All right, let's get to the live questions. Good morning, everyone, and welcome to the Morgan Stanley Global Healthcare Conference. I'm Sean Lammon, Head of SMID-cap Biotech Equity Research here at the firm. For important disclosures, please see Morgan Stanley Research's disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we welcome from Contineum Therapeutics the CEO, Carmine Stengone. Thank you for your time today. Maybe if we kick things off, would you like to set the stage a little bit and just maybe give us some bullets about the company to commence? Yeah, absolutely. I'm happy to. Again, thank you to Morgan Stanley for inviting us to the fireside. Looking forward to the discussion. As mentioned, I'm Carmine Stengone. I'm President and CEO of Contineum Therapeutics. The main focus for the company is NINI, so Neuroscience, Inflammation, Immunology. I think a lot of people look at that and think these are very disparate therapeutic areas, but as we look at certain targets, there is a high degree of overlap here. We are a clinical-stage biopharmaceutical company, currently running two different clinical assets, two clinical proof of concept studies ongoing with PIPE-307, which is a first-in-class inhibitor of the M1 receptor. We are planning to report data on our second program, PIPE-791, PET receptor occupancy data later this quarter, initiating a global phase 2 study by the end of the year. A lot of clinical inflection points on the horizon that we're excited about. Yeah, exciting. Maybe just to start with some macro considerations before we dig into the detail on Contineum Therapeutics, we're looking at the rise in China biotech in terms of the innovation. A lot of innovation coming out of that country. How are you thinking about your competitive position here? Will it influence your R&D or BD strategy going forward? Yeah, so we're a small molecule organization. Everything that we have put into the clinic has been derived in-house. It's a very focused SAR R&D effort ongoing. I don't see the change in the innovation in China changing our R&D strategy. Where we see an opportunity here is on the collaboration side, accessing additional markets, potentially looking at new programs there. Really important for us, we're in competitive areas. We want to make sure that we have a pulse of the competitive intelligence, which is difficult because the breadth of activities going on in China, I think, are surpassing what we see in the U.S. Thank you, Carmine. A question on AI. Are you leveraging it at the moment? Does it influence your business going forward? Do you see it as a potential disruptor? Again, from an SAR standpoint, we see some real capabilities here, whether it is predicting compound properties or enhancing the speed with which we can look into different chemical scaffolds. We see it as a way to enhance our R&D. Using the efficiency of AI combined with the judgment and precision from our R&D group that has crafted these molecules, we see an ability to potentially accelerate, but again, not a fundamental shift in our overall strategy. Wonderful. Last question on the macro side before we get into the more interesting stuff. What has been the most impactful to Contineum from the regulatory side? Would it be FDA, MSN, probably not, or tariffs? Definitely not MS for us quite yet. We hope to have that issue in the future. As we look at this, tariffs are something that we certainly need to consider, especially as we source drug substance from different parts of the world. Obviously, the most critical for us is interactions with regulatory agencies. With FDA, seeking guidance from FDA and from global regulatory agencies, that'll have the biggest impact on our clinical development strategy, the endpoints that we will seek, and fundamentally in the potential for us to have our compounds reach the market. Wonderful. As I said, prompt to get back onto Contineum specifically, but starting with the LPA-1 antagonist PIPE-791. We're expecting phase 1B PET data in the 3Q for evaluating PK and receptor occupancy in lung and brain. Can you talk about what you're looking to inform developing in IPF? Yeah, so one thing that when we look at our portfolio as a whole, we try to de-risk our assets as much as possible at an early stage. A lot of this comes because we see compounds dying in phase 2 because doses have been missed. In both of our clinical programs, we have taken receptor occupancy studies under our wing to really hone in on what are going to be the most efficacious doses heading into our phase 2. With this, we will look to differentiate against other LPA-1 receptor antagonists with respect to target coverage. We know that target coverage is going to be essential for efficacy. Great. How will you be evaluating