Alright, we're ready to get started. Welcome, everyone, and thanks for tuning in. This is Josh Schimmer from the Cantor Biotech Equity Research Team, joined by Mai Ringer in hidradenitis suppurativa, Imogen Mansfield, who's done extensive work in understanding this disease. Together, we're welcoming Zura Bio, Robert Lisicki, Chief Executive Officer. Robert, welcome. Maybe start with a snapshot of the company and your lead program tibulizumab. Sure. First, thanks, Josh, and Imogen. Thanks to Cantor as well. Zura Bio is a publicly traded company. We listed on NASDAQ in April of 2023. Since that time, we've raised $200 million and in-licensed three bispecific monoclonal antibodies. The lead asset is a combination anti-IL-17 B-cell activating factor antagonist. That's the most advanced of the three assets that we have. It's currently enrolling in two Phase II studies, systemic sclerosis as well as hidradenitis suppurativa. Both those studies are underway. We expect or anticipate top-line data Q3-Q4 of next year. It's a really exciting time. There's been a lot of work to get to where we are today, and now we're finally getting close to data. Excellent. All right. We've seen validation for both the IL-17 and the B-cell component targeting approaches certainly in hidradenitis suppurativa as well as systemic sclerosis. As we think about first the IL-17 targeting of tibulizumab, it helped frame its potency against the various isoforms relative to older approved, recently approved, and emerging other IL-17 targeting antibodies. Yeah, so the IL-17 component is ixekizumab. It's Taltz. When I hear potency, I think affinity first. When you look at affinity for the isoforms, ixekizumab has class-leading affinity for 17A as well as 17AF. Bimekizumab has greater affinity than secukinumab. Ixekizumab does not have any inhibitory effect against FF, and we think is advantageous based on the clinical data that we've seen and some of the offset effects as well. Sparing that effect, we think is important. Also, the comparator for us is a little bit unique because you're using combination therapy with IL-17 inhibition as well as a B-cell activating factor antagonist, where we would expect to see a more robust result because of the T and the B-cell approach that we're taking. Can I ask a follow-up on that too? We see better efficacy in HS with Bimekizumab compared to secukinumab. The sort of general consensus is that's because it also targets IL-17F, but they also do have this difference in affinity for IL-17A. Do you think it's maybe because of that, or is it the F? I think it's unclear. When you look at B-cell activating factor, how much homology is there with A, and how much redundant suppression are you getting? To me, part of the explanation on some of these differences in these trials is likely a result of two things. One is there's a normal distribution of result in all trials. Is 18 really different than 20? The second secukinumab was 17, then it was 15 and 20, kind of in the ballpark in my view. I think that the other question that you have to always look at is the baseline demographics. They're really different across these trials. The BHERD2 trial, there's a lot of things that are interesting, but the most striking is the low% of prior biologic exposed. It's 10%. That's the lowest of all of the Phase III trials. I would expect that you're seeing a more robust response in a de novo patient versus an exposed patient. I think the jury's still out on whether or not there's benefit in B-cell activating factor. What did you do to optimize the dose of tibulizumab to be confident that you're achieving the same or comparable amount of IL-17 expression as Cosentyx? Yeah, two things. One is PopPK modeling, where we measured the receptor occupancy of both arms of the molecule between 30 and 300. Ideally, you want to be above 95%. This drug is at doses above 100. Also, because this molecule is larger, it's 200 kilodaltons versus 150 kilodaltons, you naturally get a higher dose of ixekizumab than has been used in the psoriasis trial. The other thing that we've tried to do is in Phase II trials, I think it's always advantageous to have kind of no-regrets approaches. There is a loading dose at week two in both of the trials. We want to get to a therapeutic range in skin as quickly as we can. Okay, and then in terms of targeting BAF, what is the evidence to support BAF specifically? We'll stick maybe with hidradenitis suppurativa for the first part of the discussion. Again, kind of that same question, what gives you the confidence that you can replicate that extent of BAF inhibition with tibulizumab? Yeah, so let's maybe first focus on just some of the skin analysis that's been done in HS patients relative to AD, psoriasis, and healthy. Only in HS do you see an upregulation and expression of BAF among all of those areas. You also see within the draining tunnels, there's a very high expression of both BAF and autoantibodies as well. I think the way to think about this is, does B-cell biology add something to treatment that currently isn't available? The support for that is there's data for CD20, fostamatinib. BTK is not a pure analog, clearly. It has a broader B-cell subset activity, but does provide some supporting evidence. The inebilizumab data is clearly limited. The release from Novartis was that it was better than placebo. My assumption is there's a lot of things that went into the threshold to advance that agent, given they had Remy moving into Phase III and secukinumab in approval. All of those things we think are supportive. It's clear that B cells and B-cell activating factor