Good afternoon, everyone. Thank you for joining the 25th Annual Needham Healthcare Conference. My name is Joey Stringer, and I'm one of the biotech analysts at Needham & Company. It's my pleasure to introduce our next company, Q32 Bio. Joining us today from the company is CEO Jodie Morrison, CFO Lee Kalowski, and Chief Scientific Officer Shelia Violette. For those of you joining on the webcast, if you'd like to ask a question, please do so at any time. You can submit a question using the chat box feature at the bottom of your screen. With that, we'll go ahead and get started. Jodie, Lee, and Shelia, thank you so much for joining us today. Thanks so much for having us. We really appreciate the opportunity to be here. Great. Jodie, for those who are not as familiar with the Q32 story, and before we dive into the pipeline here, can you provide a brief overview of the company? Yeah, absolutely, public company, obviously, on the markets currently. The company's been developing drugs in the area of I&I with a focus on rebalancing the immune system. Our key asset that's in phase II right now is bempikibart, which is looking to have data mid-year this year in alopecia areata, which will be our second study in alopecia areata, building on our proof of concept from Part A. We're looking forward to getting that data out. We also have some additional work that's ongoing from a research standpoint and look forward to sharing more on that in the future. Great. You mentioned the lead asset, bempikibart, bifunctional IL-7 and TSLP receptor inhibitor. Can you describe a little bit more detail the mechanism of action here and it relative to inflammation? Absolutely. I'll have Shelia, our CSO, answer that one. Sure. Bempikibart binds to the IL-7 receptor alpha subunit, and it binds to a region that's shared for binding by two very important cytokines, that being IL-7 as well as TSLP. This is an antibody, therefore, that naturally has this ability to have bifunctional activity and broadly remodulate the immune system and having the potential to go across many different diseases. IL-7 specifically is known for its ability to lead to the generation of pathogenic T effector cells, that will then become hyperresponsive in what would otherwise be a low antigen microenvironment. It also importantly regulates T memory cells. When those cells become hyperactivated in disease, they also will not only locally drive inflammation, but they will suppress the function of Tregs. By blocking IL-7, you restore the balance to the T-cell system. TSLP, very different cytokine. It's known for its ability to modulate really more of an allergic response where you have an epithelial barrier, and that opens up the door for indications affecting the gut, the lungs, as well as the skin. Effectively, we have been able to demonstrate that our molecule, when it's dosed in our studies, gets full receptor occupancy, so has the potential to block both of these mechanisms quite broadly. You have an ongoing phase II-A program in alopecia areata with bempikibart. Can you describe the current treatment landscape in AA? What are the real unmet needs and the opportunities for value creation? Lee, do you want to take this one? Yeah, sure. Maybe if you bear with me a minute, and maybe we just take a step back for a second and you consider the I&I landscape more broadly, because I think there's some important comparisons that we'd like to make. Sure. If you think about other major indications such as IBD or psoriasis, eczema, just a few that sort of come to the top of my head, there's a broad range of therapeutic options. You have multiple biologic classes, oral agents with varying degrees of efficacy. In these indications, utilization is pretty well established. It's broad. It's significant. If you start to segment even further in these populations, right? You have patients with moderate to severe disease, and these patients have very significant comorbidities, deterioration of quality of life, big psychosocial impact. All of those same things are true in AA. Patchy hair loss can have significant impact on patients' quality of life. It impacts young children, adolescents. It can be absolutely devastating for these patients and their parents, and you can think about women of childbearing age, too. Yet, if you contrast AA, right, versus these other indications, there's nothing. There's nothing for moderate disease. There's very few options for patients with severe or very severe disease. I think as you know, there are three approved JAK inhibitors. They all have a black box warning. The black box warns of risk of serious infection, higher rate of death, malignancies, cardiovascular risks, thrombosis. Because of all this, patients need ongoing and very frequent monitoring. Responsiveness on the JAKs is really not durable at all. When patients stop taking the JAK inhibitors, their hair falls out very quickly, usually within weeks. Again, if you think about women of childbearing age, they'll have to make the agonizing decision of stopping their JAK inhibitor, having their hair quickly fall out, or being able to have the family they want. On the other end of the spectrum, you have corticosteroids. They don't really work for more extensive disease. They can be painful and other side effects. You have off-label minoxidil, off-label Dupixent. Obviously, by definition, these aren't approved. They're not very effective, but they are safe. We see that utilization between these off-label safe agents and JAKs are about equal, which is really telling. The unmet need is substantial. Patients with AA need newer, safer alternatives that meet minimum efficacy threshold, and are very safe and differentiated in that regard. We think bempikibart fits very squarely in this target profile. Certainly, we think you'll see that when