As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Caitlin Lowie, Vice President of Investor Relations and Communications. Thank you. You may begin.
Good morning, and thank you for joining Satellos Bioscience's Investor and Analyst Conference Call. Today, we will provide a clinical and regulatory update on our phase II BASECAMP study of forazapadin in boys living with Duchenne Muscular Dystrophy, or DMD. Joining me today are Frank Gleeson, Satellos' Co-founder and Chief Executive Officer, who will open the call with welcoming remarks, Dr. Wildon Farwell, our Chief Medical Officer, who will lead our clinical and regulatory discussion, and Elizabeth Williams, our Chief Financial Officer, who will join us for the question-and-answer portion of the call. Before we begin, I'd like to remind you that today's call contains forward-looking statements within the meaning of applicable securities laws, including statements about our clinical development plans, expected readouts and enrollment, the potential effects of forazapadin, and potential accelerated approval pathway.
These statements are based on assumptions of management that Satellos believes to be reasonable in the circumstances and invoke risks and uncertainties that could cause actual results to differ materially from those expressed and/or implied by these statements. Given these risks and uncertainties, listeners should not place undue reliance on these statements. Please refer to risk factor section of our annual information form dated March 27, 2026, and in our other public filings on SEDAR and EDGAR. Any forward-looking statements represent our views as of today, November 6, 2026, and Satellos assumes no obligation to update or revise them to reflect new information, future events, or otherwise, except as required by applicable law. I will now turn the call over to Frank. Frank?
Thank you, Caitlin, and good morning, everyone. This is such an exciting moment for Satellos, and we're so pleased to be able to share a strategic update today concerning the clinical and regulatory development of forazapadin. We have recently had a Type C interaction with the FDA. As a result, we are choosing to advance our clinical strategy built around MRI-measured muscle fat fraction as the primary endpoint in BASECAMP. We have selected fat fraction alongside safety and tolerability, as we believe it is an objective and potentially clinically meaningful measure of forazapadin's effect in Duchenne, with the potential to provide a path to accelerated approval, subject, of course, to further BASECAMP data and regulatory review. Importantly, we believe fat fraction may help to assess what forazapadin is designed to do, namely enhance the body's ability to repair and regenerate muscle.
In TRAILHEAD, for example, treated adults showed a decline in fat fraction alongside encouraging functional findings, supporting further evaluation of the potential of forazapadin to restore muscle. Wildon will now explain why fat fraction matters for boys living with Duchenne, the evidence supporting its use, and how we plan to evaluate the 12-week top-line data. Wildon, over to you.
Thank you, Frank. Fat fraction is an endpoint that is highly meaningful in Duchenne muscular dystrophy. It has been evaluated in many different natural history studies and used in several different clinical trials. It demonstrates what is actually happening in the muscle. As muscle is damaged and replaced by fat fraction increases, and this change can be detected by MRI. For clinical trials of forazapadin, we believe fat fraction will provide an objective and reproducible way to assess whether participants are preserving or improving muscle composition, which may then translate into clinical benefit. Based on a strong scientific rationale and our recent Type C interaction with the FDA, we have selected change in vastus lateralis fat fraction as the primary efficacy endpoint in BASECAMP. Let me now provide some context around why change in fat fraction matters for people living with Duchenne.
Natural history data shows that fat fraction is higher in people living with Duchenne than age-matched controls, and fat fraction worsens with both age and disease progression, especially in boys seven, eight, and nine years of age, the population enrolled in BASECAMP. Importantly, natural history also suggests to us that worsening fat fraction can be detected before worsening function. Therefore, it may be a leading indicator of subsequent functional decline. Stabilizing or reducing fat fraction relative to placebo could provide evidence that forazapadin is not only changing the underlying course of the disease in muscle, but may also be able to change the course of clinical progression of the disease. This potential correlation between fat fraction and clinical function may support a potential path to accelerated approval, subject to the totality of the data and further regulatory review.