are playing a role. I think the question is targeting them now, what benefit will you see? We can review the Phase II TibuSHIELD study, the design, the endpoints, timelines, and what is it that you need to see to think about moving beyond Phase II? Yeah, so the study is a 16-week study with two active arms, a low dose and a high dose. It has a 16-week open-label extension where all patients convert to low dose. The primary endpoint is the change in AN count, which controls for some of the variability. AN counts have some concordance with HiSCR 90s, actually. We'll do a HiSCR 50, 75, IHS, DLQI. Those are all part of the Phase II, all part of the secondary endpoints of the trial. I think in a Phase II trial with a sample of this size, you want to see a robust effect. I think the other area where you'd expect to see some differentiation is the impact on draining tunnels, where we believe B cells and BAF play a more prominent role. Can you move away from not advancing draining tunnels to actually reducing draining tunnels, which is a big need right now because that's where a lot of the morbidity is associated with this disease. We'll look at all those endpoints. What might you expect from an IL-17 antibody? We do tend to focus on high score, less so on neutrophil counter draining tunnels. What is kind of the bogey that you want to be above? On a high score of 75 on AN count and draining tunnels, kind of the two? Yeah, on high score of 75. True. That's what everyone else. Yeah, we haven't given guidance on that. I think you want to look at the totality of evidence that you have in a Phase II trial before you prematurely try to give a target, right, to a market. It's hard to do that until you see all the evidence across both arms of the trial. What I would say clearly is we wouldn't do this experiment if we didn't think we could produce a better result. Better is how, right, I think you can talk about the definition of that. We expect it to be more robust. You see a broader level of response, a deeper level of response, and then you see areas of response that are unusually reported with IL-17, specifically draining tunnels. Broader and deeper compared to Cosentyx or? No, I think CLASS. When I think about the CLASS right now, just throw out the first secukinumab study. If you look across PIONEER II, if you look at SUNSET, if you look at BHERD1 and BHERD2, to me, it's a normal distribution of studies where you're between 15 and 20. The focus we have is that even if you want to give Bimakizumab the advantage and say it's the most active, best case scenario, 35% of patients got to a high score of 75. That means 70% did not. That's clearly where the opportunity is. That's the area where we think we can address and help. The differences in my view, particularly from a commercial and a payer standpoint, are marginal and likely indifferent, not significantly different to a prescriber. How high a bar do you think of setting? Because we're in cross-trial comparison territory, which has larger error bars, obviously, than a controlled trial against a comparator arm. As you're thinking through the signal of effect that you need to convince yourself, right, I get how obvious does it need to be? Would you even advance more subtle cross-trial differences that may favor tibulizumab simply because your view is the unmet need is so high that you know you don't necessarily need to go into a Phase III with a high degree of confidence of differentiating? I feel like that was a rambling question. No, not at all. I think you want to see a robust result. Whether that high score of 75 number is 18 or 24, that's kind of the range, right, that you'd want to see. You want to have convincing evidence that you're providing something that's currently not available. There are lots of different ways you can do it. I think the only limitation is when you tie yourself to a number, there may be a reason why your number is ultimately 21 versus 24. That's explainable. The other piece with the Phase II study is really understanding the effect that this molecule has and what's the right dose. Do loading doses make sense? Phase IIs really inform all of those Phase III choices. The other piece we're hoping to avoid is having to attest more than a single dose in Phase III, which was in part the strategy between high dose, low dose. Yeah, I do think it's smart that you picked AN count because it does actually have less noise than high score because you don't have this threshold effect. On your decisions around dosing and level of inhibition of IL-17, how does tibulizumab compare over the 16-week period to Cosentyx, Bimzelx, for how hard it hits IL-17A? From an affinity standpoint, the affinity in target engagement is much, much higher than either Cosentyx or secukinumab. I don't know that Lilly had done work to look at what that was in week one versus week 16. That question I can't answer. I think if you talk to most dermatologists today about ixekizumab, what you'll hear is that their general view is it's a more active drug than secukinumab and that the durability of the drug is better. The other piece that we think is really important in the HS space is durability, right? There's a feedforward cascade that's occurring from these draining tunnels where infections promote inflammation. That inflammation generates more IL-17, generates more neutrophils. You're kind of always chasing the efficacy, right? The idea here is with B cell and BAF depletion, you're not chasing that. You're actually eliminating that. What were kind of the guiding principles between low and high dose selection, especially as