Right. Great. My name is Dae Gon Ha, one of the Biotech Analysts here at Stifel. We'll carry on the conversation next with Surrozen, and from Surrozen, we actually have Chuck Williams, the Chief Financial Officer. So Chuck, thanks very much for spending the next half hour. Thanks. Figured we would level the playing field a little bit if we can maybe get a brief overview of Surrozen as a story and the Wnt signaling you guys are trying to leverage, and we'll dive into Q&A. Great. So we're a company based out in South San Francisco, focused on the Wnt pathway. We have our lead compound is in development for severe alcohol-associated hepatitis. It's currently in phase I-B clinical trials. And then we have a series of ophthalmology candidates, some targeting Frizzled- 4 in development, for the various retinopathies. And then we also have a candidate in development for Fuchs endothelial dystrophy. Okay. Let's start with the 043, severe alcohol-associated hepatitis. I think people are much more familiar with NASH, now known as MASH. Alcohol-associated hepatitis, I think, is much less well-known, aside from, your, I guess, friends over in the Bay Area, who tried and recently had some disappointing updates. So can you maybe walk us through sort of the biology behind SAH, why you decided to use or leverage Wnt signaling, when trying to improve these conditions? Sure. This is a very grave disease. 90-day mortality is about 30%. These patients have been drinking five, six bottles of wine, handles of alcohol for years, 10 to 20 years, and so they do quite a bit of damage to their liver. In the disease state, their Wnt signaling is compromised. We have designed a molecule, SZN-043, that's a multivalent bispecific antibody that mimics R-spondin and is specifically targeted to the liver via its ASGR1 binding. If you think about the biology, you have deficient Wnt signaling. The R-spondin ubiquitinates E3 ligase, which stabilizes those receptors, to allow the Wnt ligand to bind to those receptors and enhance Wnt signaling so that hepatocytes can regenerate. What we've demonstrated preclinically and now clinically is that we enhance Wnt signaling, we proliferate hepatocytes, and which ultimately leads to better liver function. In fact, in our recent trial, we saw actually no deaths with the first six patients we treated these patients with. Okay. Okay, and when we think about the trial itself, since you already went there, maybe we can take one step back and remind us what the trial design is. What's the goal that you're trying to demonstrate with this? Sure. So, so the two objectives there are obvious. One, obviously, is to demonstrate safety and tolerability. The other one is to establish proof, proof of concept for our molecule in this disease state. The design is an open-label, multiple ascending dose trial, and we'll have three different dose cohorts enrolling six patients each. The doses that we'll test are 0.5 mg per kg, 1 mg per kg, and 1.5 mg per kg. And so in addition to looking at safety and tolerability, we'll be looking at key efficacy parameters, which include things like 30-day, 60-day, and 90-day mortality, MELD scores, bilirubin reductions, and AST/ALT levels. Okay. There was a recent update to your earlier point about the 0.5 mg per kg. Can you maybe just walk us through what was the key finding there? Where are we currently at in terms of the 1 mg and the 1.5 mg per kg arms? Sure. So on the 0.5 mg per kg, we provided an update a couple weeks ago. We enrolled six patients. The drug was safe and well tolerated, no infusion reactions, and no drug-related serious adverse events. But I think importantly, we also saw no deaths in those six patients. And we also. Duration? 30 days. 30, 30, no deaths at 30 days. And we also saw significant reductions in their bilirubin levels, as well as a majority of patients saw AST and ALT reductions. Okay, so as we think about the 1 mg and the 1.5 mg per kg, I mean, are they going to be concurrently running, or is it more staggered? It's staggered. So the way the design works is so we enroll the first six. Post 30 days, a safety review committee meets to approve us to going to the next highest dose. Safety review committee has approved that, and we are currently enrolling the next cohort. Once we enroll the 1 mg per kg in six patients, safety review committee will meet again, and then we'll go to the next six patients. Got it. And so when are we getting this data? I think the prior guidance was first half, 2025. Anything narrower than that that we can point to? No. So what we'll do is we'll actually take one of those doses, depending on the data, and take that and dose an additional 12 patients. That would read out, so the 30 patients' data would read out in the first half of the year. We will provide an interim update at 15 patients. Primarily, we may have done that anyway, but primarily, if you recall, we did the PIPE financing, and there's a milestone trigger that, once we hit 15 patients enrollment and have lower than 30% mortality in those 15 patients, it triggers a $17.5 million payment to us. So 15 from the dose selection part. Correct. Right? Correct. Just to make sure. Okay, how do we, I guess, to better understand this disease, the 30-day mortality, the MELD score? There are all these metrics that we're gonna have to get acquainted with as we follow