Terrific. Okay, welcome everyone to the next session. Thanks so much for joining us. I'm Steve Seedhouse on the biotech team here at Cantor. This is the Global Healthcare Conference, of course, and a privilege to welcome Equillium for the next session. I'm joined, of course, by CEO Bruce Steel, CSO Stephen Connelly. Should be a wonderful discussion, a very interesting approach that we'll hear a lot about and entering the clinic shortly. Looking forward to covering all of that. Maybe to start, and I'll open this up to either of you who want to kick this off, just open with the therapeutic hypothesis here for your lead molecule, EQ504. It's very interesting. What is the mechanism? How did you sort of discover it and design it? How did this end up in your hands? And we'll take it from there. Great. Thanks, Steve, and I'd like to thank the Cantor team for having us here today and all of you for listening in on the update. We're very excited about EQ504, our aryl hydrocarbon receptor modulator program. This is a drug that we acquired back in 2024. It was a little bit of a stealth acquisition. We didn't really announce the program until, I guess, it was May of 2025 last year, and we're very pleased obviously to have been able to capitalize this program with a stellar group of investors, with our August pipe that we completed a year ago or so, led by Janus, ADAR1, a few other firms, followed by a $35 million investment with RA Capital in March of this year. The company's really well-capitalized to take this program into the clinic and ideally get through some compelling patient-level data with the program over the near future. The mechanism of AHR, we believe is very compelling and differentiated from most of the other programs that are either approved or in development across a range of inflammatory diseases in that sort of the dual components of anti-inflammatory effects, as well as wound-healing effects of the drug. We believe as a potential standalone agent, it can be a best-in-class therapeutic, but importantly, could also be used theoretically in combination with a lot of other medicines. We're taking the drug in areas of very high unmet need with UC as our declared lead indication. What we announced recently in our quarterly update is that we are actively pursuing the formulation work and some translational work to support indications of high unmet need in sort of the lung. We are looking forward to getting both of those programs going as soon as we get through the upcoming SAD/MAD healthy volunteer work. We are very much on track with the quarterly update guidance. We have submitted our package to the Australian regulatory authorities, HREC. Our site is ready to go, so we are looking forward to getting this study started soon. Worth noting that we will have an update publicly when we dose our first patient. That is the milestone trigger for the second tranche of the August financing. When we dose the first patient, we will announce that. We have given guidance that we would expect top-line data from the program roughly six months after study initiation. Our audience can kind of tune into that timeline once we have started the study. With that, we would expect to get the second tranche of $20 million into the company. A little bit of an overview on where we are headed, but we are really looking forward to getting this program into the clinic and getting data shortly thereafter. Terrific. Thanks for that overview. Just wanted to ask, we will start on UC, of course, just given that program being prosecuted now into the clinic. You did some formulation work. I think that was some of the final steps necessary to get that product ready for clinic, so it is colon-targeted. Can you walk through sort of what you did there? What were the key things that you needed to satisfy for that formulation to be where you were happy with it, and are there any remaining manufacturing risks or anything? Yeah, I mean, we think at this point there is no kind of manufacturing CMC risk certainly for the phase I study. We are through all of that. I guess maybe going back to kind of first principles of really any sort of disease treatment, you want to get sort of the most drug you can to the site of injury where it is needed and minimize exposure elsewhere. Conveniently for ulcerative colitis, pretty straightforward to do that with using existing validated technologies. We partnered with sort of the world's leaders in delivery technologies for GI indications. The colon-targeted formulation, relatively straightforward in terms of what it is. You have got a capsule that is delivering drug product that will then release throughout the colon once it is released into the colon. Every API requires sort of iterative tweaking of what actual specifics go into that formulation work, so we are very pleased with where we ended up with that. Similarly, for the lung, we are planning to use a nebulized version of EQ504 for inhaled delivery