Biotech analysts here at RBC Capital Markets. Our next presenting company is Aardvark Therapeutics, represented by their Chief Operating Officer, Brian Jones. Brian, thanks for joining us. Thank you. Nice to be here. Great. Let's start. Bigger picture on ARD-101. Can you talk about 101's therapeutic target and mechanism? Certainly a unique approach. How did it come about? What are some of the preclinical and initial biomarker and correlative data that we have around its impact on key gut hormones? What's sort of unique about, most unique about it? Sure. Be glad to talk about that. ARD-101 was originally developed on the theory that if you inhibit bitter taste receptors, you would suppress appetite. That was our original theory as what was the start of the company. The idea was if you could give a really bitter compound to a person that was not toxic, they would then reduce the amount of calories they bring in. Since then, we kind of learned the difference between hunger and appetite. We'll probably come back to that in a second. The way our drug works is it's oral. We code it so you can't taste it because it is quite unpleasant, quite bitter. You swallow it, it binds to the endocrine cells of your gut and stimulates those cells to release gut peptide hormones. We know for sure it releases a hormone called CCK, releases GLP-1, releases GLP-2, and then also probably PYY. These act locally. They're the normal hormones, but they're rapidly degraded. They're not big, wide systemic levels. What we're doing is stimulating the natural processes of the body to impact. In particular for Prader-Willi, the reason we went into that is we knew that GLP-1 still worked well in Prader-Willi. We also had seen that if you knock out CCK in a rodent, and you put that rodent in a cage where it has unlimited food, it would eat itself to death, which is very reminiscent of the phenotype you get with Prader-Willi patients. We decided to do a Phase Two trial because there's really no good animal models for Phase Two. We made the gamble and we got quite good data, which I'm sure we're going to talk about in a second. Great. Maybe you can expand a little bit more on this distinction between intervening in hunger versus the appetite pathways where the GLP-1s are thought to act. Just help us understand how your, I guess that, and then also how your approach maybe differs versus more direct ways of targeting other gut hormones, like just giving direct CCK analogs. Right. Sure. Be glad. So think about that for a second. When you eat food, your gut cells release CCK. CCK sends a signal to your brain, says you're no longer hungry. Now, as time goes on and you've eaten, your ghrelin levels start to come up. And as they get higher and higher, then now you get hungry again. And so all day long, you had this interplay between CCK and ghrelin as far as your hunger level. This is your body's need to eat. This is a pain avoidance pathway. On the other hand, appetite is a pleasure-seeking pathway. This is you eat food because it tastes good. So I use this example sometimes. You come in, I don't know if this has any happened to you guys. It happens to me a lot. You go in, you have a nice big meal spread out on your table. Looks like it's going to be really tasty. You're hungry. You haven't eaten all day. You didn't get lunch. You sit down, you start to eat, and you get a phone call. You go back and you talk for 15 minutes. You come back to the table. You're not hungry anymore. The reason you're not hungry is because your CCK got stimulated when you first started to eat and you lost your hunger, but you still eat the meal because it still looks good, right? Because that's your appetite kicking in. You want to eat it because it tastes good. That's really the fundamental distinction. Now, both of those things impact how many calories you intake into your body. As humans, we can override either pathway just by our own personal predilection. The point of our compound, which is different from the GLP-1s, is GLP-1s in general make food not pleasant. You sit down to eat, you look at it and you go, "Ugh, I don't really want to eat because it doesn't sound like it's going to taste good tonight." Whereas our interaction with hunger allows you to skip a meal. It allows you to eat less food without getting hungry, but allows you to stick to whatever diet that you're doing. That's really the fundamental difference. Maybe the differences between using the bitter taste receptors to stimulate multiple gut hormones versus giving someone exogenous CCK. Right. This is really particularly relevant to CCK. CCK, or Cholecystokinin, is a hormone name. I say CCK because I get tongue-tangled when I start saying Cholecystokinin too often. It was originally discovered at the same time as GLP-1. They did the exact same paradigm. Novo's tried it. Glaxo's tried it. They did the same paradigm where you make mutations in the peptide, some artificial mutations. You have a peptide now that has a much longer half-life. You can inject subQ and you get high systemic levels. That has worked really well for GLP-1s both for diabetes and for obesity. When you do that for CCK, you get really bad acute pancreatitis and you get a bunch of neurological problems. All of those programs, while they showed really early promise, when they got into the clinic, they had to cancel them because they were just way too toxic. Again, what we're doing is we're not doing artificial systemic CCK. We're stimulating your natural CCK. As soon as it binds your vagus nerve and sends a signal to the brain, it quickly gets degraded in your bloodstream. You do not have high levels that can cause toxicity. Okay. Can you tell us more about your initial indication, Prader-Willi syndrome, the unmet need there, sort of what the current therapeutic landscape looks like? I know that's changed just in the last few weeks. What you see as the overall market opportunity for Prader-Willi? Sure. Sure. Be glad. Again, Prader-Willi, just to go back and think