your progress. So what's the relevance here? What do we know about the current standard of care, as it pertains to the 30-day mortality, MELD score? What's relevant that we should be keeping in mind as we track your progress? Sure. So in terms of some of the key metrics for these, well, we're enrolling patients with MELD scores between 21 and 30. And as I mentioned, we did observe a reduction in the MELD scores in the patients that were treated with our drug. As it relates to other metrics like AST and ALT, the patients typically for AST are in the range of 100- 200, and for ALT, it's in the 50- 150. And the ratio, the AST/ALT ratio, which the literature often refers to and physicians refer to, tends to be about greater than 1.5. And that's been consistent with what we've been enrolling. So you'd like to see a reduction in all of those various metrics, to see a clinical effect, which we have been seeing thus far in the six patients we've studied. In terms of mortality, you asked about mortality. That will be the registrational endpoint, 90-day mortality, so at 30 days, the literature's all over the place on this, but the most recent literature would suggest that 30-day mortality is about 15%-20%, and 90-day mortality is 30%. Any correlation, I mean, ultimately data will trump everything, no pun intended, but correlation between MELD with 30 or 90-day mortality. Can you speak to any of that? Yeah. So there is a correlation between reduction in MELD scores and 90-day mortality. There's also some literature to suggest that early bilirubin reductions also confer a mortality benefit as well. And again, we did demonstrate pretty significant reductions in bilirubin in these initial six patients. Okay. Is it that we're next going to be hearing about the 15-patient post-dose selection, or will we get an update on cohort two and three, just like you did with the 0.5? We may provide additional updates along the way, but the next planned one would be 15 patients. That is the first half 2025 update that you've guided. Okay. Okay, then so after that, I guess, what is the final? Well, clarification. Yes. It's 30 patients in the first half of next year. The 15 patients would come in between then. Yes. Yes, so what is the, the next step? I mean, would you have to wait for the full phase I-B data, or would you kind of take that 15-patient data, look at how things go, and then maybe start to approach the FDA about what the next course of action might be? Yeah. We haven't talked much about the F and approaching the FDA next steps. What I can tell you, given the data and taken all together, we have ramped our efforts up around planning for the phase III, which includes interactions with the FDA, and so we'll provide more clarity on that as we head into 2025. Okay. Okay, on the AST and ALT improvements, you just talked about sort of the improvements you saw there. I guess one of the things that we know of your approach is, unfortunately, you had another program, which was for IBD primarily. Can you just remind us what you saw there on ALT and AST just to contextualize how that shouldn't be necessarily an overreach into the rest of the platform, if you will? So what did you see there in the UC program and vis-à-vis what are you seeing here from a magnitude standpoint? Sure. So So we saw grade three elevations in the intestine program, which ultimately caused us to stop that program. To contextualize this is we are dosing patients at 100x- 300x that of what 1326 was dosed at. And not only are we dosing at much higher levels, but we're also seeing reductions in these patients in their AST and ALT levels, which gives us a lot of confidence in terms of what the mechanism and what's transpiring with these patients. Not to mention they already have an underlying pathophysiology for. Have higher AST/ALT, right? 'Cause these intestinal patients have normal, normal. Right. Okay. I mentioned earlier that there was another company, DURECT, larsucosterol, which unfortunately failed on its phase II-B trial. Can you maybe walk us through what are the key learnings there that you can implement as you develop an SAH? Right. I think, I think largely they have provided us a framework and pathway from a regulatory perspective on how to move forward. They just recently had agreement with the FDA in terms of what their phase III registration trial would look like. That'll be a 200-patient trial, one-to-one randomization their drug to placebo. They have breakthrough therapy designation. I think, you know, in terms of our approach to the disease and how we design the molecules, we think we're, we're addressing the underlying pathophysiology of the disease given the hepatocyte destruction and our ability to regenerate that, the hepatocytes that ultimately would confer a benefit in liver function and hopefully ultimately mortality. So I think we have a clear path moving forward, in terms of what we've seen, the planning that they've done and the dialogue they've had with FDA. Were you surprised by the distinction between U.S. and XU.S. site data that they presented? If I recall, U.S. is where they saw the stat sig and XU.S. was what threw them off. Yeah. So I guess, how do you feel about that as you think about sort of a global phase III trial? Yeah. So that, that's obviously going into the equation as we think about our design and also