Equillium, Inc. Stock

And welcome to the Equillium Virtual Investor Event. [Operator Instructions] As a reminder, this call is being recorded, and a replay will be made available on the Equillium website following the conclusion of the event.

I'd now like to turn the call over to your host, Stephen Connelly, Chief Scientific Officer at Equillium. Please go ahead.

Thanks, Tara, and good morning, everyone, and thanks for joining today's webinar titled Insights to the Aryl Hydrocarbon Receptor and miR-124 Axis.

Now before we start, it probably makes sense to give you a little bit of context on this work from the outset, both the Aryl Hydrocarbon Receptor and miR-124 are two distinct biological molecules. And indeed, therapeutic strategies modulating both of them have been shown to be effective in treating ulcerative colitis. However, data exists from cells, animals and humans that point to a more direct and functional relationship between these two molecules. And despite the biological and therapeutic relevance, the Parador relationship between these two has remained elusive and controversial. So understanding this relationship has critically important implications for both mechanistic interpretation and rational development of therapies targeting the AhR and miR-124 access in inflammatory disease.

So presented here today, we'll do a cross-section of work aimed at elucidating the functional relationship between AhR and miR-124, specifically providing a unifying mechanistic framework linking ligand-dependent AhR signaling to miR-124 expression.

Now to ensure we have enough time for Q&A, we will go over all of the data in the deck. So please be sure to download the full deck after today's call. So let me just dive straight into it.

Just a quick recap on the Aryl Hydrocarbon Receptor as a signaling hub. Now the Aryl Hydrocarbon Receptor is a Zenosensor, it's a ligand-activated transcription factor that resides predominantly in our barrier tissues. And when ligands come into the cytoplasm and buying to AhR, that causes translocation and dimerization within the nucleus. And then the recruitment of cofactors or binding to DNA leads to the induction of multiple pathways responsible for detoxification, immune modulation, anti-inflammatory cytokines, antioxidant proteins and barrier function and repair proteins.

Now let's walk you through a few of the top ones in each of the different functional areas. Now historically, the Aryl Hydrocarbon Receptors has been largely known for its ability to initiate xenobiotic responses, so metabolism genes, things that will destroy molecules that have come into the tissues given their signals and then need to be cleared. So things like the SIP 1A, SIP 1A2, SIP 1B1, a number of other genes, including enzymes that glucuronidate molecules, all with the sole purpose of eliciting a response to remove those molecules from the cell and turn off the signal.

Now more recently, in the last decade, areas relating to immune regulation and barrier function have been more widely studied. And this has changed the paradigm for how we think about the Aryl Hydrocarbon Receptor. Now here, there are a number of different genes modulated, but also cofactors recruited in a cellular dependent manner. So cofactors recruited in the immune cell typically modulate immune responses like NF-kappaB, ROR gamma t, and then cofactors recruited into the epithelial barriers, like wind, HIF, AP1, et cetera, modulate things like barrier function, repair and regeneration.

Now depending on the molecule and depending on the signal and the cell, you can get what we call biased agonism. So not all AhR modulators are created equally. These different gene sets will show a different signature, largely dependent on the ligand itself. Now importantly, XenoBiotic or external unnatural molecules like pollutants or drugs typically elicit very strong xenobiotic responses where dietary ligands, those illicit responses that are more related to the immune regulation barrier function and repair things that are more important from a therapeutic perspective.

Now an area of emerging research has been the microRNAs that are induced or modulated by AhR. Now I'm just showing the ones that we know from the literature are induced from AhR activation. But there are a number of mirrors that have been implicated that actually modulate the levels of AhR. And one of those in the literature is miR-124.

So let's talk about the AhR miR-124 access. So what's known between this relationship? Now there's a nice set of papers by Zoo. And what they report is that there's an inverse correlation between miR-124 and AhR protein levels in tissue from active celiac disease patients. Over expression in animal and cell models have shown overexpression of miR-124 decreased AhR expression and had a net pro-inflammatory effect, while inhibition of miR-124 increased AhR expression and had an anti-inflammatory effect.

Now this suggests there's some sort of negative or regulatory relationship between those where overexpression of miR-124 can then downregulate AhR as potentially a signal termination mechanism. And vice versa when levels of miR-124 are reduced, AhR levels return. And this is meant to be perhaps a way of balancing the anti and pro-inflammatory responses within cells.

Now there is another set of data out there. I'd like to turn this to sort of obefasemod paradox. And that's data that would suggest the induction of miR-124 does not illicit increased cytokine. It's actually anti-inflammatory. But the key challenge with this data set would be that we don't really understand from this data, the levels of activation or expression of AhR as a way to reconcile this with the data presented by However, this model can be reconciled, if, in fact, obefasemod is itself an AhR modulator.

Now to tackle that, there were three key questions we have to ask. Is ABX464 an AhR modulator? Does AhR modulation itself in miR-124? And what are the functional consequences of AhR blockade on the induction of these downstream pathways?

So to tackle this and largely spurred on by questions from the investor and academic community, we look to in silico modeling as a waiter actually just check a priority. Is there a potential binding mechanism here of ABX464 to the PAS biding domain in AhR? And then we actually took a number of AhR modulators and antagonist and tested them in a validated AhR luciferase reporter assay and also look to confirm that these ligands do indeed bind to the past be binding domain.

And then largely driven by the pioneering work by Abivax in terms of identifying a regulation of miR-124 and providing a plethora of very, very well-established and validated protocols to monitor miR-124. We essentially copied a lot of this work to show does AhR modulation also similarly induce miR-124? And what is the relationship between these in terms of ligand-dependent AhR signaling and miR-124 expression?

Now lastly, in a number of what we think are very well-validated systems of regulatory cells, namely regulatory macrophages, M2 macrophages or regulatory T cells, we use those systems to essentially activate AhR using EQ504 overfasemod and then looked at downstream induction of SIP 1A1, MIR-124, IL-1022 or in cells and model systems where we could look at regulatory effects, epithelial barrier repair and function, as well as regeneration.

