... All right, we're gonna get started with our last company session of the day. This is a good one. We've got from Equillium, Bruce Steel, Chief Executive Officer, and Stephen Connelly, Chief Scientific Officer, who's gonna tell us all about aryl hydrocarbon receptor modulators and why they matter so much. All right, gentlemen, welcome. Bruce, maybe set the stage for us. You recently completed a financing to advance this program. Where is Equillium coming from, and where are you headed? Great. Thank you, Josh, and the Cantor team for hosting us. Pleasure to be here. I'm with my colleague Stephen Connelly, co-founder and CSO. Yeah, we're at a very exciting time in Equillium's trajectory. We started the company with a mission to develop highly impactful novel therapeutics targeted for severe autoimmune and inflammatory diseases. We have a deep sort of immunology expertise and team led by Steve and his colleagues, and we're very excited about EQ504. This is a program that we acquired in Q4 of last year. This was a off-market sort of inside transaction from our largest shareholder at the time, Decheng Capital. They had sort of incubated this asset, led the initial discovery effort. We started talking to Decheng during the course of 2024 about bringing it into Equillium and really redirecting it towards autoimmune and inflammatory indications under Steve's scientific leadership and insights. We had some additional work to do around the program to prepare this for clinical development with that therapeutic focus, and so we announced the program in April. We felt that the target biology is extremely compelling, but in addition, the target product profile, particularly in ulcerative colitis, which is our lead indication, is very compelling, and that there is extensive clinical validation around the AhR target biology with approved therapeutics as well as other products that are available. So with that as the backdrop, you know, we were out raising capital around this program. The recent Abivax data with obefazimod, I think really triggered some investor interest and a potential connection to AhR modulation with that program, and that's really what catalyzed the recent financing. Just to touch briefly on that, and then we'll turn it over to you and Steve to talk more in depth about EQ504. We did just recently announce a $50 million financing. The investor syndicate, you know, great group, Janus, Adar1, Adage, Coastline, and Woodline were the investors that came into the company recently, so we're very pleased to have that investor support. $30 million was received upfront, with an additional $20 million financing tranche expected when we initiate our, our clinical development program mid-year next year. So with that, I'll turn it back to you, Josh. We're gonna have a great time geeking out on really interesting science. So we got Stephen to walk us through this. So let's start at the beginning: What is an aryl hydrocarbon? An aryl hydrocarbon is a small, planar ligand. These are typically polyaryls. You have chlorinated polyaryls. They can be heterocycles, they can be quinoline cores, but they're essentially flat planar molecules that bind to the xenosensor aryl hydrocarbon and initiate a number of important immune and physiological pathways in our barrier tissues. Where do they come from? So there are a number of different sources, so let's categorize them. There are. Let's start with the ones furthest from the body. So they can be exogenous, unnatural, cigarette smoke, burning fossil fuels, all of these things that lead to essentially hydrocarbons being modified. That's a good source of aryl hydrocarbons, and our body senses those and then triggers immune and physiological pathways to counteract them. But there are a number that are, what we'll categorize as, endogenous, natural. And so those come from eating plant sources, so cruciferous vegetables, high amounts of tryptophan that get metabolized into aryl hydrocarbons, and we also have plant sources and bacterial sources of these. We also have a number that we make endogenously in the body. In 2002, the first aryl hydrocarbon ligand was identified that was synthesized in the guts and lungs of humans, that activated AhR, then was rapidly metabolized. We know that loss of aryl hydrocarbon or loss of aryl hydrocarbon ligands leads to severe dysfunction in barrier tissues, be it the skin, the gut, the lung, or the eyes. Why do we have receptors to aryl hydrocarbons? What's the theory? Yeah, the theory here comes from just our interaction with the external environment. So we have a number of molecules that are produced in the skin that are then modified by UV light, and they help modulate bacterial interactions, and they help modulate barrier function. And so you also find them in the gut, which is the area which is most widely studied in the context of aryl hydrocarbon receptor biology, and that's produced sometimes by the plants we eat, it's produced by bacteria, it's produced by our own cells. And what that does is it just maintains this sort of signal flux between the external environment and the internal environment to keep the immune system in check and to keep our barrier function