with discussions with the FDA given the differential that they saw between those two different patient populations in different countries. Okay. Okay. So presumably avoid the same trial sites ex-U.S. that participated. Okay. What's the commercial opportunity here? You mentioned this is alcohol-associated. So presumably it's patients coming in kind of too late. So are we talking this is going to be an acute kind of in-hospital setting that you administer and the patients will walk away, or is this more of a chronic therapy? Help us understand the commercial opportunity. Yeah. So this would be an acute, acute treatment. There's about 170,000 patients that are hospitalized per year for severe alcohol-associated hepatitis. Is that pre or post-COVID? Post-COVID, there was just a publication out. What I wanted to mention is that post-COVID, the Annals of Internal Medicine just did a study and found that there's approximately a 20% increase in the incidence. From the 170,000. From the 170,000. So call it 200,000 patients that are hospitalized every year. And so this would really be a rescue medication. They'd come in, they'd receive our drug, and hopefully we'd be able to improve their outcomes given the dire outcomes that exist today, given there really isn't any great standard of care. Okay. 200,000 is pretty staggering, so given that it is acute, but alcohol is an addiction, so presumably it's not going to be a one-and-done walk away, but they could come back at some point in time down the line. They certainly could. And, you know, as we continue, you know, as if we continue to progress this program, obviously in part of the commercial model is helping support those patients the right kind of support to keep them off of alcohol. How do we think about sort of that sweet spot of intervention? 'Cause presumably too far gone is not going to necessarily help you. So even from your clinical trial, is there a particular window you've defined as the patient needs to have been hospitalized X amount of hours before we can actually administer? Otherwise you're excluded, if that makes sense. Yeah. No, I mean, I think primarily the way we've designed the trial is around the MELD score. The sweet spot is around 20- 30. Those beyond 30, you know, are pretty severe and may have other complications, including kidney disorder, et cetera. So that's how we've designed the study to make sure we capture the sweet spot in terms of making sure we have a benefit. Okay. Okay. Makes sense. So we now have 1326 that has been deprioritized, 043 that is your lead, but you also have 413 that you've partnered out with Boehringer Ingelheim, and you also recently announced some in vivo or I guess, homegrown new candidates both for ophthalmology. Maybe high-level question first. How are you thinking about your overall strategy here, bearing in mind this is clearly a platform you're developing? Are you looking to pursue just SAH within the hepatology space, or is this a beachhead project to something else in the hepatology while developing ophthalmology? How should we think about opto versus hepatology as your grand scheme of strategy? I think we're certainly excited about the data for SAH, and we're gonna continue to develop that. That's something we could do on our own commercially. You know, about 200,000 patients, and have a hospital salesforce to sell that drug. The vision there would be that it'd be stocked in every hospital in the United States. We do have a platform and a pretty prolific one. As you mentioned, we had a partnership with for 413 with Boehringer Ingelheim. Then we've also developed some additional candidates that combine both Frizzled- 4 and VEGF and Frizzled- 4, VEGF and IL-6. On that, Boehringer Ingelheim. I guess I've been saying BI. BI. What was the BI deal? What additional milestones and milestone-associated payments are we expecting on that? Yeah. So, so it was $12.5 million upfront. You may have seen that we just received $10 million, $10 million milestone because they nominated 413 as the lead compound as they're preparing to go into the clinic. There will be some additional milestones along the way of their preparation from getting that molecule to the clinic, which would be fairly near- term. And then there's an additional $576 million in clinical regulatory and commercial milestones with single-digit royalties to low double-digit royalties associated with that. What's the near-term milestone payment? Have you disclosed that? We haven't disclosed that. Okay. Fair enough. I guess how should we think about 413's probability of success, in light of the EyeBio acquisition by Merck? Sure. So EyeBio reported clinical proof of concept earlier this year in DME in 26 patients and then subsequently was purchased by Merck for up to $3 billion. I think it really has, you know, de-risked in a way that particular target. I think there's been tailwinds given Merck's entry into the space. Also, Roche earlier announced that they're. They have a focus on Frizzled- 4 in ophthalmology at their R&D day. You know, there's genetic evidence that Frizzled- 4 plays an important role and is critical to the vascular integrity of the retina. You know, Norrie disease, which you may or may not be familiar with, this is Frizzled- 4 mutation. These kids are born with macular edema, and it's Frizzled- 4 driven. So I think, you know, the