to the lung, which is where you want to treat the types of patients we will be pursuing, either with IPF or other ILDs. I think that is a little bit of a differentiator for our AHR program. I think it is really one of the few, if only AHR programs that has that ability to kind of go outside of GI as sort of lead indication, and we are excited about the opportunity set there as well. That is sort of the, I think, answer for the formulation work completed for the UC study. Yeah. Do you think in lung, I think you probably believe you have a strong potency advantage with your molecule maybe versus some other AHR selectivity, therefore therapeutic index. Do you think that is going to be critical in some of these lung indications? Do you think potency maybe is going to be a big driver of where you could succeed there, and maybe some other less rationally designed AHR agonists wouldn't necessarily be able to do what you hope to do? Yeah, I mean, certainly. The EQ504 program was derived from a very thorough med chem campaign, with ITE as sort of the starting compound, the endogenous ligand. A highly selective, highly potent, with very good drug-like properties. So kind of what you would expect out of a robust med chem campaign, versus a few of the other AhR programs. One of which was not designed to be an AhR modulator, but we believe is working through AhR, and a few of the others that are taking different approaches. So we think we do have a very solid approach into the indications we are pursuing, and we do think that there is significant room for improvement over what is already been observed as some pretty attractive profiles from both an efficacy and safety and tolerability standpoint. But we think we have got a pretty significant margin to pursue for improvement. Yep. You mentioned the ITE scaffold and the med chem that you've done at Equillium and the optimization of this molecule. You've presented a lot of preclinical data as well, really highlighting some of the mechanistic work that you've done, I think has paved the way to establishing some new understandings of AhR agonism, some new understandings of obefazimod maybe, which- Right I want to talk about all that. Maybe you can bring Stephen Connelly in here as well. We can geek out a little bit on some of the science that you guys have elucidated because it's fascinating. One question I want to maybe start off with that sort of opens the curtains on some of that is miR-124 and its involvement here. You've shown that EQ504 induces miR-124. It's maybe like a feedback loop to AhR. I'm not really sure what's happening behind the scenes there. But may also be contributing to activity or efficacy in some sense because there's some evidence of miR-124's targets and how it might be doing some downstream things that are helpful. What do you make of that whole debate? Do you think it's sort of incidental, or do you think the induction of miR-124 is actually contributing to efficacy here? Is it important to look at how much you induce miR-124 to gauge activity and potency downstream on key efficacy measures? What are your thoughts? Yeah, sure. We conducted a fairly comprehensive campaign of trying to elucidate the mechanism and the relationship between AhR and miR-124 because there had been some sparse details out there in the literature. Based on our preclinical work, we had demonstrated that miR-124 is induced via AhR activation. That's not surprising. There are a number of other miRs that are induced when you activate AhR. It's not unique in that respect. We showed that when you activate AhR with EQ504 or obefazimod, it induced miR-124. Interestingly, we showed quite a large dose range. Unlike CYP1A1, which is the classic canonical biomarker for AhR activation that shows a very discrete dose response, even at very low levels of AhR activation, miR-124 is induced. It shows that well below the levels that are dosed in the clinic, miR-124 is induced, and then it plateaus fairly quickly. The next question would be, what is that doing? What is it contributing to? We didn't set out in the preclinical data to elucidate exactly what miR-124 does. Some data already exists around that. From our perspective, it was really about the relationship between activation of AhR. I think what we can say definitively is if miR-124 has activity, it is coming from the induction of AhR from EQ504 or obefazimod. Because when we block with an AhR antagonist, we lose all miR-124 signal. The other interesting component of this is that the miRs generally seem to be more related to immune cells than they do epithelial cells as a generalization. miR-124 specifically, AbbVie have demonstrated this, that they see it in immune cells, but they do not see elevation of miR-124 from epithelial cells. We recapitulated that work. We can modulate immune cells. We see miR-124 when you activate AhR. But in epithelial cells, there's no miR-124 signature. But there is still AhR activation