Everyone, welcome to another great session here at the 2024 Jefferies Global Healthcare Conference. I am very pleased to have up with me two members of the management team from Morphic. We have Praveen Tipirneni, the CEO, as well as Bruce Rogers, President of R&D. And of course, for many of you who don't know, Praveen, it's great to have you up here with us after a short time off and a break, but you look good, and you're healthy, and you're back with us. Thanks, Mike. So thank you for being with us. Yeah. Maybe just start off, for Praveen, since you're back in front of everyone, here on Wall Street, that you could just give us a little bit of a high level as to how Morphic is doing. Obviously, 2024 is more of a year of execution, on your ulcerative colitis program, and there was a lot of, volatility last year. So coming into 2024, maybe just tell us a little bit about the messaging about your ongoing phase II program and, and your, how you're feeling about the opportunity for that ulcerative colitis drug. Sounds good. Thanks. Yeah, certainly had a volatile year last year. But, we are feeling really, really good about the program. I think one way, you know, one thing that we've talked about before, right? UC trials have a history of being very difficult to enroll. I mean, if you talk to any strategic, if you talk to, you know, other people, they're, they're always talking about how difficult it is to, the competition in the UC space, how difficult it is to enroll. And, you know, what we've been saying all along is we expected that, but it's been, we're quite comfortable with our guidance. It's, it's, enrolling quite well. And, I think that's a testament to both the validated target, our IIa data, and just to give props to, you know, also our clinical operations team. I think we are feeling very strong, very confident, very comfortable with our guidance, and we think we've got a winner here. Okay. Now, if I may expand on that a little bit. I would say, to be fair, Wall Street views the guidance as pretty wide. You know, so when you gave the initial guidance, it was maybe a year or something ago. You've initiated the study, but the data has been guided to first half 2025. So that's still fairly far out, and to be honest, a wide range of six months. Can you just maybe talk a little bit about what are those challenges that you speak to? You say it's going well, but then to what challenges are you referring to? And obviously, you would expect that you would need to complete enrollment, perhaps not by the end of the year, but by early 2025. And so, you know, the differing timelines around when you actually complete enrollment makes people feel better about how well you're executing. Sure. Well, I think the other way to look at it is that we. You know, by having a trial that's enrolling well, you know, especially in a difficult area, it also gives us opportunities to really optimize the trial to one that, in retrospect, will be sort of unquestionable in the sense that, you know, getting the exact right geography mix, getting exactly the proportions of patients that we want. And given that, you know, we feel very comfortable, it really gives us a trial that on the other side of it, there'll be no questions asked about, "Well, this many patients are in X country. Wait. Oh, how'd that happen?" And things like that. So I think they, you know, we're very comfortable with our guidance, but also, I think we feel like we have some opportunities here to kind of get a trial that is y ou know, unquestionable. So number one is you feel very confident that you're executing and enrolling, and you're confident within the guidance. It's a wide guidance, but one of the things when you drill down is that all of these phase II ulcerative colitis studies, and in fact, a lot of just autoimmune studies, everybody is very myopically focused on the geography, the types of patients, biologic-naive, biologic failures, and that actually drives some big differences in the results. So, can you talk a little bit about what one should expect in the Phase II enrollment criteria, and who's coming into these studies? And how that would compare to other studies that everyone's looking at, like the S1P 1s and all these others that are the benchmark. Sure. You know, this, this falls directly under Bruce's responsibility, so I'm gonna have Bruce answer that question. He's, he's living it every day. Okay. Tell us about what you- Yeah. So, so I think there's a couple of really critical things that come into play here. We wanna run a trial that's like a lot of the other trials that have been run. We don't want 100% naive patients in this trial. We don't want 100% experienced patients in this trial. We want a balance of those. We had a 60/40 mix, AT naive to AT experienced in our first trial. Okay. There's another criteria called the Mayo Endoscopic Score. The patient has to have a two or a three in this context. We wanna make sure we have a representative of both. Our last trial had 50/50 in it, and so we're looking for all of those kinds of patients. And you can enroll early, and just all comers, in some ways, come into the study, but then you've got to start to balance it out as you finish it off. So there, there's an element there. I think one of the most critical things that's both an opportunity as well as a challenge within this study, to get to your last question, Mike, people