Hey, everyone. Good afternoon now, I guess, on the East Coast side. Appreciate you joining us for the next fireside chat with Equillium, CSO Stephen Connelly to walk us through the story here. Maybe I'll kick it over to Stephen to give a brief overview of Equillium, and then we'll get into a Q&A.
Stephen, over to you.
Yeah. Well, thanks for everybody to join. Thanks, Alex, for hosting this, and Steve, of course, for throwing the event on. Just very quickly, Equillium is a company that was founded back in 2017, went public in 2018, and it's historically really focused on novel mechanisms of actions which can really bring benefit to patients, in areas of high unmet medical need, be that rare or common diseases. Our latest two programs, the EQ504, which is an oral aryl hydrocarbon receptor that's being formulated for colonic delivery. But then we also are working on a lung formulation, an inhaled formulation for a variety of fibrotic or inflammatory lung diseases.
We also have EQ302, which is an oral peptide that inhibits both IL-15 and 21, which we'll be developing for celiac disease, but of course, there are a number of other potential indications where IL-15 and/or IL-21 could be really important. As we stand here today, we're well-capitalized for those programs in terms of the development, namely a phase I study for EQ504 that's initiating here within Q4, and we'll have data within six months of that. Then we'll be working on lung formulations and IND-enabling for a potential lung program, as well as IND-enabling and scale-up manufacturing activities for EQ302. So a lot of activities ongoing. We're really, really excited about those programs, in terms of the value they can bring to patients.
With that, Alex, I'll open it back up for you to questions.
Yeah, great. So I think, obviously, to start focusing on an EQ504, I guess maybe could you walk us through maybe the origin story of 504 and the rationale for you to acquire that asset?
Yeah, sure. Equillium's historically been a company focused on mucosal immunology of the gut, the lung, et cetera, the skin. We had partnered itolizumab during the phase III that read out early last year. We had noted that if that was the successful story, we would have capital, but no pipeline, and if it was unsuccessful, we would have very little capital and no pipeline. We set about looking for mechanisms that could be really valuable in a variety of different indications, ones which had good validation, but we could solve for delivery, pharmaceutics, et cetera. We'd become particularly interested in the AhR pathway. We'd looked at a number of different molecules across those derived from botanicals, those that are entirely de novo designed. We had settled on EQ504, which is derived from ITE. ITE was the first naturally occurring AhR modulator.
It was synthesized in situ in the guts and lungs of humans. It was discovered out of Madison, Wisconsin in 2002. A company then looked at using the natural product as a drug. Later, that was acquired by Decheng Capital . Ariagen was the company, and they conducted a really comprehensive medicinal chemistry campaign that really improved the properties, improved the potency, selectivity, and drug-like properties, of ITE and its analogs, and that's where EQ504 comes from. Really, that molecule was developed to really solve for a lot of the challenges you have with AhR modulators. The first one is they're incredibly insoluble by nature.
Yeah.
Alkyl heterocyclic compounds. If you're going to deliver something to the colon, it needs to have a degree of solubility in an environment that really doesn't have much aqueous or fluid. The next one is selectivity. Again, aryl hydrocarbon receptor modulators are flat, typically planar. Our molecule has a chiral center, and it's very selective for AhR. Then lastly, things like PK, metabolites, et cetera, have all been tuned. We like to think that we've taken what is nature's scaffold, a bio-inspired competitive advantage, and derived from that a very, very attractive drug, to be used as a molecule for oral delivery as well as potential inhaled delivery.
Yeah. Obviously you alluded to this, aryl hydrocarbon receptor has a variety of canonical functions across tissues, in both disease and normal states. I guess, can you talk a little bit about that context and sort of how you think about it in terms of drug development?
Yeah. The aryl hydrocarbon receptor resides in our barrier tissues predominantly.
Yeah.
