Good morning, everyone. Thanks for joining again. We're going to go ahead and get started. My name is Whitney Ijem. I'm one of the biotech analysts here at Canaccord, and I am very pleased to be joined this morning by Fractyl Health and CEO, Harith Rajagopalan. Thank you so much for being here. Thanks for having me, Whitney. Diving right in, can you just start with a high-level overview for anybody who's not familiar with the company and the assets? What is Fractyl as a company today, and where are you hoping to go in the next five, 10 years? Fractyl's focus is on developing therapies that offer the potential for durable metabolic benefit against obesity, type 2 diabetes, and related metabolic disease. The way that we aim to achieve durable metabolic benefit is by targeting the root causes of these disease in the body. Our lead asset, Revita, is a device that enables a one-time outpatient endoscopic procedure targeting a segment of the gut called the duodenum that we've discovered to be a root cause of the abnormal weight set point in obesity and abnormal glucose set point in diabetes. By targeting the duodenal mucosa by ablation, it allows a cellular regeneration of a healthy new lining of the duodenal mucosa that then allows the body to manage nutrient sensing and signaling mechanisms to normalize body weight and blood sugar without the need for ongoing medical therapy. Our second asset, called Rejuva, is a one-time pancreatic infusion of a gene therapy candidate, RJVA-001, which is about to enter the clinic, which offers the potential for the pancreas to start making its own natural human GLP-1 on demand. What you see with Revita and Rejuva targeting the gut and the pancreas are one-time endoscopic treatments with the potential for very long-lasting benefit, which is fundamentally where we think the unmet need has now shifted in metabolic disease. There are great drugs out there. We all know their names. We see their advertisements every day. The problem is most people stop taking these medicines in less than a year and lose all of their hard-won benefit. Revita and Rejuva are both designed to help patients maintain lasting weight and metabolic benefit without the need for ongoing therapy. That is the differentiating advantage of our solutions. Perfect. Okay. What is the origin story behind Revita? Where did it come from? It started in type 2 diabetes, actually. Can you talk about that, and how did you make your way to weight maintenance? Sure. Revita, again, it is the one-time endoscopic procedural therapy enabled by our device. It is performed by gastroenterologists. The origin story is actually a simple story in three parts. The first one starts with an accidental observation from bariatric surgery, performed millions of times, that shows that if you bypass the duodenum in people with obesity and type 2 diabetes, you can immediately reverse their obesity and their diabetes without patients having to change their behavior in any way. That observation, that duodenal bypass has this profound metabolic benefit, led scientists to try to understand what is it about the duodenum that is somehow magically allowing people to improve their obesity when food does not contact it anymore. What scientists discovered is that there are critical nutrient sensing and signaling pathways from the duodenum to the brain and the liver and the pancreas that help the body control metabolism. Years and years of high-fat, high-sugar diets cause duodenal dysfunction, which is an abnormal structure of the duodenal mucosa causing abnormal nutrient sensing and signaling. Step one was this accidental duodenal bypass surgery. Step two was interrogating the root cause of that and then understanding duodenal dysfunction to be the mechanism. Step three was where we came in. How do you take that lesson and then develop a root cause targeted therapy that can enable millions of patients a year to be able to have the first true disease modification in obesity and type 2 diabetes in a scalable manner? That is the root cause story about- Okay where Revita came from. Interesting. All right. It is not just an idea. There is now clinical data and randomized controlled clinical data at that. Can you talk us through the most recent update or the series of updates, I guess, but focusing on the controlled data, and what have you learned over time, six months, 12 months? Yeah. I am going to just answer the last part of your last question as I transition. For many years, we worked on developing duodenal resurfacing for type 2 diabetes, and we developed hundreds of patients and sham-controlled data in the type 2 diabetes patient population. About two and a half years ago, it became obvious to us that as effective as the GLP-1 therapies are, most people cannot or will not stay on GLP-1 therapies for life in order to manage their weight. Even though we were developing evidence in type 2 diabetes, we had this very interesting clinical signal in hundreds of patients followed for one and two years