Good morning, and thanks so much to everyone for joining our I&I Summit. I'm Stacy Ku, one of the biotechnology analysts, and I'm joined by my colleague, Vish Shah. We're very happy to be hosting Avalo Therapeutics today. With us, we do have CEO, Garry Neil. Good morning, Stacy. Thanks so much for taking the time again. We really appreciate all of your insights that we continue to enrich ourselves from. Anyways, as you all know, Avalo is developing AVTX-009. It's a potent anti-IL-1 Beta inhibitor in development for HS, with a lot of well-deserved investor interest in the last few months. Folks increasingly appreciate that, one, multiple therapeutic targets can win in a big HS market, and two, the next target that clinicians bring up is IL-1, which suggests that there could be significant value for AVTX-009. For those listening in, there is a place in the webcast to ask your questions, but also feel free to email me or Vish if you'd like to ask any follow-up. First, for those that are a little bit less familiar with the story, can you just start with some background on AVTX-009, how you in-licensed the asset, and how the team decided to develop IL-1 Beta inhibitor in HS? Yeah, sure. Again, thanks for having me on. Yeah, AVTX-009 was originally developed by Eli Lilly, very high potency anti-IL-1 Beta monoclonal antibody. They took it in the clinic for type II diabetes. While they did show success with it, showing a reduction in A1C somewhere between 0.25 g and 0.3 g, they did not consider that to be a big enough effect to develop it, and they decided to out-license it. Not before they had completed the toxicology studies, done a lot of work on the formulation. I think there were about 245 patients treated in the package altogether. They demonstrated the safety and the high potency of the drug against the surrogate markers, CRP and IL-6. The drug then changed hands a couple of times with little development going on. It fell into the hands of AlmataBio after the last company that had it, Flame, had dissolved. We acquired AlmataBio in order to get that asset in 2024 and immediately started down the pathway of getting it into the clinic for HS, which we did in pretty record time. We've been pushing forward with it. Now we're in phase 2B, trial fully enrolled. Now, and the timing, obviously, when you all picked up that asset was ideal, we would say. We'll get to the Lutikizumab data from AbbVie in a second. We do also get some questions from folks just looking at the mechanistic perspective on IL-1 and specifically IL-1 Beta. You all have done a lot of work to really make sure you've identified the right asset, obviously also done the additional formulation work. What really gives you conviction in IL-1 Beta versus the IL-1 Alpha approach? What work has the team done to really get conviction that the HS pathogenesis is really driven by the IL-1 Beta? Right. Yeah. First, let's talk about the role of both IL-1 Alpha and IL-1 Beta. I'll start with IL-1 Beta because that was what drove us towards HS in the beginning. The clinical data that AbbVie was showing around that same time at AAD gave a really good proof of concept for the molecule. IL-1 Beta is the central regulator of the immune system. It sits right between the innate immune system and the cognitive immune system. It drives a lot of innate immune responses, bringing neutrophils into the lesion, for example, turning on the matrix metalloprotease system, which has a lot to do with the destruction of the hair follicle and liquefaction of the tissue, formation of abscesses, and also formation of tunnels and fistulas in the disease, rather. It is also really very, very critical for bringing in macrophages and turning on the TNF system, and also in the cognitive immune system in turning on the Th17 system, which produces IL-17. You can see that it is doing all of these things in a very central way in the lesion. There are massive amounts of IL-1 Beta that you find in these lesions, and it is just the consummate inflammatory driver for chronic inflammation. Again, just to emphasize that it is upstream of TNF and IL-17. If you look at IL-1 Alpha, though, there is a stark contrast. There is only about 25% sequence homology with IL-1 Beta. It is an alarmin. It is expressed on the surface of normal epithelial cells, not in the inflammatory context. Every epithelial cell in the body has very substantial amounts of IL-1 Alpha there to fulfill that role. When a cell is damaged, it, along with the rest of the alarming signals, triggers this acute inflammatory response that basically cleans up the dead cells and initiates tissue healing. It really has very little to do with chronic inflammation. When you look in the lesions of HS, you do not find any increased level of IL-1 Alpha at all. I think we start from that. You have the clinical experience. Obviously, the AbbVie data are the best, although there's a ton of anecdotal data about IL-1 Beta inhibitors in HS being successful in promoting healing. There is one definitive experiment that was done with