those phase 1B data, like receptor occupancy in brain, for leveraging LPA-1 for primary MS? Yeah, similar to IPF. What we want to be able to show is our compound has a very unique pharmacokinetic signature. With a slow on and off rate, we have an extended time above what we hope to be EC90, which is a differentiator against others. We want to be able to make a compound that is as close to a human knockout as possible of the LPA-1 receptor, both in brain and in lung. We think that will maximize the potential for the highest impact in our disease areas. Great. Right. You previously announced postponement of the planned PIPE-791 phase 2 clinical trial in progressive MS and the advancement of CTX-343 to first-in-human space. Can you comment on the rationale and what steps are awaiting for these programs to start running again? Yeah, as we look to the phase 2 study that we're going to initiate before the end of this year in IPF, it looks a lot more like a phase 3 than a phase 2. We're looking at well over 100 sites. We want to make sure that we focus our clinical and operational activities to get that study up and running and make sure that we get our feet under us. As you mentioned, we have postponed progressive MS and we have postponed CTX-343. This was not a cash consideration. This was simply clinical and operational resources. They are postponed, not canceled. Once we have our feet under us with that phase 2 IPF study, we will reevaluate the next steps on progressive MS and CTX-343. We fully expect those programs to move into the clinic. Thank you. Thank you, Carmine. Away from progressive MS for the minute and back to IPF. Can you help provide context on the disease pathology and progression? Yeah, so when you think about IPF, you can consider this as, from a progression standpoint, very similar to oncology. Right. There's about 130,000 patients in the U.S. who have idiopathic pulmonary fibrosis. Annual incidence rate in the U.S. is about 30,000 to 40,000 and 3 million patients worldwide. This is a disease that leads to a reduction in lung function and eventually death. The average time from diagnosis to death, even with treatment, is about three to five years, in line with some of the more virulent cancers. Thank you. Given the poor prognosis, what would be clinically meaningful reduction in rate of functional decline or clinical worsening as it relates to FVC? Yeah, if you look at the treatment landscape right now, there's really a dearth of treatments. We have two drugs in pirfenidone and nintedanib. They are used, but when you look at the overall use statistics here, about 50% of patients who go on those drugs are off them within a year. That is a really stark consideration since this is a fatal disease. A lot of the issues with those drugs are built around safety and tolerability, transaminitis, liver monitoring, pretty severe GI impacts. From an FVC standpoint, anything that can improve upon what we currently have is a win. As we look to the development cycle in the past for IPF drugs, it has been a graveyard. Pliant, FibroGen, the autotaxin inhibitors, a lot of promise, but fizzled out in the long run. I think that we're seeing a renaissance now with some interesting data from Boehringer Ingelheim and their most recent phase 3, and then the Takeda data that came out recently. Sure. Thank you. A competitive question. You know the BMS phase 3 locked up, you have studied it. It's ongoing. How is PIPE-791 and its PKPD properties differentiated from 278? Yeah, so we have a lot of knowledge around the BMS program. The original program that BMS brought into the clinic, BMS-020, actually originated with many of the Contineum scientists at Amira. BMS bought Amira for BMS-020. I think when we look at LPA-1 generally, this is probably the most validated mechanism within IPF outside of the drugs that are already approved. As I mentioned before, a lot of times without the rigor early in development, there's missed doses heading into the phase 2. We believe that that is an issue with Admiral Brand, the BMS drug. They brought two doses into the phase 2 study, 30 mg b.i.d. and 60 mg b.i.d. 30 mg b.i.d. based on the phase 2 really didn't show much different than placebo. The 60 mg b.i.d. showed an impact, but was certainly not maximized. If you look on the PK values in clinicaltrials.gov, it makes sense. The trough concentration, even at the highest dose, was below the EC50. As we know from animal models, as well as from human data, the higher receptor occupancy you can achieve here, the biggest impact that you will have on FVC. The BMS drug also has a couple of other areas where we can improve. It is a b.i.d. dose. It is a relatively high dose. There is a hypotension signal that has come out through all of their