Hi, everyone. My name is Maury Raycroft, and I'm one of the Biotech analysts at Jefferies. I'm happy to introduce and welcome Denise Scots-Knight, CEO of Mereo, and John Lewicki, the CSO of Mereo. Thanks so much for joining us today. Thank you so much for hosting us today, Maury. We're going to do fireside chat format, so maybe for those who are new to the story, if you can give a one-minute intro to the company. Sure. Thank you. Mereo, we're a rare disease company. We have two late-stage programs, setrusumab for osteogenesis imperfecta, which is partnered with Ultragenyx, and we recently announced the phase III data, and we're currently having regulatory interactions, which I know we're going to come on to. Second program is alvelestat for alpha-1 antitrypsin deficiency. This is an oral neutrophil elastase inhibitor, which is phase III-ready. Finally, we have a program for osteopetrosis, vantictumab, which is partnered with āshibio, and we have EU rights in that partnership, and that is being readied for phase II. Got it. Yeah. It's a good overview of the company. You mentioned one of the key updates in your recent first quarter press release is the statement that regulatory interactions have been initiated to determine if there's a path forward for setrusumab. Understanding you can't disclose specifics beyond the press release, can you describe at a high level the typical process and expected timeline for such regulatory discussions? Yeah. I think the first thing to understand is that each of these processes, you know, we are talking to multiple agencies, this is not just the FDA, but we're talking about the EMA, the MHRA. The thing about these processes that I think everybody needs to understand is that they take several months. For example, if you have a Type C meeting or in Europe, if you have scientific advice meeting, you know, that can typically be two to three months from requesting the meeting to actually having the meeting. They do take time. Obviously, we didn't succeed in meeting the primary endpoints, that makes these conversations much more complex and likely to take more time. What I can say is that what we've said is that we will provide updates once we have clarity. What we don't want to do is drip feed the process. Yeah. We're looking to provide a real clear picture of if there is a path forward or not and what it looks like. We're expecting to provide those updates, maybe from individual agencies or multiple, before the end of the year. At some point during the next six to seven months. Got it. Okay. That's really helpful. Yeah, you have those conversations. You got to wait for minutes from the conversations and kind of make sure you've got everything right. There could be some back and forth there, then you do public disclosure on it. It is about having the clarity. Yeah. So. Right. Okay. Makes sense. You've noted that further analyses of ORBIT and COSMIC, including patient subgroups, have been completed. Can you discuss the breadth and maybe the depth of the analyses across age groups, OI severity types, fracture types, and BMD responders versus non-responders? John? Yeah, I'll take that. As we and Ultragenyx have announced, we're now focused on pediatric patients ages two to less than 18, so that's really the focus at this point in time. Recalling COSMIC, the study that enrolled higher fracturing in younger patients ages two to six. The original powering was lower than that of ORBIT, we nevertheless saw a 20% reduction in fractures relative to IV bisphosphonates, which are used as standard of care. It didn't achieve statistical significance, but a pretty good trend. The curve separated quite early. We also saw statistically significant improvements in BMD in both COSMIC versus IV bisphosphonates and ORBIT versus placebo, consistent with the powerful anabolic effects of setrusumab. Over the past few months, we and Ultragenyx have been focused on analyzing both pre-specified and ad hoc analyses of the data, and in addition to that, trying to get a handle on confounding factors that affected the primary endpoint readout. In terms of confounding factors in ORBIT, despite the fact that there was stratification based on the number of fractures, we nevertheless, and I don't understand how this could happen, but we nevertheless saw a proportionally twice as many of the patients in the setrusumab arm of type three patients, so these are the most severely ill patients in the setrusumab arm relative to the placebo arm. This obviously skewed fractures toward the setrusumab arm. We also announced that we saw statistically significant reductions in pain in these patients, which is quite significant, and clinically significant improvements in sports and activity in these patients. The changes in sports and activity, in particular, led to behavioral changes in these patients. In contrast to placebo patients, the setrusumab patients were doing things like karate, climbing walls, bouncing on trampolines, gymnastics, mountain biking, all of the above. Horse riding. Horse riding, which put them in higher risk and predisposed them to activity-driven fractures, right? Contributed to, is another confounding factor in the analysis. The patients are doing exactly what we wanted them to do. It's exactly what we hoped the drug would do, but nevertheless, impacted the final outcomes, particularly since if, once again, biased fractures toward the setrusumab arm. We also have examples of major improvements in mobility in the phase III patients as we saw in phase II, where some patients have been able to leave their wheelchairs and become independently mobile. That's very significant. We've talked