Hello everyone, and welcome to the latest in this series of Fireside Chats here at H.C. Wainwright's BioConnect Conference. My name is Ram Selvaraju, and I'm a Managing Director and Senior Healthcare Equity Research Analyst within Wainwright's Equity Research Department. I'm joined here today by Chief Executive Officer Arun Swaminathan of Coya Therapeutics. Coya Therapeutics is publicly traded on the NASDAQ under the ticker symbol COYA, and we cover Coya with a buy rating and 12-month price target of $18 per share. Arun, it's a pleasure to have you with us. Coya, for those of you who are not familiar, is an emerging biotechnology company focusing on the development of highly unique proprietary regulatory T-cell-based approaches to treatment of neurological disorders, particularly neurodegenerative conditions.
Arun, perhaps it would be most appropriate to start by having you give us an overview of Coya's regulatory T-cell-focused platform and why this constitutes a paradigm-shifting approach to the treatment of neurodegenerative disease.
Yeah, no, thank you, Ram. Thanks for the opportunity to be here. Appreciate it. As you said in your introduction, Coya's primary focus is addressing neuroinflammation. We believe that neuroinflammation is fundamentally the driver of progression of all of these neurodegenerative diseases. How we address that is by addressing the regulatory T-cells. Increasing the function and suppressive numbers and suppressive function of Tregs can address neuroinflammation, altering the course of the disease. What we have seen so far in small investigator-initiated trials is that this is holding true. We're seeing stopping progression across ALS, frontotemporal dementia, as well as in Alzheimer's disease patients. How we do this is through a biologic combination approach. That is what uniquely differentiates our approach from what others are doing, is that we're using a biologic combination, a low-dose interleukin-2 proprietary, that's our Coya 301.
What the low-dose interleukin-2 does is it increases the Treg number and function, which is what we want to do. What happens with just IL-2 is that when the macro environment remains inflammatory, which happens, or pro-inflammatory, the Tregs revert back to becoming dysfunctional. We have figured out a way to solve for this problem, which is through the combination approach. Coya 302, our lead asset, uses CTLA4, which acts through the CD80/CD86 pathway, blocking the CD28 essentially, bringing down inflammation in the myeloid cells, macrophages, microglia, therefore keeping the environment anti-inflammatory. Long way of saying, we managed to increase the Treg numbers and function using the low-dose IL-2, and we keep the Tregs from becoming dysfunctional and have a sustained suppressive efficacy through the CTLA4 combination.
We do have a second product, Coya 303, which uses the same rationale, except there we combine it with GLP-1 agonists, which also have beneficial effects on Treg survival and Treg numbers as well. That in essence is kind of how we approach it. What is nice is, as I said, we have seen validation through some of the small clinical studies we have done to date, investigator-initiated trials.
Of course, it should not be lost on our audience that the components of these various combinatorial regimens that you are developing are based on very well-validated science, clearly validated targets, and are being addressed using modalities that are relatively simple and straightforward from a manufacturing perspective. You're not developing highly sophisticated, difficult-to-produce cell therapies or anything like that.
Exactly. We are intrinsically de-risked by going after IL-2 and CTLA4 that have been studied in much higher doses in other indications. We're applying it creatively to neurodegenerative diseases with a strong intellectual property around these combinations and the individual components as well.
Now, from a strategic perspective, you know, it's interesting that you are going after, for example, very niche orphan indications like amyotrophic lateral sclerosis or ALS, frontotemporal dementia, FTD, but also mass market indications within neurodegeneration like Alzheimer's. What kind of strategic optionality does this provide to the company?
Actually, it provides us great optionality. It also diversifies our risk, if you think about it. We move forward. Our focus right now is ALS and frontotemporal dementia because those are indications that allow greater regulatory flexibility, meaning the path to the market is shorter. You need to do less number of patients in the trials as opposed to Parkinson's or Alzheimer's disease, where we all know those are huge trials with a lot of patients. By taking this dual approach, we are able to maximize, I believe, the value of Coya over time. Alzheimer's and Parkinson's provides us great opportunities for strategic partnerships with larger companies where our technology and our intellectual property will allow us to be able to advance it in those programs.
Also, Coya 301 alone is well set up scientifically for combinations with some of the existing Alzheimer's disease-approved drugs like beta amyloids, but also with some of those in the pipeline like the Tau inhibitors and others. I think there's a lot of value-creating opportunity with our GLP-1 combination as well with Coya 302 in AD and PD while we create direct value right now by progressing in ALS and frontotemporal dementia, where the path to the market is much more efficient.
Of course, you know, this only serves to reinforce the fact that Coya 302 alone is a pipeline and a single product candidate. What might be, you know, in particular, the attractors for your pursuit of development in ALS and FTD in particular, and give us a sense of how you're prioritizing those?