we think about the IL-17 suppression you're looking to achieve? Are you kind of trying to sandwich the approved IL-17 inhibitors on that component or match and exceed? There's a bit of a schmuck factor in this. If you look at the last six studies, right, you have these inverted dose responses. It may just be noise or it may be the sample size, but you really want to understand is there truly a meaningful difference between the two? That's the first. The second, the Derm division always requires you to understand your lowest minimally effective dose. As a sponsor, you can do that in Phase II or Phase III. We think it's better to do in Phase II. The receptor occupancy data that we saw was similar in the two different doses that we're using. The thing that you can't measure, you can only predict or project, is skin distribution. Clearly, with more drug, we get to the therapeutic range more quickly, likely better skin distribution, but we think we'll have a clear answer given the doses that are being tested. It sounds like the high dose is probably the one where we should be focused for differentiating versus approved IL-17. That's unclear. I mean, if you look at tibulizumab, right, they used two different doses. They moved forward with a lower dose. The doses that were tested in the PopPK modeling were between 100 mg and 300 mg. The low dose, we haven't disclosed for pending IP, but the low dose is slightly north of 100 mg. The high dose is slightly south of 300 mg. That gives you a sense for the range that we're looking at here. We added the loading dose. I think until we see the data, it's unclear, but we'll have two different pieces of data we'll be able to look at and then make a decision for the Phase III. Right, systemic sclerosis is almost the inverse, where you've got validation, arguably stronger clinical validation targeting B-cell activating factor, less so IL-17. For this indication, maybe you can focus on the evidence that does support IL-17 and the confidence that that will provide a boost to the B cell targeting component. Yeah, so in systemic sclerosis, it's primarily IL-17A. It's a driver of systemic inflammation. That inflammation can generate fibrosis, which contributes to the progression of the disease. IL-17A is associated with pathogenesis and severity of SSc as well. The most supportive data you have now are a Phase I and a Phase III study from an IL-17 receptor, brodalumab. The Phase III study was more like a Phase II study. It was a 24-week study. It looked at very, very early disease. It was an atypical design. Patients had on average nine months of disease. In that study, they included 100 patients at 24 weeks, and the endpoint was MRSS. That's not an approvable endpoint in the U.S. or Europe. Ultimately, pulled the file because PMDA requested additional data in Japan that they weren't prepared to satisfy. The strongest evidence that we see is through the IL-17 receptor. Why do you think they didn't, and no one essentially continued to pursue IL-17 in systemic sclerosis? On the Kyowa Kirin side, and this is only speculation to be clear, Bediumab, I worked on Bediumab a long time ago at Amgen. It was a highly effective drug, but it had an offset increase in SIB that was concerning. In the U.S., it ultimately received a box label and a REMS. Amgen and AstraZeneca sold that product off to three different manufacturers in three different regions. It hasn't been commercially successful anywhere. Kyowa Kirin is the only company that really advanced it in other indications. I think KK had an interest in understanding this drug's effect in that population. I think for the other IL-17s, Josh, is that by the time the data came out for Bediumab and there's awareness on 17, they were strongly entrenched in PSO and AS and PSA, and maybe they didn't want to threaten the franchise with a speculative study in a disease that has a high mortality and morbidity rate. I don't know. I can only speculate. That's typically the approach large pharma takes. Don't harm the parent compound. Lilly, before you licensed the asset, had run some studies in Sjogren's and rheumatoid arthritis. Do you have a sense of what they showed and why, if whatever signal they derived there wasn't good enough that they wanted to pursue those settings? Yeah, those were Phase I, IB studies. They're essentially SAD and MAD studies. It was their first opportunity to test the bispecific in an unhealthy population. Primary endpoints in those trials were around safety, tolerability, and then the secondary was PK. Sjogren's had the longest exposure. It was 12- 6 weeks. It was about 20 patients. There were about three patients per arm. No surprises on safety. PK looked clear. There was some PD work, but again, the sample size was three to four per, and this was a mixed Sjogren's population, primary and secondary. The other study that was done, it was in rheumatoid arthritis. That was a single ascending dose study. Lilly made a decision to not progress this molecule because of overall portfolio prioritization. I don't think it was tied to data in either one of those Phase IB experiments. Maybe we can review the Phase II TibuSHIELD study design and which are appropriate endpoints in systemic sclerosis. Yeah, so the primary in the Phase II is the change in the modified Rodnan skin score at week 24. The secondary endpoints will include all of the approvable endpoints for SSc. It'll include FVC, which is forced vital capacity to measure lung, the HAC, patient global, physician global, and the modified CRIS. The other element to this trial, which was done successfully by Roche with