working. It's a very well-conserved pathway that we find in sort of eukaryotes, and one that we know that if you inhibit or you knock out the pathway, that you can disrupt immune physiology in the barrier tissues as well as barrier function. Do we have an understanding of kind of that downstream signaling process once an aryl hydrocarbon binds to its cognate receptor? ... Sure. So the aryl hydrocarbon receptor sits in the cytoplasm of almost all cells, but it's most highly enriched in your barrier functions, barrier tissues for that barrier function. When these ligands bind to the aryl hydrocarbon receptor, it moves into the nucleus, and it binds to DNA. Now, in an epithelial cell, the DNA areas that, and the chromatin that are open are related to barrier function. In the immune cells, the DNA and chromatin areas that are open to binding are related to the immune cells. So contextually, depending on the cell you are, aryl hydrocarbon will trigger these important cellular pathways related to your endogenous function. So immune cells will produce anti-inflammatory cytokines, and epithelial cells will produce barrier function regulation proteins. Again, so when this pathway is impaired, what are the consequences? They've done this in a number of different models. Let's take the animal models, because that's the one we can control the most. If you knock out AhR or you use siRNA, you disrupt barrier function and immunology or immune function in those barrier tissues. If you knock out AhR, you get animals with a lot of pneumonitis, a lot of colitis, a lot of atopic dermatitis. You just lose that ability to modulate between the external environment and the commensal bacteria that may be present, which are obviously pro-inflammatory in their nature, as well as your ability to resist infiltration of those pathogens. Okay, and what... Have there been challenges designing AhR receptor-targeting compounds? If so, what have those challenges been, and how were they overcome? So if we think about what the aryl hydrocarbon receptor is, it's a large protein that has a big credit card slot receptor pocket, and this binds these flat planar rings, and there's probably hundreds, if not thousands, of molecules that bind to AhR. There's actually no fewer than 13 approved drugs that have AhR binding properties by virtue of them just being flat and planar. So there's a lot of molecules out there that people can use as tool compounds, that people have used in biology for a long time, but they tend to be flat, planar, non-selective, and insoluble. They're great in the lab, but they don't necessarily make good drugs. So the key challenge, the first of the challenges for designing AhR modulators, is you wanna have one that has high potency, high selectivity, and is rapidly cleared so that it can bind, activate, and then be cleared from the body, and that's really how the AhR modulator function works. And I guess the goal, if we're gonna be targeting IBD, is that you need to get into the cytosol of the cells, but you don't necessarily want systemic bioavailability. Is that kind of the profile that you're thinking, or does that not matter? We don't need full gut restriction here. Because the very nature, when you bind the aryl hydrocarbon receptor, and it turns on genes, one of the genes it turns on are the metabolizing genes, CYP1A1, CYP1A2, et cetera, and then that chews up the ligand and then destroys the protein, and that terminates the signal. So if you take a drug and you ingest it, and you get it into the systemic, it's gonna go and hit all of these cells with AhR in, and it's gonna basically get chewed up really quickly. And then you're gonna get very little that moves out to the colon. Where we wanna be in the colon, right, recall, is you wanna be in the terminal epithelial cells, the luminal cells, the ones that are hardest to get to, the ones that are most proximal to your digestive tract. So it makes pretty poor sense, and it's very inefficient to take a drug systemically and then have very little of that move out to the colon. So the way you typically use AhR modulators, like in the context of Vtama and Dermavant, is to apply them topically. That way, you can get as much drug as you want onto the tissues of interest. It activates, it gets chewed up, and then less will get into the systemic. So really all we're doing by enterically coating is flipping that paradigm so that we have a better chance of optimizing tissue exposure versus peripheral blood exposure. Are aryl hydrocarbon receptors on the skin essentially the same in terms of physiology as the receptors in the GI tract? Yes. There's no reason to believe that your AhR receptor in the skin is different than the AhR receptor in the colon. But because a skin cell is different than a colon cell, that when AhR binds its ligand, and it moves into the nucleus, and it binds DNA, the chromatin in the DNA that is open in a skin cell is different than the types of chromatin in DNA that is open in an epithelial cell. So when you bind AhR, and it activates these genes, it's going to activate genes that are more physiologically relevant in skin for skin cells and more physiologically relevant in the GI for GI