Welcome to Guggenheim Healthcare Innovation Conference. My name is Yatin Suneja, one of the biotech analysts here at the firm. It is my pleasure to welcome our next presenting company, SAB Biotherapeutics. From the company, we have a few executives here. We have Sam Reich, who's the Chairman and Chief Executive Officer, and then we also have Lucy To. She's the Chief Financial Officer, so we will be having a discussion with both of them. Sam, I'm going to hand it over to you. Could you maybe give us a quick overview of the company, talk about your lead program, where you are from a stage of development, what are some of the upcoming milestones, and then we'll dive deeper into the story? Sure. Thank you. Nice to be here. Thanks for having me. SAB is developing a drug for newly diagnosed patients with type 1 diabetes. That is an anti-thymocyte globulin that is starting a phase 2b trial, which is pivotal. We're very excited about this program because there is a lot of reference data from another anti-thymocyte globulin called Thymoglobulin that is very exciting, and the drug appears to be a best-in-class efficacious drug. However, Thymoglobulin has a safety liability that makes it not suitable for commercialization. There's tremendous demand for this drug and tremendous excitement, but it's not going to be commercialized. We have solved for that with SAB-142, which is our lead program, by making a human version of Thymoglobulin. That's SAB-142. We released successful phase 1 data in January of this year. On that data, we raised $175 million to fund our phase 2b, which is called the Safeguard Study, which we are just starting now, very excited about. That is a pivotal study. We hope to be able to show definitive efficacy and that it is a best-in-class product treating a major global unmet medical need of type 1 diabetes, which today has no therapy approved. Got it. Thank you for that. So let's just discuss about the molecule, right? So 142, how does it compare to Thymoglobulin? I think you just touched on it a little bit, that Thymoglobulin has all these safety issues. What are the advantages you have with 142 compared to ATG? Yes. So Thymoglobulin is a rabbit anti-thymocyte immunoglobulin. It is approved. It is a It is a Sanofi drug that's approved for organ transplant and is the global standard of care for organ transplant. That drug is a rabbit IgG drug. It is made by vaccinating rabbits with human thymus tissue and purifying IgG from the plasma, which is how IgG products are made. The fact that it is a rabbit IgG, a foreign protein drug, causes serum sickness and immunogenicity. Serum sickness is a universal side effect in which the patients get quite ill, and it makes them miserable for four to five days. And then immunogenicity means the drug cannot be redosed. This is a chronic disease that requires chronic dosing. So what SAB is able to do is make human anti-thymocyte globulin. And that human IgG, as a class effect, is very safe, doesn't make patients sick, and can be dosed chronically for the life of the patient, which we know from dozens of other human IgG products. And so what we do is we vaccinate a transchromosomic cow, which is proprietary and owned by SAB. And we vaccinate those cows, not unlike the Thymoglobulin rabbits, with human thymus tissue, purify the IgG, and our drug is human anti-thymocyte immunoglobulin, which can be dosed safely, does not cause serum sickness, and can be redosed. And what we've shown, they're both the same type of drug, is that it has the same mechanism of action as Thymoglobulin, which we know from multiple clinical trials to be efficacious. So you don't have immunogenicity. You can redose. There is no serum sickness. So I think you are definitely differentiated from Thymoglobulin perspective. But Thymoglobulin is not used in type 1 diabetes. So can you just help us bridge the gap? Why is that a relative comparison for your product? There have been multiple. Thymoglobulin is a commercial product for organ transplant. Because it engages T-cells, in about 2013, diabetes researchers started doing clinical research giving Thymoglobulin to newly diagnosed type 1 diabetes patients. There have been two recent studies, one published in 2019 called TN19 and one published in Lancet in September of this year called MELD, both in newly diagnosed patients where they were given Thymoglobulin or placebo. Thymoglobulin led to meaningful preservation of beta cell mass as measured by C-peptide, which is the goal of the disease, is to preserve the organ that makes insulin and improve glycemic control. From two academic studies that were powered and statistically significant, one in the U.S. called TN19 and one in Europe called MELD, we know that the drug is efficacious. Yeah. Got it. Got it. So we'll go back to the