about what Prader-Willi is. Prader-Willi is a chromosome abnormality. I always kind of think if you actually see the patients, it looks sort of like Down syndrome patients have a pleiotropic. They have global delay. They tend to be short stature. They tend to have higher fat body content. They have some autistic behaviors, but the fund, and they have very severe constipation as well as some inflammatory joint issues. The thing that really paralyzes families and patients is this hyperphagia. I mean, the divorce rate in Prader-Willi patients is like 98% or something. It completely destroys families and the impact on siblings to everyone else because it's so hard to control the hunger in these patients. Just recently, Soleno Therapeutics got approved their drug DCCR. DCCR is originally approved for blocking Insulinomas. It blocks insulin production. It's not exactly clear why blocking insulin production will blunt hunger, but they were able to get that approved. There are some side effect issues with the Soleno product. We think there's still a great opportunity for us. They're out in the market. They're setting pricing. They're opening up that marketing and people are getting used to it. We think because we're actually treating the actual cause of the hyperphagia, that when we come in, it's going to be much more accepted in the market and we'll slowly replace Soleno, even the people that do try it. It does work for some. So far, it's not worked for everyone in every trial. Okay. That's really helpful. Then you've run a study, a Phase Two study in Prader-Willi. Can you just maybe briefly walk us through the data there and then some of the tweaks you've made in Phase three in the study design, the titration schedule, the entry criteria that gives you the most confidence the Phase three will replicate or even show better HQ-CT improvements? Let me start with what we did first. Essentially, we ran Two studies, right? We started off with patients on 200 milligrams a day or 200 milligrams b.i.d., twice a day. We ran that for 28 days. Our major inclusion criteria is obviously they had Prader-Willi and had to have hyperphagia. We had a cutoff score of 10 to get into the study. We only ran the study for 28 days. This is actually a really important point, the 28 days, because these patients have very autistic OCD-type behaviors. If you only treat them for 28 days, it's very hard to show a signal because they have to change their behavior, right? We did that for 28 days. We actually saw a drop of nine points on the HQ-CT scale. That's a hyperphagia for clinical trials questionnaire. Very, very robust signal. The other thing that we learned, and again, this is early days for us when we were first into the clinic, is our PIs were calling us up saying, "We actually think the drug's working better than what the scores are showing you." That really kind of gave us a lot of confidence to continue developing the compound. We then decided we went to the FDA and said, "Okay, we've completed that study. It looks good, very promising. We'd like to then up the dose." Why do we want to up the dose? There are Two. The Two. The main reason is we had anecdotal data from the people in the trial that if you took the drug in between meals, you actually got better efficacy than if you took it with a meal. This is not your classic food effects study where food affects the absorption of the drug. The difference here is that our drug is 99% stays in the gut. Only 1% gets in the bloodstream. In fact, when you inject the drug, it does not work very well. The target is actually in the gut. When you take the pill with food, you have now diluted it. Going higher in dose, you now have more free drug to make sure you have target engagement. In our safety studies, safety profile was so high, we wanted to make sure we are saturating the receptor. We went to a higher dose, right? We went to the FDA and said, "We'd like to do six more patients." What they said was, "You can do Two patients from your original trial, and then you can do, but you have to do four naive patients." What we chose to do is we took one patient that didn't do very well in our first trial, and we took another patient that did okay. Both of those patients did better in the dose escalation trial. We got essentially the same results the second time we did the study as the first time. I just told you this was an open-label study. To be able to repeat the same results Two different times is very comforting that we're not just seeing a placebo response. There's one other point I was going to make, but I forgot. We're probably going back to that. Okay. I guess maybe the difference. The learnings. Yeah. Learnings for Phase three. Phase three. Some tweaks to the design and the entry criteria. Oh, I was going to talk about the dose escalation. Okay. Yeah. Go ahead. Yeah. The reason we did the dose escalation is we had never had any experience with 800 in patients. We couldn't just jump straight to 800, which is where we wanted to go to. It was a calculation we had done from our animal studies that we wanted to get to. It also becomes sort of a theoretical practical dose. You can't go much above 800 or the drug starts to be food, so this doesn't make much sense. The 200. We did 400 for a week, 600 for a week, and then 800. Again, that was just from a safety standpoint. We do not think we need to do a dose escalation. However, in our Phase three, we've chosen to do 200, 400, 800. 