call. Next slide, please. Now to summarize, SCD-153 employs a new mechanism of action to address the complex immune pathogenesis that could be implicated in a diverse range of clinical disorders. In addition to providing an alternative option for treatment of a single agent, SCD-153 has a potential to be used in combination with established treatments to improve their efficacy in terms of durability of the response or in terms of increasing their responsibilities. The SCD-153 has a potential to be exploding multiple dermato immunological disorders and multiple topical formulations of SCD-153 could be explored. So in short, SCD-153 is a topical first-in-class alternative that has the potential to address the limitations of existing therapeutic options. On the next slide, that is Slide 35 are the projected milestones for this program. So the Phase Ib study in alopecia areata patients will be initiated in the quarter 1 of the next financial year. We will get the interim readout from this study in the quarter 1 of FY '27, and we target to initiate a global Phase IIb study of SCD-153 in Q4 of FY '27. So here, I conclude the update on SCD-153, and I hand over to Dr. Sandeep Inamdar for an update on SBO-154.

Thanks, Mudgal. So we will now shift our focus to SBO-154 an MUC1 antibody drug conjugate with monomethyl auristatin E or MMAE payload being developed for the treatment of multiple advanced solid tumors. The next slide. So MUC1 is a highly glycosylated transmembrane protein consisting of N-terminal alpha subunit, a membrane proximal beta subunit and a short cytoplasmic tail. It is widely expressed in normal glandular epithelial cells, such as the lining of the gastrointestinal and respiratory tract. It is normally expressed exclusively on the apical of granular surface of the epithelial cells. However, during malignant transformation, there is an increase in the cell surface expression of MUC1 along with the change in the normal patterns of the expression, resulting in MUC1 expression across the entire cell surface in gastric cells as opposed to the apical expression that is seen in normal cells. This change in expression patterns may allow anti-MUC1 ADCs to selectively target the tumor because the apical surface in normal tissues is not usually accessible to administered drugs. The next slide. SBO-154 is a first-in-class humanized IgG1 antibody, targeting what is known as the SEA domain of MUC1. The SEA domain is located in close proximity to the cell surface at the junction of the extracellular alpha subunit and the partially embedded beta subunit. Historically, it has been easier to develop antibodies against the alpha subunit, particularly the VNTR region. And therefore, most of the previous clinical efforts that have been directed against this region of the protein. However, the VNTR region is subject to significant proteolytic cleavage resulting in a large amount of circulating MUC1 in the peripheral circulation that may have originated from the tumor cells. In fact, the well-known cancer antigens, CA15-3, CA27-9 that are overexpressed in breast and some ovarian cancers are circulating MUC1 entities that have been cleaned off from the tumor cells. Large amounts of circulating alpha subunits in MUC1 in the peripheries may sequester or bind to exogenously administered therapeutic ADCs, resulting in a sync effect, thereby limiting the access of the antibodies to the actual size of tumor. Since the SEA domain is not subject to the same level of proteolytic cleavage as to the VNTR region, it is unlikely to be subject to the stick effect in the plasma. Next slide. SPARC has evaluated the cell surface levels of SEA domain MUC1 in various patient derived tumor issues using a proprietary immunohistochemistry asset. We have seen high levels of SEA domain-specific MUC1 expression across a variety of common tumors such as the adenocarcinomas, ER-positive breast cancer and ovarian cancer. The median H score, which is a measure of cell surface expression of the protein exceeded 200 out of a maximum possible score of 300 in most of these tumors that were predominantly Stage IV tumors. For context, an H score greater than 100 would be considered moderate and scores exceeding 150 are generally considered high. It also appears that the level of MUC1 expression increases with increasing stage of the disease. Amongst these, breast and lung cancer samples had broad circumferential expression. The expression pattern in ovarian and pancreatic cancer was predominantly apical, however, given that tumor generally use the typical glandular architecture that is present in normal tissue, the extent to which this apical expression will restrict access to SBO-154 is unclear. However, given the very high expression levels in ovarian cancer, we plan to enroll a cohort of these patients in our Phase 1 studies, which I shall discuss in the next couple of slides. So in order to further test the sync effect hypothesis, we have also evaluated the levels of circulating C domain MUC1 and compare that to the VNTR domain in plasma samples of patients with advanced cancers. Across all tumor types tested, we find that the levels of circulating SEA domains are significantly lower than the VNTR domain from the alpha-subunit indicating that the SBO-154 may not suffer from the same sync effect that impacted the earlier generations of MUC1 targeted cells. Next slide. We have evaluated the activity of SBO-154 in, in vitro cell lines and in vivo animal models with different levels of MUC1 SEA expression. The in vitro cytotoxicity data are depicted in the table at the top of this slide, where it's evident that SBO-154 shows higher potency as seen by lower IP50 values in the higher expressing Colo-357 cell and MCF7 cell line compared to the lower expressing HT29 cell line. Similarly, when the Colo-357 cells were xenografted in new miles, the tumor volume reduction was significantly greater upon treatment with SBO-154 compared to vehicle control. In contrast, SBO-154 resulted in relatively modest reduction in tumor volume in the HT29-xenograft study indicating that the preclinical efficacy of SBO-154 correlates well with target antigen expression. Next slide, please. Preliminary, non-GLP toxicology studies have been completed in cynomolgus monkeys, which is the pharmacologically relevant species for this antibody. In an exploratory 7-week dose-range finding study in 2 animals, each SBO-154 was administered at doses of 1, 3 and 6 milligrams per kilogram for 3 doses at an every 3-week dosing schedule. SBO-154 was generally well tolerated up to the highest dose of 6 milligrams per kilogram. There was no mortality or adverse clinical signs with no effect on body weight and food consumption. There were less abnormalities of bone marrow suppression, such as reduction in blood cell counts, which is consistent with the loan adverse event profile of MMAE. Histopathology was also consistent with the observed lab value change. There was a dose-proportional increase in exposure of SBO-154 and the highest non-severe toxic dose or the HNSTD was established at 6 milligrams per kilogram. A repeat dose GLP toxic study is currently ongoing as part of the pre-IND requirement. This will help confirm the preliminary cost results and estimate the starting dose in our Phase I study. On to the next slide. Now, I would like to provide a program update in terms of next steps for this molecule. We had submitted a pre-IND meeting request to the U.S. FDA for which we received a detailed better response in late November. Their response indicates broad agreement with SPARC proposed IND data package, and we do not anticipate any barrier into IND filing early next year. We proposed a multi-country Phase I dose escalation and expansion study in patients with advanced epithelial solid tumors and standard eligibility criteria for study license. Below escalation portion is expected to enroll approximately 30 unselected solid tumor patients who have failed available therapy. Once a maximum tolerated dose has been established, we plan to open 3 tumor-specific expansion cohorts of approximately 30 patients each in tumors that are known to highly expressed MUC1 SEA. This includes ER positive breast cancer, adenocarcinoma of lungs and ovarian cancer. This will be an adaptive design with the goal of establishing early clinical proof of concept for the program. Next slide, please. So finally, a quick update on the upcoming milestones for this program. We anticipate an IND filing by the end of Q4 FY 2025, followed by initiation of the Phase I study in the subsequent quarter. Next slide. So while that concludes my specific discussion of SBO-154, I'd like to highlight that the MMAE payload-based approach is only one of the multiple ways we can leverage MUC1 targeted. This uniquely targeted antibody has the potential to serve as a platform for other payloads, including other chemotherapeutic agents such as cytoskeleton disruptors or DNA damaging agents, immune oncology-based approaches using both immune agonists as well as checkpoint inhibitor and ages targeting angiogenesis. We have very early programs in development for some of these approaches. I'll now hand it back over to Jaydeep to direct the rest of this session.