Yeah, so Coya 302, we are prioritizing ALS. That's number one. We anticipate filing the IND end of this quarter, so not too far from now, and hopefully initiating the clinical trial soon after. That'll be a phase II-B potentially registrational trial, 120 patients, randomized double-blind. If that data is good, which we, based on the science, we fully anticipate it to be positive, I think we have a shot at an approval based on one trial based on the precedence from the FDA with Relyvrio and other ALS products. That is our number one priority right now is to advance the ALS program. Right behind it, as soon as we get that clinical trial in ALS started, we plan to submit for an IND in frontotemporal dementia as well and begin that phase II-B study early next year.
In parallel, we're doing preclinical work on the combination Coya 303 and GLP-1 in animal models. We'll have additional data that I believe will set us up really well for strategic partnerships, especially when the big EVOKE trial on GLP-1s reads out later this fall in mild Alzheimer's disease patients as a single therapy alone. We believe that our combination has a better synergistic potential there.
If we look specifically at the ALS indication, clearly that's been the focus of your partnership with Dr. Reddy's Laboratories. Dr. Reddy's, for those in our audience who don't already know, is a very well-established Indian drug maker, which historically had strengths in the development and marketing of generic pharmaceuticals, but is moving increasingly into branded drugs. Now, Arun, of course, you have a long history with Dr. Reddy's. Maybe you could give us a sense of, you know, how you historically have been involved with Dr. Reddy's in the past, how the partnership between Dr. Reddy's and Coya came together, and maybe give us a sense of how the economics of it are structured, because I believe you have some potential upcoming near-term, very, very low-risk milestones that Coya can earn.
Yeah, no, absolutely, Ram. Our relationship with Dr. Reddy's is excellent, and they've been a great strategic partner. This is a partnership that brings value to both sides. Dr. Reddy's has publicly stated that they're looking to become more innovative in their approach to biologics. They have a biologics division dedicated now that's going to launch biosimilars, but also they see a product like Coya 302 perfectly fitting that next step that Dr. Reddy's wants to take into more innovative medicines. Also important is that the CTLA4 that we use in combination is Dr. Reddy's CTLA4. The synergy is just built in there. How the relationship developed was in a way through that, through the partnership where, you know, we're bringing together two of our assets to create Coya 302, and of course, some of the existing relationships I had within the company as well.
When we approached them with the ALS partnership, it made a lot of intuitive sense to them right away because it fit their strategy. It fits our strategy because as a small biotech company, one of the primary goals I wanted to make sure is that when we launch our first indication, we already have a commercial partner and do not have that overhang where, how is this small biotech company going to commercialize this when we get the approval? We have taken that out. We have a steady partner with a strong U.S. and Europe salesforce presence that is going to help us commercialize this product. The terms of the deal, where it is a $700 million deal, we received upfronts. We have already received about $12 million or so. We anticipate receiving $8.4 million.
We are eligible and will receive $8.4 million as soon as we get the IND approved and the trial initiated. It'll be in two tranches of $4.2 million and $4.2 million, but that is pretty much automatic when those happen, and we anticipate that happening in 2025. We also have a line of sight to additional money through the approval of the process, through regulatory milestones, et cetera. Upon commercialization, we're eligible for mid-teen royalties and up to $650 million in sales milestones. It puts us in a unique place for a small biotech where we have a steady line of sight to non-dilutive money and potentially cash flow positive if we get approved in the 2027, 2028 timeframe.
Within the context of ALS, maybe a few words on the current landscape and regulatory environment, particularly in the wake of the withdrawal of Relyvrio, which clearly was granted accelerated approval, but then failed in its post-approval phase III trial. Maybe give us a sense of, you know, how that whole story has potentially impacted future clinical development in this space and if you have seen any change in the regulatory environment, particularly with respect to the stringency for approval criteria.
We have not seen any change from the FDA, at least nothing that has been communicated to us. We're still working under the assumption that, you know, if the data supports it, the FDA will be receptive to getting drugs for ALS out in the market because they've publicly said that. I think the FDA commissioner alluded to that during his confirmation process. We believe that that is not going to change. In terms of recruitment, I think that was your second question. I think it is unfortunate that Relyvrio and a few other products in part of the Healy platform trial didn't really pan out. That's unfortunate really for ALS patients.
We wish that some of them had succeeded, but it does open the recruitment up actually because we've been talking to sites and what our Chief Medical Officer has been hearing from them is a lot of enthusiasm because there aren't many ongoing ALS trials today. Actually, I would argue that it's the other way around. If anything, I think we're going to have, I don't want to use the word easy, but an easier time recruiting ALS patients than perhaps even a year ago.