800 for the majority of the study, but 200 and 400 just for a week to dose in. The reason we're doing that is we're doing younger patients now. We just want to be safe and cautious about the exposure. We do not have a systemic exposure. We do not think that matters. We want to be cautious. The trial will have that. The other thing we're doing is historically in the field, everybody has used 13 as the cutoff for HQ-CT. We're going to use 13 also. In our original study, our starting HQ-CT was much lower than what other people have done. The higher you are, the easier it is to show a difference. The biggest learnings that we got from these studies were a couple of others. Number one, it is incredibly important that whoever is rating the patients on this HQ-CT scale is the same person throughout the trial. We had a couple of patients where the mother did it for a couple of weeks, and then the father did it for a couple of weeks. It's really hard to compare the data. The other thing is it's really important that the patients keep their same routine. We had a patient that actually went to Disneyland for vacation. Very hard to control food intake when they're at Disneyland. The last thing that we found is that the patients that seemed to have the lowest response in our trial actually were taking Risperdal. Risperdal is an antipsychotic that makes people super hungry. People put on hundreds of pounds when they take this drug. We're excluding those patients. When we do all that, we think we'll just have a more tighter data package as we go forward. The last thing that we're doing is placebo response is a challenge whenever you do some kind of a subjective scale. We talked to the FDA about this and how we could try to minimize the placebo response. One of the problems that we have with these trials is the caregivers tend to exaggerate the scores in order to get their children into the study to make sure they hit that threshold. What we've done is we talked to the FDA and said, "Look, we're going to let anybody that qualifies for the study in the study. They're told they're in the study. Then on day zero, when they do their baseline score, whether they score above 13 or below 13, they're still in the study. There's no incentive for them to exaggerate. Because we need a higher score to start with, it is impossible to show a difference. Only the people that are above 13 will be in our statistical analysis package. The people below 13 will not be included. The FDA was quite comfortable with that, particularly the psychiatric division that does trials like that. It helps reduce the placebo response. Your level of confidence that the effect size and the delta will widen or the effect size will improve further over longer time periods? We expect that to happen. The reason that the effect size should improve over time is there's a couple of reasons. Number one, the way the questionnaire works, if you don't say, "What's your scale today?" you say, "What's it been for the last Two weeks?" You're integrating as a caregiver their response for a period of time backwards. If you're only going back Two weeks or four weeks, you don't have much time for change, right? Just fundamentally. Also, like I said, these kids are developmentally delayed, a lot of them. There's a big spectrum of this. They had a lot of OCD, autism-type behaviors. It takes them a while to change their behavior. They're not going to do it just overnight. It also takes some time for the caregivers to learn their new behaviors and to adapt to it. The longer you run that trial, the longer you have a chance for that signal to be, what do you call that, kind of wired into the population. Got it. Can you talk about the powering of the Phase three and what change in HQ-CT do you think will be clinically meaningful after three months? Yeah. I'll answer those Two questions separately. The powering that we've done right now is we're looking for a change of five points. We assume a standard deviation of six. 90% power, we would need 32 patients per arm to show that. We've actually enrolled, we're enrolling 45 patients per arm to be a little bit of overpower. Also because depending on how many dropouts we have, because we don't hit the 13 and above to get into that, we will have an interim look to adjust that, the number of patients we're enrolling in case we're getting too many under 13. That's just looking at the screening criteria, not at any effect value, interval deviation or anything. Right. It's mainly screening criteria. The other thing the FDA said, if we're going to do this 13 cutoff, we have to make sure that the placebo inactives are randomized evenly. You don't want to bias it one way or the other. As far as what effect size is clinically meaningful, this is a tough question. The FDA was very clear that they don't know. They said to us, "Look, whatever effect size you choose, you're going to have to justify that that really is a clinically meaningful difference." Now, we have a little bit of a hint from Soleno and their launch, but they did a randomized withdrawal trial. It's not really apples to oranges to compare the Two scores. We know in ballpark what they saw as a difference. We are also including Clinical Global Impression because I told you earlier, our clinicians thought they could see a difference. If that can correlate, that helps validate part of the Clinical Global Impression. We also showed in our Phase II trial that within 28 days, we saw a 2% drop in body fat relative to body mass. We think that over time, we have seen even bigger drops if you change the body fat as a quantitative hard endpoint that we can use to correlate. We have some other endpoints in the trial that we can use to correlate. That is part of the burden on us as we file, to demonstrate that. Okay. And maybe on the regulatory side, what does the approval pathway look like here? I know for Soleno, it was a little convoluted because they had to go back and run the randomized withdrawal study and sort of amend their protocol. Ultimately, they did get it over the line. Any sense as to how the FDA is going to be approaching the Phase three plan? Do you think one Phase three study will be sufficient here? Yeah. What's your latest view? The FDA did commit to us in our last meeting that one study, if our data is statistically significant, would be enough for submitting as a single pivotal. That's under new leadership, or is this sort of prior? This is before, the prior leadership. They said that would be enough. We are accumulating safety. We are doing