Great. Welcome back to another session here at Oppenheimer's 35th Annual Life Sciences Healthcare Conference. I'm William Gershell, one of the biotech analysts here at Oppenheimer, and delighted to have with us as our next company, SAB Biotherapeutics. SAB is a company that we've been covering, and we like for its potentially transformative approach to treating type 1 diabetes. On behalf of the company, we have Chairman and CEO Sam Reich and also Lucy Toe, who's the company's CFO, and I'll be leading a fireside chat with the team. If you have any questions of your own, please submit those, and I'll do my best to work those into the discussion. Welcome, Sam and Lucy. Thank you. Nice to see you. Good morning. Good morning. Great. I think for those who are less familiar with the story, I would love for you to give us a brief overview of SAB, and you have a so-called TC Bovine platform. What makes that unique in the landscape of the biopharma industry? Great. Thank you. SAB Bio is a clinical stage drug development company with a focus in autoimmunity, and our lead program being in type 1 diabetes to delay onset and/or delay progression. The drug is a human anti-thymocyte globulin, which is enabled by our proprietary platform, which is wholly owned, and we own no licenses or royalties developed in-house. TC Bovine is a trans-chromosomic cow, which produces fully human IgG instead of bovine IgG. By utilizing our platform, we can make fully human polyclonal IgG products. There are precedents for very effective therapies from animal IgG or animal-sourced plasma because of the ability to vaccinate an animal and have a targeted IgG. Those products have the shortcoming of significant safety issues as well as the inability to redose due to immunogenicity. We can leverage great data produced from animal IgGs, produce it in our TC Bovine platform, and have a drug product that is safe and can be redosed. In the case of anti-thymocyte globulin, rely on all the great data generated with a rabbit version of that molecule. The cows are kept kind of on a farm, and what's sort of the production capacity? Presumably a big animal, so they make a lot of antibody. Yeah, the cows are maintained just like a dairy herd, and they're on a farm that's like a dairy farm in every way. There are $20 billion of revenue generated from human IgG, which comes from human plasma donors. When a human donates plasma, they donate half a liter, 500 milliliters. Cows donate, they donate 30 liters, and they have much higher titers of IgG due to being a ruminant species, which just are a type of animal that produces very high titer IgG. We get 30 liters per donation. They can donate plasma three times a month with very high titer IgG. Great. Since they live at our farm, they don't miss appointments. Right. Very good. Yeah, moving to the clinical development, you've had a few programs in the past that have kind of shown the potential here. Currently, the program of interest is for type 1 diabetes, as I've mentioned, and that candidate is SAB-142. Sam, if you could sort of walk us through kind of the validation that we already have for that approach and how 142 is really much more of an optimal strategy and drug candidate for what could be really modifying the overall disease process. Yeah, sure. There is a commercial product called Thymoglobulin, which is both approved and the standard of care for kidney transplant, for lymphodepletion prior to kidney transplant, and also for acute rejection. That Thymoglobulin is a rabbit polyclonal IgG made in rabbits by vaccinating rabbits with human thymocytes. It engages T cells. That product has been tested in several clinical trials and shown to be efficacious in preserving beta cells in type 1 diabetes. Therefore, it is known to be an effective mechanism of action, an effective molecule for delaying the progress of type 1 diabetes. However, that product being rabbit is quite toxic. Patients get sick, and it cannot be redosed due to immunogenicity of a foreign protein. We can leverage our platform, make an anti-thymocyte immunoglobulin in our cows by vaccinating our cows with human thymocytes and have that same mechanism of action, which has generated great data, and we have high confidence in being efficacious without making the patient sick and with the ability to redose. That is something we studied in a phase one and recently shared that data. Yeah. You recently shared data from the current study that came out just in the last couple of weeks, looked quite good to us. Maybe, Sam, if you could just hit the high points here on what you've shown with 142 in those patients. Yes. The objective of this phase one, which was the trial, was a single ascending dose trial in which we tested dose levels up into the therapeutic range, which we know from thymoglobulin research, which is 1.5 mg per kg and then 2.5 mg per kg are in that therapeutic range. The objective of the study was to show that this drug product does not cause serum sickness, which is prevalent in over 80% of the patients with thymoglobulin. It does not lead to generation of anti-drug antibodies, which means those two in combination means we have a safe product that can be redosed and we've solved for the problems with thymoglobulin while retaining the efficacy-driving mechanism of action that is known with thymoglobulin, which is related to T cell engagement. The key signature is exhausting T cells while preserving regulatory T cells. The trial was successful. We indeed showed that. We showed that there was no serum sickness. We showed that there were no anti-drug antibodies, and we showed that we had durable T cell exhaustion while maintaining or preserving Treg. We confirmed our hypothesis and are confident moving into phase two that we have a successful product. Excellent. Yeah. You saw a number of kind of