Hey everyone, we're back. Unfortunately, there was a fire alarm in my building, so apologies for the background noise. I do this from a hotel. Anyway, happy to have Garry Neil, CEO of Avalo Therapeutics, here with us for the next presentation. Maybe, Garry, I'll kick it over to you for a company overview, and then we'll get into the Q&A. Thank you. Thanks, Alex. Sorry about the disruption for you. I'm glad everybody's safe. Anyway, yeah, hi everybody. I'm Garry Neil. I'm the CEO of Avalo Therapeutics, AVTX, on Nasdaq, and we're a small company located outside of Philadelphia, about 30 people. We are developing AVTX-009, which is in phase II-B, hidradenitis suppurativa right now. Study's going really well. Good team, and we're very optimistic. We'll have the study fully enrolled by the end of the year. We'll have data mid-2026. Great. Yeah, maybe kick things off, just talk about the, you know, the importance of the IL-1 pathway in inflammation. Yeah, absolutely. AVTX-009 is a very high affinity, very specific antibody, human antibody, against human IL-1β. IL-1β turns out to be a key driver, if not the key driver, of the inflammatory cascade that leads to HS and specifically starts with the destruction of the hair follicle or pilosebaceous unit. IL-1β gene expression and protein expression is up more than 100-fold in the lesions, specifically in HS, and compared to normal skin, and is really the most abundant inflammatory cytokine that you find in these lesions, along with IL-17 and TNF, which are both validated targets. Interestingly, IL-1β is upstream in the production of both TNF and IL-17. The clinical benefit has already been demonstrated by targeting IL-1, both in smaller studies and anecdotally, but most recently with AbbVie's lutikizumab program. Lutikizumab is a bispecific anti-IL-1α/β, but we think most of the effect, if not all of the effect, really, is coming from its inhibition of IL-1β. The only other thing that's worth mentioning at this point about the pathophysiology is, in addition to the cytokine and cellular drivers that are induced by IL-1β, IL-1β also induces matrix metalloproteinase, which basically dissolves and destroys the hair follicle and helps to create the abscesses, deeper lesions, tunnels, and the fistula that we see so commonly with more advanced disease. It has this innate immune response that's also driving that, which is unique to IL-1β. We think it's a really good target. Maybe I want to talk about a few things here to follow up, but let's talk a little bit about the lutikizumab data in particular and sort of what got you in the field excited about IL-1 in HS. Yeah, so right off the get-go, when we decided to revamp the company, we were really excited about IL-1β in HS. Around the same time, the lutikizumab data came out at AAD in 2024. What they demonstrated was really a remarkable effect in the sickest population that's been studied in controlled trials to date. They looked at 100% TNF inhibitor failure, specifically Humira failures, and about 71% of the patients, which is about double what other people have shown data in, were early stage three, which is the highest stage of the disease. Despite this really sick population in a 16-week trial, at both their higher doses, they showed significant improvement over placebo and really drug effect sizes. 25% of both placebo and HiSCR75 as an endpoint, very, very significantly better or as good as anything that had been demonstrated in a less sick population. We felt this was very strong validation for the mechanism, coupled with a lot of anecdotal data using [IL-1 inhibitors] and anakinra that we'd seen in the past. There was a small trial with anakinra as well. Some data from MAS825, which was an [IL-1] bispecific antibody that also targeted IL-1β. We really decided to go after this. We felt that we had a much better chance to demonstrate even higher efficacy than lutikizumab based on the fact that we were a pure play against IL-1β without any potential dilution of effect targeting IL-1α. We knew IL-1α wasn't playing a very significant role in the disease. We also had a much higher affinity to lutikizumab, which we were very excited about as well. In the case of monoclonal antibodies, they work in a number of different ways, but specifically in neutralization of soluble factors like cytokines, affinity plays a very important role in determining ultimate efficacy. There are other factors as well, but affinity is really at the top of the list. We also knew that high affinity would allow us to get a higher amount of antibody into these lesions, which are basically pus under pressure. We felt, and still do, that we have a better chance to demonstrate higher efficacy. We also have a longer half-life and better bioavailability, so we will have more favorable dosing frequency than lutikizumab. Maybe to unpack a bunch of this a little bit more, can you talk about why you think IL-1β is the key pathologic driver here versus alpha and sort of how you can translate the lutikizumab data towards AVTX-009? Yeah, so there are a number of factors. First of all, IL-1α is not increased in these lesions at all over normal skin. Two, IL-1α is really an alarmin, which is expressed in every normal epithelial cell in the body. It has a very different function than IL-1β. It's not really associated with chronic inflammation at all. It's associated with epithelial cell injury