Also expressed in the liver. Its role in the barrier tissues is to take chemical signals and turn them into biological functions. We tend to think about those in two main buckets. The first one is xeno-metabolism. As we are bombarded with all of these compounds each day, particularly things like aryl hydrocarbons, which can be promiscuous molecules, that is absorbed by our tissues. It activates the aryl hydrocarbon receptor, and that causes metabolism of the molecule. But that typically happens predominantly these xenobiotic mechanisms for exogenous molecules, things like drugs or toxins. But there are a second class of ligands. These are these endogenous or exogenous dietary derived, and they trigger the second bucket of activities, and that is things like modulating the barrier function and immune homeostasis.
The reason we were attracted to ITE is it is the naturally occurring molecule. It triggers mostly the barrier function and immunology. When we think about this in the drug development perspective, not all of these modulators have the same chemical signature, and that is really important. There is a concept in agonism called biased agonism. You see it with PPARs, glucocorticoids, selective estrogen receptors. One of the key elements when we were looking for an aryl hydrocarbon receptor modulator was does it have strong activity in modulating both the immune system and barrier function? Because not all do.
There are hundreds, potentially thousands of AhR modulators, but they all have distinctly different signatures. That is something that we spend a lot of time really honing in on, and plays an important role as we think about indication selection.
Yep. Maybe zooming in on IBD and ulcerative colitis in particular, what is the relevance of aryl hydrocarbon receptor [audio distortion] signaling there and what is the data supporting this as a relevant drug target?
Yeah. AhR is expressed in, like I say, skin, gut, lung, but also the liver for detoxification, primarily detoxification there. If you knock out AhR in animals, you get pneumonitis, dermatitis, and gastroenteritis. We know that by knocking out the AhR pathway or blocking the signaling, you get disruption of barrier tissues as well as immune dysfunction. Now, we also know that if you have a disease model which has barrier dysfunction or immune dysregulation, you can modulate the AhR receptor to improve that.
Now, there's a significant clinical proof of concept here in the skin through Dermavant. They took an aryl hydrocarbon receptor modulator, formulated it, and as a small molecule applied topically, it has biologic-like efficacy. Now, in the GI space, Indigo naturalis, which is a complex mix of compounds, including aryl hydrocarbon receptor modulators, that has been able to demonstrate up to 50% clinical remission rates and deepening response rates as we go from week 8, 12 through to week 52.
A very strong validation here. I think ulcerative colitis, where we know it's translationally very important, has proof of concept data from the multiple phase IIs, provides us the most obvious place to start our development program. But of course in the lung, more recently, the anti-fibrotic effects of AhR have been well-established, and Novartis published a beautiful paper last year, really honing in on the anti-fibrotics and tissue remodeling and healing elements of AhR in lung tissues.
Yep. Yeah, and I guess sort of maybe going back to some of the elements of 504 you talked about, like Indigo naturalis itself, sort of some of those plant-derived indoline compounds, like sort of how are those as drug-like molecules and sort of how does 504 differ?
Yeah. We looked at a variety of different molecules that were derived from Indigo naturalis. Indirubin, tryptanthrin, indigo are the main three that we find in Indigo naturalis. Now, I describe those typically as sort of precursors for drug development. They're small flat, planar, aryl hydrocarbon, they're indoles.
Yeah.
They have very potent activity, but they're very promiscuous. They have challenges perhaps with selectivity. Indirubin specifically can bind to CDKs, GSK-3 beta, and probably a number of other tryptophan-binding receptors in the body. The other challenge with that is it's exquisitely insoluble. One of the things that we need to understand is that AhR is not a surface expressed receptor. It's a receptor expressed in epithelial tissues, in the cytoplasm, and in the nucleus, and then it's also in the tissues and the lamina propria. An insoluble molecule is not a permeable molecule. First you need to solubilize that for it to become permeable.
Really what we were drawn to EQ504 for was it solved for the potency and selectivity issues, but also gave us a molecule that we could formulate and control the PK characteristics of that would allow us to distribute really small amounts locally into tissues because we weren't hampered by solubility challenges.
This is all well and good, but where does obefazimod fit into this story?