target is gaining steam, if you will. There's a bit of tailwinds, and we've seen some interesting preclinical data with our molecule. As it relates to our partnership with BI, we believe along with them, we think it's the most potent Frizzled- 4. And so what that may translate to, we believe will translate to one, better efficacy than the other Frizzled- 4 compounds, but also potentially longer duration of therapy as well. Okay. How did you guys carve out what BI does with the 413 compound given you have now two other programs? Like, how should we think about freedom to operate with those two? Yeah. So if you think about the Frizzled- 4 target broadly, BI has a very small slice of that Frizzled- 4. It's not quite molecule specific. It's a little broader than molecule specific. So we have the opportunity and have our own Frizzled- 4 monotherapy. And we've also announced that we have the Frizzled- 4 VEGF, Frizzled- 4 VEGF IL-6. The reason we're not pursuing our own Frizzled- 4 is a couple reasons. One is we didn't wanna be third to market, right? So BI's ahead of us and so is Merck. But also the Frizzled- 4 we have, but we believe of all the Frizzled- 4s we've made is best in class. As I mentioned, it's the most potent and has the potential for improved efficacy and/or longer duration of therapy. So it didn't make a whole lot of sense to focus on a Frizzled- 4 monotherapy. So what we decided to do was we had, we have these new candidates, Frizzled- 4 and VEGF. VEGF, as you know, is the standard of care for these retinopathies. Combining these two molecules, a couple things. One is it allows us to potentially differentiate on efficacy, but also allows us to go after multiple indications in retinopathies. And when you talk to KOLs where they think if you're skating to where the puck will be, the future state, combination therapy is where it's headed. And so we wanted to get out ahead of that and skate to that puck. And so that's why we have the combination molecules that we've developed. Does BI have any other rights, or any options, as part of the clause to basically say we want something else as well, or is it purely on that 413? Purely on the 413. Okay. So then what about 8141 and 8143 that you just talked about, Frizzled- 4 VEGF, Frizzled- 4 VEGF, IL-6? How are you thinking about the strategies there given one has one added target? Are they going to be completely separate indications or overlapping indications? What's the strategy? So I think right now we're gonna prioritize the Frizzled- 4 VEGF compound. I think, you know, so if you think about those targets, Frizzled- 4 is really about the vascular integrity, right? You think about VEGF, that's the overproduction of VEGF, and then you add the anti-VEGF to reduce the hypoxia, right? And then you have the IL-6, which is really the inflammatory component of the disease. And so as it relates to Frizzled- 4 VEGF, you have a wide variety of retinopathies, including wet AMD, DME, et cetera, that you could go after. Whereas uveitis tends to be more of an inflammatory type disease where the IL-6 probably plays a larger role. So as we kind of continue to evolve our thinking, it'll likely be somewhat separate indications, but we're gonna prioritize Frizzled- 4 VEGF for now. Okay. And presumably completely separate indications. Yeah. I guess aside from just the inflammatory response in uveitis, I mean, do you guys have preclinical data or early data suggesting that this tri-targeting, if you will, really has some beneficial effect on the uveitis side of things? So we haven't demonstrated that yet, and that's something we'll plan to do. Okay. Something that we can expect in the near term, or is this just a thing? Yeah, we'll come back to you and when we. Okay. Okay. Now that you have announced both of these, but right now you talked about the Frizzled- 4 and anti-VEGF being sort of the leader versus the other one. When is the right time for you to start pushing ahead with the tri targeting molecule? And what kind of de-risking event are you waiting on from the leader asset? So I think, I think we're gonna push for, we're gonna be pushing forward on the Frizzled- 4 VEGF. Now, some of that depends on funding and the ability to fund that. As you know, the next step would be to CMC scale up, which takes time and money to do. But nonetheless, the phase I clinical trials are fairly quick to enroll and short to read out. I think EyeBio ended up enrolling and reporting out their data within five to six months of their proof of concept data. Okay. And so the nearest milestone for your, Frizzled- 4 and anti-VEGF would be? So we're not providing any guidance yet in terms of the timelines around that, but we'll certainly look to do that as we get, we shore those up. Okay. Okay. Can we talk a little bit about this Frizzled 1/2/7? What's unique about this target? And if we, as we think about FECD, Fuchs endothelial corneal dystrophy and geographic atrophy, like what is, what is relevant or what is important about that? Yep. So Fuchs is characterized by loss of corneal endothelial cells, which causes edema, swelling, right? Vision loss. And it's accompanied by guttae, which is the focal thickening of Descemet's membrane. What we have found in the literature, as well as the studies we've conducted, is Frizzled 1/2/7 is highly expressed in the corneal endothelium. So