Alumis Inc Stock

Great. Thanks for joining us, everybody. I'm Terence Flynn, Morgan Stanley's U.S. biopharma analyst. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley's sales representative. This morning, I'm very pleased to be hosting Alumis. Joining us from the company, we have Martin Babler, the company's CEO and Chairman of the Board; and Jorn Drappa, the company's Chief Medical Officer.

Thanks so much both for being here. Really appreciate it, early on a Monday morning.

Maybe first, I figured we'd start with the company's key asset, which is envu. And 1 of the questions we get a lot is on the oral psoriasis space, there's a couple of other competitors out there. And so maybe just high level, walk us through kind of the profile of what you guys have seen in your Phase III psoriasis data versus Takeda and also J&J's ICOTYDE because those are the kind of key other competitors that I know everyone is focused here as the landscape continues to evolve.

Well, Terence, thanks for having us and happy to go a little bit into psoriasis. So envu is a TYK2 inhibitor. We believe that actually in TYK2 inhibition, one of the most critical things in psoriasis is that you maximally inhibit the target. And I think our data has been actually extremely consistent. I think that's actually the one piece that we feel we're very proud of.

What we see with envu is that we consistently see basically PASI 100 rates in 40% or more at week 24. And we actually do believe that the predictability of the molecule and the consistency of the data is an important aspect. And the fact that actually, fundamentally, we put about 40% of patients into a state of clinical cure at week 24. And then in our ONWARD3 trial, where people were able to choose to go into, we see that rate actually going up in ONWARD3 section overall to about 54%.

If you actually take a complete ITT analysis, from the very beginning of our ONWARD program all the way through the end that of week 48, you're actually getting, close to 50% as well of patients getting PASI 100. So almost half of the patients actually with this drug basically get particularly clinical cure.

The other aspect that we feel is very important is actually when you ask patients what their most important symptom is that they want to take care of, they will actually tell you its itch. Physicians don't always agree with you -- with them because itch in psoriasis is actually a matter of disrupting the plaque.

But for patients, that's a very important symptom. And we've shown consistently in our data set that for itch, we have a very, very strong onset. So it means it resolves very fast, a lot faster than the plaque, which is what -- where physicians thought the resolution of itch comes from.

But not only does it resolve very fast, but we actually use NRS scale to measure it, which is what other people have used in itch trials for atopic dermatitis. And the FDA perceives a 4-point or more improvement as really clinically very meaningful and approvable. And we've actually seen the 4-point improvement in a very large number of patients, over 70%.

Great. What -- maybe just talk to us about the filing here? What's gating to getting this into the FDA? And what's the expectation in terms of kind of turnaround time?

So we guided to filing in the fourth quarter. We are on track to do that. One of the things that we can now publicly say also is that the FDA asks you to contribute safety from all ongoing trials. So 1 of the pieces that actually we -- we're looking to get was the safety from the LUMUS trial. And we could have done that as just a cutoff point. But we felt actually understanding the LUMUS safety data, including the placebo responses was helpful. And we've shared that 1 of the key outcomes for us, for LUMUS, which was a lupus trial, which is normally a sicker population, also on other concomitant meds basically showed us that it was again, very well tolerated.

We saw no new safety signals. We have publicly disclosed. We saw no MACE, we saw no malignancies, no blood elevations that would -- chemistry elevations that would lead to a potential risk of monitoring or anything. So we actually do believe the LUMUS safety data makes the case for envudeucitinib even stronger. And that was the last piece that we needed to finalize the NDA.

Okay. And is it fair to assume standard review time lines? Is that how we should benchmark in terms of the turnaround time?

At this point, we should assume a standard review time.

Okay. One of the other questions we get is about the label. So I think you guys have made the case about more selective inhibition of TYK2 versus SOTYKTU. So maybe talk to us about likelihood that you'll have a differentiated label versus SOTYKTU because, again, I think that's another debate that we hear from a lot of investors.

Yes. Jorn, you want to start?

Yes. So I think SOTYKTU still had some carryover language from JAK inhibitors. So I think both of us and Takeda as well have consistently shown that with selective inhibition, you really do not have any JAK inhibition. So possible side effects of JAK inhibitors would be blood cell abnormalities. There would be lipid elevations, this type of thing. And consistently across both molecules, Takeda and ours, have not seen any evidence of that.

And we have had extensive early clinical development, where we also have carefully tested whether there's any evidence of JAK inhibition, there is none. So it's fundamentally a different pathway. And so we obviously make the case that we should have a label that reflects our actual data, and there is no hint of anything related to JAK inhibition in our data set.

And the other 1 is the TB issue. And I think what we've now seen is 2 really interesting data points. First, neither us nor Takeda have shown any TB reactivation in any of our trials to date. The other one is [brepocitinib], which is a TYK JAK basically just got a labeling where it's very similar to ICOTYDE where the label actually is not a requirement for a TB testing, but rather just a recommendation. And so we believe that's actually a good surrogate for us to look at that we believe we have a good chance to also get that kind of labeling.

Great. When we -- I think Takeda is a little bit ahead of you guys in terms of filing time lines. So it seems like they'll probably get their label first. Should we assume whatever they get, you guys will get something very similar? Or is there enough differential to say like, okay, because Takeda got X, envu might get Y?

I would say that the label is based on the entirety of the clinical data, right? And so I can only talk about our clinical data since all I know about Takeda is what they have published. But based on our clinical data, we expect no requirement for lab monitoring because there are no systematic excursions in lab values. And Martin has talked about the TB and the overall safety and tolerability looks excellent. So I think so the label is going to be based on the data set.

Okay. Fair enough. Last one, just the psoriasis side, is any progress with the once-daily formulation. I know that's another thing going on in the background here. So maybe just level set us on where things stand there.

Yes. Our plan was originally to just share once we have selected the formulation, so we could give you an exact time line. But I think -- we decided last week that we actually have disclosed that we are taking multiple formulations into the clinic in the near term, and then we'll make a decision which one of those will be moving forward. We shared before that we actually made 1 formulation that we were very happy with from a PK perspective.

Unfortunately, it had 1 other flaw that we just didn't like. We have since worked around that and basically are hoping to identify a formulation once we've done with the clinical testing and then we can give you exact time line at what point we will have a once-a-day formulation.

Would -- how long would initial PK/PD work take? Are we talking months here? Or is this quarters? Roughly...

This is probably quarters because we want to be very solid on that.

Okay. Got it. Okay. Maybe just moving to the kind of more recent news is you mentioned the LUMUS trial, Martin. So maybe just for everyone who hasn't gone through that data, walk us through kind of the key messages from the Phase II data set and the next steps because I know that's something else that you guys are focused on.

Sure. So this was a 48-week Phase IIb dose-ranging trial, pretty substantial in size, 4 arms, 100 patients each including 1 placebo arm and 3 active doses. Primary endpoint was the BICLA, which is a composite measure of disease activity in lupus at week 48. The headline result was that the trial did not meet its primary and key secondary end points in the overall all-comers trial population, but there was a strong signal in a predefined subgroup, which is the patients who have evidence of what we call the interferon signature.

So that's a subpopulation that constitutes approximately quarter of moderately to active lupus patients overall in prospective studies. And so we have prespecified this, but we had not a priori excluded the biomarker negative, the interferon signature negative patients because we did not have a prior evidence that there would not be at least some evidence -- some benefit in those patients.