exhaustion markers with the T cells and so forth. Also lymphodepletion, but not real lymphodepletion. I think maybe there'd be some confusion there in the market. If you could maybe just kind of walk us through what that really means with respect to effects on the lymphocytes. Yeah. Thank you. This drug engages T cells, all types of T cells, which are the majority of lymphocytes. Therefore, due to the active nature, there is a rapid and profound lymphodepletion, which is transient and recovers by day three. The way that lymphodepletion has clinical grades, grade four is also termed life-threatening. We had in our higher doses that "life-threatening lymphodepletion," which was transient. I think that there may be people who are unfamiliar with that terminology and saw that as a potential safety issue. That is not true. That is just how that condition is categorized. It is not symptomatic. The patients do not have any symptoms, and it resolves rapidly. The patients have normal levels of lymphocytes by the third day after they get the day after they've gotten their second dose or the second infusion. Got it. That's very helpful. I had said patients for that study, really healthy volunteers that you looked at. The patients are to come, and you have a planned phase two study, the Safeguard study, which will be looking at 142 in patients with type 1 diabetes. Could you maybe just, for people to understand, there are different sort of stages of type 1 diabetes. We do have there's also another product on the market that's an anti-CD3 that has an indication. Maybe, Sam, if you could just sort of lay out for people kind of the different stages of type 1 and what you're looking to achieve with 142 here. Great. Over the last decade or so, and it continues to evolve, we were able to diagnose type 1 diabetes in stages. Let's say stage one, two, three, four. Stage three is what's known as clinical diabetes. That's when the majority of patients get diagnosed, and that's when patients need to begin using exogenous insulin. Now, with the ability now that we know that it's an autoimmune disease and we know the autoantibodies, we can screen for them. There's stage one and stage two. Stage one is the presence of two or more autoantibodies, but normal glycemia. We don't have a good ability to predict when that patient will progress. Stage two is two or more autoantibodies and signs of dysglycemia. That means it is imminent that a patient will become stage three. On average, in a study run by Sanofi or by the predecessor company, two years was the average time that those patients developed stage three. We have those different stages. Right now, what we see in terms of indications for putting on label of a commercial product, we have delay onset, which would be dosing a patient that is a stage two and delaying the onset or the progression of stage three. We have what you might call early intervention, which is catching a patient early in stage three and preserving beta cells so that you're preserving the patient's ability to make their own insulin. An indication in stage two for delaying progression or delaying onset of stage three and an indication in stage three for preserving beta cells and preserving the patient's ability to make their own insulin. Right. The Safeguard study, if you could just share with us kind of the design there. You're looking to enroll patients who are stage two at risk of stage three. What are your aspirations to show there, obviously, versus rabbit ATG? Yeah. The Safeguard study is a 140-patient study with three arms, two active and one placebo. Two to one in terms of who'd get active and who'd get placebo. The patients are newly diagnosed stage three. The endpoint is preservation of C-peptide. C-peptide is the accepted marker of beta cell mass, beta cells. The goal in these patients is to preserve beta cells. The primary endpoint is preservation of C-peptide in comparison to placebo at one year. Got it. Okay. Good. Beyond this patient group, presumably you would be looking to use it earlier. I had said two to three, you're looking at really kind of early three. Would you then be looking at kind of two to three, presumably in subsequent studies, and therefore looking to move 142 earlier in the paradigm? Yes, certainly. One, we intend to go into the stage 2 population, that delay onset indication. We hope to be able to say something about that as time goes on. No timeline on that, but we're working on it as something we plan on doing. It's important to note that it's the same actual pharmacologic benefit you're delivering. You're just catching it earlier. If you preserve beta cells in stage 3 patients who already need insulin, if you catch them in stage 2, you do the same thing mechanistically. You hope to prevent them from needing insulin. We will go into study that earlier treatment early on in the disease state. Yeah. Key, I think long-term would be obviously redosing potential. How might you be looking at that? Obviously, that's a severe limitation of the current polyclonal. We have high confidence we can redose this drug, and we plan on studying that. The key to understanding when is the ideal time to redose is we're very early in understanding that because the other two drugs that are precedents have only been dosed once. While TZield, you might say they've been dosed twice, it was one course. The whole course was one dose. That is sort of somewhere in between one dose and two doses, but it's not something that anyone thinks can be redosed due to the high prevalence of neutralizing antibodies. As we have drugs to intervene in this indication, drugs specifically that are one-time only, we're just learning when the ultimate time to redose is. That is something that really we can only do with our compound, so it'll be early days. We will be looking for signs of