really love prescribing ENTYVIO. Okay. And so if ENTYVIO is available for a patient, the real message that has come out of Takeda over the last couple of years: it is the number one prescribed advanced therapy in patients. It involves a needle. It involves an infusion or a sub-Q, dose, which they've now just recently introduced. Our oral version of this has been very well-received from a recruiting perspective, and we think that, that it's in part because of our IIa data, but also because of what people are seeing in the profile of what, α4β7 has to offer in general. Well, let me, let me clarify that. So ENTYVIO, doing $ billions as an injectable is widely prescribed, and everybody loves it. Do your patients who are coming to your study, they must not have had- Correct prior ENTYVIO? Correct. That is a unique challenge to enroll patients versus any other mechanism of action out there. Well, I don't know if that's a unique challenge. That's what I'm getting at. Yeah. I think it's actually a unique opportunity. Yeah. Okay. Because there, there's a... Look, we could put you on, you know, ENTYVIO, but do you want to try an oral ENTYVIO? And of course, everybody goes, "Yes." Right? Yeah. Actually, you know, the real question is, that may be the secret sauce to the enrollment. Okay, so in the naive patients, about, let's say, in. So, cover. So if you're biologic-naive it's different challenges, but you should be able to get 50% of your study biologic-naive. In the biologic failure, biologic is just any biologic, but typically, that's a TNF. Yep. And so you're looking for those patients who have failed the TNF and have not had ENTYVIO, but because they like ENTYVIO, they're like, "Oh, I can get an oral," and that- Correct. So doesn't that sound like- Right It's kinda easy to enroll? Well, so I think in certain jurisdictions you're having an easy time enrolling that. So I wanna make sure I correct one thing, though. Okay. Our patients are not just biologic-naive, our patients are advanced therapy-naive. Okay. So when you look at our advanced therapy patients, people that have experienced this, they could have been on JAK inhibitors. They could have been on other agents, like S1P, for example. So there are other oral agents out there as well that some of these patients could have gone on, and a lot of patients today, have seen ENTYVIO and a JAK inhibitor. They've seen HUMIRA and a JAK inhibitor. The patient that's been on ENTYVIO and a JAK inhibitor can't enroll in our study. Right. But the patient that has never seen ENTYVIO, and there's a lot of places in the world where we can recruit patients like that. We obviously have more countries than Poland, which was our first one, and we heard some things about Poland, but we broadly look at jurisdictions across the world to make sure we can cover all that. But there, there's another component to just the efficacy. The safety of ENTYVIO also really attracts people to the drug, and what we reported out in our IIa data last year, and we went through week 44 with this data set, is that our oral version of this drug is also showing that same element of a safety profile in a small molecule. And so if we combine safety with efficacy, we think we've really got a triad with oral now that could then become the baseline for combining things together as well. Executing on the study, you feel good about the enrollment. There are some unique aspects to enrolling, but none of them are necessarily challenges, you said. So, you know, should be able to enroll smoothly. Second is that then everyone's gonna look at the data, and of course, typical Wall Street, they're gonna look at the exact primary endpoint of Mayo Remission. Yep Numbers, and placebo, subtract that, and compare that to all of the other agents. Yep. What should we expect for the phase two results? What is a good result? Yeah F or this ulcerative colitis study? Because people look at your oral competitors. Right. Competitors, around a 15% delta, S1P 1s, and then people look at injectables, which are a different criterion. Sure. What do you expect in your study? I'll start. Talk, talk about that. Yeah, I think the way to look at this, because this is a uniquely differentiated molecule. This is an oral. Right? If and when, you know, this gets approved, it'd be the first oral, safe, effective. It has that full triad. And so really what we are looking for, first, primarily, baseline, is an approvable agent, right? Because if you have an approvable agent that is safe, effective, and oral, there's that huge population, you know, pre-biologic, that's going to take it first. I mean, actually, we're kind of seeing it a little bit in real time when we're talking about, you know, enrollment. Everybody goes, "Of course, you know, you're gonna, you're gonna take it." So what we're looking for is an approvable agent, and an approvable agent with this profile is a really big drug as a baseline. And now, what is an approvable agent, right? I mean, the latest approvable agent is mirikizumab, which is right under 10%, right, for, you know, placebo-adjusted response, right? Well, this is the Lilly antibody. Yeah, yeah. Got approved. I did pull up the press release. Yeah, yeah. Like, no one at Lilly cares about this, that drug, but it did, it was approved. Yeah. In this day and age, yeah, exactly. Press release saying it slid by everybody, but- It's not, it's