preclinically, what we've demonstrated both in vitro and in vivo is that we regenerate corneal endothelial cells and we've improved corneal clarity and improved corneal thickening in both a rabbit and mouse model. You know, the current standard of care is surgical corneal transplants. It's been rate limited by donors. And so we believe through our regenerative approach, we could tackle the broader patient population, which is, you know, there's about three million patients in the United States with our approach. Okay. And then GA is? Oh, and then GA, you know, that we've gotten some interesting results as it relates to both, right? This is the degradation of the RPE cells, so we've been able to regenerate the RPE cells, and we've also seen some neuroprotection as it relates to the photoreceptors preclinically. In terms of our way forward there, we're still thinking about what additional preclinical studies to shore up a little bit about what the mechanism by which this may have an impact, and as you know, with GA, it's a bit of a shifting sand from a regulatory perspective, and we're trying to understand, you know, what our clinical program would look like going forward. Yeah. I mean, certainly the Izervay announcement was a little bit of a surprise. So, lesion size or slowing of the lesion size growth, I think there have been a lot of question marks around what is the clinical meaningfulness of that. Yes. despite the approval, so presumably you're looking for a different endpoint that could be a little bit more clear cut. Yeah. Easier to digest. That's what we've been talking with our advisors, KOLs, to understand what that might look like. Any early insights on what that angle might be? 'Cause certainly visual acuity we've heard is not as relevant in GA, but it's also something that investors tend to understand the best. Mm-hmm. Any early insights from talking to KOLs? No. Okay. Okay. All right, and I guess from a development timeline, what makes more attractive sense, Fuchs or GA? 'Cause GA, I don't know what the endpoint is, but at least the current standard was it takes about a year, if not two years. Yeah. So, Fuchs would make more sense 'cause you could be into phase I proof of concept study fairly quickly. Whereas GA, as you alluded to, is a little bit more challenging in terms of playing out proof of concept in a study in that disease state. Okay. Given the 413 precedent, you now have 8141, 8143, but also this Frizzled 1/2/7 target. I guess right now your finances, you're being a little bit more judicious with your priorities. Which of these three targets/programs are you inclined to keep in-house versus out license or divest? Yeah. I think we'd prioritize the 8141, which is the Frizzled- 4 VEGF, as well as the Frizzled 1/2/7 for cornea. Interesting. Okay. So 8143 would probably be more on the, the chopping block, if you will. Okay. So let's briefly touch on the, the financing side. Anything that we can expect in sort of the, the near term? I mean, you earlier mentioned sort of that PIPE associated milestone payment. If you can also just briefly remind us what that means, from a pro forma standpoint. Yep. So we have, we ended the quarter pro forma with $41 million in cash. We've generally been burning about $7 million-$8 million per quarter. We don't expect that to change significantly in the near term. And we have over $1 million in capital, either through the PIPE or BI milestones next year. In terms of the PIPE, the next milestone, as we talked about, would be $17.5 million at 15 patients of data being enrolled with less than 30% mortality. And then there's another milestone associated with the PIPE, which would be $70 million, once we read out the phase I-B clinical trial for 043. Okay, and so the cash runway as it stands today would be an underestimate, given, I guess, what is the likelihood you would get those or trigger those payments? The likelihood is if we continue along the same path as our first six patients, we would trigger the first milestone payment of $17.5 million, and then if the phase I- B clinical trial looks good, then that would also be triggered as well. So more patients from the SAH trial, and then the 413 progress. Okay. Maybe one last question and we'll wrap it up. We've had quite a bit of pushback on the Wnt signaling being just such a pleiotropic hydra, if you will, from a safety standpoint, but also how it could lead to some off-target kind of a benefit. Maybe from your vantage point, what are we overly skeptical about? What are we overly negative about, that kind of keeps you glued to the Surrozen story that we should start to appreciate more? Sure, well, I think, you know, I think, you know, the proof is in the clinical trials. You know, we've previously had enrolled more than 42 subjects in the 043 trial. It was safe and tolerable. We showed an impact in cirrhotics. We've now enrolled six patients in the phase I- B clinical trial. We saw no serious drug-related adverse events, so we're pretty encouraged by what we've seen clinically. And I'd also say that others have proven out, you know, clinical proof of concept for Frizzled- 4, so I think, you know, all in all, we'll continue to make progress, and I think it's pretty encouraging what we've been able to demonstrate from a safety perspective with 043. Okay. Well, with that, Chuck, thanks very much.