Good morning, everyone. Thank you very much for joining us. My name is Brandon Folkes. I am one of the equity research analysts here at H.C. Wainwright. Next up, we have a fireside discussion with C onnect Biopharma, and joining me from Connect is CEO Barry Quart. Barry, thank you very much for joining me.
My pleasure.
Barry, obviously, we had the news o ut this morning. I am going to just dive straight in. I just want to take a high-level view to start. How do you view the Seabreeze asthma data relative to your expectations? Where we sit, if we were to look at the rademikibart arm in isolation, the drug appeared to act as we had expected.
Yeah. No doubt. I think that the study, from our perspective, is very successful in terms of taking us to the next stage of development. You have to remember that we are, in terms of the acute indication, going do wn a path that nobody else has gone before us. There is no guidance in terms of what data you need for approval. The FDA has not given out an a cute indication in asthma or COPD.
When we met with them, they could not give us explicit guidance in what is the endpoint, how many patients they want to see, et cetera. We had no way of powering a phase II study for FEV1 change because there is really basically no data on what happens to patients in the middle of an exac erbation, how fast does their FEV1 recover on background therapy, because these patients are aggressively treated, bronchodilators, prednisone.
How much more can we benefit? The purpose of this study was to really answer those questions. What's a useful endpoint for acute? How much benefit can we show? Therefore, how do you power a phase III study? I think we confirmed unequivocally the drug works very rapidly to improve lung function, and to improve it on top of aggressive background therapy. That was a big question because we normally present data pre-bronchodilator. Patients at a trough, they're at their lowest level of airway function. Then you give them the d rug or placebo, and lo and behold, airway improves. You've got a pretty significant amount of head space to show an improvement. Here, we're taking patients, we're maxing them out on bronchodilator, and then saying, "Okay, 20 minutes later, now do a test.
Are you breathing better because you had this drug three days ago than with just the high-dose beta-agonist that they're receiving?" We were able to demonstrate certainly at day seven, statistically significant improvement over that background therapy. I think the study was very successful from our perspective on demonstration of benefit and giving us a path way to design a phase III program. Yes, we're disappointed that the background rate of treatment failure was lower than projected, and as such, even with a 66% reduction, we missed statistical significance. Unfortunate, but I think what's important is it wouldn't have changed our path if we'd had those two or three more people on placebo with a treatment failure.
We still would not be going to the FDA with a treatment failure endpoint for an acute indication, because what's clear from our study, what's clear from ABRA is you don't see treatment failures in the first week. People are on prednisone. They're maxed out on therapy. Very difficult to see treatment failures in that first week, 10 days. That's the window that the FDA would be inte rested in in terms of acute benefit. Maybe even sooner. At the very least, you're not going beyond a week to show a benefit to get an acute indication. Treatment failure was, we thought, a smart, in retrospect, maybe not so smart, way to power the study. We had a very contemporary publication of the ABRA study exactly when we were setting this trial up. That gave us, theoretically, a perfect opportunity to power a study.
We theoretically knew what the background rate was, what kind of improvement we should show, powered the study, took a conservative approach of 50% benefit. We saw much better than that, but if you don't have enough events, it's hard to reach a stat sig. That was unfortunately the outcome that we had to describe today. But if you look at it in the perspective of in th e phase II study that was completed a few years ago, 24-week trial, we showed excellent improvement in FEV1 very rapidly, which is why we're going after an acute indication. We saw about a 63% reduction in annualized exacerbation rate. Here, we're seeing fairly similar improvement in exacerbations, and the same kind of rapid improvement in FEV1. I think it totally validates the previous observations, and now is the time to design the phase III.
We plan to meet with the FDA late this year. Hopefully, we get cale ndared in a timely fashion, and then we'll be able to move forward into phase III early next year.
Fantastic. If we do think about that placebo exac erbations and treatment failure rate, any discussion about what could have driven that low event rate in that arm? Even if you do move forward with that as a secondary endpoint, are there ways to perhaps control or sort of further differentiate on that?
