Good afternoon, everyone. Welcome to our Piper Sandler Healthcare Conference. It is day two of our conference. My name is Yasmeen Rahimi. I'm a senior biotech analyst here at Piper Sandler. Thrilled to be here and be presenting Fractyl Health, to share all the amazing progress, as well as 2025 is going to be a very big year for you. That's right. So, before we go through and speak about each of the programs, we'd love to kind of, maybe for you to start off, to give an overview on why 2025 is a big year for the company, and then we'll go into specific questions. Sure. So as a brief introduction, we're a metabolic therapeutics company. We're focused on treating obesity and Type 2 diabetes, which are obviously very important markets. What differentiates us from other approaches to these diseases is that we aim to develop therapies that have durable results for patients on both blood sugar and on body weight, results that can last for years. And the way in which our approaches differ from those of pharmaceuticals that you might be familiar with is that we aim to target root causes of obesity and Type 2 diabetes in the body with procedural therapies or gene therapies that aim to offer lasting solutions that are targeting root cause, which the medicines don't do. I think in terms of data catalysts, if you could talk about that for 2025, and then we'll move into the specific program. Sure. Yeah. So we have two programs. One of them is called Revita. Revita is a medical device enabling a procedural therapy in a region of the gut called the duodenum. And the reason we target the duodenum is because it's been shown in science to be a root cause of obesity and elevated blood sugar and Type 2 diabetes. So by targeting the duodenum, we are seeing that patients undergo a durable improvement in blood sugar, body weight, what's called a metabolic reset. We have two pivotal trials underway with Revita. One of them is in Type 2 diabetes, where the aim is to demonstrate improved blood sugar control. The other one just got started this year, but is incredibly exciting, is weight maintenance after the discontinuation of GLP-1 based drugs. So as you know, there's a lot of people who are on GLP-1 drugs, but most people stop taking them within six to nine months, and then they regain all of their weight. It's easy now to lose weight. How do you keep the weight off? So what the Remain-1 study aims to do is to test the ability for Revita to keep people's weight off after they stop GLP-1. So catalysts in 2025 for Revita are, number one, key midpoint randomized data analysis and the weight maintenance trial in the second quarter. And for the Type 2 diabetes pivotal trial called Revitalize-1, a primary endpoint data on the pivotal study in mid-2025. The other program, which is the Rejuva gene therapy, I think you have many questions on, I'll just say, is a really exciting pancreatic gene therapy platform. Initial focus is on Type 2 diabetes, but with clear read-through to obesity. And we intend to initiate a first-in-human study in the first half of 2025. And so we are gearing up for that as we speak. Okay. I think, and that's really exciting to think about a one-time therapy to control obesity. Could we talk about the construct design, right? Yeah. Like maybe like what is the promoter, what's the capsid, and how is it delivered? Sure. So diving into the Rejuva gene therapy platform, I'll start with the delivery. We've developed a needle catheter that builds on existing needle catheters in the GI endoscopy space that allows a 10-15-minute outpatient endoscopic procedure to directly deliver AAV gene therapy into the pancreas. So what we do is we deliver an AAV9 viral vector, which contains a transgene composed of a human insulin promoter driving a human GLP-1. That's Rejuva 001. We've also nominated a second candidate, which we'll talk about later, called Rejuva 002, which is a GIP-GLP combo. But Rejuva 001 is the first one that's going to enter the clinic and is really designed in order to be able to enable a smart GLP-1 that's physiologically delivered in the body. And we can talk about how that works. Okay, and I think one of the key catalysts is going to be the first proof of concept study starting in the first half of 2025, so before we go into the design and expectations around that, could you talk about what type of expression level you're targeting in GLP-1 that could have a control both from a weight loss perspective as well as a glycemic control? Sure. So we all make GLP-1. It's produced in cells in our gut. It's made in large quantities, and it's held there. And a small amount of it is released constantly into the bloodstream. And after a meal, the levels go up, and then they come right back down again. And that's how normal GLP-1 works. And the reason it goes up after a meal is to make you feel full and to lower your blood sugar from that meal. Now, in order to be able to improve blood sugar and body weight, we have a lot of information on the serum levels of GLP-1 that have activity based on both DPP-4 inhibitor class of drugs and based on bariatric surgery and its effects on GLP-1 and from the GLP-1 drugs. So what we know is that you only need a modest increase in the GLP-1 levels in the circulation from baseline in order to be able to have a very meaningful effect on blood sugar. And then you need a larger increase in the GLP-1 levels in the serum in order to be able to have an effect on body weight. So the current drugs that exist, like semaglutide, have about a thousand-fold higher expression of GLP-1 in the bloodstream than what you get after a bariatric surgery. And part of