All right, everyone, I think we'll get started here with the next fireside discussion. My name is Derek Archila. I'm one of the Senior Biotech Analysts here at Wells Fargo. I'm very excited to have the next company, Q32 Bio, for a discussion here with the company. We have Shelia Violette, the Chief Scientific Officer, as well as Lee Kalowski, the President and Chief Financial Officer. Thanks so much for joining us.
Thank you.
Thanks for having us, sir.
Awesome. Maybe just to start things off, maybe just give us the high level of, you know, the company and, you know, the programs you have under development, and then we can kind of go into the specific questions.
Sure. Sounds good. We are advancing bempikibart, our IL-7 receptor alpha, primarily in alopecia . We announced our phase II- A results in December of last year, and we're enrolling in phase II - B. Enrollment and dosing is ongoing, and I expect to have results from that trial in the first half of next year.
Got it. Cool. Maybe to start off, just, you know, can you give us some background about bempi and, like, why, you know, this target is really intriguing for you for alopecia ?
Yeah, absolutely. Bempi binds to the IL-7 receptor alpha subunit, and it binds to a region that is shared for binding by two cytokines, IL-7 as well as TSLP. There's a really compelling data set in alopecia specifically, and for that matter, a number of different diseases that are driven by pathogenic T-effector cells. What's been demonstrated is that both the IL-7 cytokine as well as the receptor is upregulated in the hair follicles of patients that have alopecia . Specifically, the receptor is upregulated on cytotoxic CD8+ T cells. They're also NKG2D positive. Those have really been implicated in driving the inflammation that leads to the hair loss in these patients. Some really nice preclinical data demonstrates that if you specifically block this receptor, it provides very good efficacy in those models.
Gotcha. Maybe, you know, taking a step back, if we look at what we saw from part A, what were some of the kind of key learnings and pauses from that trial? Also, some of the things that, you know, you might need to modify as you go into part B.
Sure. I can start there. Great question. In part A, we saw statistically significant hair improvement at week 24. We showed efficacy in alopecia . We showed that the drug is safe. We saw no grade 3 or higher related events, minimal ADA. Certainly, nothing that would have an impact on TK. We saw responses that were very durable, signs of remitted effects, unlike the JAKs . The SALT actually improved from week 24 to week 36, despite the fact that dosing ended after week 24. We saw an efficacious drug and a safe drug. As you alluded to, there were also some additional learnings, which we're applying to part B, that we think we can drive even better, earlier, deeper responses in part B than we saw in part A. Some of the things that we are doing differently: we introduced a loading dose regimen.
That should drive responses to be a bit earlier than we saw in part A. We moved the primary endpoint from week 24 to week 36, which would be more appropriate for an immunomodulator like ours compared to JAKs , which work at week 24 and week 36. We're moving that to week 36, which we think is more appropriate. We've also modified the inclusion criteria as well. We've lowered the maximum current duration of episode. We had gone out to 10 years. We moved that into 4 years. We should be much more in line from a baseline characteristic, more in line to what the JAK inhibitor trials have looked like. In doing so, we know from the literature that patients, when you get out to a very long duration of episode, responsiveness, as the KOLs say, fall off a cliff.
In getting a better baseline population, we should be able to see a bit better responsiveness. The final thing to mention, we've brought a lot more in-house. In part A, we relied a lot on our CRO. We've made a change to our CMO, and we're really doing a lot of this in-house, bringing our INI expertise to bear. Those are some of the changes that we think will ultimately result in replicating what we saw in part A, safe, efficacious drug, but improving the responsiveness.
Gotcha. I guess when you think about the trial, I know you guys have shared some anecdotes, so maybe you can share them here, but this is a very objective measure. Patients regrow hair. What are you kind of seeing just even from part A, but also from the extension from that trial? What do you see? Ultimately, what's kind of been the patient experience for some of these patients?
Sure. We announced part A results and that we were moving into part B, and it was based on the 24-week endpoint. We were, of course, following patients through week 36. As we got into the earlier part of this year, we were starting to get some additional information from the follow-up. We had a patient who showed some modest growth during the trial, but as time went on, really seven months after, that modest growth really accelerated to she was a very severe patient. SALT, I think, was close to 100. Regrew basically a full head of hair. It was seven months after. Another case, we have a patient where we saw some growth, some meaningful growth during the trial, but in the follow-up and even beyond, that growth continued to really accelerate even after cessation of treatment. Twelve months after drug stopping, complete head of hair, basically.