Increasing or worsening fat fraction is not simply a finding on imaging. It is a result of what happens biologically as Duchenne progresses and muscle regeneration is no longer able to keep up with muscle damage. As fat fraction increases in natural history studies, boys experience worsening timed function tests and NSAA scores. A more rapid increase in fat fraction is also associated with an earlier loss of ambulation. That connection is important. Fat fraction provides an objective measure of what may be happening in the muscle and a leading indicator of the subsequent functional decline. That brings us to the clinical evidence we have already generated with forazapadin.
TRAILHEAD provides important preliminary support for the strategy of linking changes in fat fraction with function, as we have already demonstrated that forazapadin may lower or improve muscle fat fraction in adults living with Duchenne, and this decline in fat fraction may translate into clinical benefit. In July, we reported that the four adults enrolled in TRAILHEAD demonstrated a decline or improvement in the mean biceps brachii fat fraction from 49.7% - 46% after five months of treatment in TRAILHEAD, an absolute reduction of 3.7 percentage points. In addition, we saw a decline in fat fraction in each of the four participants. This is notable in a progressive disease like DMD, where the natural history consistently demonstrates an increase in fat fraction over time among all people living with the disease.
The reduction in fat fraction was accompanied by an increased upper limb total effort, maintenance of previously reported improvement in hand grip strength, and generally stable upper extremity function after six months of total exposure to forazapadin. TRAILHEAD is an open-label study with a small number of adults that was not designed to establish efficacy. Even so, the consistency between improved muscle fat fraction and encouraging functional results supports our rationale for evaluating change in fat fraction as an appropriate endpoint for forazapadin with potential clinical relevance to people living with Duchenne. Given the fact that boys living with Duchenne also have elevated fat fraction in muscles such as the vastus lateralis that have been associated with clinical function, we believe there may be an even greater opportunity to observe a treatment effect on fat fraction and correlate that to function in BASECAMP participants.
BASECAMP is designed with a 12-week placebo control period, which we believe provides a reasonable period of time to evaluate muscle fat fraction. In healthy muscle, degeneration after an injury begins within a period of weeks and is largely complete within approximately one month. Our preclinical studies demonstrated biologic response to forazapadin in muscle over relatively short periods. In our phase I-B study, we observed change in hand grip strength after 28 days. Natural history data show that fat fraction in the vastus lateralis can measurably increase within three months in boys with Duchenne. In boys who already have a fat fraction of 10%-40%, it can rise by approximately 10% per year. This supports our rationale for evaluating whether BASECAMP can distinguish the expected progression on placebo from a potential effect with forazapadin.
At 12 weeks, we will look for a favorable difference between forazapadin and placebo in MRI fat fraction. Stability or a reduction in fat fraction among treated participants compared with an increase among placebo could provide evidence of biologic activity and, in our view, be reasonably likely to predict clinical benefit over time. At the time of this analysis, we plan to also evaluate data for safety and tolerability, function, and biomarkers in BASECAMP. Let me turn now to the regulatory implications of this endpoint. Based on our recent Type C interaction with the FDA, we believe positive MRI fat fraction data that correlates to clinical function may support accelerated approval. Trials of other disease-modifying therapies for Duchenne have shown slower accumulation of muscle fat fraction relative to placebo. To our knowledge, none has demonstrated a reduction in fat fraction compared to placebo.
BASECAMP gives us the opportunity to evaluate not only whether the disease process can be slowed with forazapadin, but also whether muscle composition can be stabilized or even improved, and whether this change in muscle composition can lead to clinical benefit for people living with Duchenne. This distinction matters. Our objective in BASECAMP is to evaluate whether forazapadin not only changes the trajectory of muscle loss, but whether enhanced muscle regeneration can improve muscle function. Let me now turn to the amended BASECAMP study. A planned readout in the first quarter of 2027 is expected to center on the complete 12-week randomized placebo control comparison of vastus lateralis fat fraction, together with safety and tolerability results. The analysis is expected to include all randomized participants and allow us to assess both the 60 and 120 milligram treatment arms.
We also plan to report available data for timed function tests, strength, and biomarkers to evaluate whether the overall findings are directionally consistent with the MRI results. Furthermore, we plan to share six-month data from participants who have reached that milestone, giving us an early assessment of the durability of forazapadin's effect and longer-term safety profile. Our focus now is execution, completing the 12-week placebo-controlled portion of BASECAMP, delivering the planned top-line data in the first quarter of 2027, and continuing our regulatory engagement around the potential accelerated approval pathway. With that, I will now turn the call back to Frank.