So let's talk about the first of those, in silico modeling. So let's take a second to think about what the binding domain of AhR looks like. It's shown here on the right-hand side. We call this the AhR PassB binding the makers, where the canonical ligands bind to AhR. Now I think about this as kind of a baseball glove. It's got this large hydrophobic cleft that's able to accommodate the binding of a number of different chemical scaffold, quite a large variety indeed. On the left-hand side, you can see endogenous ligands, natural ligands and Xenobiotics and pollutants where this covers a wide variety of different chemical scaffolds. In fact, there are, as of 2017, 13 approved drugs that we know bind and activate AhR.

Now last year, a computational study looking at similarity based screenings of the library, found there were over 77,000 potential AhR binding molecules. This highlights the fact that the AhR binding domain as a xeno sensor taking chemical signals and turning them into biological functions can accommodate a wide variety of chemical scaffolds. So with that in mind, we took the core scaffold of ABX464 and took a look at it for its properties related to AhR modulation. And it does take a number of those boxes in that it's flat planar, confirmational constrained, has extended aromatic or heterocyclic systems and has moderate to high lipophilicity. And then we tested that not just against any compound, but against known AhR modulators. And there are three that will come up here. Laquinimod which is a and active biotech studied molecule. This molecule has been in Crohn's patients, MS patients. This molecule is a potent AhR agonist, but unfortunately, has poor tolerability in patients.

Now what you can see here is the overlay of ovefazimod ABX464 behind Lekulamodel. And we can see that the quinolone core, overlaps for elegantly. And then there's also an extended aromatic system to the ringer. And you can see the same with Equilion's-AQ312, which is essentially an analog. And then very interestingly, there's some overlap here with Lilly's recent patent portfolio of AhR modulators, and this has turned compound #68. So again, overlap of that Quinlin core and extended aromatic system and good shape, lipopolicity and hydrophobicity complementarity.

So moving forward from this, we actually did some molecular docking. We used move from chemical computing group to do a number of induced fit docking simulation. So we took a number of experimentally solved structures, more specifically the one with indirubin, which is the PDP 7ZUB, identified some of the key elements of the binding pocket and then ran docking simulations with ABX464.

Now what we can see from this is that on the left-hand side, indirubin and its experimentally resolved structure binds very much into the -- very well into this hydrophobic pocket termed by the green colors here. And then you can see on the right-hand side, Pheno Alain 295, which is a conserved residue that creates stacking interactions with many known AhR modulators. On the right-hand side, the model of ABX464 also shows the similar binding pattern. And if we overlay the residues here, you can see very strong hydrophobic stacking interactions with this FEED 295, very similar to what we observed with the experimentally resolved structure of indirubin.

Now if we take a look here and ask, what are the effects of glucuronidation on ABX464 and its potential binding to the past domain? So if we take a look at the right-hand side here, you can see the 2-dimensional structure of ABX464. On the right -- on the left-hand side, you can see that when you rotate this molecule through 90 and then another 90 degrees, it's very flat, planer and fits very well into the binding pocket. But unfortunately, when you do glucuronidation to this molecule, this planarity has lost. Steric hindrance is introduced and a lot of polar steric bulk is also a potential hindrance to the binding in the AhR past B domain. So we believe that ABX464 would likely be active as an AhR modulator. But the englucaronidated the metabolite form in humans would likely be inactive.

So actually test this. We moved on to using the AhR luciferase reporter assay to compare potency of known AhR modulators. This is an assay that provides a highly sensitive quantitative and physiologically relevant readout directly linking ligand binding to transcriptional output. And as you can see on the right-hand side here, tested ABX464, Indigo Naturalist, tapinarof, indirubin, ITE and ABX464 and glucuronidate. Now these molecules are available for purchase. These molecules were ever purchased online and/or in the terms of ABX464, we actually synthesized the englucaronidated version using human liver microsomes to get the metabolite.

Now what you can see is the EQ504, as has been disclosed before, is a very potent and selective AhR modulator. And then you see indirubin Indigo at trials to Pinrov. And ABX464 is a moderately potent HR agonist with an EC50 of about 400 nanomolar. ITE, the precursor molecule, the very well-studied AhR modulator derived naturally in human cells, ITE has an EC50 of about 460. Now the englucaronidated version as predicted from the molecular modeling does not bind.

Now of course, this is a cellular model and the purpose of glucuronidation to molecules is to typically retard entrants into cells as part of a metabolism and clearance mechanism, so this could be either lack of entry of the glucuronidated form into the cells or if it does get into the cells, a lack of binding to the aryl hydrocarbon receptor for the reasons previously disclosed.

Now another important element here is to really prove that the molecules bind to the PaaSB canonical binding domain of AhR. And for this, we use a high affinity AhR antagonist called GNF-351 has an IC50 of about 62 nanomolar. This has been widely used as a research tool to specifically block AhR transcriptional responses in vitro to confirm AhR-specific attribution in multiple cell types.

So on the right-hand side, you can see that when we take the highest concentrations of the EQ504 tested or ABX464 tested in the potency assay. And then we add to that 500 nanomolar of GNF and that is a 1:5 ratio of drug to antagonist or a 2:1 ratio of ABX464 to antagonist. You can still see very effective inhibition of the signal, and very effective competition of the AhR modulator and resulting in its lack of transcriptional responses. So a very elegant way to demonstrate that this is not only an AhR modulator that it binds to the PaaSB domain and that it can be completed in terms of signal proliferation.

Now let's switch gears. Now we know that AhR modulation can be induced by ABX464, but not by its glucuronidated metabolite. Let's take a look at does miR-124 get induced by activation of the AhR pathways.

Now for this, as I pointed out previously, we largely leveraged the Abivax data from the 2022 paper, which does an excellent job of really defining protocols for which you can study the upper regulation of miR-124 in a number of different cell types. And we've selected some data here to show you where it was originally shown to be very strong for ABX464. And then we've also shown you side-by-side EQ504.