Thank you, Sandeep. This is the last slide for discussion today, and it summarizes past pipeline of disclosed assets and their stage of development. We have multiple other programs under development that are not disclosed, and we will share details of those programs at appropriate times in future. With that, we will now open the call for question and answer session.

[Operator Instructions] We have our first question from the line of Vishal M. from Systematic.

Am I audible?

Yes.

Yes. So my question is assuming -- so we have some milestones coming up wherein we can potentially generate cash. So like one is a licensing beam for your CML candidate. And there is a priority review voucher that you might get issued. But in a worst-case scenario, assuming there is a delay in monetization of these opportunities, what is the cash level we have currently and how long we can continue or continue to fund our operations?

So, no, Vishal, thank you for the question, and that's really -- I'm sure it's top of the mind for a lot of investors. And as I said, we have a significant number of opportunities here, not just the tool that you noted that is the priority voucher and a potential licensing. We have other options like PDP, 7 months since launch, the exclusivity enforcement on Sezaby. So there are 4 or 5 potential areas where we can have access to short-term cash. But if you come back to where we are in terms of operating cash flows and access to debt that we have, it will probably take us to early part of next year. And then depending on where we reach with the short-term cash-generating opportunities, which we have visibility, we will have visibility by end of this year. We would like to take a position in terms of how we plan to resource the continuing development of these programs, which we are committed to do, but we haven't had a final decision on how we will go forward from there, even though we have some options, which we will disclose once we reach that point in the first quarter of next year.

Right. So you also expect Phase II data on vibozilimod, in psoriasis and atopic dermatitis, we mean the data is positive. So do you expect milestone income on a positive database?

It is, yes. So once it reaches the next level of development, it should move to a Phase III program. It's a milestone event for us. It's listed as one of the short-term opportunities in our presentation is the reason.