going on there. I think it really is a marker, perhaps specifically and contextually to immune cells, but is also one of many markers from AhR. AhR modulates STAT1, STAT3, STAT5, NF-κB, NLRP3. It modulates IL-10, IL-22. From an epithelial perspective, the MUCs, the claudins, which are related to barrier integrity. AhR is a master regulator of a lot of programs. To see it modulate miRs is not surprising, but I would say we're very confident that the miR-124 induction that's happening with our molecule and obefazimod is a consequence of AhR modulation. Yeah. As such, anything that modulates miR-124 that we're seeing it from our data sets is coming directly from the activation of that receptor. Yeah. It sounds like you're pretty convinced that the epithelial cell specific activity is also important here for efficacy in something like UC. It's not just the immune cell components, some of the interleukins and things like this. Yeah. Look, we've got 15+ approved drugs in UC. They're all immunomodulators of different sort of strengths and how broad they can be. JAKs are a great example. They can crush the immune system, but they don't have great clinical remission rates. We're still at sort of 30, 29% with adapaselenib, et cetera. So it can't just be about the immune system. When you have a molecule that isn't crushing, obefazimod is not crushing IL-6, TNF or other cytokine levels. So there must be something else going on there. And I thought it was very positive for both Equillium and AbbVie to actually see that obefazimod is modulating epithelial cell biology in a manner that improves wound healing and improves barrier function. I think that's really where our molecule is, I think, most directed to, is filling a gap in our armamentarium with UC, which is, look, the immune system when it goes aberrant, is attacking tissues. So it's not just an immune system issue, it's a tissue biology issue. We've shown that we can crush the immune system but not restore disease pathology. So being able to go after both the immune system and restore epithelial biology might be what we need to really bring a lot of these tissue diseases, be it in the gut or the lung, under control. And I think the really profound deepening of clinical remission rates that obefazimod shows between week eight and week 52 is I think what gets most people excited. That likely comes not because you've sequestered the immune system, it's because you're driving epithelial barrier restore and repair. Interesting point. Maybe we will come back, time permitting, to some of these mechanistic questions. On your phase I study, can you go into a little bit more detail just on what you are measuring there and what type of subjects, and what would be considered a good result or good outcome for you? Yeah, sure. The phase I is a phase I proof of mechanism study, and we are really trying to bridge what we know from this plethora of clinical data with indigo naturalis. Multiple clinical studies, phase IIs, well-controlled, multi-center studies. They show that administration of an AhR modulator in indigo naturalis, induces AhR activation in the colon along with other downstream pathways, and that leads to high mucosal healing rates, high clinical remission rates. In normal healthy volunteers, we do not have the disease, but we can still interrogate the biology locally in the colon. Our objective with EQ504 is to formulate it to be delivered into the colon, and in our phase I, be it in normal healthy volunteers, will show a safety tolerability, PK and PD, but importantly, we can demonstrate that we can turn on this target effectively in the colon. We know that when you turn on AhR, you are turning on other downstream pathways, and so we can get a very good handle on our pharmacodynamic responses to select a dose to move into phase II. Okay. On obefazimod then on the flip side, which is sort of already, I would argue, providing some proof of mechanism in UC, for AhR agonism. Now that you have sort of had time to digest the phase III data and the maintenance data, what is your perspective, I guess, on sort of the benefit risk of AhR agonism? Did that molecule perform as you would expect, knowing what you know about AhR agonism, or is there anything you would call out from that data set that was surprising? From an AhR perspective, we see headache and nausea, which was seen in the obefazimod data. You see it in the indigo naturalis data. To a lesser extent with indigo naturalis, it didn't lead to any discontinuations or dose de-escalations. But that seems to be an on-target effect. The phase III data and even just the earlier phase data where headache and nausea were observed with other AhR modulators and obefazimod. That was another indicator of this modulating AhR. I think the mucosal healing rates at the week eight were good, but the strengthening and deepening of those over the long term, again, other sort of hallmarks of AhR modulation. When you look