Thank you, Wildon. We are very encouraged by today's update. We have outlined our path toward a potential accelerated approval of forazapadin and are confident that fat fraction may be an objective measure that can demonstrate forazapadin's ability to help repair and regenerate muscle. We believe our recent interactions with the FDA have further informed this strategy. We remain on track for the planned BASECAMP top-line readout in the first quarter of 2027 for all participants, with the overlapping six-month follow-up data available at that time. This will provide an early view of durability, we believe. We are moving with urgency because people living with Duchenne are waiting, and our objective is to advance forazapadin toward them as quickly and responsibly as possible. In closing, we wish to thank the participants, families, investigators, clinical teams, and our employees and our shareholders for their continued support.
At this point, we will turn the call over to the operator for Q&A. Thank you very much.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. The first question is from Joseph Schwartz from Leerink Partners. Please go ahead.
Hi. Thanks, and congrats on the update. I was wondering if you could talk about how BASECAMP is powered to demonstrate a difference in fat fraction versus placebo at 12 weeks. What do you think baseline levels and the natural history progression in seven to nine-year-olds over 12 weeks looks like for the types of patients you've enrolled, and how much separation is realistic, do you think?
Great kickoff question, Joe. Thank you for that. I'm going to ask Wildon to take that. Wildon?
Yeah. Thanks, Frank. Joe, we believe that we have power within the BASECAMP study to see an effect of forazapadin against placebo on fat fraction. This is based upon what we have observed in the natural history, where even at three months, we begin to see that patients in the age range and characteristics similar to BASECAMP are already having an increase in fat fraction. Over the course of the year, that increase may be around 10%. In a three-month period of time, that increase may be 1%-3%. In the TRAILHEAD study, what we saw was a decline in fat fraction in all four participants, with a mean decline of 3.7%. That was in the biceps brachii. We'll be looking at the vastus lateralis. When we presented this all to the agency, they agreed that fat fraction could serve as a reasonably likely predictor of efficacy.
We now believe we have the power within BASECAMP to show this type of effect, and the trial has overall been designed to allow us to make correlations between change in fat fraction and potential clinical efficacy as measured by timed function tests and other efficacy assessments.
Thanks. Just as a follow-up, can you talk a little bit more about how fat fraction is measured? I see you have 18 sites in seven countries, so are you standardizing the scanners and the protocols? Is the reading central and blinded? How are you reporting whether the shift is being, a re you reporting that the shift is controlled for water signals or edema? Will you also be reporting any biopsy Regenerative Index data alongside fat fraction?
Joe, we will have the Regenerative Index data in addition to the MRI fat fraction. For BASECAMP, we are collecting the muscle biopsy, the biceps muscle. We will be able to look and see whether the Regenerative Index has increased in participants who have received forazapadin. You may recall in our preclinical study of dogs with Duchenne, we saw a very significant increase in the Regenerative Index, so we will be evaluating that as part of BASECAMP as well. As far as the specifics around how fat fraction is measured, we are using a standard protocol across the different clinical trial sites. We are using a central reader. Each of the sites had to be evaluated, and each of the scans had to be confirmed with that central reader. It is a standard assessment using the Dixon imaging criteria. This is a very well recognized approach.
This is the same method that has been used in natural history studies to evaluate the fat fraction. We will be controlling for water. We will be able to have a consistent evaluation across the clinical trial sites. Again, as you said, we have many sites in the U.S., Canada, Europe, Australia, all of which have been unified in their approach to how the scans are performed, and the central reader will then review those and provide a blinded result to us.
Thanks for taking my questions.
The next question is from Kostas Biliouris from Oppenheimer & Co. Please go ahead.
Thanks for taking our question, and congrats on the update. Great to see that. A couple of questions from us. The first one, how do changes in the fat fraction in biceps correlate with changes in vastus lateralis? You showed 3.7% decrease in biceps. How should we be thinking about the change in vastus lateralis? The second question is on the regulatory update for a potential accelerated approval. Did FDA comment on what would like to see in the other endpoints for a potential approval? Is it just trends, or they would like to see some tangible improvement there? Thank you, and congrats again.