Right. And so just -- any sense that you would have gathered on the efficacy of vibozilimod in psoriasis from your early data that you would have both in psoriasis and atopic dermatitis versus the other oral options in the same category. While you are targeting the -- while you are kind of -- while safety is one of the top most priorities, but just getting a sense on the efficacy that you would expect from these drugs compared to the other oral options in the market?

Vishal, we are in a blinded study at the moment. So we have no visibility in terms of early signals of efficacy and the studies that we have done earlier where Phase I trial, right? So the only human trials that we have multiple Phase I trials. And I don't know whether you've been part of the previous discussion that translational case or vibozilimod will get on 2 things. One, we have seen significant ALT reduction that is lymphocyte reduction in circulation. And that is the mechanistic marker and the dose that we are studying in Phase II setting. And if you look at literature, there are other products in this class, which were tested in atopic dermatitis and alopecia and atopic dermatitis and psoriasis. And there is a certain threshold of ALT reduction that was required for competitive activity. And we've reached that level of ALT reduction in the Phase I setting. So that was the translation case for initiating these Phase II programs. But we do not have any lingering of what is in store given the blinded nature of the study.

Right, right. And just one final one on Sezaby. Any technical hurdles there in terms of bidding exclusivity? So just wanted to understand whether it is a process or there is also uncertainty around that process?

It is a process in the sense the process that FDA follows is a risk-based assessment of how and when to enforce the exclusivity plan. They usually give this time when a new product comes to establish a robust supply chain in the markets before they start enforcing the exclusivity. So it's a process, and we are in the process of engaging with the agency. And we are hopeful, as we've indicated by the third quarter of this coming financial year, we hope to have exclusivity.

Right. And sorry, just one more, on the in-licensed asset, SCD-153, do you -- would you kind of -- and would you need to pay some milestone income there whenever you get positive data or these are completely your own assets now?

No, we have -- these are licensed very early and that is a multiyear option agreement that we had on an early stage preclinical asset. But -- and we have milestones and royalties, which are typical to those kind of deals, which is usually in small -- I mean it's in low single digits, single-digit percentages. So we have a structure, which has both milestones and royalties, but given the early stage in nature, this is not like commercial licensing.

We'll take our next question from the line of Bino Pathiparampil from Elara Capital.

A couple of questions from my side. Do you have any estimate of the unapproved if you know about the total market size in the pediatric market?

We haven't specifically disclosed a market size that you should look at the current usage in the unapproved market, it's in several scores of billions of dollars, but I don't want to give you a top of the mind number, but it is publicly available.

So if I could just add, the number of units being sold in the U.S. is in excess of 2 million injectable units, which we believe is primarily used for neonatal population.

2 million units. Okay. Got it. Second, on the specific PRV, when you say in 1Q -- sorry, 4Q FY '25, there would be a opinion of the court, is there a trial that has already taken place and it will be a final verdict by the court? Or what exactly would we expect?

So the process is that we have to have written submissions from us and FDA and HHS and back and forth on those written submissions. And now later this month, early January, they will decide whether an oral argument is required. And that will be the first indication. And then if that's required, we expect that to complete in the first quarter -- in the last quarter of this year.

Expected to complete in the last quarter of this?

This financial year.

Okay, which means it's coming in the next 3 months?

Right. That's our expectation and hope.

Okay. Understood. And last on these 2, ophthalmic products, PDP-716 and SDN-037 a little bit less updated. I was going through your earlier presentation from early this year, these 2 assets were not there. So could you give a bit of background how this came in? What is the market potential, et cetera?

Yes. The PDP-716 is a reformulation brimonidine, which is a widely used second-line drug in glaucoma and we give a significant dosing benefit for this product. And we have disclosed the clinical results in previous presentations, the regulatory standard from a clinical data expectation standpoint. And then we filed this with an external API source and that external manufacturer of the API had regulatory issues, and that led to a company response letter. And before we got there, we had licensed this product to commercialization partner, a company called Visiox specialty ophthalmology company in the U.S. And Visiox has gone through a transition, it's now sold to a different company and we are working with their management to respond to company response letter. We've replaced API source with the new source, and we also made changes to the manufacturing process because we expect higher volumes for this. So we are moving to a high volume facility for this. So our expectation is that by second quarter of next financial year, we will be in a position to file from the new facility. And then it has a 6 months review time. So we're working very closely with. And the second product in this group was a steroidal reformulation. And there are also being a very good clinical results. But with the commercialization partner, what we have agreed was we will schedule these submissions sequentially in the sense we would first complete PDP-716 and then we'll go with this reliable product. So we will wait for the closure of PDP-716 to take a position on the regulatory process for that product.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Jaydeep Issrani for closing comments. Over to you.

Thank you. Thank you, everyone, for being on the call today. In case you have any additional questions, feel free to reach out to us on the numbers that we have provided on the website, and we'll be happy to answer your questions. Thank you once again for being on the call today.

Thank you.

On behalf of Sun Pharma Advanced Research Company, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.