Okay, we are live. Great. Well, thank you everyone for joining. I'm Imogen Mansfield. I'm one of the biotech analysts here at Cantor and I am thrilled to be joined by the management team, many members of the management team from Q32 Bio. We're joined by Jodie Morrison, the CEO, Shelia Violette, the CSO and President of Research, and Lee Kalowski, the CFO. Welcome everyone. Thank you for coming-
Thank you
all the way down here. It's been quite the comeback year for-
Yes
QTTB, the turnaround story of 2026 and-
I like it.
your lead asset bempikibart. Could you give us a quick overview of the company and a snapshot of where you are today?
Yeah. A fantastic year for us. Thank you for saying that. It's been quite the turnaround. We had our readout in July of this year for alopecia areata, our second study in alopecia areata, this time with a 36-week endpoint. We were incredibly excited to see the results there where we saw an mITT of 40%, SALT 20 at the 36-week endpoint and a 30% in the setting of the ITT, the overall population including all patients that recruited. A fantastic position to be in, competitive with JAK sort of efficacy but with a totally different profile, which is what we believe and I think all the market research would support is what patients and physicians are looking for in the field. This remains one of the indications where there's no biologic in the front position in front of a JAK.
I think it's really open for the taking and we're really excited about our mechanism and how it performed.
Great. Yeah, no biologic in any position at the moment. There's some debate around the size of the alopecia areata market amongst investors, and maybe JAK's underestimating what that could be with a biologic. So where do you think that the market stands today and where could it get to with biologics approved?
Yeah, I'm going to let Lee take this one. He's been doing a lot of work here.
Yeah, sure. The first part of your question was about the JAK inhibitor sales.
The size of the market today and then where it could get to. Yeah.
We've done some extensive market research, drilling down to claims data to really get a good estimate of what the JAKs are doing. This year for 2026, in AA alone, they're on track to do about $500 million in net sales. Market's growing by about 30%-35% year-over-year. So substantial growth in that market. I think the second part of your question was around where the market could go and obviously that's just a very small sliver. Penetration is still increasing. So still early days. What we've been able to forecast out based on our market research is a U.S. opportunity of $5 billion or more and likely considerably more than that.
Does your market research give you any indication of the penetration today, where we're at with JAKs?
Low. It's probably very, very low double digits right now.
Okay. Any numbers that you could put to the size of the opportunity in the U.S.?
Absolutely.
How that splits, mild, moderate, severe.
The number that's pretty widely accepted for the U.S. AA population is around 700,000. That's the number we quote. It's what NAAF uses. Epidemiology probably puts it just above that. It could be pushing closer to 750,000. As we think about in the coming years, that will likely get to 800,000. Then you think about what the opportunity for patients as we're embarking and moving towards phase III for a severe, very severe label. You start to think about probably 500,000 or so addressable patients and probably 300,000 addressable patients seeking advanced systemic therapy. That's sort of the number that we're thinking about, and then you can apply some number to that and very easily able to see that this is a multibillion-dollar opportunity.
Yeah. Let's talk about bempikibart. What differentiates bempikibart over existing therapies today in alopecia areata and then over other biologics in development?
Yeah, let's start mechanistically, Shelia, and talk about the mechanism here versus others and then we can get into some of the other differentiated profile components.
Right. The approved therapies today are JAK inhibitors and that is a way to inhibit multiple cytokines. Those are obviously providing efficacy, but they have black box warnings that are associated with them. When we think about the new therapies that are coming along, the two that are in development today are really focused on T cells. We think of alopecia as a T cell-mediated disease, although there could be some arguments that could be a TH2 component and I think that that's where we're differentiated as bifunctional antibody that can inhibit both IL-7 as well as TSLP and thus the TH2 angle.
But our mechanism is really focused on inhibiting those T effector cells and the T memory cells, the cells that are homing in, leading to this infiltration at the bulb of the hair follicle and leading to the destruction of that hair follicle. There are other therapies that are going after T cells in other ways. REZPEG, for instance, is an IL-2 mimetic. It's designed to functionally activate and increase the numbers of Tregs. Tregs are trying to overcome the function of those activated T cells. It's ultimately trying to do the same thing, but through a different mechanism, whereas our drug is really directed at going after those T effector and T memory cells.
There are other things that are in development, like Forte has a CD122 that will inhibit both IL-22, geared to be preferential for the T effector cells rather than the Tregs, but will also go after IL-15. I think what's common to all of them is this recognition that T cells are the driver of the disease. I think the combination of the REZPEG data and our data really highlight that this is probably an important angle to take in treating these patients, but through different mechanisms.