that after a single Revita intervention, patients were losing weight and then holding their weight flat for two years without patients changing anything about their diet or lifestyle or without even thinking about it. That profile of a one-time intervention, early weight loss, and then sustained weight benefit without effort suddenly became incredibly relevant in an era where you have patients stopping GLP-1s and then regaining weight very rapidly. It occurred to us that Revita's value in a post GLP-1 weight maintenance setting could be incredibly compelling. Two years ago, we went to the FDA. We took our evidence from type 2 diabetes, and then we went straight into three different clinical trials in post GLP-1 weight maintenance. We made a hard push in this area because we saw extraordinary value because patients are completely compelled. Our customer physicians feel like this is the single biggest problem to solve in obesity, and health systems and payers are already balking at the cost of lifelong GLP-1 for their patients. How do you deliver durable weight maintenance in a manner that overcomes the fact that most people will stop taking their medicines? That is why we went into this area, and that decision ended up being a very prescient one, because we now are sitting on one year data from two different studies, open label study called REVEAL-1, and then a randomized pilot, randomized double-blinded sham-controlled pilot study, called our Midpoint Cohort. We are now less than 3 months away from seeing the definitive evidence in a 300-patient prospective randomized sham-controlled pivotal study designed much like the pilot, but just seven to 8x the size. What that means is it is very well powered, and if we just see the same thing we saw in the Midpoint Cohort, in the larger sample, in the definitive experiment, we could be less than 3 months away from the first registrable data set for a durable post GLP-1 weight maintenance solution. What we have seen from the two pilot studies that we have run, open label and randomized, very consistently, is excellent maintenance of weight loss in patients who have lost considerable weight on tirzepatide. They have lost 40 to 50 Ibs. They are maintaining more than 80% of that weight loss at one year, compared to the sham arm or historical controls, which are regaining about 60% of their weight by one year. A very large difference. We are maintaining almost two-thirds of the weight that the sham arm is. Oh, sorry, 3 x as much of weight as what the sham arm is maintaining. We believe that this is an incredibly compelling clinical profile. I am happy to go into any of that in more detail. Yep, definitely. No, I think that was helpful. Now just want to understand, are there differences between the pivotal and the Midpoint Cohort that we should be keeping in mind as we think about the read-through from one to the other? I think the read-through is very strong. Number one, it is the same exact protocol by the same physicians with the same patient population and the same enrollment criteria. It turns out that when we ran the pilot study, we learned two incredibly valuable lessons that have informed how the pivotal study will be analyzed, but not how it was designed or conducted. It validated the design and the conduct, and it helped inform the statistical analysis plan, which we have now cleared with the FDA. The core observations that I think are going to drive real value in the clinical profile is that we saw a clear dose response. The longer the length of the duodenum that we ablated in a single session, the greater the weight maintenance benefit that was observed. The nice thing about a dose response is that is the strongest biological signal that your effect is real, because let us be honest, one of the skepticisms that a bear might say is, "I do not really understand this duodenal mechanism. How do I know it is real?" We have seen dose response in type 2 diabetes. Now we have seen dose response in weight maintenance with a duodenal intervention, building on millions of patients who have gotten a duodenal bypass. So dose response helps inform us, and what we are seeing is that longer lengths of ablation lead to highly clinically meaningful efficacy. Second thing we observe is that the patients who need the protection from weight maintenance the most are the ones who lose the most weight on these drugs. They are the ones where when they stop taking these medicines, they are liable to regain weight the fastest. In those patients, Revita's effect size seems to be largest. Both of those things are built into our pre-specified statistical analysis plan, and we go into our pivotal results less than three months away with greater than 95% power to hit our co-primary endpoints and enriched populations where we think we are going to have really outstanding demonstration of clinical meaningfulness. Mm-hmm. Okay, perfect. Can you talk about those co-primary endpoints? What are they? Assuming positive data in less than