to the indigo naturalis data sets, which from week eight through week 52 continued to deepen. I'd say that's something that I think as we look to informs clinical development, which is good response rates early, week eight-ish, but also deepening of responses longer term. Based on the preclinical work, because you've used obefazimod sort of as an active control in your preclinical experiments and based on the data that you've gathered and have presented there. Is your goal essentially to just be a superior molecule and superior AhR agonist in UC, and you think you can demonstrate that through the clinical development program? That's a great question. When we think about drug development, it is an incredibly complex long-term set of activities that mix not only what your molecule is, but how you choose to develop it. The patients you choose, the routes of administration, the doses, et cetera. I think we can be better here in terms of drug development, but also with our molecule. Our molecule, starting with our molecule, it was designed as an AhR modulator from the get go. ITE, the precursor for our molecule, is probably the most widely studied AhR modulator in the literature. Many studies use ITE as the benchmark for modulating the immune system and barrier function. It's naturally derived. It's synthesized in the guts and lungs of humans. The med chem campaign just made a more potent, selective, and more drug-like molecule. We think we've got a very, very good molecule going into these clinical data sets. Molecule, we move on from that. Now the next thing is development path. obefazimod was, I guess, identified as an AhR modulator in phase III. A little too late to go back and ask some of the important translational questions that I think would help you in development. Namely, how much AhR are you really engaging in the colon? And a question of would you have a better tolerability profile if you were to deliver that molecule just to the tissues of interest, which for AhR are not the peripheral blood. Very little to no activity there that contributes towards resolving UC. It's really the damaged epithelia and the activated cells in the lamina propria. How we aim to address it with a good molecule is to deliver that directly to the colon tissues, and then identify and demonstrate that we've got good target engagement, good safety, and tolerability. When we move that dose on into later stage development, we're not asking the question, have we fully engaged the receptor? And probably the best way to describe this is that indigo naturalis was hitting about 40%-50% clinical remission rate at week eight. obefazimod is about 16%. There's kind of a window there between 16 and call it 50, that you could play for potentially by having a molecule that was more directed, more potent, and more selective towards that target. I think that's going to be the key differentiator for our program because, of course, there's a long way for us to go in drug development here, is that we know we're an AhR modulator. We know the challenges with delivering this molecule to the tissues of interest, and we've got a development program that addresses that. Maybe it's a good point to follow up, given a mixed audience, I'm assuming. indigo naturalis, why is that therapeutic index itself not viable in UC, or why was that not pursued to market ultimately? Yeah. Indigo naturalis is a Chinese botanical medicine called Qing Dai. It contains three very strong AhR modulators that are derived from tryptophan. Tryptophan in our diet is a good source of naturally occurring AhR modulators. Indigo naturalis is not a regulated substance. Under Chinese Pharmacopoeia rules, it needs to have a certain amount above, in terms of AhR modulators, but that could be really high. It could be high enough. If it is too low, it is rejected. But it is really still not a very good way to control dose. The other challenge is that although people have very clearly demonstrated that the efficacy in UC is coming from AhR modulation in ulcerative colitis. They have done knockout studies. They have taken indigo naturalis and extracted out the AhR modulators. They have tested the AhR modulators on its own. I don't think there is any question that the efficacy is purely from the AhR component. But what we don't know is what is happening with safety tolerability or any other components of that. In itself, it is a very compelling proof of concept. It has been through hundreds of patients in phase II. It has been monitored in databases for many thousands of patients. But really what the industry is crying out for is do a drug development program that can bring data forward that we know what the right dose is, what the safety limits of that are, and deliver this in a way that can be replicated and prescribed to patients. Speaking of therapeutic index and safety, what did you make of the malignancy imbalance in the obefazimod phase III program? Just because it is AhR