clinical studies to date, which has also led them to a dose titration strategy into their phase 3 program. They have moved forward now in the phase 3, dropping their 30 mg b.i.d. dose, keeping the 60 mg, and now adding a 120 mg b.i.d. dose. The only rationale that we can think of to push that dose is to get higher target coverage. It's somewhat uncharacteristic of pharmaceutical companies to bring a previously untested dose into patients in a registration study. Where we differentiate here is we moved outside of the typical IP estate for LPA-1. In that, we identified PIPE-791. A couple of the key properties here, it is based on the pharmacokinetic profile, clearly a QD drug. We are able to push the receptor occupancy, and we hope to be able to validate that in the receptor occupancy study that we'll be reporting out later this month to what we hope will be 90% plus. We know that at trough, we know that at the 60 mg b.i.d. dose from BMS, they were breaching their EC50 at trough. We also have a really slow on and off rate. What this means is that there is a low peak to trough that may limit some of the safety and tolerability issues that are encountered by other compounds within that space. Given these properties, it's QD. It is high receptor occupancy. It is low peak to trough. Really, the ideal situation to have as an add-on therapy for IPF patients. Yeah, wonderful. Great answer. What are your thoughts on the recent Tobato data TIT1 in IPF? How should investors be thinking about these data in terms of how to evaluate PIPE-791 and its competitive positioning? Yeah, as I mentioned, the development cycle for a lot of compounds in IPF has been pretty disappointing. With the BI drug and with Tybosso, there's light on the horizon. We don't have enough information from Tybosso to really make a conclusion here. Having a 96 mL improvement in FVC decline is certainly encouraging. We would love to see more data. Given that this is a four times a day inhaled drug, we're really looking forward to ERFs. The team at Contineum will be there at the presentation, looking at the side effect profile around cough and things like that. This is a renaissance within the IPF space. Sure. Wonderful. Just moving on to PIPE-307, your M1 receptor antagonist program, can you give us an overview of the program and how it's currently partnered? Yeah, so this is the M1 receptor antagonism is the mechanism that started Contineum. Our initial interest in this target was built around relapse-remitting MS. By inhibiting the M1 receptor on oligodendrocyte precursor cells, and these are cells that are fated to become remyelinating oligos, we can restart the, we hope to be able to restart the remyelination process in these patients. The compound is currently in a phase 2 clinical proof of concept study. The study was fully enrolled very early this year, about two and a half quarters ahead of schedule. It is a testament to patients wanting to and understanding that remyelination is the hole in the current treatment paradigm. 168 patients, last patient, last visit has been completed. We anticipate putting out data in Q4. This asset, PIPE-307, was partnered with Johnson & Johnson in the first half of 2023. Very favorable economics for Contineum. It came with $50 million upfront, $25 million into our crossover round in the IPO, participation in the IPO, as well as a little bit more than $1 billion in milestones that can be achieved on the horizon. That is a split between developmental, regulatory, and commercial. Royalty at that ramp up to the high teens. We have an opportunity to co-fund into the phase 3 programs should we choose to, to enhance the economics even further. We thought Johnson & Johnson was the ideal company for this collaboration given their, you know, pretty high-level focus on neuroscience. Definitely. Maybe you can give us a bit of insight into the phase 2 study design and sort of what should we be expecting or what are you hoping to show in Q4? Efficacy. As I mentioned, this is probably the biggest remyelination study that has been run. It was actually over-enrolled beyond the 168 patients. There is demand for remyelinating agents within this space. The two primary endpoints around the study are safety and tolerability, as one would expect in a phase 2, and the other is built around low contrast letter acuity. In MS patients, most patients have a chronic optic neuropathy. What this means is that the signaling from the retina to the visual cortex through the optic nerve is blunted due to demyelination. The functional biomarker to measure this is called visual evoked potential latency. Measuring that signal and an improvement there should lead to an improvement in low contrast letter acuity. That is the primary endpoint. We will