we release our Part D data mid-year. Based on the profile we expect, we think that we have the potential to penetrate into the market and really grow the market when you have an agent like ours. Maybe you think of it like the eczema market pre and post dupi, for example. All of this is to say we see a really substantial opportunity for value creation as we continue to advance bempikibart for AA. If we could go back a little bit, you announced results from the placebo-controlled Part A portion of the phase II-A trial last year. Can you briefly describe that trial design and some of the key takeaways on the results? Yeah, absolutely. That was our first proof of concept study for alopecia areata. We went in using a dosing regimen of 200 mg every two weeks for a total of 24 weeks. We then followed patients for 12 weeks off drug to see if we had some durability of response. That was sort of the set design. What we saw within that was a statistically significant difference in mean SALT change versus placebo, so a good indicator of proof of concept. We saw that the severe patients outweighed the very severe as far as responsiveness. That's to be expected. You do anticipate that in this setting. We also saw some long duration patients showing response as well. Overall, we saw in the off-cycle period, we did see stable disease overall for the program on a mean SALT change. We also saw some patients advancing with significant continued hair growth, even after drug, I think reflecting the mechanism of action here that we had rebalanced the setting of the immune system for the purposes of treatment here, and that has a lasting effect, which we think is really encouraging. As we move forward, we'll look to dose that longer. 24 weeks was probably too short for a biologic in this setting for long-term sort of efficacy marks, but I think it gave us some really good indicators of proof of concept. As you mentioned, following the phase II-A Part A data, you went ahead with Part B of the trial. Can you describe the trial design of Part B and some of the key differences between Part A and Part B? Yeah, absolutely. Let's start with the dosing. First off, the dosing changes included we added a loading regimen to the front end, which is four weekly doses prior to the biweekly dosing. That allows us to see patients get to steady state much earlier, about 9-10 weeks earlier than we saw in Part A. We also are dosing for a total of 36 weeks. All in, patients get more than 20 extra weeks at steady state versus Part A in Part B of the study. That's one key differential is the dosing, still at 200 mg every two weeks once they get through the loading regimen. In addition, we added a central review process. You may recall, and we'll own it, that we had a post hoc analysis in Part A because we had to remove a site due to challenges in diagnostic consideration. We've added a central review to the front part of this trial, where each patient for diagnosis was verified by a central reviewer who was allowed to ask additional questions, request that a biopsy was completed if necessary, so that we could confirm diagnosis of these patients. In addition, we lowered the cap on the duration of episode for this study to four years. We had allowed it out to 10 years in Part A, and if you review the JAK literature, you'll see that after four years, four or five years, you see about a 50% drop in efficacy within the trials. Doesn't necessarily mean those patients won't respond over time. Mm-hmm. May take much longer for the duration of these studies. We've brought that into line with what you've seen now in the JAK studies. You're kind of saying the three main changes here, that you have the loading portion of the trial, you've kind of lowered the duration of current episodes and have the central reader. Those are all designed to kind of improve, streamline, and potentially improve efficacy here. Is that fair to say? I think that's fair to say. The one thing that maybe didn't come across is, [becuase], I actually think the key driver of efficacy here is probably more likely than anything to be the 12 additional weeks of dosing. I see. Going from 24 to 36 weeks is probably the most critical of all of those changes. Got it. Now in Part B, how many severe patients are you enrolling in Part B, and would you expect to see similar efficacy across all disease severity? Maybe what do you need to see in terms of efficacy in the very severe population? Yeah. I think ultimately, we expect that the ratios will be similar to what we saw in Part A, which is somewhere around a quarter of patients being very severe. We anticipate it'll be in that range, a quarter to a third of patients would be very severe in this setting. I think we expect to see similar patterns as far as response patterns. With the 36 week, we would anticipate seeing far better responses in those patients who tend to take longer. Now that we're dosing for 36 weeks, and we have the steady state earlier, we anticipate that we'll see good findings there. You look at the JAK data, you will see that the very severes are not as responsive as the severes. We expect to see some level of a step down in efficacy in very severe. Ultimately, we'll be looking to see some SALT 20s in that setting as a confirmation of responsiveness for this trial. You don't have a placebo control arm in part B, but what would a typical placebo response rate on SALT, both the relative reduction and the SALT 20 rate, look like at week 36 in this patient population? Yeah, I think the mean change expected to be seen in these patients, typically around 5%. It can edge up to about 10% in at least one of the phase III trials for the JAKs, but it's largely that 5% mark. SALT 20 placebos are very uncommon. I don't have a set percentage that we've calculated. Yeah Across the