three months- Yeah What's next? Where does the 12-month data come in? Sure. There are two co-primary endpoints. Number one is a six-month randomized sham-controlled comparator between Revita and sham. Let me walk you through the study design so you understand it, and you can understand what to expect. The individuals who were enrolled in this study had obesity. They did not have any prior GLP-1 therapy, and they did not have type 2 diabetes. We gave them tirzepatide, dose titrated the tirzepatide to get them to at least 15% total body weight loss, and then once they got to that threshold, and only if they got to that threshold, were they then randomized in a 2-to-1 treatment allocation between Revita and sham. It's a double blind because the patients were not told whether they got the treatment or not. They were randomized after they were anesthetized in the endoscopy suite. The person who's measuring their weight afterwards is an obesity medicine physician who does not know their treatment allocation. At six months, we'd expect the sham arm to regain roughly 10% of their body weight, and the Revita arm to regain less than half of that. That's what we saw in our pilot work, and that's why we're very confident in the likely success of the pivotal. There is a second co-primary endpoint at 12 months, which is only looking at the Revita arm. It is an FDA-mandated durability performance metric that patients must maintain at least 5% total body weight loss from prior to their GLP-1. It's a pretty low bar because in our per-protocol analysis, over 90% of patients in our pilot study hit that metric. All we need to do is have 50% of patients hit that metric. That suggests that we are well on our way towards being able to demonstrate durability per the FDA's requirement. Mm-hmm. Okay. The 12-month data? We will see in early Q4, we will see the randomized sham controlled six-month data. That is the key milestone that investors are looking for. The 12-month will come in Q1. Okay. In the meantime, you will be starting to prepare the filing or will you wait to start that work until you see the 12-month data? Yeah, because what the FDA is most concerned about naturally is the sham controlled efficacy at six months, and the safety from Revita. We have never observed a safety signal, any late safety signal from Revita. The mucosa heals within weeks. In our pilot studies, patients experience side effects only mild, rare, and transient, couple of days after the procedure. We intend to compile our six-month data and our safety package and then file that by the end of this year. Then we will update the FDA on the 12-month data when it is available in Q1. That helps accelerate our path to market. Got it. Okay. Assuming all goes well on approval, what does commercialization look like? I ask this from the biotech pharmaceutical perspective. How might the launch here look different than a drug that gets shipped to a pharmacy and the patient goes to pick it up and all that? Right. The way to think about this is we're building distribution. The way to build distribution is in a center-by-center manner. There are centers of excellence across the U.S., nearly 50, where we've already been doing clinical trial work over the years. Major health systems, think UCLA Health, Northwell Health, West Virginia University Health System, across the U.S., where there are physicians who have gained comfort, familiarity, and experience performing our procedure through our pivotal trials, where there are patients who are being referred to them for obesity care, where we intend to launch. We see an opportunity for an incredibly targeted and efficient commercial model. If you were modeling it out, what you would be thinking about is the centers that we would be entering, the number of patients per center, and then the covered lives within those geographies that would allow us to move patients through the funnel. What's really nice about this is that the fact that the vast majority of endoscopies in the U.S. are done in the top 200 to 400 academic or private health systems allows us to have a very focused and efficient sales force targeting those in order to be able to capture the majority of the U.S. population within those health systems. Mm-hmm. Okay. Your commercial sales force call point is the physicians themselves. That's exactly right. Okay. It's the GI physician who's performing this endoscopic procedure. Or the bariatric surgeon who's already got a practice in bariatric surgery, already has a referral network built, and is now adding another tool to their armamentarium for something they don't have today. Which is a post GLP-1 weight maintenance solution. If you think about the go-to-market strategy, it's a combination of focusing on physicians who already have bariatric and metabolic practices, and then offering them a new tool that's easy to learn how to do to satisfy a patient population they cannot currently serve, but which is quickly becoming the majority of the patients that are