It shows and it underscores in our minds this very different profile, the differentiation compared to the JAKs, where you stop taking a JAK two to four weeks later, your hair will start to fall out again very quickly. It shows a very different profile in the start.
Mechanistically, biologically, what's happening? Like, why is that? Maybe it's like, you know, initial efficacy, and then it just kind of, you know, does it correct an issue? Like, why do we see that continued growth in those patients over time versus kind of like a cessation like with a JAK?
Yeah, I think it really speaks to a lot of the data that had been generated really over a decade ago, showing that IL-7 is really important for maintaining these pathogenic T-effector cells that are now responding in a low antigen microenvironment. They're T cells that normally you would have the ability to control, but when the IL-7 receptor pathway is dysregulated, they now become hyperactivated. There's a lot of data that shows that IL-7 is maintaining the activity of memory cells. When we looked at data that was presented to us when we first in-licensed the program, one of the notable findings was that there were studies that were carried out in type 1 diabetes, ulcerative colitis, collagen-induced arthritis models that you could dose animals for a short duration of time, stop dosing, and have these long-term durable responses.
OSC published data with a challenge in the skin of baboons, and they could show that they have these long-term durable effects, and it was directly related to the memory cells. There's a lot of preclinical data that supports that if you can gain control of the IL-7 receptor pathway on these T-effector memory cells, you can stop the dosing and have long-term durable responses. We're now showing this for the first time, actually, in the clinic in patients.
Is there anything specific about those patients and why they responded? I'm curious, like, we didn't see this in every single patient, but is there any phenotype or something that we're starting to see that's emerging to help with patient selection, potentially?
Yeah, I look at this a little differently in the sense that if you look at the patients that we captured in that 24-week period of time, it ended up being a little more than a third. I think that if we kept dosing, I suspect you'd get more patients responding. For the patients that showed the earlier response, I agree with you, is there some sort of marker? You know, we looked at classic things like what their T cell levels were like, what their TH2 biomarkers. There's nothing that stands out that this is a responder patient. I'm sure we'll get additional data like that as we continue to evaluate samples.
Gotcha. When you think about part B and the modified dosing schedule, what exposure levels are you getting now with more of the loading dose? How informed is that? Why did you, why are you doing this specific loading dose? What exposure levels do you need to achieve based on some of your preclinical models?
Yeah. It's a really good question. We modeled what we wanted to have as our target exposure dose for receptor occupancy. What we knew is that you get full receptor occupancy at 0.75 mcg/mL of T cells in circulation. This is an antibody bind with very high affinity, about 100-fold higher than the native ligand. If you have full receptor occupancy, you're kind of shooting for that number. If you calculate that only 15% of the drug is actually getting into the tissue, that's how we got to that 5 mcg. The PK of this drug is really quite good. Our steady state levels in the alopecia trial were up around 22 mcg/mL . You could see that you get to steady state somewhere around 10 weeks - 12 weeks.
We are seeing responses in these patients, what I said, maybe about 1/3 of the patients, in that when you're getting to that threshold there. I think of that as the right dose. That's our therapeutic exposure I'd like to see. The intention of the loading dose is to bring that in much closer to the start of dosing. We got to steady state, 22 mcg/mL mean levels on average around 10 weeks- 12 weeks. With our loading dose, what we're seeing is that we're achieving trough levels that are about three-fold higher than the trough levels we saw in the part A. We're up more now around 30 mcg/mL on mean with the early data. We're even going above that exposure level. We're getting therefore to steady state levels compared to what we saw in the part A at three weeks.
You're doing 3x at three weeks versus what you were doing before at 10 weeks- 12 weeks. Is that right?
We're doing 3x what we were doing in the first month because there's an accumulation ratio. The mean accumulation ratio from part A was about threefold, and on an individual basis, it can be as high as [16].
There is theoretical, we can talk about sort of the theoretical and the scientific rationale for it. Then there are sort of the practical implications. Obviously, it's still early and dosing is ongoing. You know, we can overlay what we saw in part A and in the early part of part B. Again, not to overpromise, but we're seeing signs of responsiveness earlier now in part B than we saw in any of our patients in part A.