cells, and the same for immune cells and the same in the liver. For instance, the liver, when you activate AhR, it's a strong detoxification response. When you activate in an immune cell, it's a strong immune cells response. Got it. Well, so you touched on Vtama, and where I think the story gets really interesting is the clinical validation that are actually coming from a few programs and data points. Let's start with Vtama. How does it engage with aryl hydrocarbon receptors? Maybe share a little bit about its profile, at least on its skin application. Yeah, sure. So there's probably a good story and analogy here when we think about coal tar and its use. So coal tar, this black tarry substance that is full of burnt aryl hydrocarbons, that's been used for centuries to treat psoriasis and atopic dermatitis quite effectively, but clearly it's not a drug. In 2013, they identified that it was the aryl hydrocarbon receptor and the aryl hydrocarbon receptor ligands in coal tar that was driving the efficacy in psoriasis and atopic dermatitis, and when they knocked down AhR, coal tar lost its efficacy entirely. Dermavant approached GSK, licensed tapinarof, essentially to make a single pure agent, coal tar analog. What you have is a tapinarof, a single agent that's then topically formulated, applied to the skin, and now you have a drug. It's really important to highlight that Vtama, as a small molecule applied topically, has biologic-like efficacy. Now, topicals have their own challenges in atopic dermatitis and psoriasis, but you can't sort of, you know, deny the fact that when you do biopsies on those skin, you see activation of immune pathways, and you see activation of barrier tissue function, and you see a very quick and deep clearance of inflammation in those skin. Could Vtama be used for IBD? That's a really interesting question. Dermavant, while developing Vtama, had in its pipeline a novel AhR program for the development in GI disease. Tapinarof is a natural product, so its patents rely largely on the topical. There could be a driving force there to say, "Well, we need a new molecule because we can't use the same topical." But it probably goes deeper than that, because tapinarof as a natural molecule in its unmodified state is an antibacterial or an antimicrobial, and it also can be lymphocyte toxic. When you ingest that, and you've got your microbiome around, there's probably a lot of challenges with ingesting tapinarof, and not to mention the fact that tapinarof is very insoluble. So that works great when you're on the skin, and you can use creams to help facilitate the topical administration, but in the colon, that's probably a big disadvantage, and so I think from that perspective, Vtama is not an optimal molecule, and that's probably why Dermavant at the time were developing a novel molecule to go after ulcerative colitis. Okay, and I think in your corporate presentation, you flag indirubin and indigo is also now starting within IBD to validate aryl hydrocarbon receptor modulating therapeutics. So tell us a little about those two compounds and what they've shown. Yeah, sure. So because we know there's just an enormous amount of these aryl hydrocarbon receptors out there, we can get them from our diet, we can get them from plants, we can get them from bacteria, et cetera. Just like the coal tar story, that coal tar, you have an edible form of this, which is indigo naturalis. It's a Chinese herb that's very highly enriched with aryl hydrocarbon ligands, specifically indirubin and indigo, very potent ligands. They're flat, they're planar, they're not very selective, and they're poorly soluble, but they are very profound in terms of their activity in ulcerative colitis patients. So across multiple Phase II studies, they've seen clinical remission rates of north of 40%, up until 50%. And what you see consistently in those studies in the Mayo Score is very high levels of endoscopic healing, and that's driven by induction of IL-22. And IL-22 is a cytokine that has strong mucosal healing properties. It actually is a drug target in and of itself. And so what you see when you administer an aryl hydrocarbon ligand to the aryl hydrocarbon receptors in the GI is upregulation of IL-10. That suppresses pro-inflammatory responses, and you see upregulation of IL-22 that causes very fast, deep wound healing and mucosal healing in those patients. And so that serves as a sort of great proof of concept in terms of the ability of AhR as a mechanism to drive deep clinical remission rates, but of course, as a botanical unregulated, it's not really a drug. So what we're essentially doing is very similar to what Vtama did when you took coal tar and made it into a single agent. We're using Indigo naturalis as a good way to think about proof of concept and clinical validation, but we're gonna develop EQ504 as a potent, selective single agent that will be enterically coated and delivered directly to the colon. It's been fascinating thus far, and it gets even more fascinating when we talk about how Abivax recent data ties into this, because I don't think anyone thinks of that program in any way related to aryl hydrocarbons, but why does their program matter? So, you