Now on the left-hand side, what you can see is the level of induction of miR-124 compared to DMSO control, of EQ504 at 5,550 as well as ABX464 and the glucuronidated version of ABX464 again at 5,550. And it's very clear that ABX464 can induce miR-124 that the glucuronidated version here does not induce miR-124. And similarly, with the other AhR agonist that we're testing here EQ504, it is also a strong inducer of miR-124.

So new data here that would hint towards miR-124 being a pathway downstream of AhR activation. Now these results correlated actually very well with the reported data in the it paper here shown by Figure 1.

Now we also took a look at the cytokines that are inhibited. Again, really leveraging the data from the Aplite paper where IL-17 and IL-6 were strongly inhibited by ABX464 at 5,000 nanomolar. We tested the 50-nanomolar EQ504, which is typically around where we see the EC50 of our molecule across multiple cell types. ABX464 the originally tested concentration and then for a side-by-side comparison, ABX464 also at 50-nanomolar. And what you can see here is a nice inhibition of IL-17 and IL-6 in a statistically significant manner.

And again, very well -- very correlated to exactly what was seen in the 2022 paper.

Now what's interesting is the dietary ligands of AhR such as the indole, triptofan rivatives are known to be very strong inducers of IL-22. And we've seen this across multiple cell types previously where we see very strong induction of IL-22. Now in this system where you have activated PBMC. So this is not just normal PBMCs. These are PBMCs that have been reactivated, what we can see is that EQ504 is a very strong inducer of IL-22 compared to ABX464 of either 5,000 or 50. And again, this comes back to the idea of biased agonism. And that not all ligands or activators of AhR and list the same transcriptional responses or signatures. And one of the things that we would draw on to EQ504 was it's a very strong inducer of IL-22. So it was nice to see this here once again replicated in the same system.

Now narrowing down within PBMCs, the offers focused in on CD4-positive T cells. They were able to sort and isolate CD4 T cells and show that miR-124 could be induced with ABX464. We replicated that experiment. But in this experiment, we also introduced the AhR antagonist. So we used 50, 500 and 5,000 as the concentrations for ABX464 compared to EQ504 at 50-nanomolar, and we kept a steady fixed level of AhR antagonist. Now the reason we do this is because this way we can be sure that the AhR antagonist is not introducing any idiosyncratic effect. But more importantly, what this does allow us to do is create some quasi dose response in terms of the ratio between AhR, modulator and antagonist. And what we can see is very similar to what was previously reported as EQ504, ABX464 at 5,000 or 50 can induce miR-124. But very, very importantly, that AhR antagonism in a dose-dependent manner can actually reduce the levels of miR-124. So this would be the first set of data that really highlights that miR-124 is downstream and dependent on AhR activation.

Now we further went on to actually look at the effects on IL-17 expressing cells in isolated CD4 cells. This is again another statistically significant finding from the paper, and we see a very similar commensurate decrease in the IL-17 expressing CD4 cells when either EQ504 or ABX464 at 5,000 or 50. So again, really just demonstrating that there's a lot of complementarity between our experiments and the previously published data.

Now moving on into macrophages, a very similar experiment here in terms of inducing miR-124 through AhR activation and then the addition of an AhR antagonist to show the effects on the AhR and miR-124 Axis. So what we can see on the left-hand side is compared to a DMS control of -- we tested EQ504 at 50, ABX464 5,000 and 50, and we introduced GNF at 500 nanomolar. So that represents a 1:10 ratio with EQ504, a 10:1 ratio of drug to an antagonist with the concentration of 5,000 of ABX464 and then a 1:10 ratio when we look at ABX464 at 50 nanomolar. Now very interestingly, in all of these concentrations, we see strong miR-124 induction and then strong inhibition when we -- of miR-124 induction when we block the AhR activation.

Now similarly, looking at the cytokines that are induced, two of the cytokines that were highlighted in the paper were TNF-alpha and IL-6, I think we see here a very strong reduction in those cytokines, and we see that map across to our experiments here with EQ504 and ABX464, very statistically significant finding in terms of levels of reduction.

Now we went beyond just TNF-alpha and IL-6 and actually looked at reductions in IL-23, IL-12 and IL-1 beta. And we saw a very strong significant decrease with EQ504. And in the context of IL-23, we saw a similar decrease of ABX464. Now it did appear that EQ504 was a more efficient block of IL-12 and IL-1 beta. And again, these could be differences from ligand-dependent bias agonism or signature responses. So -- but this just does highlight the ability of AhR modulation in dampening down multiple pro-inflammatory cytokines.

So with that in mind, I think that data does very effectively demonstrate that miR-124 induction is downstream of AhR activation. So the next question we wanted to understand was in cells that are inducers of SIP 1A1, miR-124, IL-10 and 22, what is the functional consequence of blockade of AhR activation on those systems?

Now today, we'll just talk about regulatory T cells, but in the larger deck, you'll see the data from the macrophages. And these are two systems that Equillium has published quite extensively on, including more recently at the AAI conference.

Now if we take T these are cells that have been differentiated into T regulatory cells then treated with either EQ504 or ABX464 and then with the addition of an AhR antagonist, Here, we're looking at the relative responses to SIP 1A1 and miR-124. And as is the signature of AhR activation, we can see induction of SIP 1A1 in these T regulatory cells, and we can also see induction of miR-124. Now when you add to this the antagonist, GNF at 500, which represents a 1:10, 10:1 and 1:10 ratio across these concentrations. You can see a nice clear inhibition of induction of SIP 1A1 induction at an activation marker as well as a reduction in miR-124, again highlighting that miR-124 is a downstream effect of AhR activation.

Now when we do the same experiment, and this time, we actually look at the effects of induction of IL-10 and 22, we see again a very similar response. In the induction of IL-10 and IL-22 is AhR dependent. And it happens with both EQ504 as a known AhR modulator as well as ABX464 and the addition of GNF at concentration of 500, again, representing 1:10, 10:1, 1:10 ratio, you can see a nice inhibition of induction of these anti-inflammatory cytokines.

Now again, we won't go into necessarily the macrophage data of this. The short story is there, it shows exactly the same relationship. So I urge you to maybe download the deck later and take a look at that.