Great. Thank you, Kostas. Thank you for the good wishes and the significant questions. Wildon, it is really your show this morning, it seems like, so please go ahead.
Kostas, as you said, we saw a very clear reduction in fat fraction in the TRAILHEAD study when we evaluated the biceps brachii. That is the muscle in the upper arm. It is a relevant muscle in adults living with Duchenne, as they are very dependent upon strength and function in their upper arms. In BASECAMP, we will be evaluating the vastus lateralis muscle, which is a muscle in the thigh, which again, is very relevant in a younger pediatric population where they still have ambulation, and this muscle has been shown to correlate with levels of ambulation. What we know is that in people living with Duchenne, in all of their muscles, there is an increase in fat fraction over time. The rate at which fat fraction may increase, the time at which that increase may begin, can vary based upon where that person is in their disease.
We know that when fat fraction increases more rapidly, then that person is at higher risk for losing milestones, losing function. What we believe is the improvement that we saw in fat fraction in the biceps in people enrolled in TRAILHEAD gives us confidence that we have the opportunity in BASECAMP to see a stabilization or improvement in fat fraction in the vastus lateralis as well. What the agency told us was that if we can see that difference compared to placebo and then correlate that change in fat fraction with clinical endpoints, that could be a path to accelerated approval. The discussion on correlation was a general discussion. It was not a specific degree of change. Rather, it was a statement that the totality of the data would be considered and that the correlation would be evaluated across multiple different endpoints.
This analysis has been incorporated into how we are planning to evaluate the BASECAMP data, and so we look forward to having that data in the first quarter of next year.
Thank you.
The next question is from Yanni Souroutzidis from Cantor. Please go ahead.
Hey, folks. Great to see the update today and further alignment with the FDA. I guess two quick ones for me. One, coming back a little bit to the powering topic. Obviously, the natural history here is pretty well characterized, and so curious, I mean, from our analyses, it looks like you need to show roughly a 1.3% delta, thereabouts. Just curious if that triangulates with what you'd be expecting as a kind of a rough requirement for achieving statistical significance. Then kind of orthogonally, Lexicon's pilavapadin has been showing some interest in obesity data recently from the earnings and granted that that's a longer-acting compound. Curious if you've seen any signs of weight loss from the TRAILHEAD patients or any other evidence that could maybe influence MRI fat fraction.
Great. Thanks, Yanni. Appreciate you. Wildon, I think you should just take the questions from here and save me handing them over to you.
Okay. Yanni, I think the range of difference that you're describing is consistent with how we are also thinking about fat fraction. I think if we can see that degree of difference or more, that that would allow us to show statistical significance, and that would be clinically meaningful for patients. We believe that would translate into clinical benefit over time. Again, BASECAMP has been designed to evaluate fat fraction as well as the different clinical assessments. As far as whether we're seeing any changes in weight in the TRAILHEAD study, we have not seen any meaningful, consistent changes in weight. We've not seen any aspects that would impair our ability to assess fat fraction or would influence the results that we're seeing on the MRI evaluation of fat fraction.
We believe that the data we have generated thus far is applicable, and we are looking forward to having 12-month data on each of the four participants from TRAILHEAD later this year. That will give us the opportunity to see whether the improvement in fat fraction that we initially saw after five months of dosing in TRAILHEAD, whether that improvement continues and becomes even greater or stabilizes, or how that changes with more time on drug.
Understood. Thanks so much, and congrats again.
The next question is from Arthur He from H.C. Wainwright. Please go ahead.
Hey, good morning, Frank and team. Congrats on the progress. I guess the first question from me is, what is the baseline fat fraction across the BASECAMP patients, and how should we think about the stratification upon the primary endpoint change here?
Yeah, thanks, Arthur, for that question. The analyses of fat fraction is still ongoing. We have not performed any of those analyses across the entire dataset, so we don't have an overall baseline fat fraction to be able to share. What we believe from the natural history is that a population consistent with BASECAMP would have a fat fraction anywhere between 10% and 20%. What the natural history then says is that it's expected that boys with that level of fat fraction would typically increase in fat fraction by approximately 10% per year. We believe that then gives us an opportunity within BASECAMP to potentially see a difference among boys receiving forazapadin versus placebo. Again, we'll have complete visibility into the data at the end of Q1 next year.