reaction. It does turn on the NLRP3 system, which does ultimately turn on IL-1β, but in itself, even though it binds to the IL-1 receptor, it's not involved in chronic inflammation. The third piece of evidence is the fact that J&J studied a potent anti-IL-1α monoclonal antibody in hidradenitis suppurativa in a well-controlled trial in 2023, a drug called bermekimab that they licensed in from XBiotech. That drug showed absolutely no effect at all on hidradenitis suppurativa over placebo, even though they had a positive control with Humira in that study, which was positive. I think finally, all of this taken together, lays to rest the idea that IL-1α is really participating in a meaningful way in the inflammation. I think the problem with targeting IL-1α, apart from the fact that it is important in epithelial cell health and biology, is the fact that you may be diluting your effect by basically pulling antibody into compartments that you really don't want to go into, namely normal epithelium. We lack all of that, plus the higher affinity, longer half-life. We can get a much better effect than you could with lutikizumab. To that point, how confident are you in dose selection in phase II? How can you be confident in how you're triangulating versus the lutikizumab dosing? Yeah, so we leverage PK modeling specific for HS based on the data that's out there. Obviously, we don't have final PK data from AbbVie, but we certainly know our own PK. We wanted to make sure that we exposed patients to at least the same level of antibody that they were getting from lutikizumab in their positive trial. The effective dose of drug is much higher because of the higher affinity and the higher bioavailability. We have a bioavailability of over 70% and they're in the 40s. We also have a much longer half-life, nearly twice as long as lutikizumab. The most important thing again is affinity. The way that monoclonal antibodies can get into these lesions, which are pus under pressure, you can measure pressure levels as high as 80 mm of mercury in these pustules, which is much higher than what you see in normal skin. Antibodies don't have an easy time penetrating normal skin to begin with, but getting into a pustule is very, very difficult. It's more about affinity than size in drawing an antibody in. The higher affinity targeting IL-1β, we're getting higher levels of antibody in there. We're very confident about that. It's also staying there longer, and it's having a much higher neutralization effect on IL-1β. We should be able to lower and keep IL-1β levels below a trough that's necessary to continue to stimulate chronic inflammation. Taken together, that's the key to successfully treating these lesions and getting them to heal. Yep, yep, makes sense. Maybe just can you talk about the design of the phase II study, and specifically the doses that you are testing? Yeah, absolutely. We have three arms, two on active drug, one on placebo. We're planning 222 patients. We'll probably over-enroll that a little bit, randomize one to one to one. It's a 16-week trial using HiSCR75, which is a more appropriate clinical endpoint, we think, and one which the whole field is evolving to, rather than HiSCR50. We are using a high dose of 300 mm every month with a loading dose of 600 mm versus 150 mm every two weeks with a loading dose of 300 mm, again, versus placebo. The loading dose is really important. We have the safety margins to be able to do that. The FDA was fine with us doing that because we can reach therapeutic levels of drug much faster. We hope to have a faster onset of action. Every four weeks is our preferred dosing regimen, versus every week during the induction phase that lutikizumab is using. It's four needles versus 16 during that induction phase. We are also measuring IHS-4, specific skin pain and quality of life measures, as well as effect on draining tunnels. Taken together, we'll have a pretty comprehensive clinical data set. We'll also be looking at HiSCR50, 90, and 100. We think we'll have good data across the spectrum. How is enrollment going right now? How competitive is the HS trial enrollment in this world right now? It is very competitive with a lot of phase III activity going on, not denying that, but enrollment has gone extremely well for us. We announced last month that we were 75% completed our enrollment. We just got the trial going late last year, and we are very confident that we'll be, we've had a very good summer, continue to have a very good September. A lot of interest in the mechanism. Despite the competition, enrollment going very well. As I said earlier, we're very confident that we're going to be fully enrolled this fall, and we'll have our data set out by mid-year next year for topline data for the trial, the LOTUS trial, it's called. What does good look like? Do you need to be better than the IL-17s to be a player in the HS space in the future? How should we think about that competitive landscape? Even though we think that's a very possible outcome based on everything I said before about being upstream of IL-17, about the effect on matrix metalloproteinase, about the importance of central role of IL-1β in the lesion, it's not necessary for us to be nominally better than them as long as we have a different mechanism. Right now, the market is moving rapidly away from TNF inhibitors towards 17A and now 17AF with BIMZELX, which is having a