Interesting.
Including both in severe as well as moderate.
In severe and very severe.
Okay. Gotcha. Maybe you can speak to that in terms of the population in part B and the differences there relative to part A, and some of the changes that you made there and how you think that may ultimately change the trial dynamics a little bit.
It's the same population. It's still the severe and very severe. That's not changed. I think, you know, perhaps you're alluding to the duration of current episode. From an inclusion criteria, we did change that. That's in part to bring it to be more comparable to the other trials. I think the other piece is in part A, we ended up kind of in the extreme from a baseline characteristic. We were pushing six years. We were over five years from duration of current episode. The JAKs were more like three or so, which is probably where we would end up. If you talk to the KOLs, they describe beyond four years as falling off a cliff. The responsiveness is half or even less than half for patients with such a long duration of episode compared to patients who are less than four years.
Obviously, it's not to promise anything, but it's to bring it to be more in line and to be running, I would say, a better trial with a more likelihood of responsiveness.
Got it. Okay. Yeah. I guess, you know, one of the things that, you know, as we think about the readout or the update, what should we be looking for? I guess, like, you know, we have these benchmarks with the JAKs, but, you know, is this something where you need to beat the JAK? Do you need to be in line with the JAK? Obviously, given the safety profile, maybe, you know, just in line is fine. I guess, you know, has anything changed in terms of your expectations of where the benchmark for the data needs to be?
I would say no. I mean, we talked about expectations previously. You know, we could talk about it in terms of the mean change or percentage of patients achieving SALT-20. Some of the KOLs said at least, you know, 10% achieving SALT-20. Perhaps the market has responded and said that's, you know, not good enough. We ended up being over that, about 14% or so. For the changes that we've seen, we would hope certainly to beat that. From a mean change, we saw a 20% reduction at week 36 in part A, despite stopping treatment at week 24. Certainly, we would hope to build upon that. Where that ultimately lands, you know, we'll see. Can 20 be more like 25 or closer to 30? Everywhere we go from here is putting us more in the ballpark of a JAK inhibitor. Obviously, the closer you get, the better.
We do not have to be spot in line with the JAK. It is a different MOA. The entirety of the profile is different. It's really about having a safe drug with a clinically meaningful efficacy with durable responses. Shelia, what might you add?
Yeah, no, I mean, you went exactly to the point. I understand the desire to benchmark. I'd rather think about something what I think is clinically meaningful. The feedback we've gotten from KOLs is, yep, you want to see a certain % reduction in SALT score at week 24 or 36. In many ways, if I was a patient, I would be satisfied if I get a certain degree of hair growth. What are the percentages of patients that are getting to something like a SALT-20? When we first started out, the feedback we were getting is, you know, it's around 10%. I think the market showed us, you know, we had 14%. It's probably more like 20%, 25%.
The key point for me, and you know, I'm the scientist, I want to think where the field is going, is that if you have an effect here that's clinically meaningful and you can reproduce that in two separate studies, what's important here is that you can go on an immunosuppressant like a JAK inhibitor and certainly get your hair to grow back quickly. It's an immunosuppressant that has black box warning and your hair starts falling out after you take it. It's a good drug in the right place. I think where the field should be going is an immune modulating agent. This is exactly what this drug is designed to do, modulate where we started with your first question, pathogenic T-effector cells that are linked with the pathology of this disease. We're modulating the effects. We're learning it's a pretty safe drug.
OSC is reporting it's a pretty safe drug. The icing on the cake is you stop dosing, your hair doesn't fall out. I think what we have seen is that we get deeper effects as we dose. If I was a patient with alopecia, if I had a child who had alopecia, we know that these are relatively young patients who are getting dosed chronically for years, I'd probably be more willing to be on a drug for a longer period of time to, yes, I want to say that I eventually want to get to be like a JAK. Point being, I don't think it's terribly meaningful if we compare the effects of our results at 36 with a JAK. I would want to see it's clinically meaningful and have some demonstration that the effects do go deeper over time.