So bottom line was that for the interferon signature negative patients, there was no benefit. In fact, in some -- in some -- for some endpoints, the placebo response was actually higher than the active doses, but there was a strong signal in the interferon signature positive subpopulation. And so there was a separation from placebo, both for the BILAG for the SRI-4, which is another composite endpoint in lupus for skin rashes for joint counts for remission. And so consistent evidence of response.

So going forward, I think it's going to be important to hone in on this population that is likely to benefit from type 1 interferon-targeted treatments and focus the analysis on this subpopulation.

And then just remind us end of Phase II meeting, kind of any time lines around that because I think that's...

So the data is still new. We are still digging through, including some aspects that we need to understand further such as dose response, proposed Phase III doses, et cetera. We are aiming to put together a package for the agency towards the -- by the end of this year and then request a meeting. That's probably going to be early next year given the busy schedule for the agency typically in December. So that's the plan forward. And so we want to get an understanding of the agency's position on several questions.

One question is for enriching this -- the biomarker positive population, what is the better strategy? Is it to basically focus the trial on this population in the first place? Or would the preference be to have still an all-comers Phase III trial with a cap, for example, on the signature negative patients than having the primary analysis for the biomarker-positive population and then the all-comers as a secondary analysis. So these are 2 possible approaches.

We need to get buy-in on dose selection for Phase III and several other aspects. So those would be the key topics of discussion.

Do you have all the data you need to go higher in dose if you guys did want to do that? Like meaning from your prior dose escalation work, do you have more headroom to take a dose up if you decide to do that in Phase III?

Yes. So the data does not really suggest that there would be any benefit. In fact, one of the surprises of this trial was that the dose response was somewhat attenuated. We did have a bit of a dose response within the BICLA. But for other endpoints, there was a lot of variability and the overall effect size did not seem to be very different between the middle and the higher dose. So I think if anything, the question would be whether a lower dose would go forward and not a higher one in this disease at least.

Yes. And just to add a few other things because we had an original time line if the trial was positive just in the first place, and we didn't have to the prespecified subgroup. So from a time line and from a trial size perspective, actually, we do believe that there is really good evidence here that we could stay relatively close to what our original plan was. We originally had shared that as a base case, we would have to do 1 additional trial. We'll certainly see whether that's still an option. I think the other piece is important for people to understand is we do not expect a significantly larger trial than what we've already performed because for the LUMUS trial, we actually collected quite a lot of safety data across all 4 doses.

But the long-term extension was actually all in the highest dose. And so we believe that we can actually size the trial for efficacy and don't necessarily have decided for safety given the way the LUMUS was structured.

And then anything else on the kind of placebo arms, so minimization of placebo response? I know that's historically been a big focus for lupus trials. So as you look through, I know it's still early days as you look through the LUMUS data, anything more you think you can do in terms of an implementation standpoint to kind of mitigate that placebo response further?

Yes. I think the key, again, is going to be the biomarker selection, right? So our placebo responses in this trial were high. But they were entirely driven by the signature-negative patients. So within the positive population, the placebo responses were like in the high 20s, which is within the realm of the expected in lupus trials. So I think again, sufficient disease activity ideally BILAG, at enrollment and interferon signature, both of which are highly correlated with 1 another, are the best ways to minimize placebo responses.

We already did undertake very significant efforts to try and do this through enrollment adjudication and real time data review and other things. But it does turn out that this population that lacks the interferon signature does have very high placebo responses, and that corroborates prior experiences from anifrolumab where the same thing was shown in that trial as well.

And as you think about, I guess, the interferon signature, is that just a blood test, so it's very easy. Do most lupus patients have that done during the course of their regular diagnostic work? Or is that something that would be like an extra step that doctors would have to do as we think about commercial implications for looking for that?

At the moment, that is still very much a clinical trial blood test, but it is a commercially available blood test that is offered by the large central labs, such as PPD and Covance and others. So it's nothing that we invented. We just utilize that commercially available test. I think going forward, as more and more evidence is generated especially type 1 interferon targeted therapies just do not work in the negative population that this is going to become more common as part of clinical work in the future.

Okay. Great.

You can actually already see a little bit of a precursor of that because if you type in lupus and if you go do your search on the web, it turns out there's already pop-ups happening for interferon testing if you're a patient that has been diagnosed with lupus. So it looks like at least it's a directional effort going on to assess interferon high or low status already today.

Okay. We were talking about this earlier. So Bristol-Myers has some data for their first gen TYK2, so TYK2 in SLE expected later this year from 2 Phase III trials. So as you think about that data, maybe just frame for us the range of outcomes and what it would mean for your Phase III strategy and anything you'd be focused on?

Yes. So if you look at their Phase II PAISLEY trial, there was quite a bit of variability in between the dose arms. So the delta in response between active and placebo ranged from, I think it was 26% at the lowest dose, and then it was single digits. And as they doubled the dose and then again went up to 15% when they tested the 12 milligrams. So that's quite a wide range of outcomes, and it will be interesting to see in Phase III on what end of this large spectrum, the results are going to come out.

If it turns out to be on the lower end, I think there is a clear path forward if. It's at the very high end, that is -- I think that makes it more challenging because they're going to be several years ahead. And so then that will need to factor into our decision-making of where and how to move forward with the type 1 interferon mediated group of diseases.

Okay. And any -- are they looking -- I guess it's not your trial, so kind of an unfair question, but are they cutting it by interferon signature as well? Or do you guys have any insights there?

Not that we're aware of, but I don't have any further knowledge than that.

They have done the analysis that way post hoc. Whether our data suggests that they might do something different in their analysis plan, we just don't know.

Okay. Fair enough. And maybe just high level, what are the implications of these data for other indications? I know you guys have a plan to kind of think about other indications for envu beyond psoriasis, beyond lupus. So -- what do these data mean for that plan, I guess.?

We have publicly disclosed that we are interested in pursuing CLE and Sjögren's. For both of these diseases, there is the same kind of dichotomy between the interferon signature positive and negative. I think it's got to have implications for those indications as well, and we'll need to carefully consider how we implement the learnings from this Phase II trial into any future trials and really try and focus the analysis on those patients who are most likely to respond.

I think there's probably, at this point, insufficient justification to exclude, for example, signature negative patients in Sjögren's because we have no prior clinical evidence that there's not going to be some benefit, but we'll certainly need to carefully think about how to construct outcomes and statistical analysis plans.

What is the rough time lines for those 2 indications as you think about like the Phase II rollout '27?

I think we want to carefully evaluate our Phase II lupus trial first and finish that work, have the interactions with the agency and determine the best path forward before we comment on the time lines there.

Okay. Takeda has with Zaso, their TYK2 -- next-gen TYK2 inhibitor, some IBD data coming from 2 Phase II trials. And so maybe just what are -- I know you guys was not an indication that you prioritize. So maybe just talk to us about that decision but then also what do these data mean for you guys and envu in terms of any learnings or implications for other indications you might pursue?

In principle, IBD is an obvious application for a TYK2 inhibitor. We know that IL-23 inhibitors work in ulcerative colitis and Crohn's disease. The question is, as a monotherapy, are they going to be able to break through this efficacy ceiling that we have consistently seen with other treatments. And so it's going to be really interesting to see that data. The other thing that we've been working on in our research group is on what would be a rational combination approach in IBD because in my view, since we have this relatively low efficacy ceiling that nobody has been able to break through, probably the way -- the way of the future is to explore combinations between orthogonal pathways and see whether that can actually lead to a substantial -- to a real quantum leap in remission and clinical response rates in this disease. And so that's something that we're very much interested in.

Any pathways in particular that kind of jump towards the top of the list?

So we've looked at a number of pathways and I'm not sure whether we want to go into any further details than that.