Yeah. I'll add to that. I think the safety profile is clearly a differentiator here when we think about JAKs. The black box there is problematic, and when we think about some of the market research we've done, 5% of the dermatologists are writing 50% of the scripts. That tells you a lot about who's comfortable using JAKs in this setting. When you look at example indications like atopic dermatitis, where they have great data for JAKs on efficacy, you're still seeing 90% of patients going to biologic. I think that's how we think of the differentiation on the safety component. From an efficacy component, we're in range with the approved JAKs with what we just put out for our Part B, so fantastic place to be. Indication where safety could sell in and of itself, we've already shown we're in the range on efficacy.
When we think about our data in the context of both efficacy and safety compared to rezpegaldesleukin, as an example, which is the most advanced biologic we are up against, I think the comparison there, we win as well. Their 36-week endpoint, they were sitting at 15%, 16% on their mITT post-hoc indication where they removed a site. That compares to our percentage of 30%. So we are in a really nice position there. We are more than double their low dose and in range with nearly double their high dose. Even at their 52-week extension responder analysis, where they put additional patients in on dose all the way to 52 weeks, we are still over that at 36 weeks. We are really encouraged by the efficacy component. On the safety component there, rezpegaldesleukin does have a very high ISR rate.
These are described as very large, lasting a long time. They can be moderate and severe. Comparatively, what we are seeing is a 4% overall rate of ISRs in the trial, and they are described as mild in nature across the board, unequivocally, and largely probably related to volume. They follow what you would normally see with a 2-mil injection site reaction, where you see a small bump. It resolves the next day. It is very straightforward. We have upside there. I can live with 4%, by the way, but if I can get some upside there, even better. What we are seeing as we move forward is an opportunity to move that volume down to 1.3 mils. We should have some upside there as well.
Great. Shelia, as we think about the mechanism here and possibly the biomarker data that you have generated in clinical studies so far, how do you think about the IL-7 component versus the TSLP component of bempikibart's action being important in alopecia areata?
Yeah. We do tend to think, as I mentioned before, that alopecia is largely a T cell-driven disease, and there is a lot of good data to support that. Histology data is probably one of the major ones, where you can see, even with the JAK therapies, that before treatment, you can see those T cells infiltrating the hair follicle. After treatment, concordant with the growth of hair, you see that resolution of the inflammation. Having said that, as we talked, there are some patients that do respond to DUPIXENT, and we hear this anecdotally, and there are data that have been generated by Emma Guttman. My feeling is that there could be a component, that the TH2 pathway is high in some patients, and it is further feeding the inflammatory environment. It may be specific to patients that are atopic.
Emma Guttman described it in her paper as the patients that were high for IgE, defining it as greater than 200 units per mil.
In both our alopecia Part A and Part B, we had patients that were greater than 200.
What we're seeing is that we're seeing responses in patients, whether they're IgE high or low.
For many of the biomarkers, we're seeing that we're having the effects across. I would have to say it would suggest to me that this is largely a T cell-driven disease.
But we are open to the idea that there could be a TH2 component as well.
Yeah.
And we will be well-positioned, obviously, as a differentiated asset for that.
Yeah. Jodie, you have mentioned some of the high-level data that we saw in the Part B readout, so with that 30% ITT on SALT 20. We did see quite a bimodal response pattern. Is there anything that you have observed in biomarker data or other patient factors that could help us understand who is having a great response to bempikibart versus who may have less of a response?
Yeah. Certainly an area of interest for us, and we are looking at that. I think the one thing I would point out with this data set, it is the first alopecia areata data set that includes post-JAK patients, and 40% of the patients in the program had received prior JAK. So we do anticipate that this data set looks different through the context of the patient population included in here, and we do think that some of the non-responders fall into that bucket of post-JAK. We are in process, and we will have an upcoming presentation at the EADV conference where we will present some of this data.
on the post-JAK populations, and I think that largely explains what we're seeing there for the non-responsive patients. We're also digging in on the biomarker data, and we'll have some of that also at EADV, including some optional biopsies that were allowed within the study. So we will have some additional data on mechanistic there and the biomarker data that Shelia's working on. So, looking for additional opportunities to enhance as we think about the patient population moving forward that will have the best opportunity for response.
How many patients elected for an optional biopsy?
It's a small number of patients, but really rich data.
Okay
is what I would say. So, it's really encouraging. We have examples of responders and non-responders. Not all patients gave baseline, but where they did, really useful information, and we really think it elucidates the mechanism here. We're pretty encouraged by the data.
Okay, great. As we look further at the data from Part B, could you help us, remind us of the difference between the ITT and the mITT populations?