Now what about the induction of SIP 1A1 on miR-124 by AhR activation in intestinal epithelial cell lines? Now previously reported by Abivax in the 2022 paper is that miR-124 induction is not seen in epithelial cells. And that's what's replicated here on the right-hand side. Regardless of the concentration, we show here a nice dose response, we do not see activate induction of miR-124 by either EQ504 or ABX464. But you do still have AhR modulation as demonstrated by induction of SIP 1A1 on the left-hand side. So a nice dose response with EQ504. And you see at the higher levels of ABX464 induction of SIP 1A1.

Now moving forward, we take the 50 -- 100 nanomolar concentration here from EQ504 because this is largely where the molecule tends to plateau well. And then we took the 1,000 nanomolar concentration, which is the maximal concentration here tested for ABX464. Now if you look at those cells, again, using 100 of EQ504 or 1,000 nanomolard of ABX464. And add to this 2,500 nanomolar of GNF. We use a lot more inhibitor here needed to be optimized, likely because the inhibitor has poor transit into these epithelial cells. But what you can see from a perspective of cause and effect is the activation of AhR and induction of SIP 1A1 happens with EQ504 and ABX464. And then the addition of GNF and AhR antagonist commensurately decreases that. So with EQ504, that's a 1:25 ratio and with ABX464 that's a 1:2.5 ratio, and that's why we see a sort of quasi dose response here.

Now what are the functional consequences of AhR antagonism in epithelial cells. So we're not seeing miR-124 induction, but we are seeing activation of SIP 1A1. So what does that do functionally within these cells? Now again, there's two sets of data, but I'll be just presenting the wound healing data here, but I do urge you to take a look at the barrier integrity data by assay at a later date.

So this is an experimental model that we published quite widely on, including more recently at the American Academy of immunology, where we actually tested this against indirubin another clinically validated AhR modulator. Now as a wound healing asset, you take these layers of cells, you propagate them and then you score them to create a scratch. And then you monitor the healing rates over time. And what you can see here on the right-hand side are the percentage wound area compared to the DMSO control after 4 days. And we can see after 4 days, the DMSO vehicle has about 40% wound area. But EQ504 or ABX464 at 100 and 1,000 nanomolar, respectively, significantly improve wound healing by about double of that.

But when you add an AhR antagonist into this experiment, you worsen wound healing, suggesting that the wound healing via AhR is also AhR dependent and is worsened when you inhibit the AhR dependent pathways.

Now this is shown in this data specifically when we look at the biomarker for activation of AhR SIP 1A1. So we take these 284 cells that have been scored. And at the end of those 4 days, we take a look at the induction of SIP 1A1 compared to the DMSO control. And as we've shown in immune cells, EQ504 or ABX464 to 100 or 1,000 nanomolar, respectively, induce SIP 1A1 as a biomarker of activation. And similarly, when we add in the antagonist at either a 1:25 for EQ504 or a 1:2.5 ratio for ABX464, then we see a very strong inhibition of induction of SIP 1A1 again, highlighting the AhR dependency of these molecules.

Now lastly, one of the important biomarkers for epithelial barrier function and repair is clouding too. Elevated levels of protein to have been associated with leaky gut or impaired gut barrier function. It decreased -- its increased, sorry, in ostericolitis and DSS colitis models. AhR activation has been associated with reduced chlordinib levels in intestinal models. And decreased claudin 2 may reflect restoration of epithelial barrier function following AhR agonist treatment. Now a lot of this data is already published and those publications are listed there in the footnote.

And what you see here is similar to what happens with wound healing and SIP 1A1, the marker of downstream induction -- is induced, sorry, is reduced when you add an AhR modulator like EQ504 or ABX464. So you can see those nice reductions, statistically significant reductions in the levels of cordoning 2. And then when you add an AhR antagonist, those levels shoot up. Now interestingly, those levels get even worse suggesting that AhR has sort of tonic signaling properties in modulating barrier function and further inhibition of AhR activity worsens barrier function.

Now that's an observation that's been replicated elsewhere. We know that if you knock out AhR, barrier tissues actually become leaky. -- claudin levels rise. And so this is a very important finding here in terms of looking at a functional readout for AhR modulation via either EQ504 or ABX464.

Now it also goes a long way to perhaps shedding light on why Abivax's ABX464 is effective in the treatment of ulcerative colitis, because not only it's modulation of immune cells, but it's modulation of barrier function, repair and regeneration in epithelial cells. So I think this is a new, really important finding and one that I think further expands the value proposition of -- value proposition of AhR modulation and the miR-124 axis.

Now let's just quickly go through the summary and conclusions. Is ABX464 and AhR modulator? Well, our results would suggest, yes. It's a moderately potent AhR modulator. We have a potency of about 400 nanomolar that binds to the canonical PassB domain of AhR. But the ABX464 and glucuronidated version does not bind nomodulate-AhR. Now again, this could be a lack of entrance by the cell, given that these polar glucuronidation are meant to inhibit cell transfer or it could be that if it's in the cell, that polysteric bulk and lot of planarity precludes its binding and activation of AhR.

The next question was, does AhR modulation induce miR-124? So again, using a lot of the pre-published work by Abivax in the 2022 paper, HR modulation by EQ504 or ABX464, but not by ABX4 does induce miR-124 and decreases pro-inflammatory cytokines in multiple cell types. So that's very interesting that here, this data would also suggest that it's AhR dependent signaling leading to the induction of miR-124.

Whether you use an antagonist or a modulator like ABX464 that does not induce AhR activation, then you do not see the induction of miR-124. Now there is no miR-124 induction in epithelial cell line, that's a previously reported finding. So it seems that miR-124 is contextually important just for immune cells.