that is because they want this to last in the system for a week. And so the levels go up very high, and then they stay there. What we believe can be achieved is to get levels that are more similar to bariatric surgery, much lower than what you get from the GLP-1 drugs, but to have similar effects to what any of those achieve. Okay. And then have you been able to maybe talk about where you are in terms of regulatory clearance to kick off the Phase 1? Yeah. So we've had a lot of interactions with European regulators in a series of meetings. They've been very productive. We established some time ago that the two key animal models that we need to use are the db/db mouse, which is the relevant regulatory preclinical model for diabetes development, as well as the large animal Yucatan pig, where we can leverage our route of administration. So we have done extensive pilot tests in both of those. And we also have established that there are three key in vivo CTA enabling studies that we need to conduct. One of them is to be able to show the efficacy of different doses of the gene therapy on blood sugar lowering in the db/db mouse. The other one is to show durability out to 12 weeks in a wild-type mouse of expression. And the third is to show that we can have safety and biodistribution in the large animal Yucatan pig. So all of those studies are either completed or nearly complete, and we'll be presenting data in upcoming scientific meetings across all of them. But whatever we're seeing so far gives us a lot of encouragement that we have something that's feasible, that seems safe, and importantly, could be potentially a one-and-done GLP-1 based therapy that could overcome the challenges associated with the GLP-1 class today. And is there an opportunity of, so once the data is available, shared with the regulatory agency, would this first proof of concept study be done in Europe? And then post that data, you would follow in the U.S.? What is your regulatory strategy? Yeah. Regulatory definitely outside of the U.S. will be our first in human, and the idea would be to start in a Type 2 diabetes patient population. As you all know, gene therapy is a dose escalation trial, and we've already talked about the doses that you need for diabetes are lower than the doses that you need for weight loss and obesity. So it stands to reason to start in a Type 2 diabetes patient population. That's how all the GLP-1 drugs have done it too, and then to be able to aim for an improvement in blood sugar in patients who are tolerating and benefiting from GLP-1 drugs already. Because a common question we get is, well, what about nausea, vomiting, and all these risks associated with the GLP-1 drugs? We all know that those side effects occur during the dose titration. Then once people acclimatize to the GLP-1, they don't experience symptoms anymore. What we aim to do is to take patients who have already acclimatized to GLP-1, who we know are not having side effects, which is like 90-some% of the people who are on these drugs are able to tolerate them just fine, but they don't want to have to take it for the rest of their lives. We've already tested the principle of taking an animal that has acclimatized to semaglutide and then stopping the semaglutide and then giving them the gene therapy and just maintaining or improving on those results for the long term, which doesn't happen if you stop the semaglutide. They're going to lose every benefit that they got. So, is the strategy to be, let's say, fast forward, you get regulatory clearance, you can start the study, and you're going to, like typical gene therapies, you do a dose escalation, you have a first dose, a number of patients, and then later on, go with a second dose cohort, but is the population, a diabetic that's pretreated with semaglutide or a GLP-1, are they having risk markers? Are they overweight? Or is it just a Type 2 diabetic initial study with the aim to assess glycemic control without really looking at weight management? Or is it just, what is the goal from a weight perspective? We have seen, even with our Revita product, if you enroll a type 2 diabetes patient population, they're going to be a BMI of 32. There may not be a BMI of 36 or 37 average that you might see from an obesity trial, but you can't avoid the overlap of diabetes and obesity. So I don't think we need to select for that. But I also think there's a very well-understood correlation between the levels of GLP-1 in the bloodstream and the likelihood of impact on blood sugar and on body weight. So the key question really, I mean, we're using native human GLP-1. We're using a regulatorily cleared AAV already. We're leveraging an existing procedure. So the core question really is, how does the dose that we are administering translate to the levels of GLP-1 that we're seeing in order to be able to achieve a meaningful effect on blood sugar? And then how does that, the long-term ambition is remission for Type 2 diabetes, right? If you can just do what semaglutide or tirzepatide does for years, you will offer remission. The problem is that less than 15% of people are on the drug for more than three or four years. And so no one ever actually achieves the real-world results that the Phase 3 studies show. We think that the gene therapy could sort of take that mechanism, which is very well proven, and be like the final version of that product form in a manner that could actually solve the problem that all of the promise from these drugs is demonstrating. The nice part also is that, like you said, you're using AAV for which we have approved drugs. You have a localized delivery that