Okay. And it would be try to do like an oral, oral combo or could be oral injectable? Like what would be the ideal, I guess?

I think the ideal in my mind would be an oral oral because it's certainly more challenging, both from a from a cost and from a logistics perspective to have an injectable and an oral.

Yes. Okay.

I just want to reemphasize, we have actually done a lot of work around this. And so we do have pretty strong opinions of what we should be doing, but we're not sharing that at this point.

Okay. Maybe just high level as we think about the market opportunity here in psoriasis and SLE, Martin, you can just walk us through kind of where you think this drug has the potential to generate in terms of sales or maybe any analogs we should consider as we think about those 2 opportunities on the commercial side?

Yes. So part of this is really are we launching this ourselves? Or are we launching this as a partner? And -- but we do believe there is significant opportunity. The way I describe this to people is that currently, J&J believes that ICOTYDE could be $6 billion in psoriasis alone for Takeda sees about a $3 billion for psoriasis alone. We have a molecule that really shines compared to those molecules in terms of efficacy. We have very strong evidence in some subsets of patients, especially those with a lot of itch.

So we do believe there's significant opportunity for us as well. In this market, it's a market that's quite fragmented. And if you look at as the IL-23 as an analog, even a very inferior IL-23 still approaches $1 billion in sales.

So we do believe that there's a very substantial opportunity. The question is how we best realize that opportunity. Is that alone or in a partnership? And we always said our plan was to partner the asset. But as a fallback, there's certainly the situation where we could also launch it probably ourselves in the U.S. and then figure out what do with the rest of the world. But from our standpoint, just psoriasis alone is very substantial. And then the lupus market has a very unmet need. And yes, there is quite a competition now for who gets the first oral approved and there's some competition around what mechanism might be viable. The reality is, so far, most of these drugs have about an efficacy rate of maybe 20%, maybe 30%. That still leaves a lot of room open.

And so we do believe there's substantial opportunity, both on the interferon side and on the IL-23 side. And I think the other piece that we haven't talked about is that our lupus trial also basically showed us that we suppressed interferon quite substantially. So there's other indications certainly outside of the ones that we just talked about that are driven by interferon that we could also tap into.

You mentioned this, the potential partnership. So maybe what are the important inputs or considerations as we think about the profile, the timing of a partnership, maybe just some variables that you're considering here. You mentioned U.S. versus partnering ex U.S. So how do you think about the different inputs that we need to think about?

Yes. So in the ideal world, you find a partner that shares our vision for this molecule across many indications and on a global level, and we play a role in that relationship as a partner. I think at the end of the day, this is going to depend a little bit. We were hoping that the lupus data would be a clear help to clarify what we're actually basically partnering for.

I think the data was a little bit more mixed. So it's not as black and white. But we certainly have now more information in our hands to have these discussions with people about what a partnership would look like, and we believe this could be anything from what we've done in Japan, where we just basically gave the dermatology rights to Kaken and do that on a broader basis to having a partnership that is a global partnership across multiple indications.

And anything in terms of like time lines? Obviously, is something you want to have decided, obviously, before the FDA approval decision? Is that like the kind of cut point we should think about at the far end?

I think I've been asked this question a couple of times over the last couple of days. And fundamentally, the longer you wait, the more decisions you will have made that are not reversible. And so the sooner you can get it or the partners could actually then discuss how to best approach this. There's no set time line per se. There have been situations where partnerships were done very late, but then you're not just basically trying to sell the molecule itself, but you're also going to sell the strategy. And I think that's the piece why earlier partnering makes more sense.

Okay. Got it. Maybe just provide us kind of an update on the rest of the pipeline. I know you guys have more things going on beyond envu. Obviously, that was the major focus, but just what's the latest in the rest of the pipeline?

Yes. So for A-005 we originally had disclosed that we would take it into MS after further evaluating the situation, especially in relapsing remitting MS. We realized that for us as a company, that would have been an indication we could have pursued at least a Phase II in, but that was hard to pursue at this point in time. When you look at primary and secondary progressive MS, they are a lot harder, a lot longer and something that will be hard to take all the way to the market.

So we decided, based on market assessment and some internal data where we actually have identified a biomarker for Parkinson's that we are switching to Parkinson's. And so we are finalizing the design of our Parkinson's study and plan on basically initiating a Phase IIa biomarker study in Parkinson's in '27. And then we have an earlier pipeline where you intend to put an additional molecule into the clinic next year.

What can you tell us anything about that biomarker at this point?

The biomarker for Parkinson's?

Yes. Anything you can elaborate on yet?

Yes. So it basically is a biomarker that we discovered is highly associated with Parkinson's, and it turns out that actually TYK2 modulates that biomarker. So we're now, as part of this study, looking a little bit to answer to chicken and egg question. Is this a biomarker that is just basically running in parallel? Or is there any predictive value in it. And then we're looking at other biomarkers, and I'll let Jorn a little bit allude to how we think about the overall Parkinson's study.

Yes. The study has a couple of goals. So first of all, we want to study how A-005 basically engages its targets, both in the peripheral blood, but also in the CSF. So there will be LPs as part of the study. That's the first goal. Then the second one is, is the treatment with A-005 are able to down modulate biomarkers that are associated with Parkinson's disease. So markers of neuronal destruction, will those come down or at least not come up as they typically do during the progression of this disease. So it's not primarily a study that's directed at clinical outcomes, those studies can be quite long and require much larger numbers.

So it's -- we may get some hints perhaps about clinical outcomes, so it's primarily a study that will inform and potentially de-risk future studies that are directed at clinical outcomes.

And last question was just on the cash position burn. Just maybe remind us where we stand in terms of guidance on that front.

Yes, we haven't changed the guidance yet. Originally, our guidance at the end of June was that we have cash through or into the fourth quarter of 2027. That assumed that we would do all the lupus and psoriasis activity and prepare the other trials for A-005 and Sjögren's and CLE plus our research pipeline. We're certainly reviewing exactly how we move forward, but we still have more than as of the end of June, we had more than $500 million in cash.

So -- we want to make sure we're very judicious with the cash, but a lot of it certainly goes towards psoriasis and preparing that market. And then I think whether there's a partnership or other ways to fund the company will define ultimately what above and beyond or base case plan do we do?

The next couple of months certainly are critical for us to make some of those decisions. But I think the most important thing is that we think about what do we do and how do we optimize the outcome with the cash we have on hand and what are additional ways to maybe strengthen the balance sheet. And there's everything on the table and this partnership is certainly being a key focus.

Great. Well, thank you so much, guys. I really appreciate the time this morning and best of luck.

Thank you.

Thank you.

Good morning, everyone, and welcome to the Alumis Conference Call on the LUMUS Phase IIb top line results. [Operator Instructions] As a reminder, this call is being recorded, and a replay will be made available on the Alumis website following the conclusion of the event.

I'd now like to turn the call over to John Schroer, Chief Financial Officer at Alumis. Please go ahead, John.

Thank you. Good morning, and thank you for joining us today. Before we begin our formal comments, let me remind you that during today's webcast, we will be making forward-looking statements that represent the company's intentions, expectations or beliefs concerning future events. These statements represent our views as of this date, are subject to risks and uncertainties and should not be relied upon as representing our views as of any subsequent date in the future.

With me on the call today are Martin Babler, our President and Chief Executive Officer; and Dr. Jorn Drappa, our Chief Medical Officer. Martin will open the call and then hand off to Jorn to walk through some of the data, including the prespecified subgroup analyses. Martin will then review next steps before wrapping up the prepared remarks, then we'll take questions.