Yeah. Great question. We had pre-specified criteria in the statistical analysis plan that was built in. The difference is a total of eight patients. There were two buckets of patients that triggered the change from mITT to ITT, or I guess the other way around, ITT to mITT. The first bucket were patients who did not receive at least 50% of the doses. It was a 36-week treatment regimen. If they did not reach 18 weeks
they were filtered for the mITT. Within this bucket, there were example patients where we had two during their early loading regimen, one who got their first injection and then apparently reported for the first time to their physician they had a needle phobia. That was unfortunate. We had another patient who, logistically, just the commute to the site became problematic.
Two other patients with logistics issues a little bit later in that timeframe, one of which moved states where we did not have a clinical center, and the other, I think, had family issues.
Okay.
And then for the first time ever in my career, we had a patient that actually was put in jail.
Oh
During the first 18 weeks of the study. Despite being a responder, and actually approaching the company multiple times to somehow still get dosed while in jail because the drug was working.
For obviously ethical reasons, we were not able to do that. So, that was a first for me in a lot of years of running different clinical trials.
Okay.
Then we had a second criteria that got triggered around unstable disease.
Because we had built this trial to include patients who were post-JAK.
Many know that post-JAK withdrawal, you can lose your hair pretty significantly and quite quickly.
Yeah
We wanted to make sure patients were stable. We did require an eight-week washout, but patients were also required to have stable disease documented.
We had one clinical center here in New York, I think it was, where they did not determine that criteria meant that you had to have medical records that required patients to be stable. Their position was patient report of stability was sufficient. We had two patients that were unstable in those early weeks. I think ultimately this is fixable for our phase III.
where we will very clearly say that the inclusion, exclusion does require
Okay
documentation by a physician of stability. That's easy to fix. The third one is an example of where you might see this within a phase III, and you can pick this up if you look at some of the other trials that have been run in the space.
There are other conditions that can cause hair loss.
Okay.
We had a patient in the trial who had preexisting NASH, went off the diet that they had been controlling their NASH on, had a flare of their NASH, and in tandem with that flare, lost hair and triggered that criteria. Those were the two.
Okay. That was one. Did the other patient come off JAKs?
One of the two did, yeah.
Okay.
One of the two did.
The other one had NASH. Okay.
Yeah.
Cool. Thinking ahead to the, you mentioned EADV.
There is an e-poster title online.
That is correct.
Are we going to see the long-term data that you have?
Okay. We are going to see-
Yeah
the 52-week data-
We'll see the 52-week-
at EADV
off-drug period. As a reminder, I think it is an important reminder, this is not a 52-week treatment endpoint. This is an off-drug four-month period.
What we are testing for there is continued stability of response.
Yeah.
That is the number one goal. For responders, did you keep your response off drug for four months? Is there a chance you deepened that response during that four months? We did see examples of that in Part A patients after dosing, and that has to do with the mechanism here.
Okay.
Lastly, if you were a non-responder, do we see any conversions to response? You may recall we had a pretty profound non-responder that showed a latent response-
in Part A after dosing.
Yep.
This patient was in our deck for a long time, so we're looking to see
Yeah
if we catch any more of those
Okay
as we think about elucidating how this mechanism works in that sort of balancing of the immune system, which happens with treatment.
How many of the 33 patients that were in, obviously, there's one in jail, there's one that has a phobia of needles, but how many of those 33 patients have gone into the OLE?
We have not. Oh, in the open label extension?
Oh, sorry, in 36 to 52.
Yes, the 36 to 52. Yeah. We haven't released the numbers there. Keep in mind, obviously, the mITT, it's the majority of the mITT patients, right?
Yeah.
Some of those patients didn't continue through 36 weeks.
Okay.
But the majority of patients moved into that out of the mITT population. Then we will track those patients for conversion into the open label extension, which occurs after week 52.
Okay. So that's the mITT group, then there's none of the patients that were part of the ITT who then continued the rapid hair loss or?
It's a great question. I'd have to look specifically-
Okay
at those examples.
What do you all think is good durability data?
Yeah. We look at what the JAKs show there, right around eight weeks is when you start to see pretty strong acceleration of hair loss in patients when they are withdrawn from JAK. The exact data is not in the literature as clear as I would like it to be, but you do see an acceleration starting at eight weeks with a large fall off by the time you get to a four-month mark. You can have some latent patients who lose their hair later as well.
Okay.
It is largely in that timeframe. I think what we are looking for here is stability similar to what we saw in Part A, which was largely for at least a three-month period, the majority of patients showing very strong stability.