know, I'm no expert on Abivax molecule, so we'll put that caveat straight out there. But what I think is very interesting is that if we just look at the chemical structure of obefazimod, it's a planar aryl hydrocarbon. It's a quinoline core, for which we know that other molecules very similar to that can bind and activate AhR. It's also not out of the realm of possibilities, because we've got 13 other drugs that we know of that bind AhR, that are already approved. They're just not used at levels pharmacologically relevant. And so I think some of the early preclinical data of obefazimod in DSS colitis, which is an animal model very routinely used to look at ulcerative colitis, they saw a very strong induction of IL-22, to a lesser extent, IL-10. Those seem to be hallmark cytokines of AhR activation. Interestingly, furthermore, in that animal model, when they neutralized the IL-22 signature in the guts of those animals, they lost efficacy. At least in the animal model, that data would suggest very clearly that there is a strong sort of signature of AhR modulation. Now, more recently, various groups in the investor community have done independent research, have shown data, that it is likely a binder, and is likely an activator, albeit a weak one. So I think with the Abivax's data, the possibility of that being an AhR modulator is quite compelling, because that's a mechanism that's very well characterized in the context of ulcerative colitis. The cytokine signatures on a preclinical level are very well characterized, and one of the things that we see consistently with AhR modulation through Indigo naturalis is very deep mucosal healing responses, and again, that's also something similarly seen with obefazimod, with its really stellar data that is recently reported, so I think there's a lot of buzz out there because maybe obefazimod has, in addition to its miR-124 modulation properties and its cap binding abilities, is weak AhR modulation, and so it begs the question is that, if one was to develop a molecule a priori against AhR, how would you do that, and how would you optimize target engagement, and if you optimize target engagement, could you bring efficacy closer to the benchmark or bookmark, I should say, of 50% that we see with the natural botanicals? It's such a satisfying answer to the mechanism by which obefazimod works for many of us who've struggled with that aspect of the narrative. But very, very compelling data, at least for them, and perhaps just the beginning of the ability to really exploit aryl hydrocarbon receptor targeting to improve outcomes. Maybe just to pause here, because Stephen, your knowledge of this space is encyclopedic, right? Thank you. Maybe give us a little bit of that, a background as to, you know, what triggered your interest in aryl hydrocarbon receptor in the first place, and how long have you been following this field? Sure. So Equillium, since its inception in 2017, has been a company with strong tissue immunology experience, and over time, we developed more in the area of mucosal immunology. Our acute GVHD program was oriented towards GI disease. We also did an ulcerative colitis study with that anti-CD6 antibody. We had a celiac disease program targeting IL-15 and IL-21. So as a company, deep expertise in mucosal immunology. And so as we were looking to add to the pipeline, in sort of 2023, 2024, we came across the aryl hydrocarbon receptor pathway. And as we dug in and we saw this level of validation, and there's just so much directional evidence that not only is this a very well-characterized pathway, which helps, and not only do we know a lot about the ligand binding and what you want out of a molecule and what you don't want out of a molecule, but there's a lot of clinical proof of concept in multiple diseases. And so that triggered sort of our hunt for an aryl hydrocarbon receptor. We were very lucky at the time that one of our lead investors, Decheng Capital, had been incubating a company that was developing aryl hydrocarbon receptors, and the aryl hydrocarbon receptor that they had used as a base scaffold was one called ITE. Now, ITE is a naturally occurring endogenous, non-toxic AhR ligand that's made in the guts and lungs of humans. It activates AhR and then is cleared very quickly. And that gave us sort of confidence that maybe that is the right target scaffold to use versus some of these unnatural sources because we can closely mimic natural biology. It's a tryptophan scaffold, and so they underwent an enormous structure-activity relationship campaign and developed EQ504 as a very potent, very selective AhR modulator with good drug-like properties. Now, one of the key important things about this, unlike others, is that it comes from a non-toxic scaffold, but it's also water-soluble. When you wanna deliver drugs to the colon, which has low levels of fluid and has a mucosal layer, and you have damaged tissues, insoluble molecules may not be an attractive attribute. Our thesis here would be to have a very potent, selective AhR modulator that you can deliver in small amounts directly to the colon and be very much a targeted approach to treating ulcerative colitis. Is this, is this a