Welcome back, everyone, to the 2024 RBC Global Healthcare Conference. My name is Greg Renza, one of the biotechnology research analysts here at RBC, and we're pleased to have Morphic with us today. Joining us from the company is the CFO and COO, Marc Schegerin. Marc, Dr. Marc, it's great to see you. Thanks. Great to be here. Certainly an important year of execution for Morphic. Maybe, Marc, we just have you start by giving us an overview of Morphic, the MInT platform, integrin as targets, and the work in inflammatory bowel disease. Sure, happy to. So the company is actually almost 10 years old now, so we've been through some arcs for sure. I mean, basically, at its founding, the company was designed to build small molecule therapeutics against integrin targets. So it wasn't a very novel idea, actually, because many other pharma companies for many years have been trying to do just that. There had been antibody therapeutics levied against these targets for many years, and in fact, some approvals as well. So this concept was already in place. And obviously, if you have an antibody, it's better to have an oral. But fundamentally, it's a challenging thing to do scientifically because these integrins are obligate heterodimers. There's 2 of them. They're relatively large. So for an antibody to, or any very large item, in this case, antibodies to kind of selectively target these already large integrin sort of family of cell surface proteins, it's much easier to be large and specific. To be a small molecule and attain that same specificity is the fundamental challenge. So Morphic was really founded on the premise of kind of bringing various fields of science together, including from our founder's lab, Tim Springer, but also some of the technology that is enabled by the Schrödinger platform as well. And so we were able to bring forward a couple of different but very critical components to create this MInT platform and this company in the first place. And again, one of the first things that we did was try to create an alpha-4 beta-7 selective small molecule for IBD. Essentially, it's the same target as the known drug Entyvio. And so just in plain English, call that an oral Entyvio. So this was the sort of founding premise of the company. And of course, that is our latest-stage asset today. And maybe just talk a bit about how an oral Entyvio can fit in and address the IBD indications. It's certainly a landscape and indications that are highly interrogated, but also rather complex. So there's always room for improvement. Patients have degrees of complexity. Just talk to us about how an oral Entyvio or 4/7 can fit in there. Yeah, absolutely. And there's a couple layers to that answer because on the one hand, the current treatment paradigm and all the modalities that exist today, they're effective. They're better than placebo, for sure. But they're not fantastically effective by any means. They all work about the same, and they have side effect profiles ranging from kind of annoying and unpleasant to totally beyond the pale. So there's tremendous room for improvement with respect to the current treatment paradigm. And amazingly, despite all the commercials and the billions of dollars of R&D and the tens of billions in revenues, there's nothing that is just safe, oral, and effective for these patients, even after all these years. And so that's not too much, I don't think, for patients to ask for. That's something that this could be a problem that this could solve and an unmet need that this could address just on that first level. The second level is sort of that next frontier of being combinable as well. We can talk about this in more detail. But the drugs that exist today, for the most part, are systemically immunosuppressive, at least to some extent. That's why they're approved in multiple indications, for example, of course, except for Entyvio, which is not systemically immunosuppressive at all, and also why it's approved for just UC and Crohn's, for GI conditions. So that makes it fundamentally a much better combination partner with one of these other drugs that has a different orthogonal but probably synergistic mechanism of action without adding insult to injury with two systemically immunosuppressive drugs, which obviously is not ideal. So that's kind of the second level of the answer to the treatment paradigm, which is today you have drugs which are somewhat effective in a percentage of people. They're all about equally effective. Tremendous room for improvement. Side effect profiles suboptimal. A safe, oral, effective drug would be an outstanding sort of addition to the armamentarium. But if you can combine and double or triple, who knows, that efficacy profile and break through that efficacy ceiling, you can totally change what it means to have IBD in the future. And so that's kind of the next level of what we're trying to do with the treatment paradigm. So a safe, oral, alpha-4 beta-7, amenable to combinability, which starts with that profile, of course, and also the potential shortcomings not potential, but the real shortcomings of the market. So certainly want to explore that a little bit when it comes to MORF-057. Maybe touch a bit before we do that on sort of that foundation of Entyvio's market performance with its profile and methods of administration. How is that shaping the view of MORF-057's opportunity? And there are several insights on its administration, on approval of sub-Q, on frankly, the revenue power that it's put up. And the differentiation of MORF-057 can actually present some favorable aspects to another option. So what are you seeing in the market performance that maintains your encouragement? You're right. I I mean, obviously, Entyvio is doing very well. It's