Yeah. Obefazimod, ABX464, was highlighted to us as a potential AhR modulator by a number of groups in the community. I think that spurred a lot of interest in the initial investment in Equillium. Over the last six to nine months, we'd sort of set about a challenge, which is, look, we already know there are hundreds, maybe thousands, of AhR modulators. Obefazimod being an AhR modulator because some of the prior preclinical data had indicated potential activity there. We set about really characterizing the relationship between AhR and miR-124 as it relates to obefazimod and our molecule.
What we had demonstrated in the sort of May preclinical webinar is that obefazimod is an AhR modulator, it's moderately potent.
The parent obefazimod, correct?
The parent, yes. Absolutely. Yeah. When that molecule becomes glucuronidated, which could in fact be a consequence of AhR modulation. AhR modulation induces CYP enzymes as well as glucuronidases. The glucuronidated form loses its AhR modulatory ability, but also loses its ability to induce miR-124. That was an interesting observation. We then tested, does our molecule, EQ504, induce miR-124? Does blocking AhR modulation block miR-124 induction? The answer was yes, EQ504 does induce miR-124. So miR-124's very likely a downstream biomarker of AhR activation, and that when you block AhR activation or you use a glucuronidated form of obefazimod, no miR-124 was induced.
I think that was just very elegant description that at least that molecule is an AhR modulator. Is it deriving all of its activity through AhR? That wasn't what that preclinical webinar was meant to describe, but I think that some of the data that we've seen from those studies suggests that it's significantly contributing to efficacy at the very least.
Yep. Then maybe taking a step back, you generate a lot of data for 504 across sort of the canonical UC animal models. Maybe could you talk a little bit about kind of the breadth of data you've generated and your confidence in the translatability of those models historically?
Yeah. We benefit from the fact that AhR is an incredibly well-characterized pathway. There are conferences that happen just around AhR as biology, right? That gives you sort of sense of the community's input here. There are hundreds of papers that are published on this monthly. We had the benefit of being able to have a look at what that biology was, and really the challenge we had was understanding the signature and the contribution, the pharmacodynamics of our molecule. We weren't really trying to establish mechanistic understanding. That's really been very well established.
Yeah.
We had done a number of tissue healing models where you can damage epithelial cells, be that in single layer Caco-2s, T84s, or even in organoid systems, which are more composite systems of multiple cells. And we could show that we can improve their barrier integrity, function, and healing. We also did this in immune cells. We characterized its immune modulatory function in T effector cells, where we can suppress T effector activity, but simultaneously boost regulatory cell activity, which is critically important in mucosal tissues. Macrophages. Macrophages are sort of flying under the radar, typically, of immunology. Everybody focuses on the T cells. But macrophages as it relates to GI biology and lung biology are critically important for wound healing and inflammation.
We've shown that we can modulate inflammatory macrophages and drive anti-inflammatory macrophage function. I think the benefits here are that we can modulate not only the immune dysregulation, but we can improve barrier function and regeneration of those tissues.
Yep. Okay. Now, you're on the verge of now starting a phase I study in the fourth quarter. It's got moved a little bit. Can you talk about the status of moving into humans, and what that trial is going to look like?
Yeah, sure. Since we had the financing, really everything's been focused on generating a formulation here, and that took a little bit longer, I think a month or six weeks, a little bit longer. Largely because it includes multiple players, and it's sort of shipping things around.
Yeah.
But we've essentially got GMP material, clinical trial material. We have engaged with regulators, and we're on track to initiate first subject dosing in Q4. The guidance there around Q4 is that we will provide an update to the street once we've dosed our first subject in that time. Because that, of course, ties into the financing where that will trigger the optional tranche here for investors to put in the additional $20 million. That will leave us well-capitalized to complete that phase I within the six months, is what we've guided to, and then move very rapidly on into a phase II study.
Yeah. Maybe can you walk through, when you talk about a proof of mechanism in this context, what exactly you're thinking of, and what kind of data we should be expecting?
Yeah. We should think about this on the spectrum, and I am really going to focus on the things that I think are critical for success. What does good look like for the rest of the folks looking in? We benefit from the fact that Indigo naturalis and other AhR modulators, even in the skin, have been able to demonstrate that when you modulate AhR, you can induce CYP1A1 and a number of other downstream pathways. But CYP1A1 is a very tightly regulated biomarker for AhR. In fact, CYP1A1, CYP1A2 are genetically linked to AhR. When you see the induction of that, it is coming from AhR modulation.
