At the Citizens Life Science Conference. Excited to be joined next by Avalo Therapeutics. Avalo is a company focused on targeting immune-mediated disease. The lead program is in Hidradenitis Suppurativa, and phase two trial is ongoing now, and data expected next year.
Yep.
Welcome, Garry Neil, the CEO. Appreciate you being here and looking forward to the presentation.
Thank you. Yeah, it's really exciting to be here, even though it's... Thanks for heating up the room for me, too. It's really much appreciated. Okay, so there's the forward-looking statement slide. Read it fast. I'm Garry Neil. I'm the CEO of Avalo Therapeutics, and I have my CFO, Chris Sullivan, sitting over there. If I say anything wrong, it's definitely his fault, not mine. I'm here representing a very accomplished, very excited team just outside of Philadelphia, the Avalo Therapeutics team. We are very fortunate and, again, excited to have a very interesting compound soon to be, we think, the premier compound and treatment of choice for Hidradenitis Suppurativa, and also has broad application in a lot of other diseases. This drug is a highly, highly, highly specific, high affinity monoclonal antibody, human monoclonal antibody, of course, against the target IL-1 beta.
It has a Proof of Concept, clinical concept for the target in Hidradenitis, which was kindly provided by AbbVie with their drug, Lutikizumab, which is in phase three at the moment for this indication, as well as five others. They're investing mightily in the drug and the target. I'll point out later in the slide how we differ, and we do differ substantially from Lutikizumab, but I just wanted you to focus on the comparability of the antibodies that give us this proof of concept. IL-1 beta, but not alpha, and that's going to distinguish us. I'll get to that a little bit more later in the talk from AbbVie, is a dominant immunoregulator in many inflammatory diseases, but especially in Hidradenitis. That's based on both preclinical and biomarker evidence, as well as clinical data.
Once again, I think the key differentiation is, my friend Bob Langer frequently says, "What is our unfair competitive advantage here in this market?" It is the fact that we have a very high affinity antibody, and I'll show you why that targeting is actually a difference maker. We also have a much longer half-life than Lutikizumab, which will lead to more favorable dosing in the disease. We are in phase two. We have a clinical trial up and running called the LOTUS Trial, and things are going well. We expect top-line data next year. The HS market, for those that do not know it, is an extremely interesting market, which seems to be growing all the time. We have heard recent estimates that it may afflict as many as 2% of the US population. If so, that would make it much larger than anyone had previously suspected.
Estimates continue to grow, but at least $10 billion, and we've seen estimates larger than that by 2035. I'll explain a little bit more why we think that's right. In addition to HS, which is our lead indication, there is the potential to treat multiple immune-mediated diseases in, for example, GI and Rheumatology. We do have, and Chris has been very adamant about this, a cash runway that will allow us to get 12 months past our clinical trial. Here's the very accomplished team that I mentioned, a lot of really great drug developers and a lot of great drug development experience, many drugs growing on the market, and collectively, 200 years of experience in biotech and pharma.
The drug, so we originally, we got this drug not originally from Lilly, but it was originally developed by Lilly, as you can see, fully human IgG4, 150 milligram per mil dosage formulation, which means we can give 300 milligrams in a single injection up to 2 mil sub Q. Initial presentation will be a prefilled syringe, autoinjector, definitely in the wings. It was extensively studied by Lilly, initially in Type 2 Diabetes, and there is an inflammatory component to Type 2 Diabetes, and they did, in fact, demonstrate a reduction in A1C with the molecule, but it did not reach a sufficient therapeutic effect level to make it warranted to continue development of a biologic for that indication. However, they did demonstrate a really low dose of, in fact, they were not able to demonstrate a no effect dose.
They demonstrated effectiveness down to doses as low as 0.6 milligrams based on biomarker analysis of CRP and IL-6. It just speaks to the potency of the molecule. On the other hand, they also studied it at doses up to 180 milligrams in extended studies sub Q weekly. Looking at the Monkey Tox data, there is a very high safety margin of about 50x. Its potency and its half-life suggest that four-week dosing in HS is very feasible and quite likely longer dosing intervals in other indications or maybe even in the maintenance phase of this disease. I will not go through this at any detail, but IL-1 beta has been known for a long time. It is, after all, called IL-1 for a reason, and it is a central and very important regulator of the inflammatory process broadly in pretty much all tissue types.
Because there are other drugs on the market, its mechanism has been well validated in many different diseases, and its safety profile is also very well known, and that is a really important point for us as well. Also important, and I will get to this a little bit later on the next slide, it is an important driver of both TNF alpha and IL-17, and both of those are validated targets with drugs, big drugs growing on the market approved for HS. The HS is a terrible disease which afflicts a large number of patients, most of them being women. It is chronic, it is debilitating, and these patients, as the disease progresses, develop severe disfiguring inflammatory and pustular lesions. They actually exude malodorous pus. I am not going to sugarcoat this. It leads to scarring and disfiguration, and even more important than that, severe pain.