You know, based on your comments, I think, you know, what seems to be the take home is that despite the changes that have been widely publicized at the agency, those do not appear to have had any meaningful repercussions for Coya. You do not see any qualitative difference in your interactions with the agency, you know, now versus, say, three months ago.
No, we have seen no difference. Our interactions have always been extremely constructive and positive. Of course, our team, we keep an eye on, you know, any changes, so on, but we have not yet experienced or seen anything that gives us pause or concern.
Maybe a few words on the recent biomarker data analysis that you presented in frontotemporal dementia. Give us a sense of what specific biomarkers we're talking about. You know, you saw some statistical significance on these signals. Maybe contextualize this for us in terms of how clinically meaningful that is and how that's likely to inform your future clinical development plans for 302 and FTD.
Yeah, so what we saw in FTD, Ram, again, was what thrilled us is that it's so consistent with what we saw in ALS. What we saw is Treg numbers and functions improved statistically and stay improved to my previous point of keeping the Tregs durable and suppressive function sustained. We were able to demonstrate that in frontotemporal dementia patients as well. The cognitive markers, whether it's a CDR, FTLD, the Montreal Cognitive Assessment Scale, or the PASS, which is another scale of cognitive function, all of them were stable. What it told us is that we're seeing again what we saw in ALS, which is the Treg numbers are going up, Treg function goes up, biomarkers like oxidative stress markers, NfL all moving in the right direction, and then all of that translates to stabilization of the disease.
That's exactly what we saw in frontotemporal dementia as well. We are still recruiting more patients in the trial. Once all the patients are recruited, we will look at the data and that'll inform any revisions to our phase II-B protocol. What this data gives us immense confidence in is two areas. One is moving forward with FTD, and two, this actually increases my confidence and our confidence in our success in ALS as well, because there's this consistent connection to our mechanism. We can kind of put a direct line between our mechanism and the efficacy.
So, you know, I did want to touch upon Alzheimer's disease because clearly that's kind of the white whale in neurodegeneration. It is widely characterized as a neuroinflammatory condition, and the current treatment landscape remains very sparse. You've got symptomatic therapies, the cholinesterase inhibitors, and you've got a few of these anti-amyloid antibodies that are heavily hamstrung by their well-documented safety issues, amyloid-related imaging abnormalities, which can lead to microhemorrhages in the brain and edema and so on, as well as the marginal efficacy that's been seen with these approaches in clinical studies. The field still appears pretty wide open. And when we think about, you know, the demographic impact of this disease in aging populations across multiple developed nations, it's nothing short of an epidemic.
You know, there's going to be millions, if not tens of millions of Alzheimer's sufferers in the future for whom currently there is no meaningful therapeutic intervention available. In this context, you know, what do you think is the opportunity for a company like Coya developing, as it were, a completely unique modality in Alzheimer's, you know, something very, very different from what anybody else is trying?
No, I think you summarized it pretty well. The choices today are not sufficient. Where we differentiate is I think people are starting to recognize that neuroinflammation is a driver of Alzheimer's disease, and we are addressing neuroinflammation at the root cause, unlike the beta-amyloids that are addressing what has already happened, which is the plaques have been formed. We believe that sets us up well for multiple ways. One, on our own, as just the modality has a lot of potential to work. In a small investigator-initiated trial with the low-dose interleukin-2 alone, we also saw biomarkers like Aβ42 go up in the cerebrospinal fluid, indicating that we also do remove plaque. That's not our primary mechanism, which is actually a good thing because we are not removing plaques so fast like beta-amyloids where we have to worry about ARIA.
Destabilize the cytoarchitecture and so on.
Exactly. I think we have the best of both worlds is what I'd say. The fact that we're addressing the fire at its source, neuroinflammation, allows us immense combination potential. For example, I can envision combining it with a beta-amyloid, reducing the beta-amyloid dose as perhaps an example to reduce the toxicities associated with the beta-amyloids and complement the efficacy. That could be a path. I think it allows us to do combinations as well as advancing Coya 303, which is our GLP-1 combination, which I'm extremely excited about because I think in Alzheimer's disease that has great potential to be transformative.
In terms of future clinical development, you know, based on what you have seen so far, you know, give us a sense of how that's going to be informed by the clinical trial results that have already been generated with 302, and then maybe also tell us a little bit about what you expect to be the most relevant functional outcome measures in putative future clinical development for both 302 and 303. You know, as an example, you know, many in our audience may be familiar with outcome measures like the MMSE or ADAS-Cog or CDR, some of boxes, which you, you know, we kind of mentioned in passing, but maybe it would be helpful to elucidate what you think are likely to be the most relevant outcome measures as you look at 302 and 303 in AD.