and some AhR agonists in the wrong context can be carcinogenic. Is this concerning? Is this something that you have looked carefully at pre-clinically and you are comfortable with your scaffold and your molecule and you have tuned out any carcinogenicity or onc risk? Yeah. Talk about that a bit. I think there's a lot of different ways to approach that, but maybe just on what they've observed and what they've said around those observations. I think AbbVie's position is that there's not a signal from that data set. To the extent that you think there may be a signal in that data set, and again, we're not taking any opinion on it one way or the other. In their own, I think it was in their ICF, they do highlight that the glucuronidated form of obefazimod, which is in very high circulating concentrations, I think what they state is it's known to have photosensitivity or phototoxic effects at therapeutic doses. To the extent there is something there, that would be a reasonable explanation to see something. Again, we think their data look very good, probably very manageable. I'm sure they're going to have those discussions with the FDA. We think the drug likely has a very approvable data set and should do quite well commercially. I think we're looking for them to be very successful. In terms of broader data sets around AhR programs, again, it's not clear to us that if there is something there that's coming from AhR, it's likely potentially coming from other areas. Nothing really definitively suggesting that would be an AhR on target effect. The most compelling data set for that would be we're seeing or we're talking about a non-melanoma skin cancer signal with obefazimod. tapinarof, which was administered in over 2,000 patients, as a strong AhR modulator directly to the skin for psoriasis and atopic dermatitis did not show that signal. Neither does it show up in the FAERS database or anything else like that. There are other examples. The indigo naturalis data set they followed over about 1,000 patients for multiple years, and they also don't see a signal there. Yeah. It comes down to sort of molecular risk, tissue distribution, inherent properties of the molecule. We are not convinced that is an AhR specific response. Then again, that's really part of the reason why it makes good sense. It's a truism for all drug development. If you can get more of your drug on just the disease tissues, that's better all round because drugs are, as we use the adage, they're poisons with good side effects, right? If you can just deliver them just to those target tissues, and that's really why we're thinking about this as a colon targeted or inhaled formulation, so we can maximize target occupancy and minimize any potential downstream effects in a world where it's becoming increasingly competitive and safety is going to command a premium. Yeah, indeed. For EQ504, you are comfortable with your preclinical studies that you have run on the carcinogenicity side. Presumably, there might still be some long-term studies still to do as you prosecute development in the clinic, but what you see pre-clinically, you are comfortable with even the non-melanoma or non-skin cancer sort of systemic toxicity. Yeah, absolutely. At early stage in the development, right, you are looking at genotoxicity tests in different tissues. Right Ames, et cetera. The standard ICH guided studies. All of those came back clean with no detectable aberrancies, right? We are not talking about having a margin. We are talking about a complete absence of signal for those. But they are short-term studies. They are generally high concentrations. We also chose to do that in more tissues than is required just because we are going into the colon. So what would it look like in the colon versus just bone marrow and perhaps liver cells? So we did a very extensive and deeper than would perhaps be required at this stage assessment of the molecule. So we are very happy about carcinogenicity at this stage. Very good. What are you expecting for AhR agonism in Crohn's? I guess what is Equillium's plans in Crohn's? What are you expecting maybe from obefazimod or other? Yeah. So a couple of things. For EQ504, we would have a different formulation to pursue Crohn's disease. Right. I think we're going to likely want to see the Crohn's data from obefazimod as highly informative in terms of what you might see with an AhR modulator there. Then based on that, make a decision kind of how we would approach that going forward. Stephen can comment just in terms of the AhR signal signature there. A little bit less obvious maybe than in the colon. But we'll see. If it works there, then I think we'll probably green-light moving that ahead. It's not uncommon for people working in IBD to start with UC, cleaner population, and then branch out to Crohn's. So that's the general development path. I think with AhR being downregulated in Crohn's patients, right from the data sets, that may suggest