I would like to see far better than that as we move here after a 36-week treatment where we have really gotten patients, I think, adequate treatment. We will be looking to see very strong stability markers in those patients.
Okay.
In the majority. Overwhelming majority, I guess I am willing to say.
Okay
is what we are looking for. Are there examples of deepening effect would be the secondary point we will look for, and any conversions, again, of non-responders to responders will be of interest as well, any of those latent responders.
Okay, cool. Will we be seeing data in increments between 36 and 52 weeks? Could we see a deepening of response, and then the effect wanes over time?
Yeah, I think we'll focus on the 52-week endpoint, but we'll look for opportunities to look and see if there's something there to share that's relevant, sort of if there's a change between, call it week 44 and 52.
Okay
Where there's a significant difference, we'll speak to that. We may just speak to the fact it was consistent for patients.
Okay. And there is obviously the threshold of SALT 20 and people crossing that or not.
Yeah
Being a big deal. But within each of those two halves of the, well, not halves, but the two groups of patients who didn't reach SALT 20 and those that did, should we expect to see deepening of their responses?
Deepening of the SALT 20 responses to like-
Of the sort of, I guess-
10
percentage change from baseline, the average response-
Yeah, different-
in each of the groups
it'll be a different N.
Yeah
in this subset obviously.
Okay.
When we think of stability, we actually use the baricitinib language around stability. When we think of stability, I think it was defined in the baricitinib paper as a 20-point change in SALT. So if you're within-
Okay
that 20 points, that is considered stable.
Okay.
Easy for me to come up with my own language, but always easier to take something in the published literature as your definition.
Okay.
That is the approach we will take to this.
Okay.
But we will pay close attention to the patients who were previously SALT 20 and making sure that they maintain and providing some guidance on that.
Okay, great. When you talk about wanting to see stability, would that be a patient that had SALT 20 on the dot being SALT 40? Or is it sort of maintenance of that SALT 20 response?
It would be in under the definition from baricitinib, right? You are correct. A 39 would be considered stable.
Under a straight cutoff of a 20, a 22 would no longer be stable, right?
Okay.
We will provide, I think, language around what we saw for SALT 20 as maintenance.
And we will also provide under the baricitinib definitions
whether patients were stable in that bracket.
Okay, cool. When you say that you think you'll expect the majority of the mITT to be stable, is that with the baricitinib definition or the
Baricitinib definition.
Okay
I think for that. We will obviously also think
Yeah
the majority of our SALT 20s would be stable as well.
Okay
It applies to both.
Okay.
But when I was speaking to that, it is more in the general terms of the definition for stability.
Okay, great. Are you planning some kind of drug holiday period or cycling in your phase III, which is in the works based on these data?
Yeah. Looking forward to getting the negotiations completed with FDA in order to really provide better guidance on what this trial design will look like. We have, I think, a very clear picture of what we think it will look like, but we will wait until we have formal guidance from the agency and commitment before we provide that to the market. I think as we're thinking about the designs there, I think ultimately our plan is this is a chronic dosing regimen.
Testing this four-month off period isn't because we think patients should just get dosed and then no longer be dosed. We actually think it's critical for us to understand what the opportunity is for less frequent dosing for patients.
The four-month holiday will give us a very nice sort of metric to look at there. In addition, patients after week 52 from Part B will also be put into an open label extension arm. They can elect into that. Within that, we will look at both monthly and every two-week dosing regimens. That data will also be relevant. As we think about the phase III, we will take that data together. The regimen we expect to take forward for the purposes of our phase III will be a loading regimen of weekly dosing for the first four weeks to drive patients to steady state, exactly what we did in Part B, dosing every two weeks through 52 weeks.
Okay.
We do want to see what 52 weeks of actual dosing does.
Yeah
The primary endpoint is anticipated to be 36 weeks.
Okay.
We will look at both. Then subsequent to the 52 week, we will roll patients to an open label extension. Within that open label extension, we will look at opportunities for varying schedules. We will go for a chronic dosing label here. That is the expectation of what the dosing will be. If we have flexibility based on the models and the data from that for the BLA submission to allow for less frequent dosing.
Yeah
Which is our hope.
we'll be in a really nice position to do that with the data that we collect.
Okay, great. Do you anticipate one or two phase III studies?
We anticipate a single-
Okay
phase III. I think under the Subpart C with a Fast Track status on this program already, we're in very good standing, but there's also precedent in AA for this.
Pfizer had it for LITFULO. Nektar recently announced it for their REZPEG asset. We think
Yeah
it is a very reasonable assumption here.
Mm-hmm. Thoughts on the number of patients that you will include, and would you include teens?