about BMD, which achieves statistical significance. Alongside of that, we have measures of bone health, and also bone biopsies, which really support the mechanism of action and the fact that we are building significantly stronger bone in these patients. We also have some other positive subgroup analyses. Of course, we've mentioned the vertebral fractures, where we see about a 30% decrease in vertebral fractures in ORBIT and closer to a 60% reduction in vertebral fractures in COSMIC associated with a P value of less than 0.08. These vertebral fractures are obviously very important in the development of the young kids and something that we're focusing on going forward. Got it. Mentioned a lot there, maybe digging into a couple of the points. For the 2X type three patients in the setrusumab arm, if you take out the type three patients from the study, I guess, what do you see there? Yeah. We're not disclosing that sort of data at the moment, Maury, so. That's something that you're obviously. We've done a lot. There's a lot of different data analyses that have been done. Yeah. What we don't want to get into is slicing and dicing the data so that we end up with small populations. Yeah. That makes sense. I guess maybe talk about just with the bone marrow density or bone mineral density. Well, you mentioned the biopsies as well from bones. How many patients do you have biopsies? Yeah. Again, those data are going to be disclosed- Right. at a medical meeting. Okay. Yeah. Yeah. Okay. With the bone mineral density improvements versus control, you've highlighted the reductions in vertebral fractures and patient-reported outcome improvements. What's the feedback been from clinicians? On the clinical meaningfulness of these outcomes, given that no FDA or EMA-approved therapies exist for OI? Yeah. What we've done at Mereo is we've spoken to a lot of clinicians in Europe about obviously the data that we've published. The feedback actually has been very, very consistent. We know that pain, we did the impact survey. We know pain is the number one symptom that the patients note that really impacts on them the most. A lot of that pain actually does come from these vertebral fractures, whether that's the clinical fractures. The clinicians have been telling us, and this is including in the U.K., that actually they treat patients if a patient has a vertebral fracture, a young child has a vertebral fracture, they will start with a single vertebral fracture, they will start bisphosphonate treatment off-label. Whereas if they have a single long bone fracture, that's not necessarily the case. The reason that they do that is that they want to protect the spine, because these vertebral fractures can lead to the scoliosis and the kids being wheelchair-bound as well. Also having one vertebral fracture can actually predispose you to having more vertebral fractures. They're a really key component of a reason to start treating. Got it. Is there a precedence for PROs supporting a label even if hard endpoints like fracture claims are limited? Yeah. It's a good question, but I've talked about pain. Pain is an important endpoint. There are obviously other areas where pain is the endpoint. We've got the BMD data, we've got other bone health data, and we also have these vertebral fracture data. There are some other fracture data that we haven't disclosed yet. We're not looking to solely rely on the PRO in these regulatory discussions. Understood. For outcomes from regulatory interactions, I guess what are the range of possibilities there? Yeah. I don't really want to speculate on the range of possibilities. I think what I can say is when we do update on these interactions, it will be with that clarity. Also, as we've seen with other companies, what's important is we're interacting with multiple agencies, right? Because with other companies in similar situations, we've seen different outcomes from different agencies. Right. I don't really want to speculate on the outcomes. Got it. Okay. When you do the update before the end of the year, that's going to be a perspective from all the agencies, or could it just be one agency? It could just be one. It'll be when we get clarity. Got it. Okay. As patients roll over into the open label extension, what specific long-term fracture or biomarker trends are you monitoring to validate setrusumab's clinical profile? The patients who enter the open label extension, we're basically monitoring the same endpoints as we did during the double-blind treatment period. Yeah. We're looking at fractures, including vertebral fractures, all confirmed. We're looking at the PRO, such as pain, comfort, and sports, and activity. We're also looking at BMD and other measures of bone health. We're really collecting the same data that we did during the double-blind treatment period. While a minority of the patients moved to the open label extension at 12 months as a result of patients transitioning over as part of the rescue protocol, most of the patients or the rest of the patients in the study were in the double-blind treatment period for 18 to 24 months. This includes patients who were receiving setrusumab, or placebo in ORBIT, and setrusumab or IV bisphosphonates in COSMIC. Once the patients move to the OLE, they're receiving setrusumab only. What we basically have is we have patients who were receiving placebo and/or IV bisphosphonates in the double-blind treatment period, who now have effectively crossed over into a setrusumab arm. That's going to be valuable clinical data. We'll be looking at that in great detail. I should also mention that almost all of the patients in ORBIT and COSMIC have entered the