seeking care, which patients who've tried a GLP-1 can't or won't stay on it. Don't want to regain their weight. Mm-hmm. Got it. Okay. That's helpful. And then, about a year ago, you signed a letter of intent with Bariendo, which I think is now Everself. Yep. That is right. That is right. What does that bring to the table, or where does that fit in? Bariendo is the nation's largest distribution of bariatric and metabolic endoscopy services in the U.S. When we signed that letter of intent with them, they had 15 centers across the U.S. That number has doubled in the last year, and it will likely double again in the year after. What the Bariendo relationship offers is proof positive that among the physicians and the service lines in the community that are servicing these patients, they see an extraordinary need for a post GLP-1 weight maintenance option. What we are hearing from Everself is that when they run an ad in Dallas or in Tampa, 80% of the patients who respond to that ad are on a GLP-1 and looking for an off-ramp. What that tells you is in addition to the 50 centers where we've been working clinically in the U.S., there's a whole other network of private centers where we already have a letter of intent to begin for our distribution. When we're approved. Okay. All right. You mentioned something that I was going to go to next, which is there is clearly a DTC component to this market. But that's not something you have to do. It's the maybe centers of excellence, but also the Everselfs of the world that once they have access to Revita, will then be advertising it to That's not our job. Yeah. It is for the centers to do. In fact, I think the most effective thing for a large health system is essentially to put out a notice in their EMR because if there are patients who are on a GLP-1, they are looking to stop or wanting to stop. If they are having GI side effects, they are actually very easy to find. But even easier than that is that gastroenterologists are increasingly seeing referrals from primary care for patients on GLP-1 who are experiencing GI side effects. Even easier than that, there are nearly a million people in the U.S. who are on a GLP-1 today who are going to get an endoscopy anyway for other reasons. The gastroenterologist is actually already seeing these patients in the clinic and in their endoscopy centers. That will be the low-hanging fruit from which to start. Then within their health system, there are so many people who are looking to stop. It is about raising awareness through the EHR. Then for the Everselfs of the world, then drug to consumer can also augment that as well. Got you. Okay, noted. How should we think about the eligible patient population here? You just threw out some different buckets. I guess, can you quantify those a little bit more? Are you targeting initially those patients who are on a GLP-1 and getting an endoscopy anyway, or are there other kind of, what are the different cuts, I guess, we should be thinking about? Yeah, I guess the way that I would think about this is that there are over 100 million Americans with obesity, but there are 30 million Americans who are on a GLP-1 today for obesity, and there are 1 million discontinuers a month. However you slice this, there is an extraordinarily large group of patients in the country. The two places where we intend to focus on identifying patients are in the endoscopy roles themselves. People who are coming in for an endoscopy anyway for other reasons, who are on a GLP-1, are already being flagged by endoscopy because the doctors, the anesthesiologists actually, want patients to stop the GLP-1 at least a week before their endoscopy because of the gastric emptying issues around GLP-1 and getting an endoscopy. They all already know anyone who's on a GLP-1 who's getting an endoscopy. It's about informing them about Revita's availability and then offering them a potential off-ramp. We think it's going to be highly attractive. Second is within the GI clinics themselves. Patients who are on a GLP-1 who are coming in because of side effects, and then offering Revita for a problem that they can't offer them a solution for today, is like, how do we help you with the GLP-1s that you don't want to take? I think this is an opportunity for us to also say that we have scheduled an investor day on September 1. Because in 30 minutes, we can only say so much about our commercial model. As we think about how this is going to roll out and how we plan to make this available, we have an investor day on September 1st in the morning, and anyone who's interested can, by all means, listen to it, either as a webcast or asynchronously from our website. Perfect. All right. We look forward to that because I have more questions there, but I will switch. I guess, can you talk about the competitive landscape here? There are other approaches that are similar in terms of, I think, ablating or resurfacing the duodenum. Can you talk about that? How do those technologies differ from yours? Maybe