been a multi, multi, multi, multi-blockbuster for many, many years now, and it's getting into the high single digits these days. But what really has changed in the last few years is its dramatic increased use in first-line therapy. So it went from being used a little to being used a lot to now the clear number one. Drug of choice. Not just in the U.S., but even globally. When I say first-line, I don't mean 5-ASA, mesalamine, and steroids. I mean, as you graduate from those relatively free 35-year-old drugs, which are effective in some people but usually not permanently effective and have side effect profiles but also not catastrophic side effect profiles, these should always be used first, of course. But after a time, these stop working in folks, and they get deeper relapses. They get more frequent relapses. So they now deserve an advanced therapy, so-called. In that case, pretty much there's two choices. There's Humira and Entyvio. And right now, Entyvio is being used predominantly in the U.S. and across the world. So that shift has happened more in the last, I don't know, call it five years or so, also probably as a result of the VARSITY study, which had those two drugs head to head. So that is something which definitely points us in the direction of that earlier line of therapy. This is a huge bolus of patients. If you think about UC, just rough numbers, mild, moderate, severe, it's about 40, 40, 20. So there's a large bolus of patients that are on that cusp of moderate to severe, which is they're about to graduate to these advanced therapies, if that makes sense. And it's a big deal to go from these free oral drugs to now both Humira and their needles of some sort, whether it's an IV infusion or sub-Q. Then you have payer and all the different issues that you have to, you're kind of admitting that you failed, right? So it's a big step. So there's probably a lot of folks, and our research confirms it, but there's certainly a lot of people who are kind of dragging their feet, if you will, and delaying that inevitable progression to the moderate side of things and where they would ultimately deserve all these drugs that you see on TV every night on CNN. That's the basic idea with respect to how we're thinking about ultimately this drug would most likely be used as an early first-line therapy. That would be sort of the backbone of therapy. Forget about combinations just as a monotherapy. That's a huge market. It's a huge unmet need. To be able to go from pill to pill, it's just much less of a violent transition for these people who are kind of struggling with the true first-line therapies. Yeah. All All right. Very helpful. 2024 is a year of execution for EMERALD-2. I know it's a rigorous emphasis for the company, marching towards data in 2025. Maybe just walk us through how we got to this point with the data that you've built with EMERALD-1 and just recap that. Yeah, absolutely. So two things. So EMERALD-1, we can talk about the data because that data is now public and that trial is complete, which is great. And then EMERALD-2, which is our randomized phase 2b trial, which we're wrapping up with enrollment here shortly, is a more sort of standard FDA registrational path type of trial, which, as you mentioned, will read out in the first half of 2025. So backing up to EMERALD-1, this was a small, just a few dozen UC patients, moderate to severe, in the U.S. and Poland. And the purpose of this trial really was to kind of see a signal or not. Is the drug active, or is it not active? Most of the drugs that are approved or the ones that are including the ones that are likely to be approved in the near term, they have a clear benefit over placebo. But none of them is 100% effective. They're all approximately the same. In terms of patients that get quite a bit better, it's usually about half of them. And for patients that get way better, these have actual definite I'm calling way better remission and quite a bit better as a response. But patients that get way better, it's about 20% or about 1 in 5. And all of these drugs are very similar to that. Placebo rates for remission are in the high single digits, usually. And a response, get it a little bit better, it's around 20%. So again, these drugs are better than placebo clearly, but there's tremendous room for improvement. And so it's pretty easy, even a small number of patients with any drug, to give to a few dozen patients and see if your drug is in the first category or the second. You're not going to be able to tell the difference between 1% or 2% because each patient represents 3%, just him or herself. But you will have an idea of whether your drug is active and working or not. The results of this trial were very, very clear. Our primary endpoint, the only thing the trial was really powered for, was a change in RHI, which is a fairly objective histologic measure. Patients dropped on average 6.4 points from baseline on that measure, which was very highly statistically significant. It was like 0.0019. Everything else was measured as well, of course, because we were curious and we want to extract as much data and information as we can from the least number of patients. We measured everything else, including all of the Modified Mayo endpoints, which are the typical kind of registrational path endpoints and, in fact, is our primary for the phase 2b, of course. When you look at response and remission, again, very similar to what you see with all the other approved drugs. The remission rate was 26%, which was outstanding. Again, relatively small, so you can't hang on to each decimal place of percentage. But it's clearly an active drug and doing as well or better than other drugs in the space. When should we anticipate any additional or a