Now from a functional perspective, we know that AhR modulation is effective at inducing downstream pathways, including miR-124 in immune cells and epithelial cells. But what was really nice here was that using functional models of inflammation, tissue barrier function and regeneration, we should AhR antagonism inhibits the induction of SIP 1A1, miR-124, IL-10 and IL-22 in T-regulatory cells and macrophages, and it also inhibits SIP 1A1 and Cloudant 2 in epithelial cells worsening the healing. Now again, not shown here, but I urge you to take a look at the barrier function assays included in the larger deck is that we also see the AhR antagonism reduces and inhibit SIP 1A1 in epithelial cell lines in worsening the barrier integrity.

So that sort of moves us on to really this last slide, which I think moves us towards a more unified mechanistic framework for how we think about ligand-dependent AhR signaling and miR-124. So this is an agglomeration of work that's published by ourselves, by Abivax, but also the academic community. And that would suggest that when AhR modulators bind to AhR and activate it, it induces downstream pathways. It induces modulation of immune and barrier function proteins. It induces expression of xenobiotic enzymes that terminate the signal and remove the ligand from the system via SIP 1A1 or glucuronidation. And then it also induces a number of microRNAs shown here specifically for today's context, miR-124. We know that other mirs, such as MiR, I think, it's 355, are also related to T-effector cells and IL-10 signaling. So the fact that mirs are downstream markers of ligand activated transcription in the AhR pathway should not be a surprise.

Now what's interesting is that the SIP 1A1 or glucuronidation negative feedback mechanisms leading to ligand metabolism or the induction of miR-124 that leads to lowering of AhR signaling could be parts of the regulatory framework that help modulate AhR activation in cells. But overall, what this shows is that modulation of the AhR pathway via AhR modulators such as EQ504 or ABX464, reduce inflammation and fibrosis and increased barrier function and repair mechanisms.

So with that, I'd like to thank the key acknowledgment here of the Equillium research team and pass this back to the moderator for Q&A.

Great. Thank you, Stephen. Yes. So at this time, we will be conducting a question-and-answer session. So please hold for a brief moment while we poll for questions.

Our first question comes from Steve Seedhouse at Cantor Fitzgerald.

Great. Thanks so much. Very interesting studies. Thanks for hosting this. Wanted to work through a couple of interesting questions I had here. Just first regarding the mechanism behind miR-124 induction. Do you think it's transcriptional? Because the working hypothesis for obofasimod, I think it's around splicing regulation, but it seems just more likely that it would be transcriptionally induced. I'm just curious what you think?

Yes. We're not experts at miR-124, so all I can do is give you my sort of opinions and some hypothesis here. When AhR is activated, it can bind to DNA elements, right, which is where we'd likely see genomic elements like me as be generated, but it can also induce co-factors. I think what we can tell from this is that it's very clearly AhR modulated. Is that the only mechanism? It seems like from this data would be a very much a dominant mechanism here. Now is it transcription or is it something related to AhR activating something and that leading to modulation in miR-124? I don't think these experiments go to that level of detail. I think from our perspective, the key question was modulate AhR, does that modulate miR-124? The exact mechanism here, I believe, is transcriptional. But I think further work would be required. I think the alternative mechanism here and that it binds to the cap binding domain, which has been demonstrated and that changes splicing. It would be very interesting to identify ways to be able to blockade that pathway and actually look at the impact on sales. That would be a way to sort of tease out relative contribution there. But I think we can all appreciate that using an AhR antagonist that then blocks downstream miR-124 induction does very, very strongly suggest this is a downstream induced market of AhR activation.

Yes. Great points. Just on the -- on the negative regulatory activity that miR-124 has on. So in your experience that you've shown here, did you look at AhR expression over time? Like what is happening there? Is it getting down regulated -- and then what do you think will happen in vivo? In other words, what are the implications here for the durability of the efficacy like in a maintenance setting in IBD, for instance?

Yes. So we've looked at this in immune cells. And that data is in the broader deck. We did this in the T regulatory cells. We see a reduction in HR expression by about maybe 20% to 30%. So it doesn't cause the wholesale loss of of the receptor. Now we should maybe think about how the ZAL research was completed. They very, very heavily overexpressed miR-124. So we can't really reconcile the concentrations of miR-124.

Now we've already known in the literature that when you activate the ligand and the receptor, the ligand gets metabolized or shuttled out of the cell and moved away. There are represses that turn off the signal and the protein of AhR can be moved on to the proteasome for degradation. So lots of AhR after activation has been previously reported. Now the miR-124 Axis is sort of interesting because it would be another element that is sort of a regulatory element in response to activation and that it's generated and then it sort of dampens the signal.

So we do see a reduction in AhR expression, total protein expression, but this doesn't, we believe, result in a meaningful drop in protein available for signaling. You also see this that in Crohn's patients, there does appear to be a reduction in AhR, whereas ostaive colitis patients, there does not seem to be much of a change in the level of -- change in the levels of AhR expression. And then lastly, I'd say that we've done animal models that have dosed for prolonged periods of time, and we can continue to see sustained levels of activation and efficacy, suggesting that there's plenty enough AhR still present as it sort of is made used, recycled made used recycled, et cetera, that would allow us to continue to stimulate that pathway in a durable fashion fourth, as you point out, maintenance dosing in ulcerative colitis.

So just as a follow-up on that, just the last question for me today. The -- do you think that -- so given the miR-124 may have this negative regulatory effect, but it doesn't seem to be sort of fully abolishing what AhR agonism is doing that's constructive. Do you think miR-124 separately has its own independent anti-inflammatory effects separate from that regulatory action such that maybe on net its induction is helpful? And just because looking at the -- I'm just curious if the degree of miR-124 induction is relevant here for the efficacy translating into the clinic. And if -- or if you just be better off having an AhR agonist that doesn't induce miR-124 at all?

Yes. So we've tested other working backwards. We've tested a number of different AhR modulators, indirubin, et cetera, to -- and these do also induce miR-124, but we focused in on EQ504 for this presentation. So it does seem that AhR modulation broadly does induce miR-124. So then your question is, does miR-124 on itself induce an anti-inflammatory effect? Kind of like if you induce IL-10, induce IL-22, these are all functional proteins claudin I mean there are a laundry list of things that are regulated by AhR that contribute to therapeutic efficacy here.