I would like now to turn the call over to Martin.

Thank you, John, and thank you all for joining us. Let me start by acknowledging that the LUMUS Phase II study this trial did not meet the primary and secondary endpoints. This was clearly not the outcome we expected. However, this Phase II trial has provided important insights and a clear path forward for envudeucitinib in type 1 interferon-driven diseases, including SLE.

The LUMUS data confirm the favorable profile that we have seen to date. In LUMUS, envudeucitinib was well tolerated with no unexpected findings and was comparable to placebo. These data strengthen the overall safety data set we have for envudeucitinib, especially as we continue to expect our NDA submission for moderate-to-severe psoriasis in the fourth quarter of this year.

Robust clinical responses were observed in the prespecified subgroup of patients with high interferon gene signature, which represent approximately 60% of the patients enrolled in LUMUS. This analysis shows meaningful treatment effects across primary and key secondary efficacy endpoints. These results are consistent with the type 1 interferon targeted mechanism and confirm that envudeucitinib is working as designed. The subgroup of the population is an established and readily identifiable patient group and represents a large opportunity of moderate-to-severe SLE patients. Jorn will outline the factors we believe contributed to the overall outcome as well as the meaningful clinical benefit that we saw in the prespecified subgroup of patients with high interferon gene signature.

On this call, to simplify the lexicon, we will be abbreviating high interferon gene signature to IGS-high and, similarly, low interferon gene signature will be IGS-low. We believe that we have a clear path forward for regulatory engagement on Phase III development for envudeucitinib and SLE, and we do not foresee significant changes to our overall development time line.

I'll now turn the call over to Jorn to go into more detail on the LUMUS results.

Thank you, Martin. LUMUS was a Phase II randomized, double-blind, placebo-controlled study that evaluated multiple doses of envudeucitinib in adults with moderately to severely active autoantibody-positive SLE. The trial enrolled 408 patients who received 1 of 3 envudeucitinib doses or placebo for 48 weeks in Part A. The primary endpoint was the assessment of improvements in overall disease activity using the composite endpoint BICLA at week 48. Key secondary endpoints are listed on this slide. After week 48, patients had the option to roll over into the long-term open-label extension portion of LUMUS, which is Part B.

Let's now review the efficacy data. As Martin said, envudeucitinib did not achieve statistical significance with the primary endpoint in the overall population at week 48. The same was true for SRI-4 and other key secondary end points.

With respect to safety, we were pleased to see that in LUMUS, envudeucitinib treatment was well tolerated through week 48 with no new safety signals. Overall, incidence rates were lower on active treatment compared with placebo for treatment-emergent adverse events, serious adverse events and adverse events of clinical interest. Notably, there were no reports of MACE, extended MACE or malignancies in any treatment arms.

We were encouraged to see that the pharmacodynamic data from LUMUS confirms that envudeucitinib worked as intended. As a TYK2 inhibitor, it blocked downstream type 1 interferon signaling. And here, we see that in a dose-dependent manner.

On the left panel, you see expression levels of SIGLEC-1, a biomarker that is exclusively sensitive to TYK2 inhibition. On the right panel, you see a 4 gene panel that measures the expression of interferon regulated genes. By both of these measures, the top dose of 40 milligrams BID achieved strong target engagement with maximal down-regulation of the type 1 interferon pathway.

Before we go further into the LUMUS analysis, I would like to provide a little bit more context about the interferon gene signature characteristics in lupus patients, which play a key role in treatment response to type 1 interferon targeted treatments. The distribution of interferon gene signature is bimodal with a natural separation into 2 distinct groups: High and Low IGS groups. IGS-high is an established patient group that represents approximately 70% of moderate-to-severe SLE patients, as reported in the SPOCS cohort study. And as Martin mentioned, this subgroup is readily identifiable using commercially available assays.

IGS-high patients tend to have greater disease activity and typically respond more favorably to interferon pathway targeted therapies with lower placebo response rates. Conversely, IGS-low patients respond less favorably to interferon targeted therapies and show higher placebo response rates.

Now let's look at the key factors that affected the LUMUS study outcome. The baseline demographics were generally well balanced across groups. There were 2 key factors that impacted the overall study outcome as follows. The first is the proportion of patients with the interferon signature. The second is the disease activity as measured by BILAG. BILAG stands for British Isles Lupus Assessment Group, which measures how active a patient's lupus is across 9 organ systems. Symptoms are graded through a letter scale where A denotes severe disease activity, B denotes moderate disease activity, and C denotes mild disease activity.

First, let's talk about the interferon signature. LUMUS enrolled a lower-than-expected proportion of IGS-high patients and, therefore, also a lower-than-expected proportion of patients with severe disease. For context, other Phase II and Phase III trials achieved approximately an 80-20 split between IGS-high and IGS-low patients. The split in our study was closer to 60-40.

As to why this occurred, one reason we hypothesized is that having more approved treatments available for SLE has reduced the pool of patients with severe disease activity that are available for clinical trials. In LUMUS, the interferon gene signature status was a stratification factor, but was not a requirement for inclusion into LUMUS. The result was more IGS-low patients being enrolled than we had anticipated.

Second, with regard to disease activity, the proportion of patients with severe disease activity, as indicated by BILAG-A, was slightly lower than the proportion of patients with moderate disease activity as indicated by the presence of at least 2 BILAG-Bs. Patients with IGS-low respond less favorably to interferon pathway targeted therapies and also show higher placebo response rates, and both of that -- both of these turned out to be true in our study. When we analyzed the LUMUS data for the prespecified subgroup of IGS-high patients, we observed clinically meaningful benefit across primary and secondary treatment measures in these patients.

I will now walk you through these compelling results. On the left side of the table, you'll see the IGS-high subgroup, and on the right side of the table, you see the IGS-low subgroup. In the green rectangle, you'll observe that for the IGS-high patients, on all endpoints, there are robust responses with clear separation from placebo. I'll also point to impressive results, not only on BICLA but as well on CLASI, SRI-4 and LLDAS.

To achieve LLDAS, several criteria that incorporates both disease control and limitation of steroid exposure have to be satisfied. LLDAS is important because it answers the question of whether patients achieve a remission-like state of low disease activity, and it has a strong connection to long-term outcomes.

Conversely, in the red rectangle, you'll see that there was no apparent clinical benefit from envudeucitinib in the IGS-low subgroup. And these results are consistent with the TYK2 mechanism of action, which primarily acts by down modulating downstream type 1 interferon.

On this slide, in the top panel, on the next slide, we show the response over time by dose in the IGS-high subgroup with a clear separation from placebo shown in the yellow line as early as 24 weeks. In the bottom panel, you'll see the lack of response in the IGS-low subgroup.

I'll now walk you through several slides comparing our data to published data on deucravacitinib and anifrolumab in IGS-high and IGS-low subgroups. The usual caveats around cross-trial comparisons, of course, apply.

Starting with Slide 13 for the IGS-high subgroup, we see overall strong response rates for BICLA for envudeucitinib compared to placebo and also compared to deucravacitinib and anifrolumab as well. In contrast, this slide shows that it's much more difficult to characterize responses in the IGS-low subgroup. Response rates are a lot more variable with no clear patterns.

The same holds true if we look at the SRI-4 endpoint. There was a clear separation from placebo in the IGS-high subgroup. And again, in contrast, this slide shows that for SRI-4, it's more difficult to characterize responses in the IGS-low subgroup with variable response rates with no clear pattern.