topical targeted approach? Or like, do you need to really cover the, the colonic area that's inflamed, or is there, are there kind of bystanders or endocrine-type effects that can benefit? Yeah, so topical's an interesting one because when I think about topicals, I think about creams that will just sort of layer out over the skin. And so I like to use the word GI-targeted because we do want some penetration into the, into the GI, and we will get penetration through, and there will be some systemic exposure. There's systemic exposure with tapinarof, albeit very low. But I think what you... what we wanna separate ourselves from is that we're not a gel that needs to coat all of this. We're gonna distribute the compound into the GI tract, more proximal to the damaged areas. In ulcerative colitis, that's basically the ascending, transverse, and descending colon, by using standard enteric-coating capsules, which have been around for, you know, decades. I think that gives us a better opportunity to optimize tissue exposures and minimize systemic exposures, whereby you can feel more confident that you've hit the target sufficiently. I mean, ulcerative colitis from our perspective, and I think many share this view, is. It's a local disease. It's one that's happening in the GI tract, and so it makes a lot of sense for us to just go after it directly via the digestive tract locally. I like to think about this as sort of locally acting or GI-targeted, not necessarily topical as we may think about a cream or gel that would need to cover the inside of the colon. Maybe you can share some of the preclinical work that's been done with the compound, either from a tox or an efficacy, if there are appropriate animal models to explore efficacy. Yeah, so for the first time in a long time, I've got the benefit of just this enormous wealth of information that's published from the studies that have been done at Harvard Broad and other areas where these sort of key investigators studying aryl hydrocarbon receptor activity have already published. And so one of the things that we did is we looked at all of these key studies and said, "Show us studies where we can show we can improve barrier function," and we can improve barrier function against competitive molecules like tofacitinib, which is a strong anti-inflammatory, but doesn't necessarily improve barrier function. And we can show that we bring more to the table in those experiments than just ability to attenuate the inflammation. We've also done wound healing. We've done modulation of Tregs, T effector cells, macrophage biology. All of this has already been demonstrated by people out there in the public domain, and what we've been able to do is take our molecule in against sort of appropriate competitor molecules. For instance, we use the chemical constituents out of Indigo naturalis, and we show that consistently we're more potent and more selective than those molecules in those studies. Yeah. The big study, I think the one to draw attention to here, is the DSS colitis model. In the DSS colitis model, which was also a model that Abivax completed with obefazimod, is a very informative model. We'll not necessarily call these models predictive, but they're very informative for ulcerative colitis. In that model, we were very effective at one mg per kg in mice, which is about a human dose of about five mg total, so a very low dose, very potent molecule. We saw strong mucosal healing responses, strong induction of IL-10, strong induction of IL-22. It's that, as a model, that we think is gonna be informative as we move into patients, first normal healthy volunteers and then patients, if we want to show that level of engagement of target and that level of induction of those important cytokines. I guess first, before talking about the Phase I program, what is left to be done before that's ready to start? ... Yeah, so we've done all of the key IND-enabling studies here in terms of, you know, our toxicology program, et cetera, the genotox, everything that you, you know, you require to move into humans. The key activities between now and the clinic, we characterize as sort of low risk, but time-consuming, right? So they're manufacturing. We're essentially going to make mini tablets or microspheres, which are coated with our drug and then enterically coated, then they're put into a capsule, and so you can titrate the dose up very, very conveniently. And so those need to be made, put on stability, then we need to do the manufacturing process. So that's about six months of work, and then from there, we plan to move that into normal healthy volunteers. Now, one of the benefits of doing this level of formulation work up front, which is typically done after Phase I, is that that's another level of validation we'll get from a Phase I study, is that our formulation can deliver this directly to the colon. Okay, and when do you expect the Phase I program to start and conclude? So we're expecting Phase I to initiate in mid 2026, and then typically with Phase I studies, they're about six months to run, a very typical SAD/MAD cohort. And we're also considering at the company, you know, how we can accelerate from Phase I into a 1b or