Gotcha. Okay. I mean, do you think we know how long that kind of like remitted effect lasts? I mean, ultimately, I don't know how long it lasts in some of the preclinical models, but do you think that impacts dosing? Would it be something where it's like you dose every quarter, or would you want to continue to dose pretty frequently just to maintain even though you have that remitted effect? It gives you options, but how do you think you actually play to it, either it would be commercially or clinically?
Yeah, we will learn more from our current trial because we're going to stop dosing at week 36 and follow with another 18. We're going to learn more there. If you asked me sort of what we were ballparking, I think if you get away with quarterly, that would be a big jump right there. We have examples of patients that are off longer.
I don't think that, you know, we're not necessarily exploring this for the case that you would stop treatment. I don't think anyone would think that that's a good thing to do. You can show that, you know, if a dose, if you don't dose it once, that you're okay. We know, for example, with the JAKs that two to four weeks, your hair falls out. We are very comfortably way beyond that. I think that's kind of the point that your responses are durable. We would advocate you're going to want to continue to dose, but you're going to have a lot of flexibility. I think time will tell. We'll need to further elucidate that in further trials, what that margin looks like and what that dosing paradigm would be. The construct is that we fundamentally have something that's different.
Data are positive. What are kind of the next steps, you know, in terms of development for bempi?
There is a lot of precedent. You know, we've seen other, what, for example, the JAK inhibitors have done. There are different approaches that we could take. The next step could certainly be registrational in nature. There are different avenues, whether it's a standalone II- B or a II- B/III or a seamless II- B/III trial. I don't think we're committing to any one of those today, but we could definitely, with our next trial, be moving it toward registration.
Okay. Gotcha. I mean, what's that, so like, what's the size of that trial look like? Is it, again, would you want to go out 36 weeks? Is that kind of going to be confirmed by part B in terms of like what you think the length of the study needs to be?
Yeah, I probably won't speculate on sizing just yet. I think from your question about the timing, yes, I mean, look, the JAKs have looked at it at week 24 and week 36. In part A, we looked at week 24, and that was probably on the early side for a biologic that we know now. 36 is a very utilized endpoint. I think, you know, again, we'll have to see what part B looks like, but I think that that's not unreasonable.
Will you feel after part B, like, okay on dosing, or would you want to explore additional doses in like a phase II/III? You've done some dose work, but do you think you need to do more in the future just to see if there's any more juice that you can get on that? It seems like it's a very safe drug, right? You could potentially go higher.
Yeah, it is, and we could. I think certainly have that possibility. We have a hyperconcentration, so we could go to, for example, 300 flat versus 200 with our new formulation. That's an option. Certainly could. We have the margin. This is not in any way to suggest we need to. You know, again, we feel like we're getting with our current dose, we feel very good about it. Sure, in the next, you could, and it's done in a lot of trials, we could explore multiple doses in one trial. What would you add to that?
That's exactly what I would have said. I don't think it's that we necessarily need to, but you have the ability, and it's the perfect place to do it, in that next trial to do a little bit of dose ranging. Safety margins are there, and we've got the drug concentration higher.
Gotcha. Okay. Obviously, the atopic derm trial didn't work out, but what did we learn there? Is there any kind of takeaways from there, whether it be to alopecia or maybe in the future for other indications about bempi and the profile and some of the effects there?
I think it puts to rest the question of whether or not we were blocking TSLP. I think the biomarker changes that we saw were profound, and folks that have looked at that have agreed with that. I think what it opens up the door for me are other THD-mediated diseases where TSLP has been validated. I really think about all the respiratory indications that are out there. It also raises the question, you know, there's some folks that believe that in alopecia, that there's an atopic population that responds to DUPI. I think we cover TSLP, and we cover IL-7 adequately. I think the atopic trial, while it was disappointing with the high placebo effect, we showed again that we had really good PK. We're getting good coverage of the target. The biomarker changes are likely a reflection of inhibiting the cells in the tissue and getting TSLP.
Gotcha. Just remind us of the competitive landscape with the IL-7 receptor alphas. You mentioned OSC a couple of times. Do you think they're all kind of the same, or are there nuanced differences that we should think about for some of these programs? Obviously, OSC seems like they're plowing ahead in a couple of indications. Are these opportunities that you could also pursue like you see?