So this study, and we should be fair to what this study helps us answer and what it doesn't help us answer is it shows that miR-124 is induced by AhR, but it doesn't actually levy the contribution in terms of anti-inflammatory effects from miR-124 or other components of the AhR pathway. I think that experiment one would want to just add in miR-124 in the absence of an inducer like an AhR activator, et cetera. And that would be a key experiment where one could really ascribe some anti-inflammatory, antifibrotic tissue barrier function effects to the molecule itself miR-124. The challenge we have in our experiments, of course, be it the original Aplite paper or our work here today is that you're always giving an HR modulator. So it's very hard, if not impossible, to tease out the relative contribution.

How I generally see it is that if it does have effect, which is great, it's induced by AhR activators, right? So it comes back down to the original point here, which was -- when we set out to do these studies, it was to ask a lot of questions from the academic and investment community is, what is the relationship between AhR and miR-124. And that miR-124 seems to be induced by AhR in an AhR dependent fashion. But it doesn't necessarily tell you what level of contribution that has to therapeutic efficacy. What I would say in the last point is that people have taken AhR modulators, put it into animal models and used anti-IL-10 antibodies, anti-IL-22 antibodies and they see a very strong reduction in the efficacy in those models by neutralizing IL-10, IL-22 and other pathways. So I'd say that if it is contributing, I would posit that it's probably a minor contribution compared to the others. But again, caveated but this is not a set of experiments meant to tease that out.

Our next question comes from Thomas Smith at Leerink.

Thanks so much for putting together this really comprehensive event. Really interesting data sets. Just a couple for us. Just on the wound healing assay, it looks like you aren't seeing miR-124 induction in epithelial cells. You have an AhR dependent relationship on a junction proteins. Wondering what do you think is driving that? Have you looked at other tight junction proteins beyond

We have, in other systems, we've done this in barrier function tissue tear assays. I think we've looked at the a variety. We can certainly follow up with that information at a later date. There are a number of those known in the literature -- now miR-124 was previously disclosed to not being upregulated in epithelial tissue. This was from the Aplite 2022 paper. So we were not necessarily surprised to find that it wasn't induced, but we do see the economical activation marker of AhR. Now when you look at the other mirrors that are related to AhR activation, they tend to be very contextual, meaning that they show up only in certain cell types. So I think the miRs here, as we think about the part of the downstream transcriptome of AhR would be cellularly contextual, right? So it comes back to Steve's question is, do we think it's driving efficacy, maybe in a certain cell type or its contribution is limited to a certain cell type that's reflected in this data here. So I think learning from what we've seen with other miR molecules is that it tends to be maybe important to certain cell types. So here it could be that it's a very important regulator of the AhR activation pathway in immune cells because it seems to be very predominant in immune cells, but it doesn't seem to have an effect in epithelial cells.

Now conversely, the levels of induction of SIP 1A1 are much, much higher in epithelial cells than you see typically in immune cells unless you really hone in on a specific immune subset. So it could be that depending on the cell, they have their own specific intrinsic mechanisms for regulating downstream AhR activation.

Got it. That makes sense. And then maybe I could just ask -- maybe taking a step back, given what you're seeing mechanistically here, you've done all of this mechanistic work now. Maybe talk a little bit about how you expect that to translate clinically relative to And then maybe another corollary to that, obafasimad hasn't got restricted. I mean are there any implications, I guess, to your approach here with gut-restricted AhR modulation that we should be thinking about?

Yes. So super important question and one that we're early in our sort of clinical journey, right? So a lot of this will be better answered in humans. But I'll give you my opinions and hypothesis here on sort of the relative differences here maybe from a molecular perspective and then potential advantages through EQ504 and Equillium approach.

Now we should first talk about the pharmacology. When you agonize something, you can decouple PK and PD. When you antagonize you largely want to be an IC90 sit on the receptor because every time you come off that receptor, it can signal. When you agonize you should think about this as you're pushing a ball down the hill. Once it's going, it's going, which is why you often see a disconnect between the PK/PD relationship, but you also see cumulative responses in which that the downstream markers have durable pharmacodynamic effects even when the AhR receptor is no longer occupied.

Now that's important because it sort of gets at one of the key questions I think we get asked a lot, which is if the englucaronidated version is not an active AhR modulator, but it has been hypothesized to be the active component in patients the parent molecule, which is an AhR modulator is in a minor component. So how do we reconcile that? How would you reconcile that? And there are three main ways we can think about this. I think the first one is that, again, with pulse agonism, you don't need to be on a receptor all the time. It's not total exposure sensitive system. It's really time on the receptor to turn it on and then once it's on, it's doing its thing.

So you don't necessarily need high levels of continuous exposure to elicit those pharmacodynamic responses. So perhaps even just the shorter pulses of obafasemod before it becomes englucaronidated and accumulates as what we believe is a non-AhR modulating loyalty. Maybe that's enough.

The next one is that the end glucuronidation can be deconjugated in the intestinal tissue. There's macrophages, neutrophils, and they do produced beta-glucuronidase. And I think that's likely to be a minor contribution here is that the molecule would find its way out into those tissues, BD glucuronidated and then become active in those tissues, it's certainly plausible. I think perhaps the most interesting point to think about here is enterohepatic recycling.

Now the concentrations of the englucuronidated version of ovefasmod appear to be a bit of a biological and pharmacological outlier in that they are 5 to 20 micromole of concentration. This is going on. Unfortunately, the sort of scan data that I can that I can glean from the literature. I think this might be a better question post Abivax is that those very high levels of molecule. If even a fraction of that is excreted into the bile, which is a very natural mechanism for glucuronidation, remember, adding this polar group is meant to excrete the molecule, the fact that we're seeing very large an extended PK times does suggest that there's some intrahepatic recycling.

So even if a fraction of that gets endrohopatically recycled gets pushed into the bile into the colon, where the long residence time in the colon allows deconjugation from the beta glucarolidays is there to the parent AhR activating molecule and memory absorption. That does give you a potential mechanism for gut enrichment, whereby you're actually shuttling the molecule out of the peripheral blood into bile, into the colon, deconjugated reuptake. And when that activates AhR lists its pharmacologic response as that moves back into the plasma, it gets glucuronidated and that cycle continues.