is also de-risked and is feasible. I guess the question here is, do we have the right dose to get enough expression of GLP-1? What will you be running? Biopsy analyses? Will you be looking at serum or plasma GLP levels? How are you going to, like glucose is easy, right? How are you going to correlate enough expression to blood glucose level? We're going to be looking at the amount of GLP-1 in the circulation, right? There's a mouse model called db/db that I've already mentioned. That develops an accelerated form of diabetes. We've been testing it in animals that are early on and mid or late in their disease. The gene therapy works very well across the spectrum. The earlier you intervene, the better it is. But when you start in your clinical trial, what you really want to do is to take a patient population that's at risk and then start to establish a dose response correlation to the pharmacokinetic and pharmacodynamic profiles you're looking for. We think serum GLP-1 levels should be able to give us that information because biopsying the pancreas is not an easy or straightforward thing to do. And you noted too, what is the target GLP level that you need to go to? So what is the gastric bypass GLP level? Yeah. So a DPP-4 inhibitor may raise your levels to like 10 to 20 picomolar, okay? And a gastric bypass might be 10 times that. And then a GLP-1 drug is like 1,000 times that. That's 20 to 40 nanomolar levels. Where do you want to be in that target? You know, as you know, there's a regulatory guidance that you want to be around a minimally efficacious dose when you start, which means you're looking at the tens of picomolar, not at the thousands or nanomolar range. It would be also great, I think. It sounds like a dream, right? Can you do a one-time therapy to maintain your weight and have glycemic control that's profound? Question that will come up from investors typically is, what is the safety requirement that you need to have? I guess question number one is, what is the safety data that you have on hand? What is the longest time animal duration that you have? Yeah. And two, how do we ensure that we don't have any side effects, off-target effects years to come? Right. So I mean, this is an open question from a U.S. FDA perspective, but I think that academic laboratories have done pancreatic gene therapy in wild-type mice and have seen expression for the duration of the life of the animal. And the reason we think that it could be very long-lasting is because the beta cells don't turn over in an adult, especially in humans. Actually, they do turn over in mice. It's more of a worst-case scenario in a mouse than it is in a person. So the expression levels seem to persist. Now, the question on safety, I think, is going to be one that we're going to have to ask. But importantly, because this is a smart GLP-1, because it's driven expression by the insulin promoter, there is a physiologic autoregulation to the amount of GLP-1 that is produced that provides you a safety mechanism that's built in on top of the safety mechanism of choosing people who've already tolerated much higher doses of GLP-1 drug from the therapy that they've been taking beforehand. I know it's difficult to assess GI tolerability in a mouse. Is there a belief that if you're keeping a continuous sort of an on-and-off switch of GLP-1, could for some reason have provoked GI tolerability? I mean, you would assume that if you're controlling the on-and-off expression of GLP-1 as we eat and fast and feel full, then you wouldn't expect greater rates of GI. You know, it's an interesting thing. But I don't know. What is the expectation? Your GLP-1 levels and my GLP-1 levels go up after the box lunch that we just got, right? And we just feel full. We don't feel like we're nauseated, right? But the GLP-1 levels from semaglutide or tirzepatide are very high levels, even at the lowest doses. And that's something that the body is not accustomed to. So we think that the physiologic regulation of it is actually going to be a huge advantage. And we also think that you're right, like the mouse, you can't tell for sure. But on the flip side, we have millions of patient years' worth of experience with bariatric surgery that increases GLP-1 levels post-meals, which is exactly what we expect to see. Do you, as fast forward, you get the sign-up, have you thought about the size of the cohort of the low-dose, high-dose groups that you're wanting to, because I'm sure there's tons of patients lining up wanting to be part of the study? You'll be surprised. I mean, there's one set of people who are like, "Oh my God, a gene therapy sounds scary." But I think if you tell people that there is an opportunity to basically have your body make more of the normal GLP-1 to be able to control your blood sugar and your body weight on its own, I mean, that's a pretty compelling prospect. I think a lot of people will want that. And it's too soon to tell. And I think we will be careful about how we design the dose escalation with the DSMB. So we are ensuring patient safety, but at the same time, only treating enough people at the low dose to not waste time and energy on a dose that may not be sufficiently high enough to be seeing the levels that we want, the effects that we want to see. So what is the ultimate strategy in terms of fit? Is it going to be once you have the data, patients who are controlled on the GLP-1, got to their ideal weight, and then this approach, this therapy would be for individuals to then, once they get to their ideal weight, to maintain it? Exactly. It wouldn't be for somebody who is morbidly obese, wants to lose a ton