Thanks, Wildon. Just a follow-up. During the meeting with the FDA, did they comment on the size of the BASECAMP is sufficient for potential FDA approval, assuming the fat fraction data and the correlated clinical data will be positive?
In the discussion with the FDA, it centered around the background data supporting fat fraction as an endpoint, whether results in fat fraction could then correlate to clinical function, and how the analyses of that dataset would need to demonstrate the improvement in fat fraction compared to placebo, as well as correlation with clinical function assessments. There was no expressed concern on the size of BASECAMP or how the study was conducted. It was really centered around fat fraction as an endpoint and how data from that endpoint could then correlate with clinical function to support accelerated approval.
I see. That's very helpful. Thank you, and congrats again.
The next question is from Francois Brisebois from LifeSci Capital. Please go ahead.
Thanks for the question. I was just wondering, when you talk about the natural history progression, about 10% on fat fraction per year, is that more of a children thing? Is it smaller in adults? Just to hit on that change with natural history, how much variability is there in that? I am just trying to figure out the heterogeneity just based on the disease here and how stable and confident we feel about that age at 10%.
Yeah, thanks for the question, Frank. There is variability on the rate of progression of fat fraction muscle to muscle and person to person. There is data that we reported with the TRAILHEAD release in July. For the biceps, the annual progression is about 6% per year. For vastus lateralis, it is about 10% per year once kids get to that 10% level. Not every kid is going to have the same rate of progression. There may be some kids who have higher increase, and there may be some kids that have a slower increase. What is very consistent in the natural history, and it is consistent across muscle, is that people living with Duchenne do not have a decline in fat fraction.
If we are able to see participants decline in fat fraction, and if the participants on placebo stable or worsen in fat fraction, that gives us a very clear differentiation from the natural history, and we believe that can then correlate to clinical benefit for people living with Duchenne.
Just to touch on that quickly, just when you mentioned that on placebo they can stabilize, is there also a scenario where on drug it can stabilize the fat fraction, but we know that patients with Duchenne always increase, so you can get your P-value that way as well? Would stabilization there be enough, or is it more we hope to see a decline and the placebo can stabilize?
This is where we're going to be looking at the mean in the population on placebo versus the mean on the population treated, because the natural history for some participants without forazapadin may be that they have a slow increase. Over a three-month period of time, their natural history may be that they would have only increased by a very small percent. But in that person, if they receive forazapadin, they may have a decline in fat fraction. This is where it will be important for us to see what is the mean change in participants on placebo versus the mean change among participants on drug, and see if that difference is statistically significant and how that then correlates to change in function over time.
Perfect. Thank you very much. Appreciate it.
The next question is from Adam Vogel from Craig-Hallum. Please go ahead.
Great. Thank you. Congrats, everyone, on a positive update here. I guess just to continue on that conversation on the placebo-adjusted fat fraction, has the FDA indicated whether statistical significance is required here, or would slowing fat fraction be sufficient? Then maybe just on filing requirements, beyond the positive 12-week MRI data, what additional follow-up would be required before filing, and what could set the timeline for a potential launch in the U.S.? Thanks.
Thanks for the question. We believe that BASECAMP has been designed to allow us to evaluate for a statistically significant difference on MRI fat fraction. In a condition like Duchenne, given our novel mechanism of action, we believe there is a lot of regulatory flexibility. If we are able to show statistically significant difference on fat fraction and correlate that to clinical function, that provides the clearest path to accelerated approval, in our opinion. We believe all of the components that are necessary for that are within the BASECAMP study, and we will also have additional follow-up. As BASECAMP was designed for a 12-week placebo control, there is also a long-term extension where all participants will be on drug.
At the time that we evaluate that 12-week placebo control period, a sizable number of participants will also have six-month data and even longer follow-up, so that any potential trends or signals in that 12-week period, we can also evaluate with more time on drug to see how that further progresses, to see if the effect is durable, and see what the overall long-term safety profile for forazapadin is.
Thank you.