OLE. We talked previously about the phase II data, and 22 of 24 patients still are in an OLE receiving setrusumab after about three years. We think the fact that so many patients entered the OLE from ORBIT and COSMIC, and those phase II patients have stayed on setrusumab, tells us something about what the patients think of the drug. Yeah. It makes sense. For ORBIT and COSMIC, is there a certain amount of follow-up time that you want to just strengthen the conversation with regulators? It's something that we're looking at at the moment. If you think about it, we reported the data out in December, end of December. By the fourth quarter, all of these patients who've rolled out over will have had at least 12 months data. Right. That's coming up in the fourth quarter. Got it. Okay. Just looking at the ORBIT study and the design, types of patients that you enrolled, if you had to do it all over again, I guess, would you do anything differently with the study design? Is it just a matter of having more patients, or what would you do? We are comfortable with how the study was powered and how it was designed. Things like fracture adjudication, we are comfortable with the way that was done. The rescue protocol, which did impact the number of placebo patients and setrusumab patients that went on through 18 months. It was something we basically had to do in a placebo-controlled trial because you had to give those patients the opportunity to move to setrusumab if they were not doing well on placebo. We had to incorporate that into the study. People mention things like the bisphosphonate washout period. Did that affect us? What bisphosphonates do with respect to fractures in OI is really pretty obscure. We have no evidence that that had any impact on the study. We have mentioned the activity levels, which we could not control for and believe would happen again. I think one of the factors here, and you've seen a number of rare disease trials that read out and they've missed the primary and/or secondary endpoints. I think a big factor there is that we underestimate the heterogeneity in these patient populations. We underestimate the heterogeneity, and particularly when you conduct a larger trial like we've conducted. That also impacts the trial. COSMIC, which had a tighter age group and higher fracturing population, actually performed pretty much as we expected. If you recall, we were saying that COSMIC was underpowered, and that we wanted to see a numerical trend. We actually achieved that in that study. It was a little tighter, a little better defined, right? Yeah. When you think about the trial, we're comfortable with the trial that was done, we're comfortable with how it was powered, and we think we understand some of the factors that contributed to the primary analysis. Got it. Okay. Can you walk through just more on the EU reimbursement process and what you need there to just have robust conversations with the EMA for a path forward? Yeah. Separating the two, obviously there's the EMA and the MHRA, in terms of if there is a path forward, what does that look like? What are any post-marketing commitments? What might a label look like? That then directly impacts into our conversations with the HTAs, the individual country HTAs, NICE, for reimbursement. You have your launch sequence, but we've already been in discussions for several years with the national HTAs over what comparator data they would need to see, for example. For example, neridronate is approved in Italy, for example, you need to have those comparator data. We really understand, across the European landscape, if we're able to find a path forward in Europe and the U.K., what the reimbursement process, what we need to deliver for the reimbursement and pricing. Got it. Are those conversations are happening in parallel, or how do we think about that? Well, they have been happening in parallel. Yeah. Obviously, at the moment, the focus is on determining if there's a path forward. Yeah. With the regulators. Once we know where we are with that, then we can refresh all the work that we've done. Got it. Okay. Yeah, next steps for setrusumab. You guys are working with the regulatory interactions right now. Is it fair to assume that there's back and forth with the regulators, and then you kind of get the minutes from? Yeah, the minutes are one part. You know in the meeting what the feedback is, and then you get the minutes. Yeah, as I say, it's complex because we didn't hit the primary. There's multiple ways of interacting. There's the meetings, there's also written communications, and there's different forms. Yeah. It's just going to take time. Okay. Switching gears for the AATD- LD market, can you characterize the competitive landscape with emerging oral therapies, gene editing, and explain how alvelestat's mechanism, development timeline, and regulatory path position it for commercial success? Yeah. So alvelestat's an oral neutrophil elastase inhibitor, daily dosing, and it's designed at the dose that we're taking into the phase III to really inhibit neutrophil elastase at the 90% level 24/7. Okay? If you think about, obviously there's second generation augmentation therapies in development, and as you said, there's the editing platforms that are working in the AATD space. I think there's lots of discussion at the moment around what is the right level, chronic level, I guess, of AAT, circulating level of AAT, and then what do you need during an acute event, like an exacerbation. I think the question for the, not so much the second-generation augmentation therapies, but the question for the new platforms is what level of AAT on a steady state can