publication on EMERALD-1? I think you've disclosed a great deal of data today. Maybe there's some vedolizumab-failed cohort or patients, maybe longer term. Are there other data points that investors can expect on EMERALD-1? Absolutely. So I think we are writing that paper now. It'll be sort of a big sort of compendium of all of the totality of that EMERALD-1 data, which would include, as you mentioned, those exploratory cohort patients. I'm not sure if we said in the past how many, but I'll just say it's four patients that were in a separate cohort of folks who had failed vedolizumab in the past and went on our drug. As you can imagine, this is not the easiest trial to enroll because they just failed a drug with the exact same mechanism that does the exact same thing in the same compartment in the body. So it was very interesting to see, although it's a low bar, there is some reason to believe scientifically that we could rescue a portion of these patients. And so that's very interesting data as well. That would also be included in this sort of totality of data set in the paper. As far as vedolizumab failure, any other characteristics where one would, other than feeling compelled to join a trial, that would make 4/7 maybe as suitable? I mean, I think, I mean, at the time that this was enrolling, there was some most of these patients enrolled anyway. There was some data that was public already from EMERALD-1. And so there was a sense that, yes, these folks really do appear to have an oral Entyvio. That said, for someone who just failed Entyvio, that may be less of a compelling argument than it is for the entire world. And so some of the scientific reasons may be difficult to explain to patients or potential patients, but they nonetheless still exist. So for example, Humira struggles with this too. Many of the antibodies do, including Entyvio, anti-drug antibodies. So over time, you develop high titers of antibodies to the drug, which blows your PK and therefore your PD and then your efficacy. And so that's a fairly predictable consequence of high ADA titer and an obvious point of scientific differentiation with respect to us and Entyvio despite having the same mechanism. Great. So let's talk EMERALD-2. How's the trial proceeding? Not asking for blow by blow on enrollment insights, but how is it working with respect to your expectations and projections? Yeah, absolutely. I mean, with respect to projections, it's right on track. And so we've had this first half of 2025 guidance since the trial began over a year ago. And so we've just been very consistent there. We have had certain tailwinds with respect to enrollment. We have a great ClinOps team and medical team. We've also had, I would say, one headwind in particular. And so those two things kind of netted out, I suppose, and we're right on track. And so that's why we're close to completing enrollment and should be on track for, again, the first half of 2025 readout. The headwind, just to take that on first, is that we don't want the trial to be 99% naive folks. Even though that's a huge market and it probably fits the profile very well with 057 and the like, it's still not the way typically trials are done. And so we've established some sort of minimum criteria for advanced therapy experienced patients, patients who are refractory, patients who have failed several other mechanisms. It could be TNF, it could be S1P, it could be whatever. But there has to be a certain portion of patients that are AT experienced as well, but not having failed Entyvio because that's a different group, of course. And like I said at the beginning, when you graduate to advanced therapies, you normally get Entyvio first. So you have a bit of a catch-22 with respect to looking for advanced therapy patients who haven't had Entyvio, which means they had to weirdly avoid it somehow. It could be people who hated the infusion concept. That's an obvious type of patient that, for whatever reason, they couldn't tolerate going to the hospital and losing a day with parking and infusing and leaving. So these patients do exist. They're just not the easiest in the world to find. So it's kind of a positive with respect to long-term commercial opportunity because Entyvio is being used first line so frequently. But for enrolling IV-experienced patients, it's not the easiest thing in the world. But it is a global study. We have dozens of countries and many, many dozens of sites. And so we've kind of cast a wide net with respect to that. What are you sharing about at least the anticipated mix of geographies? You just alluded to the U.S. and ex-U.S. What is an optimal breakdown? Yeah, I mean, I think it's typical for most of these types of trials, which is that there are countries which are well known to be very sophisticated for IBD trials and a relatively high-volume IBD trial type of countries. Unfortunately, two of them historically are Russia and Ukraine, by the way. So obviously, we're not enrolling in either of those two countries for the phase 2b trial since that was prior to the beginning of this trial. But there are these sort of Eastern European countries, Western European countries, where in India, we're in Asia, Taiwan, obviously, the US, Australia. So we've kind of spread the net pretty wide. And I would expect a geographic mix that's very much on par with what you see in all of these trials. Great. Great. And for a trial of this size for a phase 2b, when it comes to the endpoints, how should alpha-4 beta-7 be judged from the measurement? We certainly see clinical bars. There are several bars that we can align to as to what is meaningful. What's the latest from you as to what is competitive and what's a bar that we're shooting for? Yeah, absolutely. So it