MELD in a little bit. But thank you for that context. So you have completed, as you said, the phase 1 study earlier this year. Could you summarize the key learning from that study? What were some of the what investors should be focusing on? The objective of our phase 1 study was to show that the drug did not cause serum sickness, did not lead to the generation of anti-drug antibodies, which Thymoglobulin does, which means it could be given safely and redosed, but also show that the mechanism of action is the same as Thymoglobulin. And that's what we showed. Patients on our drug did not have serum sickness, did not generate ADAs, so we know it can be given safely and given chronically, redosed. And we also showed that the mechanism of action is the same as Thymoglobulin. And that mechanism of action is inducing T-cell exhaustion while preserving T regs. What we see with Thymoglobulin is that it induces durable T-cell exhaustion but does not impact T regs. And we showed that our drug does that as well. Got it. So just staying on the PD marker, like all these PD markers that you showed, whether it's the cytokine increase, T reg preservation, how do they translate to C-peptide preservation in type 1 diabetes? Exhausting CD4 cells is shown empirically to preserve C-peptide. So the mechanism is leading to self-tolerance. It's causing self-tolerance by somehow taking a proportion of those T-cells and kind of taking them out of the mix. So the patient isn't immunocompromised, but there is tolerance to self, as proven by C-peptide preservation. Got it. How was the safety in that study? I think there was some transient lymphopenia, which I think happens even with the Thymoglobulin. Just can you comment on that? What is the relevance of lymphopenia and how clean is the profile of your? Yes. Yes. So when patients get the drug, they have a rapid and profound lymphopenia. And that's all their sort of T-cells and immune cells going down dramatically. But it rebounds immediately within a day after the dose. And this is the same thing seen in thymoglobulin, except thymoglobulin doesn't rebound back to normal. And what that lymphopenia is, is a lab value, meaning it's just something that shows up on a blood test. It does not present clinically, so there are no clinical symptoms. It rebounds rapidly, so there's no safety consequence. And what it is, is a demonstration of on-target activity. So it's not a safety concern, while it is an indication of on-target activity. And it's that initial binding, which shows up as lymphopenia, which is activating the cells to turn them exhausted. Yeah. Yeah. Yeah. And again, I think differentiated from Thymoglobulin because that one just doesn't bounce back as fast. Right. Okay. So this was just a single dose. You are, I think, also doing a redosing, or do you have a redosing cohort? Could you talk about what the expectations are, when we should expect data? Are you doing the redosing with this asset or not? Yes. So in our phase 2 Safeguard study, patients will get dosed every six months. And therefore, we wanted to have some data to support the phase 2 from phase 1. And so we have a cohort from phase 1 that at an active dose was redosed at six months. Because of that six-month additional time, we don't have that data yet, but we should announce that data by the end of the year. And it's just to show that after a second dose, the effects, the safety profile, as well as the effects of the drug are the same and give confidence to really the investigators in the phase 2 who are going to be rolling 90 of these, 150 of these patients if you count placebo and giving them a second dose. Got it. Show that data to those investigators and say, look, it's good to redose. Got it. So we'll come back to Safeguard study. But are you also doing a T1D cohort in the phase 1 right now? Should we expect any C-peptide data in the sort of next in the near term? We did do a T1D cohort. That was not unlike our redosing cohort to provide evidence to the investigators that this drug has been given to T1D patients that has been well tolerated. We're not collecting any efficacy data because in order to enroll that quickly, we enrolled mature patients, patients who may not have C-peptide to preserve. It's also a short study, and there's only a handful of patients, I think four patients. In a short period of time with four patients who are mature patients, not newly diagnosed patients, there's no efficacy to be demonstrated. It was for safety in that patient population ahead of the Safeguard study. Got it. So you touched thank you for that. Maybe we just now go into your Safeguard program. But before that, I want to touch on the MELD data that was presented at EASD. What were some of the key learning and what are some of the reads through to your