Absolutely. I think the big difference, like with any antibody, often comes down to pharmacology, where they're binding. I think any of the IL-7 receptor antibodies, in order to block IL-7, you're probably blocking TSLP. It's around dosing. OSC is dosing high. They're dosing IV. Not clear to me. You can look as closely as you can about their PK PD. I think they have to go to higher doses to get the full coverage. I don't have the full data set. The antibody that was developed by Pfizer and then licensed to Zura , that is an intact FC, probably wouldn't want to have a full effector function antibody. Its PK properties are different. Bottom line is, from our look at the data, we think we have the best-in-class asset taking into account the pharmacology. You can get full coverage, low [mid-percake] doses that can be administered sub-Q.
Our PK is looking good. I mean, we're dosing every two weeks, but we may be able to extend that, especially if we do go to higher doses to once a month or even longer than that.
Gotcha. Do you think that full, like, full FC, like that effector function, do you think will drive maybe like AEs for Zura or like what?
I can't say that driving AEs. I can only look at the published data and look at the drops in the T cell subsets. They're very deep reductions. Whether or not that's related to the FC, I don't know for sure. I probably, by choice of design, would bring around something that's effector-less. I mean, that's what BMS did. They incorporated all the mutations to get rid of effector function.
Interesting. Okay. Maybe just a couple last questions. In terms of the cash runway, we have cash. We're going to flip the cards over on part B. I guess, maybe Lee, just in terms of how you think about funding the company through the rest of the program here and for and beyond.
Sure. Maybe we just rewind the clock. We have had runway the second half of 2026, and we announced over the last quarter or so we've been able to extend it into 2027. We have runway to Q1 2027, so that gives us a good deal of margin to let the trial run out. First half of 2026 with runway to continue to do that. We probably have some additional strategic options available to us to further extend it. Of course, any of this doesn't include potential proceeds from monetization of our complement platform, for which we're making continued progress. That could also be some additional sources of non-dilutive capital. We'll continue to be opportunistic as we evaluate the trial and our funding. We'll continue to evaluate all of our options. For the time being, we don't need to do anything.
We have runway now into 2027 with the trial reading out in the first half of next year.
Got it. Maybe just on the whole, you know, bempi part, I guess, where do you think, you know, maybe, you know, investors underappreciate the story right now? Is it just some of the evidence that you got, these anecdotes, or is it the new kind of setup in terms of the dosing in part B? What do you think people are kind of missing on the study right now?
I'm a little biased here. I think there's this desire to benchmark negative relative to JAKs . As I talked about before, I think that that's a guide for me. I think about what's missing here is how differentiated this is. I'm convinced that we're having effects in these patients. It may take a little bit longer to get there. Having something that's an immunomodulating agent that's safe and has these durable effects, I'm not sure that's been grasped to the extent I would like it to be seen. The other is that if we are demonstrating proof of concept in alopecia , and I believe we are, this is a biology that goes very broadly. I think this is just a start. Pfizer was interested in type 1 diabetes. GSK was interested in MS for really good reasons, really good genetics. There's all this ulcerative colitis.
I think you can go very, very broadly. I think the other piece that unfortunately got lost with the atopic dermatitis is that I think we have a pretty good TSLP inhibitor. We have good evidence, empirical data to show that there's a real opportunity here in other indications.
Obviously, there were some execution challenges, which perhaps that's also a factor. With part B, we've made changes that should really enhance the efficacy. Of course, bringing stuff in-house, really doing it ourselves has been incredibly helpful at ensuring we're getting the right patients with the right characteristics. Even if you look at, for example, something like dropouts, it's considerably less in part B than in part A. AA is an indication where we've seen it across trials. We ourselves had probably more dropouts than we would have wanted. We're just not seeing it in part B. It kind of just goes to show you that sometimes you have to do it yourself, which is what we're doing. I think there's a little bit of a show me it. We will. We'll turn, we will have the part B results in not too distant future here.
The early signs, we're starting to see all the things that we put in place for part B coming to fruition. As mentioned earlier, not to repeat ourselves, but seeing those earlier responses are a good early indication.
Awesome. Cool. I think we'll leave it there. Thank you so much, guys.
Thank you.
Thank you.
Great to see you. Thanks, Lee.
Thank you.
Thanks, Shelia.
Thank you. Good to see you.