not obesity, but- ... a new ulcerative colitis drug was approved. Yes. It's an antibody. It's a biologic. Yes. But you're telling me it's a 9% placebo Yeah So, I'm just using that as an example. Yeah. Yeah. It's one drug that got approved. So we agree with your assessment of that profile of that drug, but if you had that response in an oral safe, effective, right? Yeah. It's a whole different ballgame. Yeah. Right, so I think that's the baseline that is a big win, and then from there onward, right, is different levels of how big it potentially could be. But on the baseline minimum, we just need an approvable drug. So it's- And let me tease out one more thing there, that Praveen actually started with here. A lot of the other orals that are out there today they're not being used as front-line therapy, and they're not being used as front-line therapy because of their safety profiles, not because of their efficacy profiles. I think the same is true in biologics. ENTYVIO is not being used first because it's the most effective drug. It's being used first because it's effective, and it's the safest. And so if you bring those two together and add oral to that, now we think we'll really be able to pull in. So do we have to be equivalent to S1Ps? Do we have to be equivalent to JAK inhibitors? We're not equivalent to them already because our safety profile is proving to be a significant benefit within this space already in the data that we've released so far. In a generally younger, healthier population- Yep Absolutely. And there's that part of it, but I think that's the thing we often forget. I mean, you know, so I came from Cubist with Cubicin, right? There's always this question of, "Well, how and why did Cubicin become such a big drug," right? It really was a safety profile, you know, and down to, you know, doctors, do no harm, right? And the same dynamics you kind of see here, even though we don't talk about it nearly as much. Okay. So the low end is 9% on the low end, which is a recently approved drug. The higher the numbers, the better. Yeah. 15% is what S1P1s show. JAKs are in the 20s, but JAKs have their own black box and their own issues. And so how do you think about the data you saw in phase IIa and what you think you could see in phase IIb? Because based on conversations with other ulcerative colitis companies, there are ways to think about the types of patients to get into this study to kind of make sure that you're gonna have a good result. Right. Can you talk a little bit about that? Because there was controversy about the phase IIa data. Sure. People, they're not convinced that it, this works, per se. Yeah, I think that I mean, it's a bizarre controversy. We will save all the controversy. Yeah. But, to what are the what are the two things that you're convinced that it would, that it's going to be very potent? Yeah. So, you know, I think that the controversy, if you will, was driven off of some strong statements about certain things that just can't happen, and they're factually not true, right? Okay. So it turns out the same nine patients that went into remission also had endoscopic score improvement within the context of the trial. We didn't have, in the context of the trial, as we talked about last fall, an AT-experienced patient that went into remission, but, but we had many that responded. But to your point of patient population matters, the patients that were in our, our AT-experienced cohort were also an MES score on the highest of three. Okay. Okay? So very severe patient population that was in the context of that study. If you look at the totality of the data overall, though, the results are very consistent. We've always gotten great PK, great safety, full receptor occupancy in the context of this trial, which resulted in a really nice outcome, on the primary endpoint, which is RHI, which no one ever seems to talk about anymore. But it was powered for RHI, and we hit that with high statistical significance. And then if you go down and you look at the modified Mayo, fantastic result overall, 25%, nearly 26% of patients were in remission. It's those subscores that in 35 patients, it's really difficult to read into. So how does that affect what we're enrolling in the IIb trial? Sure. What we want to see in the IIb trial is as diverse a group, as we can, that represents this patient population. So we want to see, and what we've targeted is at least 30% of our patients in that trial, we want them to be advanced therapy-experienced patients so patients that could have been on TNF, patients that could have been on IL-23, other drugs that are actually out. They could be on TL1As for that actually as well, none approved, but they could have been in a trial on one. So they could have been on a variety of agents out there. We want at least 30% of those patients, and that's part of measuring disease severity, but we also want to make sure we have enough patients that have an MES of three versus two, and we had a 50/50 balance in our last study. We think that's a great population. And if we bring that overall balance in and control things with modified Mayo, centrally reading endoscopy scores, et cetera w e think the quality of that data set is also gonna be very high. Okay I think one of the key messages, rightfully so, but also because the stock valuation is different too, is that Wall Street has been using the S1P1s and others