of weight, like they should just go on the GLP-1s or tirzepatides or other weight loss products, get to the ideal weight, and then when it comes to maintenance, then basically establish. We've made an assertion that we think this is going to be safer and better tolerated than the GLP-1 drug. You need human experience to substantiate that assertion. And until we can substantiate it, the safest thing to do for patients is to ensure that you're selecting people who can already tolerate it. And then once we build that experience, then we will know exactly whether it should be first line. I do think that the ideal, of course, is to diagnose a person with the disease and then make the disease go away. Like that's what anyone would want whenever they have a problem, right? Rather than, "Oh, let me help you manage this progressive condition for the rest of your life," which is what we're doing today. What is the regulatory framework on the path forward? Like, is there a regulatory path set up for maintenance of weight rather than the treatment of? Funny that you should ask, because our Revita device is establishing the regulatory framework for maintenance of body weight. So the Remain-1 pivotal trial is taking people who are obese, non-diabetic, who are not on a GLP-1. We're starting them all on tirzepatide, dose titrating them to get to at least 15% body weight loss, and then stopping the drug, and then randomizing them to either get Revita or a sham, and then following weight over the course of a year. And the FDA gave us breakthrough designation for weight maintenance after GLP-1 discontinuation because they see this as a huge problem. As the drugs get more and more effective at weight loss, it's easy now to get weight loss, right? The hard part is keeping it off. And the bigger the weight loss, the bigger the problem when you stop the drug. So that's a framework we're establishing. I think that the breakthrough designation is an indication that they're supportive of the strategy that we're employing. Would love to talk about M&A and partnership discussions because I think it's very clear the two giants in the field are Lilly and Novo, and they have each 20-plus candidates in development for obesity, of various mechanisms and approaches and view sort of obesity or metabolic diseases that requires many different tools to achieve efficacy. I do not see in either of their portfolios a gene therapy approach, which would be, so I guess at what point does it make sense to partner this? Is there a certain risk that you need to take off the table for them to also wanting to get comfortable around this technology and this? I would expand the aperture to other players in obesity, of which there are many entrants, and other players in gene therapy. And we're having active dialogue with all of them. I think that the key enabler for this to work, I think, is the local delivery. And that's made possible by a catheter that we have developed and a very strong IP protection around. So I feel like we have a clear leadership position in being able to make this possible by a gene therapy today. And we're in active, ongoing dialogue with all of these major players. I think that there are different levels of, clearly, it's a new thing. Gene therapy for a big disease area is something that has not been done before. We think it's actually most compelling because you have a local delivery means low cost of goods with a low dose. ICER has stated that semaglutide for a year would be worth $9,800. So if we have a cost of goods of sub $10,000, like we're paying for ourselves within the first year of therapy, five to 10 years' worth of benefit, I mean, you're looking at a Harvoni-type pricing model with two million new patients a year. I mean, that's a pretty massive opportunity. You can imagine people are interested in that. But who's manufacturing? What is your manufacturing capability? Right now, we're working with the CDMO. I mean, because we're using AAV9, many places have a platform process for AAV9 manufacturing and scaling. And so we are making our way through that scaling process. So, you don't foresee this direct. Most gene therapies are in the millions of dollars. You don't foresee this could be a product that could go. Why are they? Because they're amortizing their development costs over very small populations, right? It's not like local delivery of a low dose of a viral vector does not justify a million-dollar price point. Having a small number of people with the disease and then potentially no more patients after that is what drives those prices, and that's the totally different commercial model break that we think actually makes this gene therapy quite feasible. Right. No, I mean, listen, most gene therapies would be, it's another important aspect of the story, right? Like that you can scalability and that you could potentially think about an annual cost of a semaglutide or a higher. Otherwise, gene therapy would be. $100,000. Like it would be worthwhile for any payer, et cetera. Yeah. I mean, the cost of Type 2 diabetes, let's say Type 2 diabetes, is like already extraordinarily high. High on the path. Five years of Type 2 diabetes in Medicare is more than $100,000 worth of total cost of care. Maybe last question, what is the cash position of the company and their runway? Yeah, so we have cash in the Q4 of next year, and so we have a lot of exciting catalysts between now and then. Okay. Perfect. Well, what a great discussion. Don't you guys agree on a really exciting technology and approach? So let's thank the team for a great discussion and being part of our conference. Thank you.