Yeah. Look, we just unblinded and analyzed the top line results literally within the last few days. We have not had time to drill into it to the extent that we will over the next several weeks and months. But some of the things that clearly pop out when you look at the data are that even though we use the same entry criteria for one of the key issues would be how many exacerbations has the pati ent had in the last year. So we set it at least one. I can tell you that KOLs pushed back and said, "Don't even ask for one, because that's going to be hard." We stood by it because we wanted to match the ABRA data, and we ended up with about 1.6 in both groups in terms of exacerbations in the prior year, which is pretty good.
We now look at ABRA, and it's four to five. So it's a population of very rapid and frequent exacerbations. I think from that perspective, it's probably an anomalous outcome to see that rate of treatment failure. Easy to say in retr ospect, but I think that that rate we now know is definitely higher than what is seen normally in the real world in the U.S. We have data that it's 17%-20%. So if we were ever going to do a treatment failure study, we'd certainly have a much more realistic expectation of what we should see. We did not even see that 17%-20%, obviously. I think that has to do with a lot of factors related to the majority of patients coming out of Eastern Europe. Those patients they tend to be a little more compliant, I think, with medication.
If you use your inhaler more regularly, you take all of your pre dn isone, probably have a lower expectation of recurrence. I am sure there are other factors that we will find as we drill into the data.
Okay. If we talk about and maybe drill down on that exacerbation rate ove r the last year in the U.S. in particular, can you just talk about what gives you then confidence that the acute market remains a meaningful add ressable market from a revenue perspective?
Yeah, really excellent question because you do have to take a step back and say, "Is there a market here?" Because you had such a low background rate. Again, we think that that is probably driven by location of where patients came from in terms of Eastern Europe predominantly. We did just complete a very extensive assessment of claims data in the U.S., much mor e recent data than we previously had, so it came from 2025. It shows unquestionably there is a very important market, because you are looking at large numbers of patients. It is actually about twice as large as we earlier anticipated. In the U.S., about 1.6 million patients with high T2 profiles, so exactly our target population, went to the ED in 2025 for treatment of an acute exacerbation.
Depending on whether they were the easy to treat, kind of middle of the road or harder, were admitted to the hospital, that drove a rate of about 17%-20% of those patients coming back in 30 days afte r discharge. That turns out to be and the cost of each of those patients returning are billions of dollars in terms of cost to the economy and certainly a significant cost to the hospital.
Okay.
The goal of preventing those patients from coming back, no question is a market, and a market where there's a significant payback for using the product.
If we look at the Seabreeze data relea sed today in asthma, we look at the IV data, do you think the health economic value to the hospital and the ED has changed at all?
No. It's only gotten better as we've gotten a more contemporary, robust data set from the claims data, because this is actual patients coming in, how much the charges were, et cetera. You're looking at, on avera ge, of the 300,0 00 people who were admitted. Those patients, you're talking about $20,000 a patient in terms of cost during that 30-day period. And so you average that out across the total number of patients, a drug like what we've just demonstrated, 66% reduction of treatment failure, saves a tremendous amount of money for that hospital.
Okay. Fantastic. What do you take from today's asthma data and an y read-throughs to the Seabreeze COPD data?
Well, certainly we have a somewhat better opportunity in COPD because there's more events. I think we'll have more granularity in the COPD study in the sense that with asthma, and again, this is kind of what we expected, there were no hospitalizations for treatment failure in that 30 days. The majority of them were an ED visit or a visit to the clinic, to get another round of prednison e or additional pharmacologic treatment. With COPD, a lot of hospitalizations and ED visits. I think it'll give us a great opportunity to actually model those costs and be able to say, "Hey, here's the difference in total treatment failure, but even more important, here's the difference in really the meaningful patient who are not going to the ER, who are not going to the hospital.
When you do sit down with the FDA, with this data, what do you hope to get from that meeting and maybe, any color in terms of how receptive they have been in prior meetings to FEV1 versus treatment failure as th e endpoint?