Finally, on Slide 17, we captured BICLA plus 4 key secondary endpoints, including CLASI-50 and SRI-4 response, active joint count reduction and glucocorticosteroid taper for envudeucitinib compared to anifrolumab. Again, there was clear separation from placebo on primary and these key secondary endpoints.

To conclude, although LUMUS did not achieve its key objectives in the overall study population, the trial did provide us with deep insights that we can build upon moving forward and incorporate our findings into Phase III development.

Before I turn the call back to Martin, I would like to express our gratitude to the patients, families and investigators whose participation made the LUMUS study possible. Martin?

Thank you, Jorn. The data in the IGS-high patients show a clear treatment effect, which we believe defines a patient population for a potential Phase III design and sizing. We are preparing for an end of Phase II meeting with regulatory authorities and do not foresee significant changes to our original development time line. We have some additional work to further characterize the responder population and prepare the LUMUS results for a future medical meeting. We believe that this represents a clear path forward for SLE.

We have accomplished a lot this year, and we have some additional milestones that will be important for Alumis going forward as well. We have now demonstrated that envudeucitinib has opportunity to help patients with both IL-23 and type 1 interferon driven diseases. We recognize that the key value drivers are psoriasis and pursuing interferon-driven diseases, such as SLE.

More broadly, we will continue to evaluate opportunities to maximize the value of our TYK2 portfolio for both patients and shareholders.

With that, we'll take your questions. Operator?

Thank you, Mr. Babler. We would now like to begin the Q&A portion of the call. [Operator Instructions]

Our first question comes from Eric Schmidt at Cantor Fitzgerald.

Sorry about the outcome here. Yes. I guess, how do you think about a future Phase III trial controlling for interferon gene signature high such that this doesn't happen again? Is there a way of instituting an assay that requires some percent of patients to be IGS -- interferon gene signature, IGS-high or some other metric that you're going to look at? And do you need to develop an assay if you're going to do that?

No. So the assays are commercially available. We did actually use this assay at screening and already in the LUMUS study. But since at the time, we did not have evidence that envudeucitinib would have no benefit for the negative population, we decided not to make this a requirement. That is something that now can clearly be adjusted since we have compelling evidence that there was no apparent treatment effect in the negative subgroup while there was quite convincing efficacy in the positive group.

So you could -- as a consequence, you can either completely focus future study on the interferon signature high subgroup or at least cap the proportion of negative patients. And so we'll do further analysis to see which one of these possibilities makes more sense. It does seem pretty clear that this drug did not have a beneficial effect for the negative subpopulation. So one, certainly, we would focus the future development on the population where it actually works, and that is quite consistent with our mission as a precision immunology company.

Our next question comes from Thomas Smith at Leerink.

A couple, if I could. Just wondering if you could give a little bit more color on your expected timing here for the regulatory engagement in the next update? And is the expectation here, you're thinking this would require one additional study, like 1 Phase III study? Or is there potentially a need for 2 Phase III studies?

And then secondly, I was wondering if we could just get your thoughts on the dose response. It seems like the 40 mg BID performed quite well in that IGS-high subgroup on BICLA, but it seems like the 20 mg QD dose also performed well on some of these other secondary endpoints. So I just wanted to get further thoughts on potential dose response in this study.

Yes. So to start with the first question, we will engage with regulators as soon as possible, hopefully, by the end of this year. Although as you all know, the FDA's calendar tends to be quite busy towards the end of the year. So -- but we will work expeditiously to prepare briefing materials to request an interaction.

With respect to dose response, I think we have a little bit more work to do. In this study, we used certain imputation methods where patients who either failed to taper steroids or who had adverse events or clear evidence of no efficacy were imputed as nonresponders. And so that can actually lead to some distortions across those groups. And so we will do some further detailed analysis, including the detailed dose response modeling to get a better handle on dose response.

You're right that in the slides, at first glance, it does not appear that there was a dose response for some endpoints, whereas there was for others. But I think we will reserve judgment until we have actually done this dose response modeling.

Certainly, if you look at the PD, there was a very clear dose response where there was progressively deeper inhibition of the type 1 interferon signature with increasing doses, but that does not immediately become apparent in the clinical outcomes.

Our next question comes from Terence Flynn at Morgan Stanley.

Great. I guess 2 for me. The first, I was just wondering how you think about these data in the context of other indications that you might be considering. I know that was something that we're expecting to hear more about later this year in terms of how you guys are thinking beyond the current indication set.

And then the second question, was just wondering if you could comment on the placebo behavior in the 2 different subsets. It looks somewhat different. So just any theories for the differences in the placebo behavior across the 2 subsets.

Yes. So to start with the second question. I think that has been a consistent observation across multiple trials and it was already seen in the anifrolumab trials that the interferon negative subgroup or the interferon gene signature low subgroup had a much higher placebo response rate. So if you recall the anifrolumab MUSE and TULIP programs, it was -- the active arms actually had relatively comparable response rates in between the signature high and signature low group. But the placebo response rates were much higher.

And the precise explanation for this is, I think, not completely clear. It just reflects the fact that these are probably biologically distinct populations with the ISG (sic) [ IGS ]-high population typically having more severe disease, that is probably a little bit less susceptible to placebo responses than the more moderate or milder disease that the interferon gene signature negative patients have.

And I'm sorry, remind me of the first question. It escaped my mind.

Just the other indications. So as you look at [indiscernible] data like other indications you might pursue? Or does this change anything in terms of development plan for those indications?

I think it has strengthened our conviction that this is a rational target in type 1 interferon mediated diseases, at least those patients who have a bona fide interferon signature. So certainly, the results we've seen in the positive subgroup with respect to the CLASI would strengthen my conviction that this should be working in cutaneous lupus as well. And we have previously communicated that we're considering development in Sjogren's, and we'll continue to evaluate that.

Our next question comes from Derek Archila at Wells Fargo.

Maybe just to carry off of Terence's question, just in terms of the future indications like Sjogren's and CLE, is this now the strategy to enrich for interferon high patients as well for those studies to kind of enrich the population?

And then Jorn or Martin, just curious, like, are there any precedents supporting enriching for interferon gene signature high patients after an overall miss in any other types of indications? Or what precedents would you point to in terms of bringing this to the FDA to narrow down the population?

So I think there's plenty of precedent for overall negative trials where convincing responses were identified in a subgroup and then subsequent trials honed in on that subgroup that seems to be more amenable to treatment with a given mechanism of action. I don't think that for this -- for the type 1 interferon signature, there's a precedent quite yet, but it is certainly a well-known paradigm in drug development that if you have a study in a broader population that clearly identifies a signal in a subgroup that you can then subsequently go on to develop in the subgroup.

And I would expect that the FDA would look at this at our data and come to the same conclusion as we did that there really did not seem to be any appreciable benefit for the interferon signature low group and then agree with us that subsequent development in lupus and potentially in other indications as well should be focused on those patients that have the biology meshing the mechanism of action.

Our next question comes from Alex Thompson at Stifel.

Maybe I wanted to follow up a little bit on imputations. And could you talk about discontinuations across arms here as well as in the prespecified subgroup analyses and what that looks like and how they were imputed? And then secondly, what's the level of importance for the deucravacitinib Phase III here in terms of further validation of sort of TYK2 in SLE as you think about going forward and talking to the FDA?

So with respect to the imputation method, our primary analysis used an imputation method that uses both a nonresponder imputation and multiple imputation methods. So the -- in the event that patients dropped out because of an adverse event or because of lack of efficacy, they were imputed as nonresponders.