certainly be putting out data around LCLA. Beyond that, we haven't publicly stated what else we will be including in that top line data. Stay tuned. Thank you. Just looking back to the phase 2 results with nintedanib, how could PIPE-307 help to mitigate the tolerability profile while delivering therapeutic benefit? Yeah, so with Clonastine, this is a study that was run years ago called the REBUILD study from investigators at UCSF. Single site study focused on VEP. A little bit about Clonastine. This is a first-generation antihistamine, but it has broad anti-muscarinic properties. This was brought into a 50-patient phase 2 crossover design study to demonstrate whether you can see an improvement in remyelination. The main focus here was VEP. As you mentioned, Clonastine is not a clean drug. Biggest issues with it were really around fatigue and also dose limitations that limited the level of receptor occupancy. After the REBUILD study was done, scientists at Contineum Therapeutics, as well as researchers at UCSF, found that the driver of that remyelinating impact that was seen was solely driven through the M1 receptor. In having a selective M1 receptor antagonist without the other anticholinergics or without the antihistamine allows us to push the dose, and then that allows us to hopefully have a better signal with respect to remyelination. All right. Thank you. Excuse me. Thinking about remyelination and therapeutic benefit, if this was positive, where would you see PIPE-307 positioned within the RMS treatment paradigm? Yeah, so looking at relapsing-remitting as a whole right now commercially, there's a little bit more than 20 drugs approved. Last year, the overall sales were about $27 billion. On average, every drug is a blockbuster if you look at those stats. In the VISTA study, patients who came in, everyone was on background therapy. This was a simple add-on onto Gilenya, onto Ocrevus, onto anything that was out there. This is really a transformational opportunity to be able to have a drug that can be used on top of every immune modulator and really lead to that polypharmacy approach. This is the only aspect of the potential drugs to treat these patients that addresses the hallmark of the disease and the key driver of disability, which is demyelination of the axon and then axonal degeneration. Wonderful. Maybe just start moving on to PIPE-307 in depression. Can you touch on prior clinical data with scopolamine supporting M1 receptor antagonism for depression? Yeah, so this is a kind of a similar cadence to what we saw with 307 in relapsing-remitting. The clinical data preceded the actual mechanistic rationale. There were investigators at UCSF, Maura Furey, and Wayne Drevitz. Wayne Drevitz is now the Head of Neuropsychiatry at Johnson & Johnson, as luck would have it. They ran multiple studies using scopolamine. What they did is they found that at a 4 microgram per kg injection in major depressive disorder patients, I believe it included bipolar patients as well as treatment-resistant depression, a single dose leads to a very rapid improvement in the MADRS. In the studies that they ran, these were crossover designs. I believe they were four weeks each, two weeks on dosing, two weeks then off. They saw a rapid decline in MADRS. Even when patients were taken off of drug, you saw that benefit of MADRS stay at least to the end of the study. This is a pulse dosing scheme that they used here where the patients were only dosed twice a week. It was replicated multiple times. Scopolamine is a more typical anticholinergic, pretty broad activity against all five of the muscarinic subreceptors. Subsequent to the Furey and Drevitz data, investigators at Johnson & Johnson and Lilly elucidated that the benefit that was seen on MADRS was driven through the M1 receptor. Right. Got you. Thank you. The MDD study in partnership with Johnson & Johnson is posted on clinical trials, given estimated clinical trials with an estimated completion date of June 26, 2026. Are you able to comment on enrollment in terms of inclusion, exclusion criteria, or rate to completion? I would love to be able to tell you more, but given the relationship with Johnson & Johnson, I'm limited. With that, sure. How are you thinking about 307's profile in terms of frontline monotherapy versus as an adjunct to background antidepressants? Based on what we've seen with the scopolamine data, it looks like this can have very broad use across MDD and potentially other indications within the depression space. Wonderful. Maybe just to help sort of size out market, on the IPF front, you know, could you sort of size out the market opportunity for us? As I mentioned before, 130,000 patients in the U.S., three to five years survival even on drug, and then those who are