you have less target to hit. It might be the reason there is Crohn's existing because you've lost AhR. So questions could be raised about is that still viable to target? The other data set was indigo naturalis was tested in UC and Crohn's. It behaved much better in colitis patients than Crohn's patients. That said, it's a very insoluble mix. The molecule probably spends more time in the colon than it does the upper intestinal tract just by GI transit time. So formulation may not have been ideal to address those. Got it. I think from our perspective, it would be great to see what happens with obefazimod. I think also, we shouldn't just think about this as Crohn's. There's celiac disease. There's a lot of good data about the celiac disease being barrier destruction, et cetera. You could think about upper GI diseases as not just Crohn's, but potentially celiac disease as well. I see. With the same formulation, basically? Yeah, exactly. An upper GI tract delivery formulation would be. Yeah Skip the stomach, upper intestinal. That would do both Crohn's and celiac. Equillium is not the only company, obviously, that's honed in on this AHR hypothesis, including in UC directly. I'm starting to see more molecules pop up, both purported AHR agonists, but also I think even indigo naturalis, some of the molecules in that itself being now pursued as proprietary molecules. How would you compare your program to what you see in the competitive landscape? Where are you advantaged or differentiated or what expectations do you have for some of these other molecules? Yes, maybe I'll take that. Not all AHR modulators are created equal. So each of them have a different set of properties. They have advantages and disadvantages. When we got interested in AHR, we surveilled a lot of different molecules with the question of what would be the best place to start. I'd like to tell everybody I was super smart and we picked the right one, but we essentially just went to what biology is doing, right? Look at the one that's naturally made within humans, that's synthesized in the guts and lungs of humans, and one that's well-studied. Now, there are others, and perhaps our most proximal competitor would be indirubin or the prodrugs of indirubin being developed by ADL. Now, what I would say is that it's very convenient that that is a molecule that's coming from indigo naturalis, and that's been tested. Again, the downsides of that molecule, be it's incredibly insoluble. You need solubility because AHR as a target is expressed inside of cells. So you need to be able to get through gut tissues into the lamina propria, into the immune cells. So if you're insoluble, you can't do gut transit. AHR is not expressed on the outside of a gut wall. It's really internally. So insolubility is a big challenge for that molecule, and the other one is selectivity. To get around that, those molecules are essentially using prodrug strategies. The prodrug will most likely still need to be formulated to deliver it to the colon. There, the improved solubility of the prodrug then is expected to release indirubin, and then indirubin can go on. Indirubin is very permeable, but it's incredibly insoluble. When we developed EQ504 for colon delivery, we looked for one that was very potent, very soluble, and had good permeability. Because, again, what we want to do is titrate small amounts of AHR modulator in the colon environment. The other flip side of this is that because we're not a prodrug, we can start to think about other indications. So our molecule is potent, stable, water-soluble. We can think about nebulizing this or other inhaled routes for lung diseases. That would give us a very, very clear opportunity that excludes other AHR modulators because their lack of potency, lack of solubility, et cetera, from going into those areas. I think we are very keen on diversifying our program into the lung as a way we think we can demonstrate further value of modulating not just the immune system, but barrier function, fibrosis, and wound healing. Indications like ILD, IPF, COPD, enormous unmet medical need, very amenable or preferred for a nebulized inhaled route. That is an area I think could be a huge value for the company in the future. Yeah, I was going to ask about specific indications, but you just named a few, and it sounds like there is maybe quite a few to choose from where AHR could be pertinent in the lung. Yeah, we have not put a stake in the ground on specific indication yet, but I think the ones that Steve has mentioned would be on the shortlist. Terrific. We will look forward to obviously learning more about the plans in lung, and then of course, excited about the progress you will make here in UC and the data that will be emerging from that study, I guess, next year. I really appreciate you coming to the conference this year. Thanks to everyone in the room. Please join me in thanking Equillium for a great conversation. Thanks for having us.