as sort of a bar, and I constantly heard 15%, 15%. But in fact, I think, you know, when you looked at the phase IIa data. It's actually, correct me if I'm wrong, north of 15%, but then everyone got messed up on the endoscopic data. Sure. That's when the stock went down. Okay. So, I guess, to be clear, the messaging is around the fact that you want an approvable drug. I'd still say that 10%-15% is a range you'd like to be in, and you feel confident that that's gonna happen, and appreciate that, executing on enrollment is gonna be important and safety. Now, we talked about this earlier, you know, it's always that people want the highest efficacy, but you had pointed to Otezla and Aubagio. Absolutely. Sure. A nd maybe other examples, particularly in a bit of a similar, healthier, younger population, by the way, multiple sclerosis and psoriasis. Yeah. Where those types of patient populations, safety is important, yet those drugs are still doing billions of dollars. Sure. I think we fall in that same category. Okay. And I think that it’s really down to what are the patient options? Which work most effectively in them? And we have to remember that key element of if your drug is efficacious, and it’s the safest of the options that people can take, the evidence out there today, based on ENTYVIO, is that that’s the drug the patient will try to revert to first. Okay In terms of the next six plus months, will you give us an update on enrollment? Will you narrow the guidance a bit? We'd love to hear about that because 2024 has mostly been, again, just sort of a blocking and tackling year and- Chris, what, what would you say to that, Chris? Chris says he's gonna narrow the guidance. Yes, Chris. Chris is in charge of that. We'll give you an update in the next six months. We'll give. I'm sure we would definitely like to get an update. Again, I think people view the guidance as, as wide, and that's sort of been why people haven't been so engaged necessarily with with, the near term. Got it. Noted. Okay. Were you gonna say something? No, I wasn't gonna say anything. Noted. He was about to say something. Okay. So, we would love an update on the timing of the guidance. Lastly, you had also started a Crohn's study. Yep. Can you tell me about what the status is there? Is that just much earlier along, or what do I need to know about the Crohn's study as well? So we initiated the Crohn's study. We haven't got it to completion of that o bviously yet. You'll see that it's shown up on clinicaltrials.gov. We're going through all of the processes to enroll patients. We're screening patients now, and we'll have updates for that program, as we progress forward. I think the real thing that people are interested is not necessarily even when it starts, it's, it's when does the study finish? And that's something that's hard to judge at this point in time, until you've got all of your centers up and screening, and once you've got your centers up and screening, then we'll start to- Wouldn't you think these are at the same centers? Some of the same centers. In fact, there's less options in Crohn's, usually, you know. Well, I think that's the opportunity. Yeah. That people don't, I mean, the opportunity on the Crohn's side, right? Yeah. That people don't think about is that, you know, it's a much less, you know, crowded space, right? And so an oral there with ENTYVIO, it's, you know, is- Okay. Even bigger. The other, topic that people have been focused on is strategic, value, which is that, you have a wholly owned, multi-billion dollar opportunity. In fact, we look back at the M&A chart, I think there's, like, five M&A transactions in that space over the last 12 or 18 months. You guys have a wholly owned asset as well. It's gonna take billions of dollars to run the phase III and launch this thing. Yep. Although you have some cash, people have wondered whether or not you could just partner this thing out, and that would help things. How do you view just doing a global partnership about that? Because that'd be an easy way to get cash and accelerate things. Well, I you know, I've said it many times, even, you know, from the IPO onwards, I mean, this particular program, we could have partnered at any time since preclinical. I mean, you know, there's been plenty of interest, and my background is a BD person, right? And so I know it's not easy to get to these stages, and so I've been pleasantly surprised you know, about the interest in this particular program. And since preclinical, it's one that we could have partnered at any time. I mean, I think part of the question is, you know, obviously, it's a very valuable asset, right? Yeah. So getting a partnership or other interest at a valuation that's acceptable to us is what we're looking for. But you know, we're always talking to people. Yeah, I mean, I think we feel very comfortable. We've put guidance out there that we could take this thing to approval if we need to. We have the capitalization to do that. But we do think that to fully optimize this molecule in all its dimensions, which is both as a monotherapy, you know, in combination with various agents, globally it can only be optimized in the hands of a big partner. Talk to me about the cash balance, because one of the things we've also seen is that a lot of companies coming upon two years, but then eventually, by the time you get into 2025, next year, I would say, based