not on drug or those who start the currently approved therapies in nintedanib and pirfenidone roll off drug within a year. There's nothing out there that compels patients to stay on this. A big hole in the treatment paradigm for these patients is these drugs don't make them feel better. With nintedanib, which is, again, one of the two compounds approved for IPF but has a lot of liabilities, it's still generated over $4.5 billion in sales. If you look at everything that comes along with this, with the diarrhea, the transaminitis, and everything else, patients don't feel better on the drug. It's hard to tell someone, "You have three to five years to live. Maybe we can extend it by a year or so, but you're going to feel worse." Anything that improves the quality of life of these patients is going to be really important. We think that given the profile that we've seen with LPA-1 receptor antagonists, this is something that can be helpful. Just using that one comp of nintedanib and the sales that they're able to achieve, this is really just a drop in the bucket at this point. Sure. Maybe to help investors sort of build out a market model, we know what the TAM potentially is, but just in terms of the touchpoint and the clinical pathway, how does it work? Yeah, so this is all built around improvements in FVC. Right now, we have some compounds that are able to move the curve up a little bit. Still a reduction in FVC going forward. As we age, we all have FVC declines. The holy grail here is, can you stabilize the disease? When you begin treating these patients, can you flatline it? We haven't seen the ability for a true antifibrotic approach. That would be fantastic. I think right now, any improvement that we can make in that FVC decline and have a positive impact on the quality of life in these patients is critical. Right. How do you think the reimbursement pathway might work? We know that pirfenidone and nintedanib are reimbursed at this point. I don't see any issues with this. Right. This is a fatal interstitial lung disease. It's not only IPF. You start with IPF, then you move into PPF, and then the ILDs associated with RA and other areas. There's a scope here that really increases the reach that you have with all of these compounds. Right. Some physician access sounds pretty straightforward. There's sort of limited touchpoints, limited expertise. You've got lower touchpoints, and therefore it might make market penetration easy. Maybe talk us through that. Yeah, so that was some of the considerations that we had with Johnson & Johnson with PIPE-307. We looked at the indications that we were going after. Relapse-remitting MS and depression is not something that a small biotech can really handle on its own. Sure. We chose the ideal partner there. The difference with PIPE-791, especially in pulmonary fibrosis, is this is an orphan disorder. This is something that a small company can bring forward. The sales force required for this, focused on pulmonologists, is something that can be handled through smaller organizations. That's for idiopathic pulmonary fibrosis, and that also follows through to our eventual restart with progressive multiple sclerosis. We can bring this forward and make sure that we have the commercial capabilities to drive this. Sure. How do you think about potential pricing? I mean, it might be a little way off, but how do you think about potential pricing against the existing therapies? The existing therapies aren't cheap. They average about $135,000 a year. In our modeling, we take a general annual price increase upon that. For our modeling, we are using pirfenidone and nintedanib as the current standard. That being said, being able to improve upon the properties and have a better impact on patients, obviously, that grants us a little bit more flexibility in the future. Sure. Thank you. Maybe just to sort of map out, we've talked a little bit about this, you know, some of the catalysts coming up. What does the catalyst pathway look like over the next few years? What's sort of an ideal outcome for Contineum Therapeutics in terms of getting progress to market? We went public in April of last year. One of the criticisms that we got early on was there's a data desert. We have now gotten through that data desert. We have multiple clinical readouts over the coming 12 months that could be truly inflectional for the company. The PET receptor occupancy data for PIPE-791 in brain and lung is important. We had a high degree of confidence already based on our non-clinical modeling on top of our human PK from the phase 1 study. We were very confident in our doses. This was just a validation of those doses to kick off the phase 2. We'll have that data out this quarter. In the fourth quarter of this year, we'll