an anti-IL-1 Aplha, though, and that's J & J's experiment, the clinical trial that they did with Bermekimab. They licensed that in from XBiotech. It's a potent anti-IL-1 Aplha. They studied that in HS and found absolutely no treatment effect whatsoever. There was just no effect of inhibiting that cytokine. They also tried it in AD with a similar result. There was a positive control in that study with Humira. We know it was a good experiment. Taken all together, the biomarker data, the mechanistic data, the clinical data, it's just showing us that IL-1 Beta is the right target and IL-1 Alpha is not something that's contributing to the disease. Okay. Understood. Now, interestingly enough, both our consultants and surveyed clinicians, they all seem to really have, as you noted, this paradigm shift in their views on the IL-1 class with the AbbVie Lutikizumab data. If we could discuss both the proof of concept that we've seen in the phase two for TNF inadequate responders and, of course, also the recent EADV open label extension results in bio-naive patients, just help us understand what read-through you all take as it relates to AVTX-009. Yeah, that's phenomenal data, and it's absolutely applicable to what we're doing. Again, Lutikizumab is a bispecific anti-IL-1 Alpha/Beta, but we think based on the previous discussion that all of the activity that's being generated against the disease is coming from the IL-1 Beta binding. They showed in a very interesting experiment that they did for dose ranging in very severe patients, so 100% TNF failure patients that had all been on Humira and more than 70% having early stage three, which is a much higher proportion than others have studied. They showed really remarkable data at the 300 mg dose, both once weekly and every two weeks in that study, also very well tolerated. They were getting a treatment effect size of about 46% of patients. Placebo-subtracted, they were in the 25% range. That's data that's as good or better, actually, than anyone's shown in an induction phase in HS in the sickest population. The question then arose, though, is this a mechanism which is only going to work in patients who've failed a TNF? They did recently show data at EADV from a bio-naive population. It was not controlled, but it's still very instructive, 47 patients over 20 sites. They had a very, very similar, almost identical treatment effect size in this bio-naive population that had a mix of early stage two, three, which is more typical with the majority of patients being early stage two. You look at these experimental results, you have very robust, and I think reproduced data that proves a mechanism of action across the spectrum of patients with HS. We took that as a very strong proof of concept. Yep. And noticed that you kind of took the average when it comes to every week versus every other week dosing when you're bringing up the efficacy that you're seeing and it seems like your kind of expectations as to where Lutikizumab could settle. Now, as it then relates to then you all and your phase two trial design, maybe talk about what learnings you've then applied from the Lutikizumab work you've seen so far. And of course, what we understand is that you all have done a ton of work with all the clinical trial specialists in the HS space. In HS, a lot of nuances when people think about all the different baseline criteria and enrollment nuances. Just help us understand what you're incorporating into the phase two, especially as the development landscape has progressed. Right. So we've taken a little bit more mainstream approach, although we put a little bit of our own nuance on it in doing the phase two design in that our studies are going to look, they're going to very much mirror what's been seen, not only with what we think the AbbVie phase three trial is doing, but also what we've seen from Sonelokimab and also from Bimzelx in their development programs. We are allowing in patients who are bio-experienced, but most of the patients that we have are bio-naive. We will have more bio-experienced patients, perhaps than either UCB or MoonLake did. That is because we're letting in both TNF experienced and IL-17 experienced patients, whereas they did not. We will have a good mix of both of those. When it comes to early stage two, three, we will be about the same as they are. Disease duration, about the same. Active nodule counts, about the same. In a lot of ways, we'll be very comparable with that one notable difference of having some more bio-experienced patients. We take a lot of, it gives us a lot of confidence that AbbVie had such great results in bio-experienced patients, at least patients on TNF inhibitors. Okay. Super helpful. We also hear from consultants that, of course, your team has been very thoughtful when it comes to the heterogeneity of the HS patient population, which is obviously exemplified by your enrollment criteria for the bio-experienced patients. Maybe specifically, what work have you all done then to keep the placebo response manageable, especially