on my model, approximately one year, as you get into 2025, that people look to that one step forward and say: "We have a big event." A lot of people are doing financings before those big events either as insurance or to shore the pipe, balance sheet up, or because we're going into an uncertain capital markets environment around November of this year. So how do you think about. And there's an election. I'll take that. How do you think about- We're too focused on execution. I got it. Yeah, okay. Well, make sure you vote in November. This year? This year. But many people have done pipelines in front of events. My point is, how much cash do you have? How much money are you gonna have at the end of this year, and would you, How do you think about, financing? Yeah, well, first of all, I mean, I think, you know, we obviously consider all these options all the time in terms of financing, but we don't, we don't feel any need to finance anytime soon. We feel very comfortable. We're not thinking, you know, I mean, I think things can happen, but we're not thinking about pipes or anything like that y ou know, at this point. And we got a, got a validated target. We, we know likely what the efficacy looks like. A nd validated. It's going well. And we have a big event coming up, you know, next year, and so I, I think we feel v ery comfortable. We're around $700 million. Seven. Yeah, and so that's, like I said, if we needed to, you know, maybe not in the current form, but if we needed to, that could take us actually to approval Okay And just to refine a little bit to something. So you said your model takes you out into 2026. Our guidance has been well into 2027. Okay. So we feel we have a fully loaded pipeline that takes us out quite a- I just worry you're spending more money than you say. No. Okay. All right. Marc is very- Marc is very good a t controlling us. Okay, I will take a look at the expenses next year. That's good. Last question, too. Another company has been talking up their α4β7 Gilead. Sure. Yeah. They, as a big company, it's interesting that they're actually talking about a phase I, phase II. In the context of a $100 billion company, they're talking about their α4β7. Have you heard of that compound or know anything about that compound? Because they're talking it up and saying it's best in class. So, I have a meeting, next meeting, and I know they're in this room, so we'll have to ask them that question. They haven't come in yet. You'll have to ask them that question when they get here. I will. If you have good data- Well, you have a meeting with Gilead. I f you have good data, typically, you publish it. Yeah. We don't have any data on their compound at all. Zero. Okay. Right, you know, so I mean, I think, you should ask them. Okay, I will. Well, in the study that they're planning to be, you know, that we've seen, what we've seen of the study plan that's actually out there is actually the identical study to what we've already run, right? A phase IIa single arm? Their phase II study i s a study that we're running right now as a phase IIb study. A randomized study. It's a multi-dose arm, has single dose and multiple doses in the context of that, just like we do in the context of our study. And then on the back side of that, they've bolted on a combination trial. I think that's a fantastic idea, but it's also something we could execute off the back end of ours. Combination with? So, it's a combination with one of their agents internally, that they have. I, I don't know if it's the right agent to combine with, though. I mean we've talked a lot about possibilities. In fact, if you look at the rest of our pipeline of emerging things that are coming in our pipeline, we've actually announced that we've started an IL-23 program, an oral IL-23 program. It's at the hit stage right now. We've actually got good cellular activity with these compounds. That's exciting for us to be able to start to now think and advance forward. It's at a hit to lead stage, though. It's gonna take years to actually get there. No development, no DC yet, but it's- Not yet A n oral IL-23. Absolutely. Okay. So, our focus is on things like that. We've also said that we have an oral TL1A program. Yeah, so where is that? Again, early stage program. Early, okay. What we're really focused on in our phase IIb study right now is find the right dose for our agent, and then we can run into all these different things. Combinations. Yeah. And in the meantime, they're not the only ones running combination trials. Takeda's running combination trials with things like α4β7 and IL-23- A s a clear example here. I think there's a lot to be learned within this space in the very near term, that we can just jump on once we know our dose at the end of Phase IIB, decide what Phase III programs now we're gonna run and how we might think about this, but yeah. Yeah.. I mean, I was being a bit flippant, but, you know, they're a big, important company. Yeah. You know, we watch carefully what they're doing. We haven't heard anything or seen anything. That's right. That's why we ask, but they talk it up s o it's our duty to pay attention. Yeah. That's it, yeah. When you see some data, can you send it to us, so we can see? Well, they'll be coming in in just a minute. Perfect. Thank you very much. I appreciate it, guys. Thank you for the update. Thank you. Good seeing you. That's right. Thank you.