be putting out top line data on PIPE-307 in the remyelination study. With PIPE-791, we have an exploratory study also ongoing in pain. I want to caveat this, that we understand the intricacies and the challenges in getting pain drugs through clinical development. Based on non-clinical data that we had in non-human primates, as well as some pretty impressive literature precedent, we moved into a placebo-controlled crossover design study looking at osteoarthritic patients, as well as chronic lower back pain. We will be reading out that study in the first half of next year. As you mentioned, I can't really go into the timelines, but Johnson & Johnson has on their clinicaltrials.gov that they expect completion in the middle of next year. Arguably, one of the bigger catalysts for us is Bristol Myers Squibb data. They are now fully enrolled in their phase 3 for idiopathic pulmonary fibrosis of about 1,100 patients. The expectation is they will be putting out top line data in the fourth quarter of next year. There's a nice cadence of events for us over the coming 12 months or so. Sure. Do you think that sort of accommodates recent stock price performance? Is there something that you think the market might be appreciating about Contineum Therapeutics stock? How do you think, if there is, how do you think about addressing that? These are all huge opportunities that we're looking at. We chose the ideal partner in J&J, but we held on to very favorable economics there. As we mentioned, we can drive the IPF program and the progressive MS program on our own should we choose to. I think that some of the improvement in the stock over the last couple of quarters was more constructive investor engagement and purchasing, a lot of that driven by near-term milestones. When we IPOed, I would say 65% to 70% of the discussions that we had were built around IPF. That has equilibrated a bit now. Now that people look at a completed phase 2B study in remyelination, any improvement in remyelination could end up being an add-on treatment on top of all other current relapse-remitting drugs. We think that people are looking at the catalyst calendar, and success on even one of these can be really incredible for the equity value of the company. Sure, sure. We've talked about a lot, Carmine, but a few minutes left. What should I be asking or what haven't I asked you today that you think I might be missing? Yeah, I think a lot of this is built around the IPF study and the differentiation. I know we've gone through some of that. When we look at our competitors in the space, and as we look at IPF generally, I believe that LPA-1 is the most validated target out there. This is credit to the Amira Pharmaceuticals team and to Bristol Myers Squibb. We now have over 500 patients' worth of data out of three phase 2 studies. Two on 278 in IPF and PPF and then 020. I think it's indisputable that LPA-1 receptor antagonism works. I think people underappreciate that. I think that investors have been, they've been beaten down in IPF. We had high expectations for PLIANT and Fibrogen and things like that. The validation wasn't there beforehand. I think what we do a good job of at Contineum Therapeutics is we're running multiple clinical studies over these two clinical assets. Of the indications that we're looking at and the main drivers of the company, there is a high degree of clinical validation in IPF, in MDD, and in relapse remitting. We're a small organization. We're still pretty young as a public company, but we have heavily de-risked assets that increase the probability of success that we are able to work through these POC readouts and hopefully bring this into larger registration studies. Wonderful. Two minutes left, but is there any message before we sign off that you'd like to leave investors with? It sounded like you just wrapped it up nicely. Yeah, the risk in our industry is probably the scariest part of it. Anything that we can do to mitigate that concern, whether it is receptor occupancy studies to hone in on the doses that are important, looking at other companies' clinical validation, is valuable. I do want to credit the research and development team that we have. They have chosen some pretty tough targets where pharma has brought forth assets that were probably less than ideal. We have taken the time to look at their data and then craft molecules that I think are best-in-class approaches. Having an IPF drug that is QD, that has high levels of receptor occupancy, that potentially limits safety and tolerability issues, this is a drug that would be used across the board. Awesome. That might be an appropriate place to park the discussion, but it's been wonderful hosting you, Carmine. Thanks for your time. I appreciate it. Thanks, Sean. Thanks.