Then there was a second category of intercurrent events that related to the use of restricted or prohibited medications. So if patients had to start a new medication to treat lupus or they were unable to taper their steroids to the target level, or had to increase the steroids, they were also imputed as nonresponders.

Other missing values for reasons not related to either of those 2 categories were imputed using multiple imputation, and that basically uses multiple data points for a given patient to predict what the response at the missing value would have been. So that was the basic methodology. The rate of dropouts ranged between 12% and 20% for the 4 dose arms.

It was actually a little bit higher in the 40-milligram BID group, which helped to depress -- or further depress the response rates. And so that was one of the contributing factors. So there's a lot more detailed analysis that needs to be done on this and sort of post-hoc and exploratory analyses to further characterize this. And then there was a second part of your question.

Yes. What do you think about the importance of the deucravacitinib Phase III as another validating data point ahead of meeting with FDA potentially later this year?

Yes, I think it's going to be an important readout, right? So at the end of the day, we want -- we expect that the TYK2, the mechanism works, and we -- it's certainly going to be important for us to look at that data and to see what are the potential avenues of differentiation.

Our next question comes from Jeff Jones at Oppenheimer.

I guess as you think about the study design in Phase III, is there a preference for enrolling solely the interferon high versus limiting the enrollment? And is there anything further you can say on safety in terms of your observations here and whether that supports your view on prior testing requirements for -- as you see with deucravacitinib in the context of your psoriasis filing?

Yes, to start with the second one. So the safety profile overall excellent. So consistently in all categories, whether we're talking about regular AEs or SAEs or AEs leading to discontinuation, the proportions of patients in the 3 active dose arms were actually lower than in placebo. So placebo had the highest rates of adverse events.

And we did not really see anything that could raise eyebrows, either opportunistic infections, malignancies, these types of signals. So we were really quite pleased with the safety profile that we've observed and don't think that any -- that anything we've observed would lead us to conclude that prior testing or screening for certain things would be required. And the first part, sorry, remind me again.

Was just in terms of how you're thinking about the -- using the gene signature...

Yes, capping versus selecting. So I think both are options, and we have not finalized the decision on that. Based on the data that I've shown you today, I think it's pretty clear that there is unlikely to be a major benefit to the interferon gene signature negative population. And so in my mind, at least at my current thinking is that it makes more sense to really select the patients with the underlying disease pathology that matches the mechanism of action. But certainly, that requires additional discussion and further consideration.

Our next question comes from Brian Skorney of Baird.

Just when we think about moving forward in the Phase III plan, how are you thinking about dosing given this data, understanding it's a new data set and there's probably a lot of review to do. But given the safety, it seems like you could even theoretically go higher. There seems to be a small difference between 20 and 40 on BICLA response, but a much bigger response on the interferon biomarker. So do you think the plan would ideally be to move forward with 40 mg versus placebo study? Are you thinking of having a second dose in that study? And is there a rationale to go higher? Is there substantial amount of work that would be required before putting in a higher dose into Phase III?

Yes. So based on the data that I see, I don't really think that the higher dose is likely to be required. When you look at the PD, it really does seem to max out and pretty completely suppress the interferon signature at the 40 BID dose. Ultimately, what dose to take forward in Phase III is work in progress. As I said, we -- this is just top line data, and we have really just begun to dig into the whole data set, and we'll need to do really detailed exposure response modeling to see how we can actually best correlate the PD effect that we've observed with the overall efficacy outcome.

And so part of the issue is that there was a dose response for some endpoints, but not for all of them. And so we'll really need to dig deeper into the data to see what could possibly account for this and then which dose actually makes the most sense to take forward. So that is still work in progress and not done yet.

Our next question comes from Christopher Raymond at Raymond James.

Just can you guys quantify what actually qualifies as IGS-high? Just looking at the literature, it looks like it's 2 standard deviations from healthy. Is that the right cutoff? And I guess just -- I know this question was kind of asked in previous questions, but I think there's a relatively high correlation between IGS-high and skin involvement, but there must be some nuance here because I know you guys control pretty tightly for patients with skin involvement. Just maybe talk a little bit about what you've learned now about that correlation.

Yes. So clearly, skin involvement alone is not sufficient to predict the IGS-high status because all of our patients in the study had skin involvement, but only 60% ended up having the interferon signature. The cutoff is -- varies by assay and by methodology, but it's actually usually a fairly easy to set the cutoff. And on this slide, I've shown you this bimodal distribution. And oftentimes, you can just set a visual line in between the 2 peaks that constitutes the cutoff. And so different commercial assays use different methodologies, whether it's by standard deviation or some other method. But in general, the cutoff is actually fairly obvious.

And then if I can ask a follow-up actually. So Jorn, your comment about how maybe the landscape has changed with more therapeutic options. Just what does this mean, I guess, in terms of just clinical development in this field? It sounds relatively like the bar has been raised and it might make things much more difficult going forward to get the right population. Just any -- if you could expand on that, please?

Yes. So there's 2 factors, right? So there's patients, especially in those countries where approved therapies are readily available, including the United States. Patients are given these therapies, and they are obviously no longer candidates for a clinical trial, and that somewhat reduces the pool of available patients.

And in addition to that, there's really pretty intense competition for this relatively narrow segment of the overall lupus population that is needed to identify a reliable signal in lupus patients. So we need to focus on those patients with relatively severely active disease in order to get the appropriate signal-to-noise ratio and avoid those placebo response rates, which showed in our trial, despite really significant efforts have still turned out to be an issue, especially in the type 1 interferon negative subgroup. I would expect that if you just hone in on the patient population with underlying interferon pathology that you should be able to avoid some of this.

So this concludes today's Q&A session. I will now turn it back to Martin for closing remarks.

Thank you. I do want to emphasize that the hypothesis that we originally set out, which is TYK2 actually and the interferon pathway that TYK2 ultimately deactivates is a viable therapeutic option. And so we believe that this data clearly supports that hypothesis.

So I want to thank you for your questions, and we really appreciate that you joined us today. And we look forward to sharing additional progress and information with you for envudeucitinib down the road later this year.

We're back now with Alumis for a fireside chat. We have CEO, Martin Babler; and CFO, John Schroer for a fireside. Maybe I'll start off by sending it back to Martin for a quick company overview, and then we'll jump into the Q&A.

So Martin, over to you.

Thank you, Alex. So we're Alumis. We are about a 4-year-old company. We're a precision immunology company with a focus on our lead asset being a TYK2 inhibitor. We have three clinical molecules and a research pipeline behind that. And to start with, our lead asset is envudeucitinib. That's a TYK2 inhibitor that we're studying for psoriasis and lupus.

We will have the readout for psoriasis in early Q1 of next year. We will actually, at that point, read out both our Phase III trials. They're both about -- or each trial has about 750 -- sorry, 850 patients in it. And basically, we will read out both the 16-week endpoint, which is against placebo and active drug and then the 24-week endpoint, which is against active drug. This will position us well in time-wise with the competitors. As you might remember, we started way behind the competitors, but we were able to catch up. I think the team did a really fantastic job in terms of execution.

Behind that, we have the readout for lupus, which will happen in the third quarter of next year. In lupus, we are in a Phase IIb right now. This is a trial that was designed as a pivotal trial. And if that has a good outcome, we have the opportunity to potentially to just have to run one more Phase III trial. And then we have A-5, which is going to go into Phase II for MS, with A-5, which is a brain penetrant TYK2. We have been able to show that we have a 1:1 ratio between the plasma and the brain. So a very well-behaved molecule as well.