open-label extension, obviously, which will give us more safety exposures. We're still continuing to develop in HO, hypothalamic obesity, and general obesity. We are accumulating safety patient data in those indications also. The biggest question for us will be at our end of Phase three meeting will be, is this enough of a safety database to submit, or were they going to want some more enrollment? We have some other trials too, like mass balance and some PK studies and PD marker studies we're doing that also accumulate patients. We are continuing to accumulate safety exposures. What are you hearing on the ground with regards to the DCCR launch and any kind of learnings that you guys can take away as you approach where 101 can potentially fit into the market? I mean, it sounds like, I mean, you mentioned at the beginning you expect it to slowly displace that drug. Do you expect that there'll be some additional market expansion catalyzed by having Two entrants? Do you expect there could be combination use given the different mechanisms? The good thing for us is Soleno is setting the price on the product. They're getting that through payers and getting reimbursement, which is really good. They're getting patients into the clinic to try the drug. Now, the diagnosis rate in Prader-Willi really is quite high. Unlike a lot of products I've worked on in the past where you're trying to force patients in to be diagnosed, that's not really as big an issue here. We do think it's going to be a replacement more so than a combination just because of the price. It's hard to imagine payers paying for twice, right? What we know from the Soleno product is there's a large fraction of people that aren't eligible. In their randomized study or withdrawal study, they had almost 50% of their patients withdraw even though they were still getting a free drug. It tells you something about the effect size. What I expect will happen, and we're not hearing from the patients when we talk to the advocacy groups, they're not jumping up and down and saying, "I've been cured." At best, what people have said is, "I'm not hangry anymore. I'm just hungry." Right? There definitely may be some efficacy, but it's not a home run for them. I suspect what is going to happen in the market is there's going to be a subset of people that will do pretty well. There's going to be a lot of people who will stay on it because they're desperate for something to be on. When another thing comes along, they're going to try it. Our trial is actually designed if you go off Soleno's product or any product for 30 days, you're then allowed to go into our study. Okay. It'll represent potential real world situations. Right. Potential real world situation. Right. Potential real world situation. I know we've only got three minutes left, but maybe talk about hypothalamic obesity and sort of the plan, the market opportunity, regulatory path. What's sort of the latest on your go-forward plan? Let me tell you why we think it'll work first. If you think about the CCK signal, you have the signal that's released in your endocrine cells, and then the receiver is your hypothalamus in your brain. When people have a cranial pharyngioma surgery, their hypothalamus gets damaged. It no longer can be as sensitive to receiving that signal. If we can induce more CCK to be released, get more of a signal going to the hypothalamus, even though it's damaged, it has a chance to react, right? The other piece of information we have is people have done a study in the past where they take artificial CCK, and then they are actually able to suppress the hunger in people that have Hypothalamic Obesity. Now, because it's toxic, they weren't able to show it with the cost of weight loss, but they were able to show it suppressed hunger, right? That should help people reduce calories. For the approval pathway, that actually will be through the metabolic division, and it will be a weight loss endpoint. Okay. What is the latest status of the plan? The latest status for us is we have a clinical trial design. We're interviewing CROs and planning to get that study started imminently. Or we've told people by the end of the middle of this year. Great. Maybe lastly, what about obesity? I mean, obviously, there seems to be a compelling reason to combine this with a more appetite-suppressing drug. You've got some preclinical data showing good synergistic weight loss potential with DPP-4. What's the latest on what that trial design might look like and where this could fit in? What we want to do is we want to compare our drug to placebo, obviously, the standard. We want to put a GLP-1 arm so we can compare the magnitude of weight loss of our drug to a GLP-1. We also want to do our drug in combination with a GLP-1. That will give us the magnitude in each of the different combinations. We plan to run that study for about 12 weeks until people have lost enough weight that we can then withdraw them from treatment and randomize them to either ARD-101 or to placebo. What that allows us to do is to show the rebound, particularly in the GLP-1 arm. As you know, when people go off GLP-1s, 85% of their weight comes back within a year. If you can stop that rebound, that's a super big home run. One of the things we showed in our Phase Two study was we could help suppress ghrelin levels, which is the other arm of the CCK, which suppresses hunger, right? When you take chronic GLP-1s, your ghrelin levels rise. People report that they are the hungriest they've ever been in their entire life, which is part of the reason they gain that weight back so fast. Really, the purpose of the trial is to see where we fit into the GLP-1 market to help us design what would be our approval strategy and our Phase three strategy, not so much for approval itself. Sure. Great. Good. We're out of time. Brian, thanks so much for joining us here. Thanks for the insights. Thanks, everybody. Yep. Thank you, everyone. Thank you. Yeah, that was great. Thank you. We enjoyed the conversation.