talks a little bit at the beginning about the profile. So when you look at the drugs that are approved today and you look at their phase III trials, these are obviously placebo-controlled trials. So instead of looking at the absolute remission rate in a treatment arm, which I was talking about earlier as 26% for us, about 1 in 5 for the vast majority of drugs for us so far, I should say, there's also a delta, which is more typically looked at for later stage trials and for approval and the like. And so the most recently approved UC drug is an injectable. It had a delta of about 10%. Older trials, so be careful with cross-trial comparisons. But Humira is in the 11%-ish range. Entyvio is 11%-12%. Another drug with a big phase III trial a year or so ago, which is an IL-12/23 is 14%. So this is the general range with p-values, which clearly indicate that it's better than placebo. But again, they're not 50% better than placebo, right? So this is the kind of range where all of these approved drugs are in for the most part. And what we're trying to do with our profile is not thread the needle between 12.2 and 10.9 and 14.1 because ultimately, that's not what matters for a patient. The patient who's sitting in front of you in your office is either going to get way better or they won't. Safety really matters a lot. Convenience matters a lot. And so the drugs that work for them, whether it's 14.1% or 13.2, it really doesn't matter for that patient. What matters for that patient is, are they going to get better? Are they going to have completely unacceptable side effects or even the threat of the risk of a totally unacceptable side effect, which keeps people up at night? And so that's the kind of overall profile we're looking for. And I mean, I think safety is a huge point of differentiation in this field. You look at the efficacy ranges, and they're all so narrow. And people are pointing to, oh, mine is 2% better than this, mine is 8% better than that. But the safety deltas between these drugs is enormous. You have Entyvio on the one hand, which I think is pretty much undisputed as the safest in the field, although I've never heard anyone disagree with that, to I won't name names, but to drugs that are way over on the other end of the spectrum, which when you read the label, you kind of can't believe it. And so there's a huge range of safety between these drugs. And that's what ultimately explains the huge range in revenues and penetration and early line use, et cetera, because the efficacy deltas are like third decimal place type of differences. That's a good pivot to just talk the pipeline into the combinations. And you're developing a library. You're doing this organically. Just talk to us, Marc, about the rationale for the selection on TL1A, IL-23. Of course, very rational. We get that. But this is an important sort of setup for exploiting combinations. Yeah, very much. So when you look at the landscape in terms of what the mechanisms are that have given rise to approved effective drugs, and you kind of combine that scientifically with alpha-4 beta-7, and how that mechanism works, it's actually more often than not that the mechanism would be a great counterpart. There are maybe a couple of exceptions that you probably wouldn't try first as a combination partner. But for the most part, these orthogonal mechanisms that give rise to efficacy in UC patients are completely different than alpha-4 beta-7. It just kind of stands to reason that they're going to be obvious combination partners. And so the issue, and by the way, between themselves also, could give rise to dramatically improved efficacy. There's nothing particularly magical about alpha-4 beta-7. The difference is the safety profile. So when you start combining drugs with their own nasty side effect profile is one thing. When you start combining drugs with the same side effects, immunosuppression and the like, you're really asking for trouble. And so because Entyvio, and our drug, as far as I know, is the only non-systemically immunosuppressive therapy that's even in development for UC, it's just a no-brainer combination partner. And we've kind of voted with our feet a little bit with our preclinical work. We're using our relationship with Schrödinger as well. We've expanded beyond integrins to include some approaches like the targets you just mentioned, including some others too, which we haven't yet disclosed. And so these efforts are really designed to kind of in-house create that second tier, that second level of treatment paradigm shift with the potential for maybe even a fixed dose single drug combination. So again, that's the next frontier. And these are relatively early stage programs, of course. But we have a great team. We have a great structural biology team and chemistry team. And so I think we're going to be able to succeed there. Last question as we're over time on the non-IBD programs. Maybe just pick or highlight some of your favorites when it comes to how you're expanding the pipeline beyond. Yeah, absolutely. So I think currently, there's a tremendous amount of enthusiasm for our alpha-5 beta-1 program. Again, it's another small molecule program against a selective integrin target called alpha-5 beta-1. There's a lot of very exciting preclinical work that we've done, which could imply disease modification potential in a variety of diseases, including sort of call it the pulmonary hypertensive umbrella of diseases, but obviously, PAH being the classic member. And so that appears to have a very broad therapeutic potential and a lot of very interesting underserved diseases. But we're really excited about taking that forward as well. Great. More to come. Marc, great to see you. Thank you. Thank you. Thanks, everybody.