program? So we have to start with the TN19 study to get to the MELD study. TN19 was conducted by TrialNet, which is a U.S. consortium of diabetes researchers. And in TN19, 2.5 mg per kg was shown to be efficacious. And it showed preservation of C-peptide and reduction of HbA1c in newly diagnosed type 1 diabetes patients. Now, that led to a lot of excitement and the interest in further study. And so a European consortium of diabetes researchers wanted to continue this research. And so they wanted to explore dose ranging and look for the minimally effective low dose, mostly because of serum sickness, probably. But it allowed continued research. And MELD, which you're referring to, published on September 18, had multiple doses. And if we consider 2.5 the anchor dose, because that was efficacious in TN19, in MELD, 0.5 mg per kg was also efficacious. They replicated the results of 2.5 and showed, in addition to that, 0.5 mg per kg was also efficacious. What we can learn from that, which we had hints at from earlier research, was that lower is effective, and you can go low. Now, we know historically from the 2013 study that you can overdose and lose the effect, which is one of the reasons why researchers wanted to go lower. If you give too much, you can lose that benefit. When you go lower, you retain the benefit. What we learned from that is you may be able to capture efficacy by going even lower. In our Safeguard study, our other dose for our dose ranging is lower than our anchor dose and not higher because we know that from MELD now, but we were hearing sort of we're kind of gleaning that in the meantime. Got it. What about the C-peptide data from both TN19 study and the MELD study? How consistent were the findings between these two studies? I mean, I think from a statistical standpoint and sort of a global standpoint, they were comparable. And that you can't really make the stats aren't there, and the research isn't there to really declare a difference. Got it. Got it. So now the Safeguard study, I think you emphasized that it is a pivotal study. So could you just talk about the back and forth or the feedback you have received with the FDA regarding this study? So that's one. And then how is the study set up? Because it does have a few parts, right, as part A and part B or two-part studies? So we had a type B meeting with FDA in late May or early June. And at that meeting, we got agreement on our protocol. And we got confirmation that the study is registrational and FDA agrees with us that it can be used as a pivotal study. The Part A and the Part B, Part A is beginning to collect safety data in adult patients. So a key feature of Safeguard is that the drug is being studied in patients from 40 years old all the way down to five years old. And the way you do that, both with the U.S. and Europe, is by starting in adults. And as safety data comes in, you can move younger and younger. Now, part A is getting a bunch of adults on the drug outside of the statistical analysis for efficacy in order to have a balance of pediatric adolescents and adults in part B, so part B is really the core study where we're analyzing for efficacy, and part A is kind of getting adults dosed so that we can step down sooner in part B to younger patients. Got it. How is the dosing? I think you are doing a split dosing in this study. Why is that? The dosing is done over two days with 0.5 mg per kg on day one and on the second day, the remainder of the dose. So if it's a 2.5, it would be 2 mg per kg. And that's done simply because that's what has always been done with Thymoglobulin. And we didn't want to introduce a new variable to our study because it was unnecessary. In the future, perhaps we could get it in one day, but we didn't want to introduce another variable. And I believe it was done in Thymoglobulin just not to sort of overwhelm the patient on the first day, just kind of ease them into the dose to avoid any AEs that the investigators were worried about. Got it. And then how is the study powered? I assume it's powered on C-peptide preservation or change. What exactly you would like to see and just talk about the powering? So the study has 80% power to show a 40% preservation of C-peptide at one year. Now, thymoglobulin has shown a 50% preservation of C-peptide. So we're expecting the drug to behave very similarly to thymoglobulin. And with a 50% preservation of C-peptide, that would be 90%, 90 power. Got it. And when is the redosing in the study? Every six months. Every six months. Okay. Okay. Have you commented on when we should expect the data? What will be the enrollment time frame? And also, I think you didn't mention exactly what type of patients. The Safeguard study is newly diagnosed type 1 diabetes patients that have been diagnosed within 100 days of diagnosis that have a certain baseline C-peptide, which is two picomoles. 