The questions raised from strategic partners have been, "Look, we really believe in the AhR pathway." It is very rare to find something validated, yet novel. But what we want to see from this is it is safe, well-tolerated, and that you can pharmacologically activate AhR in the colon tissues. By virtue of doing that with a formulation, you are validating the formulation itself. The SAD/MAD will be in normal, healthy volunteers. We will look at showing safety and tolerability as the primary objectives, and secondary objectives there would be looking at blood and tissue PK/PD.
I think what we really, at a minimum, would want to see is that we can engage AhR in the colon tissues by looking up using scopes, sigmoidoscopies, colonoscopies, those types of scoping procedures, take biopsies, and show we see an induction of CYP1A1. Now, how much CYP1A1 is not a question that is universal across all AhR modulators.
Yeah. Is there a bar? Yeah.
Enormous amount of CYP1A1, which is not necessarily that helpful. The way we think about it is you want to see a plateau, where you are basically saying no more drug gives you no more receptor activation.
Yeah.
We already know from the translational work, and this may be evident as well in normal, healthy volunteer tissues, but we know from translational work is that when you activate CYP1A1, or activate AhR and induce CYP1A1, you are inducing all of these other pathways in tissues. I think really being able to come out of a study where we can demonstrate safety tolerability, PK/PD allows us to select a dose for taking this on into phase II. It goes beyond just typically safety and tolerability in these studies. It bridges to what we have known is very important in the clinical studies. If you do not activate AhR in the colon, you do not induce these downstream pathways, and those patients do not respond or enter clinical remission.
I think from that perspective, this could open a lot of doors for strategic interest. A lot of questions that they have been asking of this pathway. But it really tees us up very effectively for moving into a phase II, where we will have a better understanding of what the relevant doses would be.
There are a couple of follow-ups. One of the elements that you have seen in some of your preclinical models is the induction of IL-10, IL-22, some anti-inflammatory cytokines. Is that something that you might be able to see in a healthy volunteer setting, or is that TBD?
Yeah, it's TBD, I think. It depends on the types of markers and how long we're dosing for. A good example is IL-10. IL-10 comes predominantly from activated cells. You typically have to activate cells to see the secretion of cytokines. So in normal, healthy volunteers who are A, going to have less inflammatory molecules present, they're unlikely to be activated and will be dosing for between one and two weeks, is typical for these phase Is. We'll provide more guidance on exactly what that phase I looks like shortly. From that perspective, I think we're going to look for them in tissue biopsies.
Yeah.
I think that those are more inherently linked to the inflammatory status of the patient, so they may be a little bit more quiescent in normal, healthy volunteers. However, and we've demonstrated this and so have others, the induction of CYP1A1 does really not change between inflamed cells and non-inflamed cells. We think that the use of CYP1A1, which is going to be our primary biomarker, is really what is going to be most informative as we think about bridging and translating between normal healthy volunteers and diseased patients.
And then when we talk about preferential exposure in the colon, how much of that is related to the biological hypothesis in ulcerative colitis, in particular, versus thinking about broader safety considerations?
Yeah. There's not a number that we think you want to stay below that is toxic, right? We have our own safety margins. We believe delivering this molecule to the colon is useful for a number of reasons. First of all of the cells you want to target from a receptor perspective are there, your damaged epithelial cells, your activated cells. We can't say this for every mechanism, as every mechanism is different. But we often get asked the question, do we need systemic exposures? I'd argue, no. I do not believe the cells that are important to treating ulcerative colitis as it relates to AhR are circulating in the systemic. They're really localized to those damaged tissues. Inflammatory cells in the lamina propria, as well as the damaged epithelial cells of the gut lining.