Now we don't in the PK data that I've seen, see a classical intrahepatic recycling second peak as they call it. But the likelihood is that there's such high concentrations in the peripheral blood that I'd point out, even if a fraction of this is enterohepatically recycled, it's pharmacodynamically meaningful, but it may not show as a sharp peak. It may just show more as a blended sort of tail to the PK. I think what would be really interesting is understanding the levels of ABX464 as its parent molecule in intestinal tissues. And answer the question, how much of AhR are we actively modulating in those tissues. And then you could understand is this fully saturated. Is this as much efficacy that we can get out of the molecule? Or is there more to be had, which is why our approach has been largely to get the molecule directly to colon tissues because it's the epithelial cells, the resident laminaproprias cells that we're modulating those are the pharmacologically relevant cells. And to avoid systemic exposures by creating these high local low systemic ratios.

Got it. That makes a lot of sense. And maybe last question on my end. Can we get an update on some of the clinical preparation formulation work that's ongoing? And just remind us what are the outstanding gating factors to getting 504 in the patients here?

Yes. No problem. Thanks, Tom. Well, look, the short of that is there's been no change. I'd refer you to the corporate deck there. The guidance still holds that we expect to initiate the study here in midyear, which we believe it brings up to Q3. So there'll be future updates pending on that as and when they're available, but I'll defer to the corporate deck for all of the deferred guidance.

Our next question comes from Alex Thompson at Stifel.

Great. Appreciate the presentation. Maybe to follow up a little bit on Tom's question. As you're thinking about 504, I think restriction, in particular, is there a rate or do you expect 504 to be glucuronidate or metabolize more rapidly or less rapidly than opefazimod? And is it really the time to modulate AhR that matters here? Or is it the way that you are modulating AhR kind of as it relates to kind of the downstream signal that you're seeing in sales at this point that might matter clinically?

Yes. So each AhR modulate has its own unique properties, right? And I think by and large, what you want to induce is less of the xenobiotic more of the immune, right? Inducing SIP 1A1, there are 13 approved drugs. -- inducing SIP 1A1 on itself is not a toxic attribute of the molecules or anything else that. So things that we've seen with the dioxane or even the signals of Indigo Natalist, largely idiosyncratic to the molecule and unlikely to be a class effect of AhR modulation.

So when we think about giving a molecule directly to the colon, we're not thinking about this as got restricted. I tend to avoid using that term because I don't want to give the impression that this has some active restriction mechanism that keeps a molecule in the GI tract and for bids from going out anywhere else. I think that would probably be an overreach. We know that when molecules get into GI tissues that some will get out into the plasma.

Now in our toxicology studies and in the literature, there's no specific predefined level for which you want to stay under. This is really just about tipping the scales in our favor, which is -- the cells that we want to activate are the epithelial cells, the immune cells that are in the and appropriate. We don't believe we're getting any bang for our buck from modulating cells in the peripheral blood. Sometimes you can see changes in the peripheral blood because of what you've changed in the in the colon. So that's always been an area of controversy. So we want to deliver the molecule directly to the colon tissues.

And the same properties that allow you to get into the tissues are likely the same properties that are going to get you into the plasma. But we've seen it with steroids, multiple other different molecules is that if you can deliver the molecule to GI tissues directly, you see high tissue concentrations and low systemic. That allows us to drop the total DUCs. And in the modeling, which we can give an update on later in the year, our modeling, as would be expected, shows that we can get high tissue concentrations, lower systemic concentrations. And again, we believe we're going to be well below the level of important activation of AhR and the peripheral, but certainly very much adequate in those colon tissues to activate AhR and get all of our signal of efficacy.

So I think we'll learn more out of the Phase I in terms of how much those ratios pan out. But I think it's hard to say anything here about comparative efficacy to overfasma. That certainly wasn't the intention of these studies, it was really about what is the relationship between AhR and miR-124. I just think the advantage we have is a molecule de novo designed to modulate AhR. It's based off the naturally occurring strong immune and barrier function modulating endogenous AhR ligand, and we're going to deliver this and monitor its levels in colons to make sure that we're maximizing all of the efficacy on target for AhR.

Now if anything would be one of the blind spots with the ovafasemod and ABX464 data set is we just don't know how much AhR would be modulating in tissues.

Great. And then maybe as a follow-up, as we think about the Phase I study and you've kind of framed it as a proof of mechanism study. What kind of biomarkers PD or otherwise, should we be thinking about in that sort of data set?

Yes. So I'd say a win for us would be getting tissue concentrations into the levels that we expect for EC50, EC90. The next one is SIP 1A1 induction. That's a conomical biomarker. The reason that's so widely used is because it happens in all cell types -- differential levels, but it happens in all cell types. It's very predictable. And it's a very clear signal above the background noise really -- it's a very transient biomarker. And so that allows us to really look at dose response. The other downstream markets, which we may or may not see in normal healthy volunteers because you typically require activated cells, right? So it's typically more important for cells in the gut or cells that are activated is things like IL-10, IL-22, changes in other biomarkers. So we will do some pretty broad transcriptomic analysis on an exploratory data basis. But what we know from all of the translational work completed by ourselves and others is that activation of SIP 1A1 is indicative of downstream translation -- transcription, sorry, of important genes to modulating the immune and barrier function.

And this is meant to really bridge what we know about the atrial experience where they've dosed it to many hundreds, potentially thousands of patients. And in those data sets, they've shown on target activation of AhR by induction of SIP 1A1. So I think that's how we think about this from a proof of mechanism perspective.

So our next question comes from Jacob Herbert at Raymond James.

And I really appreciate how thorough you were on the slides today. So I guess just a quick follow-up to one of the last questions. In the event that you do measure microRNA 124 and the Phase 1 healthies. Would you be able to help frame for us if there's a full level of induction that you would see as derisking?