tocilizumab, is high-res CT scan. You want to do that to understand how effective is this intervention in lung fibrosis. It's used in other diseases. It's not an approvable endpoint in SSc, but it is concordant with FVC. Give us confidence as to whether or not we're having a benefit. are the dose arms in this trial? This is the high dose. It's the same high dose that's being used in the HS trial, and there's also a loading dose in this trial. Okay. Kind of the same line of questioning as we were thinking about cross-trial comparisons in HS versus the IL-17s here now, I guess we're against Benlysta to the extent that we've got data in that setting. Is that the right or wrong comp to think about as we interpret the data? That's a great question. There is no clear comp because of maybe the uniqueness of the molecule and the lack of successful studies in SSc. What we've shared publicly is that off the primary endpoint in the Phase II, we're powered at 80% to detect a difference of 3% - 4% on the modified Rodnan skin score. We haven't shared any of the powering assumptions we have around the Phase II. If we do that, we've achieved something no other molecule has. I think the other thing that we think is needed within this space is a drug that treats the totality of the disease. Most of the comparisons right now will be ILD only. Two approved agents, they show a modest effect in slowing progression. Part of what we want to understand is can you actually move away from slowing to halting or improving fibrosis? The CT scan will really help us understand whether or not that is a hypothesis that could be explored in a Phase III trial with a larger sample size. does MRSS? It measures skin thickness. You can think about this the same way you would think about a PASI or an EASI score, but instead of a visual inspection, you're actually pinching the skin. The scale goes from 0 - 51. 0 is the lowest healthy, 51 is the highest, which is the most severe. It measures 17 areas across the body, the torso, the upper arms, and the upper legs. It's assessed by a certified and trained skin assessor who literally pinches each area of the skin, the body, and then assesses a value to it. Maybe quickly on some of the other programs, unless there's anything else you wanted to flag on tibulizumab, do you want to talk about some of the other pipeline programs that may be deprioritized for now? Good, good, fresh decisions that you made there. Anything else on tibulizumab? Yeah, I say in hindsight, I'm very glad we adopted the strategy we did, which is to wait for external readouts. On 168, which is crebankitug, which is the combination of IL-7 and TSLP, we saw the data in UC, AD, and AA, and while there were some signals, there was nothing in our view that was compelling. We were encouraged by no new safety surprises in those studies. Given the backdrop of TSLP, what we wanted to understand is, is there an additive benefit of inhibiting IL-7 and TSLP in any disease? To validate that hypothesis, we've done some work with Sequoia Bioscience, it's a genetics company that does this work. What they were able to help us understand is that there are diseases where you see upregulation of both IL-7 and TSLP. Most notable is airway disease. That is asthma and COPD. IL-7 alone, TSLP both provide a benefit, together, it was additive. Based off that, we have commissioned some translational medicine and a typical asthma house dust mice model, where we're going to compare the relative inhibition of a combination, our combination, anti-IL-7 as well as TSLP to just TSLP alone or just IL-7 alone. That translational work is ongoing. I would expect we'll have the results of that in Q4. The house dust mite model? Yeah. What is that, and how predictive is it of clinical effect in humans? It has all the limitations of a kind of a mouse model, an animal model. It's usually the basis for advancing into human studies, like a Phase IB, which probably would be the next step, but it's not outlined. We looked at the commercial success of TEZI, the high need in low T2 asthma, particularly with comorbid obesity. Clearly, there's a need and an opportunity. We think we may be able to build on the value that TSLP shows today. We'll look at this data. Based off this data, we'll make some decisions as to whether or not we would advance in a more typical IB human experiment, where you get certainly a clear indication as to whether or not your drug is appropriate for further study. Is that a critical box to check to move forward? I guess given the limitations of extrapolating from that model to humans relative to some of the encouraging data supporting the target you have in humans, is that basically a go/no-go decision? The TM model, do you mean? The translational medicine? Yeah, house dust mite. I think it's supportive. I think it's always helpful when you have genetic validation as well as early translational medicine before you go into humans. We also want to make sure that we really understand what is the right dose for us to use in a human experiment. We're doing all of that work now. I think the value on this, Josh, is that this is low cost, low effort, potentially high yield. This is a minimal amount of capital and time that we have to spend to these experiments. If the experiments prove unsuccessful, we've done the work. If they're successful, perhaps it creates optionality for the company, for the investors, and also is BD attractive as well. Will success be better than TEZI? Yes, absolutely. I think when you think about when this product will come into the market, you're going to have to demonstrate early that there's