early 2a, where we can really start to think about dosing patients. So that's something we'll provide further updates on. But the SAD/MAD study, we are fairly confident about initiating, mid-next year, and then having data within six months of initiation. You talked about getting receptor occupancy data in healthy volunteers. How do you do that with this type of a therapy? Pretty much all the drugs that we think about these days, excepting, I guess, for the GLP-1s that have dominated the sphere, are typically inhibitors. For target occupancy, one wants to be above the IC50 and occupy the target all of the time. When you're doing normal, healthy volunteer work and you're suppressing a signature, the signature needs to be high to see a suppression of the signature. Actually, what we're doing is we're inducing pathways, and we know we can induce these pathways in normal tissues, and we can induce them in diseased tissues. We have the ability in healthy volunteers to induce these pathways, and what we'd look for is a sort of a plateauing out on a dose level of inducing IL-10 and IL-22. I think if you can look at tissue levels of drug, blood levels of drug, safety tolerability, target engagement, I think that sets you up really well to move into ulcerative colitis patients, where they're hard to come by. You don't wanna be doing too much experimentation at that point with a limited resource, which is your patients. I think having a really informational and Phase I is really gonna not only create a lot of value for the program, but it's gonna de-risk, I think, the movement of that program into Phase II. So, IBD is kind of a grab bag of indications. You did mention ulcerative colitis. As you're thinking about where to take the molecule or the program, how are you thinking about prioritizing indications which may be primarily GI or, in theory, could extend outside of GI? Yeah, so the data suggests with Indigo naturalis that it's very effective at treating ulcerative colitis, but was less effective at treating Crohn's disease, and that's not overly surprising because at a base disease-causing or etiology level, they're actually very different diseases. We tend to group them the same because clinically they, they've got GI damage, and we see a lot of bystander inflammatory cytokines that are common across both, so our strategy here would be to go directly after ulcerative colitis or pouchitis, so diseases of the colon, with a colon-targeted formulation. In the future, we could come back with a different formulation and go after Crohn's. But there is this sort of way to think about strategy here, which is if we wanted to go after Crohn's and colitis, we'd have to change the formulation, and there I think we'd be less targeted, and there I think we'd be less optimal. And what we might end up doing is ending up with neutered efficacy in two indications versus actually strategically going after ulcerative colitis and aiming to be the best ulcerative colitis medication there. I think from there, we can do a number of things. We can change the formulation in the gut, and we can go after Crohn's, or we can take that single agent molecule because of its very attractive drug-like properties, and think about formulations that may be able to be inhaled and nebulized and go after lung diseases, where there's a lot of emerging evidence of not only an anti-inflammatory effect, but an anti-fibrotic effect in lung tissues. And so again, as we've thought about, one of the key challenges is having a very effective AhR modulator. We believe we have that in EQ504, and the next challenge would be delivering that directly to tissues. And of course, we can do that with enteric coating strategies, and people are already doing that with nebulization and inhaled formulations in lung diseases. Since you said pneumonitis at the start, I was gonna ask if there'd be an opportunity for an inhaled approach, so you beat me to that question. All right, last question: As we're waiting for the programs to get underway, what can investors expect in terms of news flow and/or just awareness-raising from Equillium? Yeah, great, great, question, Josh. So we are now just kind of restarting our overall investor engagement program. We will certainly be expecting to host a KOL event sometime this fall. We think that will be a very insightful event with some great thought leaders on both AhR as a mechanism, but also how that applies to ulcerative colitis as a lead indication. So we can look to that. We plan to be doing some additional work between now and clinical study start to potentially further elucidate some of these pathways and comparisons we've talked about earlier. So we'll see how some of that work turns out. But I think overall we'll be... The financing we just completed was a very focused financing. Very few investors were really even contacted for that round of financing. So we're now broadening out the investor engagement and dialogue, so we're looking forward to that process. All right. Getting the word out. Yeah. Great way to close our company tracks for our healthcare conference. Thank you, Josh. Thanks so much for joining, and thanks, everyone, for tuning in. Thank you.