The next question is from Debjit Chattopadhyay from Guggenheim Securities. Please go ahead.
Hey, good morning, and thank you for taking my questions. Is there an expectation for better response in ambulant patients with higher muscle mass? I have a couple of other follow-ups.
Hi, Debjit. We certainly believe that there is the opportunity for a greater response in ambulant patients with more muscle mass. We began to see that in the CL-101 study, so the first phase I study that Satellos conducted, where the participants that had improvement in hand grip strength. Those participants who had greater improvement were participants with a higher baseline creatinine, so more muscle mass was correlating to greater improvement in hand grip strength. We believe that could also be present in BASECAMP, where we know the kids have more muscle mass than do the adults, so we believe it is very possible that these kids may be able to have an even greater clinical response to forazapadin.
Got it. Given that the alignment with the FDA is post-enrollment, do you think the baseline is enriched adequately for the right patient population?
The natural history is pretty clear that all of the people living with Duchenne, in particular boys in the age range of seven, eight, nine, who would qualify for BASECAMP, have elevated fat fraction compared to non-disease controls. Again, the natural history is pretty clear that the fat fraction really only moves one direction over time. The rate of how it worsens may vary depending upon the person, but we do believe that BASECAMP, the population in BASECAMP gives us the opportunity to see a change in fat fraction with forazapadin, as well as to see whether that change in fat fraction can correlate to clinical function.
Got it. With respect to the functional endpoint, has the FDA specified which functional endpoint you need to correlate with the decrease or stabilization in fat fraction?
The FDA spoke again to a totality of data that there would be a benefit in being able to show correlation across the clinical function. How we are evaluating the BASECAMP data, we have the opportunity to evaluate stride velocity, 95th percentile. As many people know, this is becoming a very increasingly recognized endpoint in Duchenne as well as other muscle diseases. It is recognized as a primary endpoint in Europe. We will be evaluating stride velocity. We will also be evaluating time to rise. This is another time function test that has been utilized in many other interactions with the agency, as well as four-stair climb. This was an endpoint that was a part of the givinostat filing, and the agency is also very familiar with that. I want to also point out that we are not walking away from dynamometry.
Dynamometry was also recognized by the FDA as an important clinical endpoint, and so we will continue to evaluate dynamometry. That is still a very important endpoint in the BASECAMP study. We believe we have a number of opportunities to evaluate the totality of data showing potential correlation between change in fat fraction and change in clinical function.
Got it. One last question. How important is it to show a dose response? Thank you for taking my questions.
We have designed BASECAMP to evaluate both the 60 milligram as well as the 120 milligram dose. We believe both dose levels allow us to achieve a concentration that would be therapeutic. For Satellos, we want the opportunity to bring as much benefit to patients as possible with a very reasonable safety profile. We will be evaluating the 60 milligram and the 120 milligram, first to see if there is any difference in the safety profile between the two dose regimens, but then to see if there is any difference in effect on MRI fat fraction, if there is any effect on clinical function. If we see that one dose level has a greater response, then we may decide to pursue that dose level.
But in order for us to be successful, we just have to show that forazapadin compared to placebo has a meaningful effect on MRI fat fraction, and BASECAMP has been designed to evaluate that.
Thank you, and looking forward to a potential breakthrough in DMD.
Thank you.
This concludes the question-and-answer session. I would like to turn the floor back over to Frank Gleeson for closing comments.
Thank you. And thank you, everybody on the call, for your interest in Satellos and for your questions. I would like to make a comment to just follow up quickly on a question that I think Adam asked about our intentions moving forward. Our goal is, of course, to make sure we do everything possible to understand and analyze our data as rigorously as possible before we wish to present to the FDA. We will be providing guidance in Q1 when we are in a position to share data about our intentions for what that means in terms of filing moving forward and what that means in terms of our thinking about commercialization of this drug. These are topics that are very much on our minds.
We have heard the expression many times in this disease area that time is muscle, and we intend to move as rapidly, as rigorously, and as carefully, while moving quickly as we possibly can to get this drug to as many people as possible, as fast as possible. So again, thank you so much for your interest in Satellos, for your really penetrating and thoughtful questions, and we appreciate all of you and engaging with you. Thank you very much.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.