Yeah. I'll first talk specific to 302 and 303. Some of the relevant markers will always be for us Treg function and Treg numbers because that is a marker that the combination is working. With GLP-1s, we have demonstrated that the combination does a better job of keeping Tregs alive. The survival of Tregs improves better than the individual component. There is a synergistic component. Same way with 302, we have shown that with CTLA4, we can keep the Tregs functional longer. That will always be an important unique measure to measure our mechanism. We'll obviously look at things like Aβ42s and the ratios. All of that is going to be important. At the end of it, I think in Alzheimer's disease, the clinical outcomes that are going to matter are the ones you said, which are the cognitive scales, whether it's ADAS-Cog, CDR, some of boxes.
I think the FDA has certain preferences that at the end of it, measuring change in cognition or improvement or stabilization in cognition is the ultimate clinical goal. I think that will be the primary endpoint in all the Alzheimer's disease trials.
Do you have any thoughts on, you know, the specific Alzheimer's subpopulations that are most likely to benefit from intervention of this kind? You know, is it more likely to have impact in mild to moderate, for example?
Yes, that is one of the unique things we have generated so far is all our data is in mild to moderate Alzheimer's disease as opposed to only mild Alzheimer's disease patients, which is what most of the AD trials are. We believe that we can work also in a slightly more advanced Alzheimer's disease patients, the moderate. I think our broad target will be mild to moderate. Are there some other biomarkers that we will use as screening criteria? Perhaps, but we have not yet, you know, like we're still discussing those and trying to finalize it. We'll obviously discuss with the regulatory bodies at the right time as well.
Maybe you can describe your investigational regulatory T-cell derived exosome platform, which is intended for the treatment of systemic and neurodegenerative diseases driven by chronic neuroinflammation and how that dovetails with your plans for 302 and 303.
Yeah, no, our exosome program complements what we're doing with 302 and 303. It is again targeting Tregs. What is unique about Treg exosomes is they're end-stage differentiated, right? What that means is that they are less likely to revert to becoming dysfunctional, unlike Tregs in an inflammatory environment. That is a huge advantage of the Treg exosomes. Now we achieve the same by using our biologic combination, but Treg exosomes intrinsically, because they are end-stage differentiated, will not revert back or are unlikely to revert back. That is a big advantage we have. They have been shown in preclinical studies that we decrease inflammation and decrease all the neuroinflammatory markers pretty well. They have huge potential. Our next step there is, you know, we have done work to scale it up.
We're continuing work to scale it up, and we think that that can be very complementary to both our 302 and 303 programs moving forward.
Now let's talk a little bit about corporate strategy in the current market environment. You know, this is something that I think is becoming top of mind for more and more executives these days, particularly in biopharma. How are you at Coya thinking about all of this and how to position the company most optimally?
Yeah, no, for Coya, I think our core is to stay focused on executing what we are doing, which is to get this ALS filing and get the ALS study started. I think that's going to be our most immediate near-term value driver. Continue to generate data like in frontotemporal dementia, which we expect to have more in the second half. Continue to generate biomarker and preclinical data in Alzheimer's disease and in Parkinson's that continue to validate our mechanism. I think that will build a strong value story, and the potential of the GLP combination is going to be immense.
From a corporate perspective, I believe we are well poised to continue to grow value, and then we could have a few hockey stick moments in there through strategic partnerships or other things that I think will allow us to build our corporate strategy in this tough capital market environment. Also, our partnership with Dr. Reddy's puts us in a position of strength, unlike many other companies that are our peers with market cap similar to us. We have a strategic partner that we can lean on that also helps us a lot. Our strategy is to stay focused on neurodegenerative diseases for now, be opportunistic about autoimmune and other diseases only through strategic partnerships. Drive value through neurodegeneration, opportunistic value through partnerships outside of the neurodegenerative space, and drive value through our strategic partnership with Dr. Reddy's as well.
So, you know, for our audience, just later this year, clearly we see in the near term the IND submission for Coya 302 in ALS, the potential start of that phase II-B trial in ALS, both of which are associated with the payment of those $4.2 million milestones from Dr. Reddy's. Then, of course, you have the IND submission in frontotemporal dementia and potential initiation of that proof of concept study. You have other preclinical data coming with the exosome platform, as well as biomarker data for both 302 and 303. Clearly a lot going on at Coya Therapeutics. I want to thank our audience for their attention. Arun, thank you so much for coming to our conference, for participating. It's really been a pleasure having you talk through the company with us, and very much look forward to the next set of catalysts. Thank you very much.
Thank you. Thank you, Arun, for giving us the opportunity to be here. Appreciate it, and thank you to the audience.
Thanks for.