just, I guess, how are they being developed differently? Just your thoughts in general. Sure. There are different forms of energy that people use for ablation throughout the body. Each of them has unique features that make them more or less relevant to the anatomy that they're targeting. We use hydrothermal ablation. There are other approaches that are not as far along that are using either pulsed field ablation, which is a form of electrical energy, or vapor ablation. I would say a couple of things about that. The first one is, we were the first to define duodenal dysfunction as a potential target for therapy. We were the first to generate clinical evidence, and we were the first to generate intellectual property that's meaningful and valuable in the category. What that's afforded us is a very strong, robust, and broad IP estate that covers not only our system methods and devices, but broad methods of use and other potential ablation modalities, which we conceived before these companies were even formed. We have stated publicly that we have very broad coverage covering our thermal, but also electrical energy, thermal and non-thermal, and other forms of energy. This is a market that we intend to defend. However, it is nice to have other entrants because it validates the mechanism. It validates our observations. It is worth noting that those other efforts are earlier, really copycatted us followed our type 2 diabetes path, but did not move into post GLP-1 weight maintenance. We are leading with post GLP-1 weight maintenance because we believe that's incredibly compelling, highly motivated patient population, very large problem that is otherwise unsolved, and we also intend to follow our type 2 diabetes trial data through to a label expansion. We think that not only from an intellectual property standpoint but also from a commercial standpoint, we will be in a leadership position for years to come. Okay, got it. You mentioned some of the smaller companies working in the space, but I believe Boston Scientific might also have something. They were talking about targeting the duodenum at their investor day. Do we know anything about what they're- They've invested in one of these other companies. Okay, got it. Yeah. Got it. I don't think they have any internal. They may or may not have an internal program. Got it. Everything I said. Got you. continues to hold. Okay. Perfect. All right. In the last minute and 30 seconds, switching over to Rejuva, which is the gene therapy GLP approach. Similarly, what's the origin story of this program, current status, and next steps? Origin story of this program is that GLP-1 was first identified as a hormone that is produced in the gut, secreted in response to nutrients in the gut whenever you eat at very low levels, and acts more as a neurotransmitter than a circulating hormone. Pharmaceutical companies took that observation and then pharmacologized that by making them into injectables with longer acting effects and now orals. But the way that the pharmacology works is very high circulating levels for long-lasting effects that is not really following the physiology of GLP-1. As a consequence, they have great efficacy, but they also have a lot of side effects that are dose-dependent because of these high circulating levels. The founding story behind Rejuva is can we do something that's way more physiologic, something that offers a one-time intervention that can mimic low cycling levels of GLP-1 targeting the neurotransmitter signaling mechanisms in the gut and the pancreas itself? What we have developed is RJVA-001, which is a gene therapy candidate delivered locally to the pancreas that delivers a very small amount of virus, AAV9, less than 1/100 of the amount that's already approved in the use of ZOLGENSMA, which is another AAV9 that's being used all the time in the U.S. Within that gene therapy, what we've packaged is a smart GLP-1 insulin promoter driving human GLP-1, allows a beta cell to start making its own GLP-1. In our preclinical models, what we have observed is that this leads to, exactly as designed, very low circulating levels of GLP-1 that are unlikely to cause the nausea and vomiting you are seeing with the pharmacology, thereby mimicking physiology, but also efficacy that greatly exceeds what you can get from the GLP-1s themselves. We believe this is potentially a best-in-class GLP-1. One-time administration, potential lifelong therapeutic benefit, excellent efficacy in therapeutic relevant regulatory models, preclinical models, and very low circulating levels that should confer excellent safety and tolerability. Perfect. All right. Well, with that, we are out of time. But thank you so much for all the interesting color, and we will be very much looking forward to data very soon. Yeah, so that is about to enter the clinic. It just got clearance to begin a first-in-human study. First sites will be activated imminently, first patients enrolled and dosed anticipated later this year. Thanks so much. Thanks.