For these patients, it tends to manifest itself in some of the most sensitive areas of the body. One of our senior advisors describes many of these patients with advanced disease as being walking biohazards because they're exuding these lesions. This is a very, very unpleasant lesion, to say the least. Interestingly, it often takes, these patients usually present to a general practitioner. They're diagnosed as having boils or some other skin infection. They're treated with antibiotics, with lotions and potions and whatever else, which doesn't really help or only temporarily alleviates some of their symptoms. The disease tends to progress, and it's often years, and I'm talking 6 years-12 years before they're actually referred to a dermatologist who could give them more effective therapy.
You can see some of the symptoms that they present with, including, again, pain is very high on that list, along with discomfort, restricted movement, the malodorous drainage, and not surprising given this whole aggregation of symptoms, a lot of depression. By the time they get to the dermatologist, they frequently have advanced disease. There are three major stages, Hurley One, Two, and Three. Two and Three are considered moderate to severe, and most of them are presenting at that stage. As the market continues to evolve, we're seeing a tendency for better recognition, earlier referral, and more aggressive treatment earlier in the disease to prevent it from progressing to disfiguring lesions and to try to alleviate some of the suffering of these patients. Now, IL-1 beta, in basically alignment with its role elsewhere, is a key driver of the inflammatory cascade in this particular disease.
In the Pilosebaceous unit, the hair follicle of the skin, which is where the inflammatory process begins, is where you see increased levels of IL-1 beta. Gene expression is elevated well over 100-fold, 133-fold inside the lesions, making it the most common and most abundant Cytokine that's present in the lesions itself. Again, it is upstream in the inflammatory cascade of both TNF alpha and IL-17. There's also complex interplay with those two cytokines further driving the cascade towards the NLRP3 complex, which elaborates IL-1 beta. IL-1 beta levels go even higher in these patients. It drags in macrophages, which produce TNF alpha, as well as TH17 cells, which produce IL-17 and IL-23 and lead to inflammation and pus formation. We're not quite seeing the placebo on this slide. It seems to be, at least on my version, you can see it up there.
It's the light gray at the bottom. IL-1 inhibition, IL-1 alpha beta inhibition, in this case, we think really limited to IL-1 beta, by Lutikizumab has been associated with a remarkable treatment effect. These are phase two data that were presented at the American Association of Dermatology a year ago. You can compare those data to both the JAK1s, which don't seem to work quite as well, and the IL-17 class. We've not shown TNF. It's not quite as effective as the IL-17s. What's remarkable about the AbbVie data with Lutikizumab and what differentiates it from all the others, which use a similar moderate to severe population, is that AbbVie studied a population of 100% Humira failures. Humira was the standard of treatment at the time they did this study. That is a surrogate for a more severe stage of the disease.
Despite that, they had an excellent clinical response, and the drug was also very well tolerated. This prompted AbbVie to move forward with their phase three program and also invest heavily in other clinical indications. 71% of these patients, also the 100% TNF failures, but 71% were the severest stage, Hurley Stage Three, which is much worse than, for example, what we've seen with the Moon Lake data. These are very impressive. There are other data, including anakinra, an IL-1 inhibitor, which had a 70% versus 30% placebo response in the disease. There are a small series with Alaris, which is not being developed for this indication, but is another IL-1 beta inhibitor from Novartis. There is at least anecdotal and uncontrolled data showing that that drug can be effective.
We are very different than Lutikizumab in a couple of key ways. Lutikizumab is the best data set, as I've just shown you, but they have a bispecific antibody which targets both IL-1 alpha and IL-1 beta. Ours is a pure IL-1 beta antagonist. Now look at the affinity, which is in the next line. The affinity of our drug is less than 3 picomolar, whereas the AbbVie drug is 44. This is a 15-fold difference. In fact, the difference increases if the AbbVie molecule also does bind to IL-1 alpha. Also, bioavailability is much lower with the AbbVie drug versus ours, and the half-life of theirs is also much shorter than ours, which is 19 days, almost three weeks. The dosing evaluated in their study was every week or every two weeks.
They're taking the every week dose into the acute phase of treatment with their drug, whereas ours is, we believe the ideal dose will be every four weeks, and we derive that by modeling the PK from Lutikizumab. We are also studying every two weeks as a second dose to look at this. So the advantages are of 009 is much higher efficacy based on the increased affinity, the longer half-life, and the better bioavailability, but also a much more convenient dosing regimen of up to every four weeks. We do think that the IL-1 class, and I can talk more about that later, will also have a differentiated safety profile versus some of the other drugs in the class or in this disease.