as it relates to the HiSCR 75 endpoint? Yeah, exactly. To manage the placebo response and to get the best signal-to-noise ratio in the trial, you start with a design, and we are using HiSCR 75 as the primary endpoint because that is associated with a very reliably consistent, with the one exception of the recent Belle II placebo effect between 13%-18%. We've looked at that placebo rate carefully over the 10 years or so that people have been doing these trials in HS. Really, the trend has been very consistent with a couple of notable outliers, the most notable being the Belle II study. Secondly, we were very careful about which CRO and investigators we would select. We went with Parexel. They had been the CRO that UCB used for the Bimzelx study as they were finishing their phase three trials. That really attracted us to using that CRO. We were able to get a lot of those experienced investigators in our study. We only used experienced HS investigators. We developed our own training program with Tina Porter specifically on consistency of measurement. We even trained them on the placebo response and made sure that people were going to be objective and consistent in their measurement throughout the trial. We worked very hard with the CRO and with our team in site engagement to make sure that people were following the protocol as they were supposed to and doing the measurements that they needed to do. It was a great partnership with the CRO. Enrollment really went very, very smoothly throughout the trial. We did not have to do anything extraordinary or accelerate things at the end. We just kept it moving nice and steady, which is something that I like to do for consistency in clinical trials. We ended up still exceeding our initial enrollment timeline. We completed enrollment and had more patients than we had initially planned as we completed enrollment at the end of October, which was a couple of months early. We are well on track to get data from this trial by the end of the second quarter next year. Okay. Maybe remind us what powering assumptions you all are taking when it comes to, obviously, increased enrollment numbers from original plans. Yeah. What we did was we originally powered the study based on the average effect size that we saw from Lutikizumab. We used a more conservative placebo assumption of 20%. It was powered at 80% to show a difference of about 25% placebo-subtracted with a placebo of 20%. That yielded a sample size of about 180. We then upsized the sample. We realized that we wanted to do a little bit more subgroup comparison as we went along in the bio-experienced versus bio-naive patients. We upped our sample size. At the time, we modified our protocol to 222, which also increased the power for the primary endpoint. We ended up over-enrolling. We are a little bit over 250 patients in the trial. We are conservatively powered now. Going to 222 gave us power to withstand a 22% placebo rate. Now with the extra patients that are in the trial, we should be able to get higher than that if we did have a placebo surprise. Okay. Understood. And then, of course, you've said that the bio-experienced patient population is going to be half TNF experienced patients and then half IL-17 experienced patients. So. Roughly, that's right. Rough, very roughly. As we think about the, I would say, enthusiasm to really understand the different positioning of where IL-1 fits, and obviously, we'll get to that before the end of this discussion, maybe comment on how that enrollment of the patient population went and the level of patient interest that really led to this increased over-enrollment and faster than expected timelines. Yeah. As I said, it was very smooth. We continued to enroll at a very steady pace throughout the trial. I think that that reflects the interest that both patients and the investigators had in the mechanism and the drug. That bodes well for what we can expect in phase three. It is a very competitive situation out there with a lot of companies studying different drugs. It is gratifying that patients were attracted to come into the trial when they had other choices and help us with this. Okay. Wonderful. As we wait the, let's say, late Q2 results then for your phase two, maybe help us think about what type of efficacy you all want to see. Maybe in terms of, I would say, clinician diligence, there's a lot more sensitivity to the safety profile. First, efficacy, what you think needs to be shown for this to be a big drug, obviously, big, big market when it comes to the HS expansion. Of course, what safety you all expect. Yeah. First of all, again, AbbVie and the IL-1 Beta mechanism has shown itself so far in the phase two trials to have a higher drug effect size than the IL-17s. That's what you'd expect since it's proximal in the pathway to both TNF and IL-17. We know from the durability, really, I think hasn't been fully assessed yet, but we know from other IL-1 Beta antibodies that are out there that treat a number of inflammatory diseases that the durability has been