that T cell exhaustion wearing off. We are starting to learn more and know that it does wear off after time. That would be the time to redose, and we will study that. We do not know yet what that will be, if it will be every year or every six months. That is something we will learn in the Safeguard study. Right. We did release your, yeah, that's terrific. When you released the phase one data, you had a webinar with a top KOL in the space, Dr. Haller, down in Florida. Maybe, Sam, you could kind of just recapitulate some of the feedback and highlights from expert response to the data and to 142's promise here. Yeah. Mike Haller is a key opinion leader who is very well known in understanding the molecular pathology of diabetes and having studied TZield and thymoglobulin and knowing how they work. Michael Haller, his support and enthusiasm at our product, I would say, is consistent with other experts in the field who understand what's key mechanistically to preserve beta cells. It is well published and well understood that both TZield and thymoglobulin preserve T cells by preserving beta cells, the pancreatic beta cells, by exhausting T cells. TZield shows exhaustion on CD8-positive T cells without much regulatory T cell preservation. Regulatory T cells or Tregs are key just for mediating any tolerance to self. It is very important to preserve Tregs, and that is understood by Michael Haller and other thought leaders. Thymoglobulin does work by exhausting CD4 T cells and preserving Tregs, and we have that. We kind of have a double signature. We exhaust CD8 cells. We exhaust CD4 cells. Something TZield and thymoglobulin do. And we preserve Tregs, something that only thymoglobulin does. When Michael Haller sees these data and other experts in immunology and endocrinology, they're very excited to continue to study it, very excited to have the opportunity to get it to patients. We have a tremendous amount of support and confidence from the KOL community. Really, a lot of enthusiasm and excitement to get the Safeguard started and to move this forward. C-peptide was not so much a focus of the phase one study given that these were healthy patients, people. In the Safeguard, obviously, that will be maybe if you could just share kind of how you are looking at that in terms of the endpoints and what your expectations may be there, given that it is a marker of insulin production by the healthy beta cell. Yeah. C-peptide is the accepted regulatory endpoint. We know now in Europe and in the US, it's the key, it is the accepted marker for beta cell function, and that's the key. We want these patients to preserve, we want to preserve their beta cells. In order to study it and have meaningful data on it, we need to enroll a population of patients that has C-peptide to preserve, one, so some threshold C-peptide, and we can measure that and have an absolute number and also screen patients within the right window from diagnosis. We're looking for patients within 100 days of their first insulin use. First, we need to start with a patient population that has a threshold level of C-peptide so we can show preservation. We need to have a duration of the study that provides enough time for the placebo group to lose C-peptide in order to show a difference between active and placebo. The data from other studies show that time period is one year, which makes for a long study, but you need one year in order to have that placebo group lose an appreciable amount of C-peptide. We are looking at patients that are newly diagnosed within 100 days that have a certain amount of threshold C-peptide in order to be included in the trial. At one year, in order to have enough time for the placebo to lose enough C-peptide to show a difference. This is depending on what disease you are looking at, a slowly progressing disease. That also, the upside is it gives us time to intervene and preserve a meaningful amount of beta cells. Right. Yep. Dr. Haller, who you mentioned, KOL, also involved in an ongoing study with rabbit ATG, the so-called MELD study. I think we're going to be seeing some data from that at some point soon. How should we think about how those results could impact our thinking with respect to 142? The MELD study is a study of thymoglobulin at several doses versus placebo in new-onset stage 3 patients that was conducted in Europe and has been completed. The real goal of the MELD study was to study lower doses with the dose that is proven efficacious by Dr. Haller in his study as the positive control. That is 2.5 mg per kg. It was an adaptive design so that lower doses could be dropped out and then look to see if lower doses might be as effective as 2.5 mg per kg. The interesting news for those intimately familiar with thymoglobulin in the MELD trial is whether or not a lower dose also works to preserve C-peptide. In the broader community, maybe perhaps people who aren't as familiar with the field, just showing the 2.5 mg per kg is efficacious at preserving C-peptide, which really won't be a surprise. It's certainly more data supporting our mechanism of action that we capture. When MELD data is announced, we expect to have a nice catalyst because it puts thymoglobulin in the spotlight. It shows that thymoglobulin is efficacious and should just create more excitement and enthusiasm for getting superior thymoglobulin into patients, which is SAB-142 or the human equivalent. Right. It should therefore not be weighed down by all of the safety baggage and redosing limitations. You mentioned TZield, right, so Teplizumab, and that's a Sanofi product. Sanofi had bought Prevention Bio maybe a couple of years back, I think about $3 billion price tag to get that. For people who may be looking at TZield sales and the launch, maybe it looks like there's, I don't know, maybe a bit of a disconnect there between that