200. 200 picomoles per liter. They're different units, so too with a different unit. And from ages 40 to 5. 5 to 40. Yeah. Okay. Okay. Yeah. Second part was. Timeline. Timeline. We are on track to have data readout in the second half of 2027. Got it. In terms of the stage for these patients, stage 2 versus stage 3? These are Stage 3 patients, so within 100 days of a Stage 3 diagnosis. Got it. And then here, your sort of competition will be the Tzield? Yes. Tzield is the primary competition. We hope that Tzield will be approved soon and kind of pave the way for us. And we have a very competitive profile that should include superior efficacy as well as a much more convenient dosing regimen. So we're confident that with Tzield as the competition, SAB-142 will be a best-in-class product. Got it. Since we just talked about Tzield, so Tzield received recently this FDA Commissioner National Priority Voucher. Any relevance of this news? It seems like the FDA is recognizing T1D as one of these high unmet needs. Just love to hear from you the implications if there are any. Yeah. I mean, it's very encouraging news. It shows the FDA's acknowledgment of the importance of this unmet need and just how unmet it is and the FDA's desire to get new drugs approved for T1D that they ranked it among a select few for the CNPV, and it also shows regulatory clarity and gives a lot of comfort to the regulatory path and the path to approval for a drug in these patients. Got it. So I want to come back to the market, but could you also touch about how you are thinking beyond Stage 3 type 1 diabetes? Is there a plan to go expand the indication? Yeah. First and foremost, we want to be able to treat Stage 2 patients. The Stage 2 patients do not yet have a clinical diagnosis, but they're at high risk of becoming Stage 3, and they can be identified through screening. It's the same mechanism of action. It's the same disease molecular pathway that's leading to destruction of beta cells, so there's no question that if it works in Stage 3, it should work in Stage 2, but it's a different indication. We need to get it approved there, and then we would be providing a drug for that whole population of people contending with this diagnosis, and then there is also the need to preserve beta cells in a patient with cell therapy, so as cell therapy emerges for the mature diabetes population, all these programs require some kind of immunomodulation to preserve the replaced cells. We believe that there will be a place for SAB-142 in Stage 2 earlier stage patients and patients getting cell therapy in addition to the main population, which is Stage 3 patients. In addition to that, the drug induces tolerance to self in a patient that is attacking some organ. There are other autoimmune conditions which will probably have a therapeutic benefit from SAB-142 that we will begin to explore as the diabetes program matures. Got it. One clarification question. For the Safeguard study, are there any interims, or do we just wait for the full data at the end of the study? Because it's a pivotal study, we're not doing any interim analysis. Got it. Helpful. Then final question from me. Can you frame the market opportunity, at least in stage 2 and then stage 3 when you go? What is the market opportunity there? Sure. I'll let Lucy answer that question. Stage 2, there's no clinical symptoms that get presented. These are patients that have not been diagnosed. We believe that's relatively a small market, around maybe $250 million if we were to talk about Tzield. Stage 3, this is when type 1 diabetes patients get presented with symptoms. There are 64,000 newly diagnosed patients every year. Almost all of them will have a C-peptide level of 200 picomolars per liter, which is, if you recall, our inclusion criteria for Safeguard. That market is $5 billion plus, depending on pricing and market share. We believe Sanofi will get approved ahead of us. Obviously, that's a big market. There's room for multiple players. If we believe that 142 has superior efficacy in dosing, we should be able to capture a pretty large market share of a really big market. Sanofi will pave the way. We believe they'll be approved first, but there's definitely room for two more patients. Very, very good. Helpful. And how are the financials looking for the company? What's the burn rate or how well you are capitalized? We just raised $175 million back in July that will fully fund our Safeguard study. That will take us through 2028. That will fully fund the study. That should be enough for the data readout in the second half of 2027. Got it. Got it. Very, very good. That's all I had for you. Thank you so much. Thank you. Thank you, Sam. Thanks for having us. Thank you.