And then we have Lonigutamab that came in with the merger from ACELYRIN, and we have multiple pipeline assets, and one of those actually will have Phase I data sometime next year. I think the most important other aspect is we have with the merger with ACELYRIN enough cash to readout both psoriasis and lupus and still have cash beyond that into 2027. And the team here that actually has quite some experience. Many of us on the leadership team came from Principia and MyoKardia. And so we've basically had successful development programs before.

So I'm going to stop here and hand it back to you, Alex.

Yes. I think first question I have is just kind of like a high-level one on TYK2 as a mechanism and a class generally. And kind of if in 10 years or so, the TYK2 class is this multi-blockbuster class, like the next JAK class, what would you look back at now and point to as evidence for that happening? I think right now, a lot of investors are skeptical of that, just maybe given the way SOTYKTU has been launching. Like, what would you point to, to give your confidence in this being a huge class in the future?

Yes. So I think the most important thing is that when you look at the original thesis that we had based on the genomics and how that translates to the clinic, we have always known that for TYK2 to get the real effect of the target, you actually have to hit the target really hard. When you actually start with the genetics, and there's -- TYK2 is one of the richest targets when it comes to genetics and genomics and the mutations.

There's one specific mutation, which is this 1104 mutation that just downrelates the kinase function. And there's 2 features of that. The first one is that there's no phenotype. So it should be really a safe mechanism. The other one is that when you look at the effect that it has is that a lot of people have highly protective effect against autoimmune diseases. That would suggest that there should be a good therapeutic effect.

The one twist that a lot of people have not necessarily understood is that when you look at the patients that have one allele or the heterozygotes carriers, they actually have a 20% to 30% protective effect and less kinase function reduction. Those that have the homozygotes variant, with 2 alleles, they have a very strong kinase reduction, and they actually have about an 80% to 90% protective effect. So that already told us that inhibiting this target really hard is important.

Unfortunately, the first couple of molecules in this class have not really delivered on that promise. But they actually have now been a total of 4 molecules that have delivered on that promise and actually have shown really, really good results. There's our own molecule. There is a molecule that -- a second-generation molecule that BMS had. And then there's 2 molecules that are developed in China only from Inventus and InnoCare that actually also show that better inhibition actually leads to better outcome.

So I think the challenge that we really have is that the class has been a little bit -- gotten a bad rap because of the first couple of molecules that maybe just weren't that effective as the target. But when you actually look at the data and you look at nuances of the data, you already know from our Phase II data from the CLE data with deucra, from the psoriatic arthritis data and -- that TYK2 actually is a very viable target that really instills a benefit for patients. So I think we will look back at this and think about -- it was not the target. It was not the mechanism. It was actually the molecule that led to the perception. And I do believe that in the next 12 months, we will really change the view of TYK2 as a target.

Yes. And then specifically for your molecule envudeucitinib, what are the key design aspects or otherwise that you think are differentiating versus even these next-gen molecules?

Yes. So amongst all these next-generation molecules, I believe or we believe that envu actually stands out because we've already shown from a safety profile that we do not have, for example, to dose reduce because of that -- those skin reactions that others have seen.

The first three molecules in this class, all had to dose reduce when they went from Phase I to Phase II. We did not have to do that. We could literally push the dose to above IC90 for 24 hours a day. And so that is the key differentiator. And we know that some of the newer molecules, besides ours, actually have the same feature. Whether that is TYK2 driven or whether that actually is a metabolite issue is to be seen. But we do believe actually the one molecule where we get a sense that it might be a metabolite issue is actually the case of SOTYKTU versus its second-generation follow-up molecule, which basically was a little bit more optimized for the metabolic profile.

So we do believe that actually is some credence to that hypothesis that this is really if you have active metabolites and they might not be as selective, you might actually have a different side effect profile.

Yes. Yes. Makes sense. So I want to talk about your Phase III design, et cetera, but we're going to get, before your Phase III reads out, the final Phase III at least top-line data from Takeda, the Nimbus molecule later this year. What are your expectations for that readout? And what are the important read-throughs for Alumis?

So if you look across the board of all Phase II data so far with this molecule, most endpoints show an efficacy that is probably better than SOTYKTU. Where exactly it's going to fall, we don't know. What we know is that, that molecule is not at the dose at least tested and that we understand that they test in psoriasis, able to be above IC90, 24 hours a day in patients. So where that exactly comes out, we don't know.

Our assumption is that we have three molecules that are in late-stage development in psoriasis, and they will have better efficacy than what's out there right now, how they ultimately stack up compared to each other, we will see. The one thing we know is that at least from the data in the two Phase IIs that have read out for the molecule from Takeda that there is a little bit more skin reaction than we've seen in our trials. And so the question really is on the efficacy and safety, is the molecule going to set a new standard? Or is this molecule going to fall slightly below the expectations? And we'll have to see that.

And then sort of the other molecule I want to talk about is Icotrokinra, IL-23 receptor antagonist, oral as well. Where does that fit into the conversation around next-gen orals in psoriasis?

We do believe that, that is probably the molecule that we all have to reckon with. However, we actually have not seen a pure adult population data set yet. We will see that sometime later this week. And it will be interesting to see because the data we've seen so far was always actually slightly probably biased by the fact that they had adolescent patients in there who normally actually have a better outcome, and that has been shown. So I think really, the bar will be set by the data that doesn't include the adolescents, and we'll see that later this week.

We do believe it's a competitive molecule. The big question for that molecule is whether the clinical efficacy is going to translate into the commercial market. When you talk to dermatologists, there is a suspicion that patients will not be fully compliant with the fact that you have to fast 2 hours before and sometime after. And so we know from other oral protein molecules, for example, in the GLP-1 space that when they were ultimately in the market, the efficacy was not quite as high because patients just were not compliant.

It's a safe molecule. It's a very well-understood mechanism. It is an efficacious molecule. I think there will be nuances here that will differentiate those different molecules and those different classes. For example, we see that at least in when it comes to reduction of itch, for example, that our molecule has so far shown in Phase II a faster and deeper response. We do believe that there's an opportunity in plantar disease, for example, where IL-23 pure mechanisms actually don't work that well. So there will be preferences and there will be differentiation. But we do believe all of these molecules have a competitive profile that we need to work with.

But we also -- if you look at, right now, there's actually more patients on oral therapies than -- the oral systemic therapies than there are on injectables. It's just that from a patient share, there's more, but from a dollar share, basically, the injectables are dominant, but they're actually less than 10% of all diagnosed psoriasis patients actually are getting an injectable at this point. So there's a huge market opportunity for these orals that we believe leaves room for everybody.

So then on your own Phase III program, can you talk about the design of the trials and really what you think good looks like here? I guess, like, do you need to replicate what you saw in Phase II?

So we actually might not even need to replicate what we saw in Phase II because I think the bar currently is set that at 16 weeks, you need to be somewhere between 50% and 60%. At week 24 through 52, what we've heard from the dermatologists that looked at our Phase II data is that they believe if you're somewhere in the range of 80% for PASI 75, somewhere in the range of 60% for PASI 90 and somewhere in the range of 40% for PASI 100 during that time period, you have a highly competitive molecule. And we believe that, that is achievable.

Our design is such that we have a 16-week primary endpoint against placebo. We also have active control at 16 and 24 weeks and then patients go into the long-term extension, which will give us the durability and the maintenance language for the label. So you will have a table in the label with 16- and 24-week data, and you probably will have text in the label on the rest. So we believe we will have a very competitive label very comparable to others.