going to be a clinical advantage and no additional safety burden. When I think about the asthma market, I think about an initial point of entry is severe asthma as well, likely in a post-TEZI kind of world. Maybe we can talk about torudokimab, the IL-33 antibody, another good choice to await external validation, which so far we haven't seen. There's one shot on goal that we're waiting for. Is there any hope here? Where do you think the biology has gone wrong relative to some of the expectations that prompted three large pharma companies to pursue Phase III? That's a really good question. I'm not sure I know the answer to that. I think the data has been very conflicting, where in some cases you see positive outcomes and others you don't. I don't think it's fully explained by the trials or by the sites. I think that much lower rates of events than were projected or anticipated have impacted these trials. When you look at the data right now, it's not clear that there's a significant opportunity to advance into a IIB or III for COPD in our view. There's more data coming. We'll wait and we'll see that. Right now, I would say it's highly undetermined. Similar to the work we did with 168, with both of those, with that second and third asset, we look at the optionality through some of the genetic validation. Is there some easy translational work that we can do? The other thing we've uncovered is there are some areas where we think IL-33 may play a role that are not common and not currently being studied. Could that attract the potential interest of an external partner from a development standpoint? All of those options are on the table. We try to do these in a way where we can potentially create value but not have distraction to job one, which is study execution. Maybe we can talk about your current cash position in Zura Bio. As we get to the other side of the Phase II trials, how much residual cash you'll likely have? Yeah, so our update at the end of Q2 was $155 million. That cash funds both of the Phase II studies as well as the open-label portion and pushes us through all of 2027. We likely have cash four to five quarters post data. That's kind of the current guidance and expectation. The burn rate will start to increase as we get more and more patients in these trials. It probably peaks at around $15 million per quarter. Assuming there's no surprises or no changes, we should be in a strong position post data. We expect that HS data in Q3. That's potentially six to seven quarters between cash out. In the event that the response there is robust and sends a clear signal, we'll be, I think, in a very good financing position at that point. That'll be before the SSc readout. Okay. I guess that is what it comes down to, irrespective of your own view of how supportive the Phase II data are for moving into Phase III. It may be the decision made by investors if they share your enthusiasm and are willing to fund it. Is that fair? Yeah, I think it's spot on. The Phase III programs, and I think this is probably part of the calculus Novartis used, we've cost out Phase III programs depending on the size and how you do the study. There's $600 million - $1.1 billion. You're going to have to have investor confidence that you have a product that's going to be meaningfully different in the market and has a clear position within the market as well. I think it's largely dictated by that. You can think of all kinds of strategies with partnerships and financing and debt financing. The reality is for that kind of capital, you need to generate belief. It's also part of the reason why you want to separate your Phase II readouts because you don't want to put everything within the same kind of quarter or month. You want to create as much optionality as you can and potentially create separate financing opportunities as well. Okay, right. You kind of have two shots, two kicks at this cannon. In theory, either could go in, in which case you get two inflection points for your cost of capital to come down. I guess that does seem like if it's $600 million to $1 billion for HS, I'm guessing it's roughly ballpark for systemic sclerosis or? 250 to 300. Okay, that's more manageable. Yeah, it's a 52-week study. The typical size of the study is 250 to 300 participants. The cash component is more capital efficient. I think that the other reality with HS is that your data creates options for you in biotech. If you have really strong and compelling data, my experience has been you have interest, right? That interest may be in co-development, those types of agreements or licensing deals outside the U.S. We'll evaluate all of those options, and we work on those today. By the time the data comes out, we'll have a clear view on how we want to approach it and what financing will be required to complete Phase III studies. All right. Looking forward to some of these updates. Any final thoughts or closing remarks? No, I think, look, we're excited. Everyone who has been following the company has been waiting for clarity around dates and data. It's good to be able to give some clarity to that. We expect to update on guidance toward the end of Q4. What we're really waiting for in both of the 106 studies, which is the bispecific monoclonal antibody, is how European sites come on board for both hidradenitis suppurativa and systemic sclerosis. I think we'll know the answer to that by probably December. We'll have a good indication, and then we'll provide updates around that time. That's our current expectation. All right, looking forward to it. Thanks, Lilly. [crosstalk]Yeah, thank you, Josh. Thanks for coming.