they achieve? We've seen these acute responses in a few patients in one of the platforms, and the question is: Does that improvement in the AAT level in that acute response lead to clinical outcomes? Okay. What we showed in our phase II, in both ASTRAEUS and ATALANTa, was that with alvelestat, so we saw these improvements in SGRQ, which is a standard PRO instrument used in COPD studies. We also importantly saw a reduction in exacerbations, which is a key clinical outcome here. We have seen trends, at least in these clinical outcomes with alvelestat already in the phase II. Yeah. In terms of the regulatory path forward for alvelestat, right now, the current design, we have these two independent primary endpoints. We have SGRQ for the FDA, and we have lung density by CT for the EMA. It's a single global trial, two independent primary endpoints in one study. The thing that we are doing is obviously there's a lot of interactions going on with the FDA and the EMA right now over pivotal endpoints for these other platforms, and also for the second-generation augmentation. We're keeping an eye on those discussions just in case there's an opportunity for us, without too much delay, to simplify our design. Okay. Keeping an eye on some of the updates in this space, are there specific competitor programs that you're focused on? No. We're keeping a watching eye on all the different platforms, as the data evolves, and obviously there was some data updates from Sanofi at ATS on their three-weekly augmentation. There's a lot of debate around AAT levels and acute responses. Got it. Okay. That's interesting. For this opportunity, what could your estimated peak sales and market share opportunity look like for alvelestat? Yeah. Alvelestat, one of the differentiation factors here is that we're actually, the phase III is designed to enroll both late stage and earlier stage patients. When I say earlier stage, I mean patients who haven't lost so much of their lung function, they're still at 95%-100% of their predicted FEV1. They have got emphysema, and they have got the genetic diagnosis. The opportunity there with a daily oral is to really try and prevent the lung tissue from deteriorating. Really preventative. That's one area that we're really targeting. The sales of augmentation right now are around a billion dollars annually. There's only about 10%-15% of patients are actually diagnosed. I think as these therapies evolve and are developed, that 10%-15% will hopefully go up significantly in terms of diagnosis rate. Got it. Maybe going back to the Sanofi data that you mentioned, what's the exact relevance or read-through to your program? Well, I think the Sanofi data was more around the levels of AAT that they were able to achieve. Yeah. They were talking that they don't believe 11 micromolar in a steady state is sufficient. They're focused more on 20 micromolar. Yeah. Okay. As you engage in active alvelestat partnering discussions, what's a realistic timeline for closing a deal here? Yeah. Again, a very good question. Difficult to answer because you never want to guide when things might close, just in case. I think what I can say is that we're targeting to start the phase III around the end of the year. Got it. Okay. Around the end of this year. Yes. Start phase III. Okay. You'd run the study on your own? No, we've consistently said that we plan to partner this to have the cost of the study funded. Okay. Theoretically then you'd have some sort of a partnership in place by that time. How much would a phase III cost? Rather than give you the exact cost, because it depends on what's included, what's excluded, CMC, et cetera, so it's around 220 patients. It's a very reasonable cost for a study given the market opportunity. Got it. Okay. Interesting. For vantictumab, do you want to provide a brief update on the program? Yes. Just quickly, vantictumab is an antagonist. It's an antibody that basically blocks Wnt signaling in various tissues, but most significantly in bone. When you block Wnt signaling in bone, it's actually the opposite of what we do with setrusumab. What you do is you increase the activity of osteoclasts, in other words, increasing bone breakdown, and osteoclasts are deficient or aberrant in conditions like osteoporosis, autosomal dominant osteopetrosis type two specifically. What we've done is we have licensed vantictumab to āshibio We've retained the European rights. They're paying for the clinical studies in the CMC and obviously have rights to the U.S., rest of world. We've basically completed that with them, and one of the advantages of vantictumab is that it was in the clinic previously for the treatment of solid tumors. It's been in over several hundred patients. It has a safety profile consistent with its use in ADO type two. It's a ready packaged program, ready to go back into the clinic phase II studies. As we speak, āshibio is completing all the requisite work to move it into the clinic as quickly as possible. Got it. Okay. Probably no updates on that program this year, but maybe something next year from then. Yeah. Okay. We're out of time. Maybe to close out, if you want to highlight cash runway assumptions and key catalyst investors should we focus on over the next six months? Yeah. At the end of Q1, we reported that we had just around $36 million in cash on the balance sheet. We expect that to give us runway into mid-2027, that doesn't include any potential income or milestones from business development. We expect that's going to provide us runway to work through these regulatory interactions alongside Ultragenyx and also we'll see what happens with alvelestat. Got it. Okay. Denise