excellent with the IL-1 Beta class. I wouldn't expect anything different there. We also know that, as kind of a base for us, would be comparable to what AbbVie has shown. As you also know, our drug has a lot of advantages. It has much higher affinity than Lutikizumab. It has better bioavailability. It also has a longer half-life. There is the possibility, and we feel there's a realistic chance that we can do even better than AbbVie did in their studies. We don't have to, though, because we do have a better and more favorable dosing regimen where the drug is going to be dosed every four weeks, whereas AbbVie has taken the every week dose into the induction phase of the trial. That would be a lot more, would reduce patient burden, be a lot more patient-friendly dosing regimen. We don't really have to beat them, nor do we really have to beat the IL-17s. We're going to have a different mechanism in place, again, a little bit more favorable dosing. I do feel good about the prospects of being able to show efficacy that's better, but just having a different mechanism in a disease state that's looking for new mechanisms and where most of the patients are not completely satisfied with the therapy should be enough for us to have a successful product. Okay. Very briefly on safety. On safety, we do have a differentiated profile with the IL-1 Betas. They're very well tolerated. As you know, it's not an immunosuppressive drug. It's an anti-inflammatory drug, is I guess the best way to characterize it. It's associated with maybe an increased risk of bacterial infections, a little bit of neutropenia, not really a great concern in patients with HS who have very high neutrophil counts to begin with. It's interesting looking at the safety profile of the IL-1s from long-term studies that were done with Ilaris, for example, that not only did you see a reduction in cardiovascular risk, which was the primary endpoint of their study, but a decrease in cancer, not an increase in cancer, but a 50% reduction in cancer, in fact, a 75% reduction in lung cancer, a lack of opportunistic infections. You're not going to see a lot of the side effects that we've seen with the 17s, such as Candidal esophagitis and some of the other opportunistic infections there. It does have a very good safety profile, which I think dermatologists are going to appreciate. Yeah. We would note we still have, obviously, the IL-1 class of drugs to be fully borne out. We obviously have great proof of concept. Even with the results that we have so far, when we run a survey of clinicians on where they would kind of position these different drugs, post-17, we have 50% of prescribers that would switch post a Bimzelx to an IL-1. Post just 17s are all, they expect 30% would switch to IL-1. It takes into account the very heterogeneous patient population, lots of different nuances, of course, when it comes to results. In the last few moments, I want to make sure we hit on, obviously, the HS market, obviously, very dynamic. Many, many folks on the call do appreciate how big the opportunity could become. As you all are digging into the commercial opportunity, I understand day-to-day, really, the focus is to execute on the clinical trial outcome. What are you seeing these days? What gives you conviction that this could be a really, really large opportunity for you all? Yeah. It's a much bigger patient population than anyone ever expected, especially as awareness continues to increase. The time from initial presentation to diagnosis and referral is going down all the time, which means more patients are going to be referred into specialists to get definitive therapy. There's a recognition that earlier, more aggressive treatment can lead to less progressive disease, disfigurement, and a lot of the other problems that are associated with it, the need for grafts and surgery and so on and so forth. All of that's going to continue to drive the market. Biologic penetration is still relatively low. We have a long way to go to grow there. We think this is going to be a very robust market looking for new mechanisms of action. We're going to supply one of those. We're very bullish about that. I think the estimates of this being a greater than $10 billion market by 2035 are maybe even conservative. Wonderful. As we wrap up, we want to remind folks that, again, a 5% patient penetration of our total addressable market, our target market of 200,000 patients is a $1 billion opportunity, even if there is inline efficacy versus current agents. If you listen to the commentary of our thought leaders, it suggests that the branded biologics total addressable market could really be maybe even potentially double our conservative views. Our survey results have been really consistent in the fact that we're seeing growth in real time. KOLs have a lot of high enthusiasm for IL-1, believe it's implicated in HS. We can believe that the market is massive for multiple agents. Thank you so much, Garry, for your time. Thanks to everyone for listening. Please reach out with any questions.