Yeah, look, what I can say is that when we had our meeting to discuss this program, they were remarkably engaged. They readily admitted and put it in the minutes, this is a clear unmet need. These patients who've just had an exacerbation are almost universally excluded from every development program. For phase III programs, phase II, entry criteria almost always exclude patients who recently had an exacerbation. Why? Because they're likely to have another one, and nobody wants to take the risk that they have them on their dr ug because it doesn't work fast enough. They exclude those patients. The agency was very engaged. What they also admitted is we can't tell you how to design a phase III study. We've never given this indication. Go do the study you've designed. We agree with the approach. Come back and we'll agree on the path forward.
They have accepted FEV1 for approval of other products in this space. Most recently a notable, Otivari, which was approved based on an average AUC over 12 hours. Here we have a drug that once you give it and you're up by day seven, you're pegged up for the entire 28 days at that higher rate. If they came back and said, "Hey, we'd like to see an AUC rather than a single val ue," no probl em. Happy to give it to them. I see very little risk in their accepting FEV1. We would've clearly powered the study originally for FEV1, except there's no data to do that in a setting where, and this is something that's important to keep in mind, we normally use pre-bronchodilator data, and so you've got the opportunity of showing a big improvement. Post-bronchodilator, much more difficult.
You are maxed out on beta-agonist, 20 minutes a fter you use the inhaler, and now you are asking for a greater improvement over that. We made it a key secondary endpoint because we knew the FDA had interest in a more rapid onset of effect. We feel very confident they will be looking at that very positively.
Okay. Ahead of Seabreeze, you had mentioned that if both asthma and COPD read out positively, you may look to prioritize asthma, just given the data generated to date and the shorter path to market that that may allow. I f we take a step back, does today's data meet that threshold to remain consistent with that statement? Similarly, do you view today's data as being consistent in what you have seen in prior data readouts?
Well, I think I mentioned, I see it as very consistent to what we have seen. We saw a very rapid improvement in FEV1 in the prior study. A lot of that data was home spirometry. That is always much more variable. You want confirmation of that before you move into a large phase III. We now have confirmation. Very rapid onset of effect. Faster than what we certainly have seen with o ther product s. Very positive about the data that comes out of the current study, completely consistent with what we have seen in the prior study. It really allows us to check the box on was an observation that was interesting, a true observation, are we going to be able to repeat it? No issues there. Truthfully, even if COPD, we hit statistical significance in treatment failure.
Wouldn't change our mind in terms of, oh, well, we will focus on that instead, because as I said, treatment failure is not an acute endpoint. It is an endpoint that we thought we had great clarity on to power a study. We wo uld then collect the FEV1 data as a secondary endpoint to allow us to ultimately power a study. You cannot power an acute study with something where there is no events in the first week.
And if we just think about the IV push study, does that study's importance change at all in light of this data? Any learnings, anything confirmatory we can think about?
Well, I think that the value of the IV dose is just reinforced in that we're seeing very good response by day three. It'd be great to see that day three, the day seven data pushed closer to the day three data. And so an IV dose b asically cuts a day out of the response curve. And so certainly if the FDA comes back and says, "Hey, great day seven data, but for an acute indication, we want day three," certainly we know how to power that, but having the IV just gives us that much greater opportunity to see that.
Okay. That's fantastic. And then maybe just lastly from me, I know w e're almost out of time here, but what do you take from today's data in terms of the broader chronic opportunity?
I think I mentioned we're seeing clear benefit in terms of treatment failures, but in the real world, for a chronic indication, it's exacerbation. And again, small numbers, but clearly about a 60% decrease in the number of exacerbations. Very consistent with what we saw in the chronic study. So we feel very confident. A chronic study is kind of a no-brainer in te rms of how to power it, the likelihood of success. We now have two studies pointing that way. It's just a question of kind of the prioritization. And because of the unique attribute s of rademikibart, we started with the acute studies. And now that we have this data, and we meet with FDA and can get the acute going, the next step would be moving to the chronic.
Fantastic. Barry, I appreciate you making the time.
Thank you. Always a pleasure.
Likewise.