But our design is such that we can submit with the 6 months data, and we don't have to run all the way out to the 12 months data. And that gives us a little bit of timing advantage, and that's how we were able to catch up basically with the other TYK2 inhibitors that [we're doing].

Yes. I guess sort of fast forward, successful Phase IIIs, can you launch this drug on your own? Can a biotech like Alumis be a competitive player in this market?

So I would say the likelihood that we're going to launch a drug like this on a global level by ourselves is relatively low. But we do believe that there is an opportunity. There's actually a precedent now in the psoriasis market with Sun Pharma having launched their drug, and they found a creative way to basically be a player in the market.

Is it going to be the same size product as if you had a partner? Probably not. But could we possibly do this on our own? Yes. But that is not necessarily our intent to do. So -- but is it a possibility? We do believe we've done a lot of thinking about this and a lot of work on it. And we do believe there is that possibility certainly to do so.

I guess, are you going to go through the necessary prep into the launch of this drug on your own? Or are you going to look for a partner immediately following positive Phase III data?

Yes. I can't really just declare what our strategy is here. But what I can tell you is that given that we have a commercial organization in-house that has a lot of experience with launching drugs, myself included, we are doing all the things that need to be done in a timely manner in preparation for the launch. And I think that's the most important part is that even if we have a partner, the things that need to be done at a certain point in time prior to the launch will actually have been done for the launch of the molecule.

And then for -- moving on from psoriasis, why is SLE such an exciting market opportunity for a TYK2 inhibitor?

Yes. So we decided on SLE for really two key reasons. The first one is when you look at most programs that are run with TYK2 right now, they're actually focused on the IL-23 mechanism. The second mechanism where TYK2 is actually very strong is the interferon pathway.

And we've shown in our Phase I and then in the Phase II, in psoriasis patients that both systemically and in the periphery in the skin, we actually reduce interferon levels down to normal levels with our molecule. And so we do believe that there is really good data that validates interferon as a mechanism. The first one is that we have genomic information that shows that.

The second one is anifrolumab basically goes after the interferon pathway. The Biogen molecule also -- one of the Biogen molecules also goes after interferon pathway. Those both had actually successful clinical data. And so the third one is really that there is already positive data in Phase II with the TYK2 inhibitor in the case of deucra.

So we have three key pieces of validation that TYK2 actually is a really interesting mechanism for lupus. And so we decided to pursue that also to open up the entire path of the interferon mechanism because there's a lot of indications, especially in rheumatology, where that mechanism plays a key role. So for us, the readout next summer in the third quarter is not just about lupus, but it's also about opening up that opportunity set of interferon-driven diseases.

Yes. Makes sense. I guess beyond rheum, IBD has always been a question for the TYK2 class. Like, what's your level of confidence that, that could be unlocked with this higher exposure strategy with these next-gen TYK2s?

Yes. So I have one key question there. And as you know, if you think about gut restricted drugs didn't necessarily work very well in IBD. And then the biologics need to dose really, really high because you actually have to get some drug into the gut for them to work well.

So for me, the question actually is not necessarily about whether the IL-23 mechanism works. And I think it will if you appropriately dose and inhibit it. The question is how much drug do you need to have in the luminal side and how much do you need to have on the systemic side. And that's more a drug property question. What we've seen clearly with the [ICO] data is that IL-23 as a mechanism will work in that disease. Whether it's going to be the best one, we don't know.

I think the other piece here that is very interesting and where we have a little bit of an edge over our competitors because of our PK profile is that we do believe one interesting approach for IBD is combination. And so we have a molecule that is really easily combinable because it's so well-controlled and has such a small percent CV. So we will wait to see what other people show in IBD, and that certainly could trigger for us to move forward in that direction.

For right now, we believe that there is as much opportunity on the interferon-driven diseases' side and some other indications, but it's certainly an area where besides CLE, lupus and psoriatic arthritis and psoriasis, you could possibly go and see a decent effect.

Yes. So you obviously have a lot of experience in MS. What gets you excited about TYK2 as a brain-penetrant molecule with your next-gen here and where that could go?

Yes. So the very original idea was actually to really enhance what we've seen with BTKs in MS. And one of the most fascinating things, and we probably as a company, as our former company, Principia, spent more than most other people really understanding the gut-brain axis and the whole question about [end the] microglial function.

And so one of the best ways to describe it to you is that when we started to do work on TYK2, it became very obvious to us that not only do we affect microglia really well and very similar to BTK, which we know is a key driver of the BTK response in MS, but we're also affecting the astrocytes. And the other thing is that we are actually a better -- TYK2 is a better anti-inflammatory.

So the way we think about it now is that TYK2 really could be a BTK plus. Because when you look at our preclinical data in the EAE model, which is basically a model of inflammation, when you look at especially the prophylactic data, we literally can flatline that model. In other words, you cannot induce any inflammation if our drug is on board. And that's actually better than the gold standard in that model, which is fingolimod. In the therapeutic model, the same thing. We actually beat the S1P1, which are the strongest anti-inflammatory drugs in MS in that model.

And so you get the effect that we've seen with BTK, which is basically the effect on disability more than anything. And then you get the effect on the relapse rate, which really comes a lot from the anti-inflammatory side. So I think that combination is a really intriguing combination of effects that could really benefit MS patients.

Makes sense. And I guess you mentioned in the upfront that with this ACELYRIN deal, you've obviously extended cash runway into 2027, but you've also got this new drug, Lonigutamab from thyroid eye disease. Where do you see, if any, path forward for that drug here at Alumis?

Yes. So I think the most important thing here to understand is that Lonigutamab is a differentiated asset. It has a differentiated mechanism. The mechanism of Lonigutamab is such that instead of actually competing at the receptor site against IGF-1, you basically internalize the receptor and IGF-1. So the systemic circulation of IGF-1 is very different from what you see with other TED assets currently.

The question is, does this feature translate into a valuable patient benefit on the safety side and therefore, something that people really care about. And so the key question is, how do you best test that hypothesis in a way that you don't have to run a full Phase III to find out. And so we are working through that aspect. We are also working through the fact that the TED market has a dynamic that people did not well understand in the past, but I think we start to understand better, which is that the retreatment rate is actually very low. So there seems to be some durable benefit from the treatment of these patients.

And so the number of patients that come into the pool versus the one that leaves through treatment is actually almost smaller. So what you've seen is like basically a flattening versus -- or maybe even a slight decline of the number of patients available. And so the question really in that context of that, what do you do and what you actually have to accomplish to really get a dominant share in that market for it to be worth doing.

So in our minds, those are some of the factors that we're working through and eventually we'll make a decision whether we move forward. There's also some new biology around IGF-1 that might make other things attractive or interesting. And certainly, as an organization, we do believe that Lonigutamab is a drug. Fundamentally, the question just is where and how to best develop it.

So your current runway doesn't include any Loni development at the moment?

So the current runway actually does include some money for Loni, but we haven't spent any. But -- so -- or spend very minimal on it. But fundamentally, there is some money in there, but we also want to be very judicious on whether -- and how to best spend that money.

Then I did want to touch on -- before we wrap up, on your newly disclosed IRF5 program. It seems to be an emerging target currently. I guess curious what you can say about where you think you might be differentiated versus others in the space.

So we haven't disclosed which molecule we will have Phase I data for next year. We have an IRF5 program. That is correct. And from our standpoint, this is a very interesting target that we've done a lot of genomic work on. But at this point, that is about as much as we're disclosing on that program.

Great. Well, I appreciate you both taking the time and thanks for joining us.

Thanks for having us.

Thank you.

Thank you.