placebo arms for the JAKs, but it's very low. Got it. Just as a reminder for those that aren't familiar, what's the regulatory requirements for approval in AA? Also, what's a minimally important clinical difference on SALT? Yeah. I think ultimately, SALT 20 will be the registration endpoint. That has been the consistent registration endpoint. Yeah Through the programs that have been approved. We anticipate SALT 20 will be the key endpoint as we look at the data in Part B that people will be focused on for that reason. I think we'll look at mean changes as well. I think it's an important thing to look at, but we're not going to be focused as much there as we move to the later development. Got it. In terms of the readout, the phase II-A part B readout here, what would you need to see to essentially green light further development or warrant further development? Yeah. I think as we think about mean change, we're looking to see something, let's say, ±30%. 30%-40% is pretty standard in the mean change setting. I think we are looking over time to look for SALT 20s, though, that are in the range of what we see for the published JAKs and approved JAKs. Those range from 21% when you look at the low-dose Olumiant, 23% for LITFULO, and then edging up to around 31% for Olumiant. Ultimately, we're looking for a SALT 20 range that's in that sort of starting with a two, edging towards the mid-20s. I think if we can push towards 30, we view for a biologic that being a home run. Got it. Kind of, Lee, you mentioned it earlier, spoke to the competitive landscape, some of the approved drugs, JAKs. What are some drugs in development that you would consider potential competitors? Nektar has a drug that's out there for AA. What differentiates your drug from, say, Nektar's drug or some of the other biologics? You want to start? I can start, sure. We've seen their data that they had late last year, and we saw their mean change in their SALT 20, which I think everyone rightly remained very focused on. It was about 15%-16%, which is good to see activity across the space. Ultimately, with our Part B data, we think that that will be a beatable number, and obviously, we'll wait to see further updates there. It's good to see that there are going to be alternatives to JAK inhibitors, and it's nice to see that there's going to be further options. As far as what else is in the landscape, obviously, as mentioned, Nektar is advancing their program. We saw that the OX40s, one was returned and the other one was discontinued in AA. That was probably the other class of drugs we were most focused on. Of course, it's good for patients to have alternatives, but from our perspective, it just further re-emphasizes the amount of white space in the area. Got it. When we think about the likely dosing presentation and schedule for the drug in AA, how important is dosing convenience and presentation for uptake of a biologic in the AA market? Yeah. I think it's pretty important, right? You're talking about derm offices for patients, right? A population that's going to have to use these drugs forever, right, if they want to keep hair over time. I think it's going to be critical that you have a presentation of material that is ease of use for patients and for the treating sites. I think that's really important as far as a product profile that we're looking to bring forward. With our fixed dosing, we have that flexibility of moving in the direction of a prefilled syringe or auto-injector for patients to be able to use at home. We think that's critical given we do not anticipate having the black box warning you see with the JAKs. We also don't see monitoring being necessary at the clinical centers or the treating centers for a commercial product. We think those are going to be critical in this treating environment for derms as well as for these patients. In your view, what are the biggest disconnects that investors have around the Q32 story, and in particular, bempikibart in AA? Yeah. I think ultimately we need to be in the range of where the JAKs are on SALT 20. I think that's the thing everyone's looking for. Yeah We look forward to hopefully releasing data later this year that meets the mark of what people are looking for. We'll see. Patients are still advancing in the program, but we're certainly encouraged, and we're hopeful that we can bring that forward. I think that's a critical part of it. I think our original AA program a bit got swamped by the AD readout. Yeah People didn't pay close enough attention to it. I think we had very solid proof of concept in that setting. I actually think seeing the Nektar readout just gives good support for the fact that biologics can work in this indication. We just believe we have the better of the biologics moving forward. Great. Lastly, what's your current cash position, and what are your expectations on cash runway? Yeah. Cash as of our last financial report, so that would be our Q4 end of year 2025 number, was around $48 million. Now, that number excludes some additional capital we raised since December 31st, and it also excludes the guaranteed milestones due this year from the sale of ADX-97, our non-core phase II program that we sold late last year. The cash that I just mentioned, plus the additional capital and those guaranteed milestones we've said provides runway through Q4 2027, really almost through the end of next year. We'll provide more details, of course, when we report Q1 in just a couple of weeks then. Got it. Great. Well, Jodie, Lee, and Shelia, thank you so much for participating. It was an excellent discussion. Joey, thanks for hosting. Thanks for having us. We appreciate it. Thanks, everyone. Great. Thanks, everyone, for joining us on the webcast. Have a good day and a good rest of the conference. Thank you very much. Thank you. Bye-bye.