Now, going back to just a little bit more data to try to convince you that IL-1 beta is a much more important target than IL-1 alpha and why you don't really want to target IL-1 alpha, you can see, and there are several studies like this. We've done some of our own as well to corroborate this. You can see IL-1 beta expression levels in the lesions of these patients versus normal skin versus Psoriasis on left IL-1 beta, and you can look at IL-1 alpha on the right. You can see that there's no increase in IL-1 alpha in HS lesions compared to control. In fact, it's probably even lower than in control tissue. Beta levels are very high, and expression levels are up to, as you can see, about six-fold higher than what is in normal in a much larger number of patients.
We know that IL-1 alpha basically functions as an alarm in the skin. It's expressed in every epithelial cell in the body, skin, lung, and GI tract. What does it do? It functions to, upon injury of the epithelial cell, turn on the NLRP3 system, which releases IL-1 beta. It's effectively the match and kindling for the inflammatory response, but it doesn't need to continue. IL-1 beta will drive the inflammatory response. In the case of an acute lesion, heals, IL-1 alpha levels go back down to normal. You don't see much IL-1 beta, and the lesion goes away. In these chronic inflammatory lesions, IL-1 beta becomes the dominant driver of inflammation. That fits teleologically and also with the observations in the skin. There's clinical data to basically bolster this as well.
If you look at the drug bermekimab on the left, it's a pure IL-1 alpha monoclonal antibody, the J&J licensed from ExBiotech. A few years ago, they did this well-controlled trial, which included a Humira control arm in it. We know that it was a good study. In this study, permecamab results were identical to placebo. There was no treatment effect whatsoever, whereas they had a positive response from Humira. You can compare that to the AbbVie Lutikizumab data that I showed you before. Clearly, J&J discontinued that program, wrote off the $650 million upfront, and gave it back to ExBiotech.
I think taken all together, we feel that this puts the issue to rest about the importance of IL-1 alpha in the treatment of this disease and probably other chronic inflammatory lesions as well, making us really want to focus on IL-1 beta. Why we think it's an advantage to have a pure IL-1 beta. The other point I want to really make is about the affinity because, well, who cares about affinity? Isn't an antibody an antibody? No. In particular, in this disease, affinity really matters. Why? Because we're targeting the HS lesions. As I showed you in those disgusting pictures earlier, this is basically a lesion of pustules, a pus under pressure. An antibody has several barriers it has to overcome to be able to get into that lesion to neutralize the target and affect healing. What are they?
The first is these patients often suffer from obesity, and adipose tissue is a sink for IgGs of all types. It does tend to end up there. You're losing a lot of the drug at that first stage. Skin is also a barrier for Monoclonal Antibodies. You only get about 11% penetration of what's left into the skin, but then you have to get it into the lesion. That very small amount of drug that's left then has to diffuse into the lesion against a pressure gradient, not just a concentration gradient. Affinity, and so these are all macromolecules. We've heard, well, this one's bigger than that one. They're all macromolecules, and diffusion into a lesion like this is difficult. You're not going to get very much drug in there.
What you do get in there, though, had better be neutralizing if you want to have a good effect. In this case, affinity actually is drawn towards the target. You will have higher concentrations, the higher the affinity in the lesion, and you will have a longer dwell time in the lesion as well. The higher concentration that will occur in the lesion, although we have not been able to, we have not demonstrated that, and we have not done those experiments, but we feel like there is a very good rationale for why the levels should be higher. The levels that you get into the lesion will then be, well, 15-fold more effective than Lutikizumab in neutralizing IL-1 beta, leading to a lower trough of IL-1 beta over a longer period of time.
Where you reach a Saturation Kinetic Point with the antibody, with a drug with a lower affinity, we expect that that saturation point will be higher with our antibody, the Effective Saturation Point. Therefore, we should achieve lower IL-1 beta level. That is why we hypothesize that we will have a better treatment effect in the lesion in this disease. This is the study we are doing. Like Moon Lake, we have done a very similar design to theirs. We made a conscious decision to move to HiSCR 75. The standard for approval up to now has been HiSCR 50, which means 50% healing of the lesion. We see the market moving more towards 75. We see the FDA following this sort of playbook that we have used in Psoriasis with moving to higher levels of efficacy over time. We wanted to use that higher standard.
Moreover, there's a more reproducible and lower placebo response when you use HiSCR 75 as the endpoint. That placebo response has been well demonstrated across many different drugs right now, between 13-18%. We think we had a better signal-to-noise ratio and a more clinically relevant endpoint. We're studying two dose regimens, one 300 mg following a 600 mg loading dose every four weeks, subQ, of course, and half that dose every two weeks, 300 mg loading dose and 150 mg every two weeks versus placebo. It's a one-to-one ratio. We're looking to enroll 180 patients. The key inclusion criteria are listed there. This is very standard compared to all other studies that have been done. The one difference for ours is we're currently targeting about 60% patients being TNF alpha failures. We're also including patients who have 17A failure as well in the study.