When you give a drug systemically, you're going to raise the levels systemically, right? And most drugs are limited not by their efficacy, but by their safety. We essentially remove the burden on having to go into the systemic first. And we know that AhR modulation from the Indigo naturalis studies, perhaps also seen in the cohorts of dioxin-poisoned patients, and then we also see it in the obefazimod data, where headache and nausea are what we think are on-target signs for AhR modulation, and they can be dose-limiting. So by giving the drug directly to the colon, we can get high local and lower systemic. We're not going to have zero.
I'm not a believer that one can restrict a molecule that you need to be in tissues. But what is very clear from our data, from other people's data here of different molecules, is by local delivery, you can really drive those local levels high, and by modulating the dose, you can keep those systemic levels lower. And I think that will lead to a molecule and program profile that gives us optimal target engagement with minimal systemic exposure, which should yield a better safety and tolerability profile.
That makes sense. Maybe you alluded to your inhaled program. What is the status of that, and I guess, what is the rationale and sort of indications you might be going after?
Yeah. So one of the unique elements, at least for Equillium, is our competitors are using prodrugs. Prodrugs typically are designed to address a liability in the molecule, and for many of the AhR modulators, it is solubility. But because our molecule is soluble, potent, and very stable, we can actually move that molecule into the lung where prodrugs couldn't enter for obvious reasons. We are developing an inhaled formulation currently, so doing all of the checks there to see that that can be inhaled. We are evaluating toxicology in the lung, and we are also looking at translational data. So that really is the sort of three pillars we think that would enable entering into patients.
Now, the indications there could be anything from COPD to IPF or ILDs, right? We can modulate inflammation, fibrosis, and tissue healing. The same thesis holds. If you pick IPF, for example, we can modulate tissue healing, we can be anti-fibrotic, and we can be anti-inflammatory. We really cover a lot of that, kind of, call it cycle of destruction that you see in IPF patients. By, again, having a molecule that is delivered more locally inhaled, limiting systemic exposures will avoid the challenges of stacking therapies you see in these indications, be it ILD, IPF, or COPD, where you are going on top of standard of care.
Yep. Okay. You said IND filing TBD?
On the lung IND filing TBD. Our phase I for the oral is obviously we're not filing there yet. It's going to be in Australia. We'll anticipate an IND filing later as we think about bigger, broader jurisdictions for a phase II.
In the last few minutes, I want to touch on 302. I guess, obviously, a lot of data recently in the IL-15 CD122 space. Where does this molecule fit into that story, and how is it similar and different?
Yeah. I'll oversimplify celiac just for the competitive landscape. IL-2, 15, and IL-21 are key cytokines. IL-15 and 21 are overexpressed in about 70% of patients with persistent ongoing inflammation. IL-2 is not elevated in those patients unless you expose to gluten. Many of those patients with persistent chronic inflammation are not exposed to gluten. It's an oral bispecific molecule that we think has a better mechanistic rationale. We think given orally that localizes to tissues could avoid some of the challenges with these monoclonals, which is tissue distribution to the damaged villous areas. It's a little behind those, but this is an area of what, 750,000 patients.
I think I benefit from seeing what our competitors are having to do in later stage development. Even if we're third, fourth to the market as an oral, as the first oral, that could be really, really important. I think it's just ritlecitinib and ourselves in the oral space anti-inflammatory right now, but it's a super exciting program. It's got a lot of interest, and one that we're advancing towards the clinic within 12- 18 months.
And then you alluded to, but can you talk about your current financing position? You obviously have a tranche potentially unlocked in 4Q. How does that all look?
Yeah. Let me just refresh myself here on the numbers. So our last- Q, cash and equivalents was $57.2 million. We have a relatively low burn as a small capital efficient company. That does not include the anticipated $20 million second tranche. So, if you add that to the last- Q, that would put us into $77 million, of course, not including what the burn will be between then, and getting that tranche in. But needless to say, plenty enough capital to get through that phase I. And in time, we'll provide additional guidance on those other programs in terms of clinical studies for a phase II, as well as potential timelines to the clinic for the follow-on indications in EQ302.
Great. Well, Stephen, thanks for joining us. Always a pleasure.
Thank you very much, Alex, and team.