and what Sanofi's initial excitement was. Maybe, Sam, you could share it. TZield's obviously not a perfect drug. It has certain, the administration's kind of belabored. Could you go into kind of the challenges there? First on sales, today, TZield is only approved in stage two. Stage two represents less than 10% of diagnosed type 1 diabetes patients, and it's a hard-to-reach patient population. Kind of upon some thought and some discussion, the idea that sales for TZield in stage two were disappointing, I think, is wrong. I think that they exceeded the expectations of people who really analyzed the space. $50 million in 2024 was actually probably really good numbers. Now, why did Sanofi pay $3 billion? The real market opportunity here is stage three. That's over 90% of the patients, and they have a more sort of urgent need for intervention because it's patients in a different place. It's patients that have recently been diagnosed with a life-transforming disease, which is a little bit different than patients who aren't sick yet. On the one hand, I don't think that the real experts in the space were disappointed at all by TZield sales in stage two. The $3.5 billion price tag that Sanofi paid for Prevention was really about this really, really large market, which is stage three. Sanofi continues to work towards getting an approval in stage three. Yeah. I'd just elaborate more on the stage two versus stage three. At the time of acquisition, when Sanofi bought Prevention for $3 billion, $3.5 billion if you include the royalties that they bought up from all the royalty players, we'll call it $3.5 billion. At the time, stage two was estimated to do around $250 million peak sales to maybe $500 million, if you believe that, right? If you do the calculation on the math, the split between stage two and stage three is probably anywhere from 30%-50% of the entire value. If you believe that it does $50 million today and it does $250 million peak sales, that percentage goes down lower for stage two. We believe that Sanofi attributed more of the value to the stage three. Just to put it into context, stage three, the annual incidence is 64,000 patients a year alone in the U.S. Based on the therapeutic profile, if you assume any type of market share for a drug with no approved therapies, I think conservatively it could be 10% up to 30%, being that the only drug approved. That gets you anywhere from $1 billion-$3 billion in sales, given the patient population, assuming an orphan pricing type structure for stage three. Right. Absolutely. Given the nature of the asset and technology, presumably your protection, your market exclusivity on this will be extensive and durable, right? Would there be any sort of biosimilar path? Should 142 get approved, would there be a way for anybody to kind of make a copy? There really isn't a path. This is not a small molecule or a monoclonal, which now we have biosimilars. It is a plasma-derived biologic with hundreds, if not thousands, of different individual active moieties in it. There is no biosimilar path for plasma-derived biologics. That is one. In that case, someone could make one and file an IND and start from scratch if the market's big enough, right? The next layer of protection is the fact that we have cows that make human IgG, and that is not trivial at all. I mean, it's got to be a decade's worth of work to just mimic that, and then they run into patents as well. The trans-chromosomic bovine that we have involves state-of-the-art cloning ability, a cell line that doesn't make bovine IgG, and a human artificial chromosome that has the full germline repertoire of human IgG. Getting that all together in a healthy cow with good yield is a significant feat. Someone would have to do that and then start from IND in order to have "copycat." No generic path, high barrier to entry to try to create a platform that would be in any way similar to ours. Yep. Clearly. Plus regulatory exclusivity, the patent on the actual drug product that comes out of the cow. Yep. Really some pretty high barriers. I think as we wrap up, just obviously, T1D, great opportunity. You're moving ahead in. You've had some proof of concept in some other conditions. Any thoughts about expansion? Should you have resources to move into other indications where you might take the technology? Yeah. I think the first thing for us to recognize is that a safe drug that engages T cells and exhausts them should be applicable in a wide range of unmet needs within autoimmunity conditions like scleroderma and celiac and lupus nephritis. We have a safe and effective T cell engaging therapy. We believe that this product will be a franchise product that will apply to multiple diseases and that potential partners will see that and recognize that, in addition to the fact that there is data in other of these indications with the rabbit product, thymoglobulin. Validation of the autoimmune sort of success in autoimmunity for preserving whatever cell is being attacked will make it quite a simple step to step into other major unmet needs with autoimmunity. I think that SAB-142 in itself is really a huge opportunity for a franchise product. It is enough for one company to chew on, but we do like to remind people that we have this platform with a lot of versatility. How we monetize that is kind of up in the air, but we would like to have partnerships as the platform is validated and excitement continues and momentum builds. We think partners will also recognize that they can carve out their own niche with our platform that no one can compete with. Absolutely. Great. I think we're just at our time here, so we'll conclude the session with Sam and Lucy. Thank you very much for joining us, and thanks to everybody else who tuned in for this session with SAB Biotherapeutics. Thank you. Thanks very much. See you.