We're looking at, of course, HiSCR 75 as the primary endpoint, but we'll include both 50 and 90 endpoints. The IHS4, which may be a little bit more sensitive, that's what they use in Europe. The FDA wants us to use HiSCR 75. We're looking at AN count, Draining Fistula count. There's been some data out there suggesting that the IL-1 class may be more effective in healing deeper lesions, tunnels, and fistulas, and we want to take a look at that, as well as the patient's own assessment of skin pain. Again, I won't go into it today, but there's some evidence that the IL-1 beta receptor is directly associated with pain transmission, both at the lesions and at the spinal cord level. There's a possibility that we'd be able to demonstrate a faster, more superior pain relief here.
We want to take a look at that and a number of biomarkers. We expect that study is enrolling right now, doing well. We're in a number of countries targeting 100 sites around the world: U.S., Canada, Australia, European countries, and Turkey. We're expecting good data and representative data next year. We'll be able to give you a little bit more precise estimate when we've completed that as the study progresses. The market, again, the prevalence is here, it's given as 3.5 million, which would be about a 1% prevalence. It may be twice as high as that with appropriate diagnosis. The number of those that are actually diagnosed is probably less than half of the patients that really exist, and it may be a much lower proportion than that.
You have moderate to severe being a fraction of those that we know about, and only about half of those are left currently getting targeted therapy with a biologic. This is a huge opportunity. More recognition of the disease with more promotion out there, more patient awareness, earlier referral, GPs cannot and do not use biologics, referral to dermatologists and even internists that are starting to treat this, and then more aggressive treatment early on to be able to prevent the lesion from progressing. That is what is going to drive the size of this market. I think there is a lot of, personally, there is a lot of analogy to the IBD market in the way that this is evolving and its potential. These are our timelines going forward. We have been very aggressive about this.
We acquired this drug in March of last year with our merger, and within three months, I had a team that I think half of them couldn't spell Hidradenitis at the time, get an open IND with FDA, and get the regulatory process going all around the world to enrolling the first patient in October to where we are right now. I think this has been a very remarkable performance by our team. I'm very proud of that, and we'll have data next year and be able to initiate the pivotal program certainly by 2027 in HS. Thinking about other expansion areas, and again, there are many places you can go traditionally in the INI space. The big three are Dermatology, GI, and Rheumatology, and there are obviously opportunities, big opportunities for all 09 in all of those. We're seeing AbbVie exploit all three of those.
They're in six indications right now with Lutikizumab. I really have to compliment AbbVie as being the premier company in the Immunology space today. When I was with J&J , we had a great deal of respect for them. Their investment in this, I think, really tells you what they think of the indication and the size of the opportunity. They are doing HS, but they're also looking at rheumatology diseases, including Psoriatic Arthritis, which is an obvious place to go, and also in GI, where they're big players with Skyrizi. They're looking at this and also Colitis and Crohn's disease. Those are obvious opportunities for us. There are some unique ones as well in arthritis. We've seen some data in the IL-1 space documenting a very good opportunity in, for example, Crystal Arthropathy, CPPD, Calcium Pyrophosphate Deposition Disease.
Nobody's heard of it, but there are millions of patients with it in the United States, a very important cause of debilitating arthritis. That's it. Again, our executive summary, good opportunity here to be best in class in a growing market, phase two data due in 2026 from a trial that's well designed and running, big market opportunity and potential in a number of different diseases with an expected cash runway into at least 2027, 12 months beyond data. Thanks for your attention.
Yeah, let me just squeeze in a quick couple of questions. The phase two trial, you said it's capping biologically naive patients at 40%. What do you actually expect? Is there any chance to get a higher percentage of biologic failures than 60%?
That'll be challenging, I think, given the market. I mean, you could do whatever you want, but those patients are less abundant than the ones that haven't had the disease. I think in the grand scheme of things, it's not that important for us. We want to be able to have enough of those patients to be able to make sure that we are able to appropriately benefit them. I think looking at other data, it really hasn't made much of a difference. The stage of disease does seem to make a difference with the later stage patients being harder to treat, and there's a confounding there.
I know this one's looking forward a little further, but from a regulatory perspective, is there any potential for this phase two study to be considered a registrational study? You'd only need one phase three, or?
Yeah, these are conversations like every other conversation with the FDA. It depends on the data. This is a well-controlled trial, which is going to have a lot of really good data. The rhetoric that we're hearing out of Washington is they're willing to take a little bit more flexible approach. We'll certainly be having those conversations. The reg says more than one well-controlled trial. It does not say what the more than is.
The rhetoric seems to vary day by day, right?
Yeah, but I think it's going to be a definitive trial. It'll help us to design phase three at the very least.
Thank you very much, Garry.
Thank you.