fantastic launch. [Sotalacamab], a drug that reports phase III data any day now, I understand. Still, a minority of patients are really getting to HiSCR75 on any and all of those drugs. Physicians are looking for an alternative mechanism that's not 17 related for patients that are responding. I also think when they look at the side effect profile of the IL-1β class, and we've had discussions with dermatologists about that, they're very favorable to it because it lacks a lot of the other issues that can make it a little bit more complicated to use the 17s. Specifically, what am I talking about? IL-1β is not associated with an increased cancer risk, not associated with an increase in cardiovascular risk, not associated with an increased risk of opportunistic infections, fungal infections, candidiasis, that sort of thing. Taken together, we think we're going to have a very favorable efficacy profile, a very favorable safety profile, and a very attractive dosing regimen with just four doses during the induction period once a month. That's our preferred regimen right now. Yep. I do think that we have a good chance of demonstrating higher efficacy based on the AbbVie data, which was so effective in patients that had really advanced disease. As it relates to cross-trial comparison in HS, I think one of the questions is just how you're thinking about your statistical analysis plan, you know, ABX non-responder, imputation approaches. You know, how are you framing your actual endpoint in that context? Yeah, it's very critical that you do this in the right way and in a scientific way. I think that we are making sure that we're going to do imputation for the modified intent to treat in the right way. I think one of the things you want to avoid is excluding patients from the efficacy analysis based on using an incidental antibiotic that's not going to have any effect against HS, for example. That approach has been taken and wasn't shown to be beneficial with respect to reducing placebo effect. By the way, using HiSCR75, the placebo range is fairly tight between 13% and 18%, as has been pointed out. That's pretty good for a chronic skin disease. You don't really need to do any enhancements there with statistical analysis. We're going to try to avoid that, which can falsely reduce the efficacy, effect size. Yep, yep, makes sense. I think in terms of, you know, next steps here, obviously the IL-1 class has a lot of potential beyond HS. AbbVie is doing a lot of work outside of HS as well. Obviously, you mentioned canakinumab, et cetera. What do next indications look like and when might you be in a position to expand beyond HS? Right, so AbbVie is really investing heavily in this, and I think it's appropriate given the central role that IL-1β plays in so many anti-inflammatory type diseases. That spans the therapeutic areas of GI, rheumatology, and dermatology. They've already done and reported data from a study, a monotherapy study that they did in ulcerative colitis, comparing lutikizumab to Humira. They announced that they were numerically superior to Humira in that trial as a monotherapy. The IBD field is moving pretty rapidly towards combination therapy now. They're continuing to do a study with combination therapy with lutikizumab and Skyrizi in Crohn’s disease. I think that's going to be very exciting as a good chance to be positive. We're interested in that again with what we think could be a superior drug based on our specificity and also higher affinity. They're also studying rheumatoid arthritis and psoriatic arthritis, which are again two pretty obvious choices for IL-1β. I know that they're also doing a study in atopic dermatitis. All of those look very attractive as markets. In our case, we've also been interested and we've done some exploratory work, looking at the feasibility of doing something in crystal arthropathy, particularly CPPD or calcium pyrophosphate dihydrate deposition disease, which afflicts many Americans, older Americans, as many as 10 million may have, CPPD with diseases that range from an acute gout-like illness, only the crystals are totally different, not at all amenable to uric acid lowering therapy, to something that looks like chronic rheumatoid arthritis, to a disease that looks like osteoarthritis, pretty severe, and could lead to the requirement for joint replacement therapy. That's another very attractive area for us to explore, which is clearly related to IL-1β. There's lots of opportunity there. Right now, our focus is on HS, getting this trial done and showing, demonstrating high efficacy and a good safety profile that allow us to get into some of these other areas down the road. Maybe the final question here, you know, can you talk about your cash runway and what's included in those assumptions heading into this HS readout next year? Yeah, we've got enough cash to get us into 2028. We last reported that we had cash at $125 million. We have enough to get us through our phase II data readout. We will have to raise for phase III. As you know, that's a much bigger lift, but we're confident we'll be able to do that based on the data that we generate in phase II. We're not, we don't need to raise money right now. We're very fortunate in that regard. Great, Garry, I appreciate it. Thanks for bearing with me as I wait for this fire alarm to turn off. Always a pleasure. Thank you very much, Alex. Great. Have a good one.