Great question on the number of patients. I am going to hold until I complete my negotiations
because it'll depend on dose ranging considerations, whether the FDA requires that.
Okay.
We are anticipating single dose versus placebo, but we're holding in reserve an option to do multiple dose if the agency would like to push on that.
Our PK/PD models, we don't believe support the need for that. That'll be a critical discussion we have with the agency. I think as for including adolescents, it is our plan to include adolescents as we move forward. That will be a negotiated point at the end of phase II, but it is a reasonable assumption when we look at all other programs and the overall safety of this.
Okay, great. When do you anticipate having that end of phase II meeting? When will you be able to-
Can't come soon enough for me.
start the phase III?
Yeah. We are in the final stages of submitting the information needed for that, the PK/PD model being
the critical point we were waiting for. That meeting will occur before the end of this year, and we anticipate providing guidance to the agency or to the market ideally by the end of this year or early next year, dependent on if we need to do some back and forth with the agency to finalize things.
Okay, great. Are there any ways that you think you could enrich a pivotal study to show a more meaningful effect?
Well, I think-
Or as meaningful effect?
Yeah. I think adolescence is actually a nice way-
Okay
to do that, right? We know from the JAK studies that adolescents are better responders here. So moving adolescents into the program has benefit in that context because those that respond are much better and quicker responders. It is less time since their diagnosis, probably less overall fibrosis.
that goes on in these patients on their scalp. I think we are also looking to enrich that through other models based on the final data sets we are reviewing now, including things like biomarkers. We are looking at prior treatment with JAK and thinking about how to best stratify around that. So we will look for all opportunities to enhance the response and the signal here.
Mm-hmm. There are lots of other indications that you could go into here.
Yeah.
Your slides from the top-line data for Part B had many on there.
Yeah.
How are you thinking about narrowing that down and starting another proof of concept study?
Yeah.
When could we hear about that, and what are the contenders
Yeah
that that might be in?
This asset, and I think this class of drugs for the IL-7 has a wealth of opportunity. There's no doubt. We call it the wheel of indications in our slide deck. But there's a lot of indications there. I think strategically, we're thinking about the best fit for the organization. Overall, when we think of indications, the derm adjacencies make a lot of sense for the company. So vitiligo, lichen planus. We could revisit atopic derm, although I think we all have a little PTSD from that. So there are options for where we can go in those derm adjacencies. Outside of derm adjacencies, though, there's a wealth of other opportunities. We could leverage the TSLP side or the respiratory indications. We can think about IL-7 alone indications. We've already seen a de-risk of that for UC. Celiac disease is certainly on the table.
We think about indications where both sides of this bifunctional antibody play, TSLP and IL-7. That includes things like COPD. We could contemplate RA. But again, strategically as an organization, if we are going to move towards commercialization of this asset in the setting of derms, the idea of having a bag that has multiple indications is of high value. We will make some decisions. I think in the near term, we are doing non-clinical work now that will be supportive of that, and we look forward to providing more to the market next year, probably in the first half.
Okay, great. So lots ahead. Could you remind us of your cash and the runway that that provides you, and a quick overview of the milestones?
Yeah, absolutely. Lee, do you want to take the cash? I will take the milestones.
Sure. Cash at the end of Q2 on a pro forma basis was just under $300 million. We have said that that funds us through phase III.
Okay.
Yeah. Upcoming milestones obviously include the 52-week data, as well as some of the biomarker data coming in the EADV. We will also have the readouts from the end of phase II and final design for our phase III. First patient is expected in the first half of next year for that phase III program. Then we'll have the open label extension Part B data in the second half of next year. On top of all of that, we are looking forward to thinking about new indications and providing a nice summary of what the timelines for those indications might be as we move forward.
Okay, great. Should we expect to hear about the study design after your meeting with the FDA as well?
Certainly. As soon as we possibly can settle on a final design with the agency, we will guide the market on exactly what that trial design is and what the timelines for that will be for the organization. As Lee Kalowski mentioned, we are fully funded for any of the iterations we're presuming could occur coming out of the end of phase II meeting. We have a going-in position. It's a very reasonable position we think that the trial will likely come out with. But we have other alternatives to that, and we're prepared for those and fully funded for those on top of running what will be an open label safety extension study in other populations of alopecia areata, including moderates and some of the pediatric indications or patients that are ineligible for the phase III.
Okay, great. Well, Jodie Morrison, Shelia Violette, and Lee Kalowski, thank you so much for joining us.
Thank you.
Thank you everyone in the audience. Thank you so much.
Thank you. Appreciate you having us.