For miR-124, we're not the experts there, right, again, caveat with all of these experiments are really meant to tease out the relationship, right, mechanistic pathway profiling less perhaps comparative pharmacology here. Now what I would say is we would most likely now knowing that EQ504 modulates miR-124. And that it's a good biomarker in blood, but perhaps less so in epithelial tissues, which we'll be collecting is that I think we'd be it behooves to collect that and take a look at it.

Now the increased levels of miR-124, they did not appear to correlate dose responsively with SIP or even the downstream market. So that's where I would caution is that we just don't know enough perhaps in terms of how they correlate to other markets. That's why SIP 1A1 is so widely studied and so widely relied on is that it's just a very well-characterized cause and effect system for pharmacodynamics of HR modulation.

So I'd say we'd collect it, try to make sense of it and perhaps between now and getting that clinical data read, we can perhaps look to get a better understanding of those levels. But I would say that it -- so far, because it looks like it's a market that might accumulate so multiple doses lead to accumulation and then you see a plateau those types of biomarkers typically don't give you the best read on dose response because depending temporarily on when you look for them, we see that a little in our data today.

We're looking so late down the line is that you've saturated and accumulated all of your response. So I think markets like SIP 1A1, which are more transient and happened earlier and in a more dose responsive fashion, might just be more enriching from a dose selection perspective than miR-124, which may accumulate and persist saturating the signal, so you might lose your ability in dynamic range.

That's very helpful. And then I guess just one follow-up on the glucuronidation I apologize if I missed this detail. Is EQ504 glucarona data? And if not, would you expect that to be an advantage versus obafazimod in terms of potentially having a longer duration of action?

Yes. I'm not sure there's -- we can never call it advantage or disadvantage at this stage, because we don't know really the effects of humans. Typically, glucuronidation should cause the rapid excretion of a molecule. So to see the accumulated suggest either high plasma binding high plasma protein binding, so it just sort of sits around in the plasma, you create this larger sync. There's perhaps little to no benefit of that happening. If it's not the active species, right, which is what the data here would suggest. It doesn't mean that it can't then release it as a sync to become pharmacologically active elsewhere. But it's hard to really tease out whether that's an advantage or disadvantage for us in our molecule.

What I can tell you about our molecule is that we don't have extended persistent accumulation in the plasma. We have good tissue retention in epithelial cells. And then we have fairly rapid plasma clearance. And that's likely a contribution of sip enzymes, glucuronidation et cetera. But from our early animal models, we have not seen our toxicology PK models a mechanism like obafazimod, where it is almost entirely or predominantly glucuronidated and then that changes the pharmacodynamic profile.

We have a very well-behaved typical sort of decay curve again in animals of EQ504. And that's essentially what we're looking for is activation within the tissues. It gets out to the plasma. It gets metabolized, no active metabolites, no quirkiness, no additional accumulation mechanisms. What would be interesting is if what you see with ovafasemod, which I do believe is an advantage for the molecule is that you don't really want AhR activation systemically. Ideally, it just happens locally. And that's largely just to avoid over metabolizing your molecule. So by actually modifying the molecule to not be an AhR modular.

It might just be a protective masking mechanism, which again is inherent to AhR as a pathway. So there you could argue perhaps could be an advantage. But it's not a prerequisite. That's not what is absolutely required. You don't need to necessarily design that in I think what you want to see is rapid clearance from the plasma, rapid uptake in the GI tissues and this asymmetry in tissue versus plasma concentrations that leads to activation in the tissue, but no activation in the plasma.

Our next question comes from Leland Gershell at Oppenheimer.

Great. Thank you, Stephen. This has been a terrific presentation, and we appreciate the updated data. A few questions from us. First, I wanted to ask, I guess, teeing off the point you made earlier about with the sort of an agonist condition. I need to have the molecule on the receptor for very long. It can have durable downstream effects. Have you looked at the time course between obefazimad and EQ504 in terms of the time course of action and expression of miR-124? And also wanted to ask your opinion, obviously, you've gone a long way here in terms of the science delineating the pathways between HR and miR-124. Do you think that this negative feedback mechanism is sufficient to sort of help us explain and resolve the conflicting evidence between some of those preclinical data and the clinical data we've seen from

Yes. So working backwards, I'm not -- again, not the expert of all of that data in hand. I'd say we really set out this to sort of do mechanistic attribution and pathway profiling. -- there are some disadvantages or limitations, deficiencies in using cellular models. And that is when we add the drug, it's on the cells, right? And then actually in the Aplite paper, the drug is added over multiple times. So you assume in all of those cellular models, drug is always on the receptor because it's always in the system. That doesn't reflect what happens in humans. The drug is dosed, it gets on the receptor, then it's cleared and cleared from the system.

So it doesn't necessarily reflect the cellular models well in that way. So we should just acknowledge the deficiencies, limitations of cellular models. We have done experiments where we compared this to indirubin, which is the relative induction of SIP 1A1 versus IL-10 and IL-22. Again, this isn't about how much time is required on the receptor because in all of these cellular models, the molecule is always on the receptor essentially in those scenarios. What we did see is that indirubin induces a lot more SIP 1A1 per, call it, pound of or whatever metric you want to use of IL-10 and 22. And that's sort of known in the literature as I the precursor molecule for EQ504 is a very strong inducer of IL-10 and 22. It's less of an inducer of SIP 1A1. But in both of those experiments, the IL-10 and 22 or both of those molecules for indirubin and EQ504, the IL-10 and 22 goes up and it stays up for quite a long period of time where SIP 1A1 comes up and comes back down pretty quickly.

So I'd say that, that demonstrates the sort of temporal effects that when you agonize the pathway, the downstream effects can be durable, but the limitation would be that there's no we'd have to wash molecule off or clear that system of molecule to then look at really a time decay there. So I really can't answer a sophisticated fashion about what it is the specific time one wants. I think from a clinical perspective, we'd be looking to see that we could durably induce SIP 1A1 in the tissues in a dose-responsive way. And we'll be looking for choosing doses that were either on the curve or into that plateau, and then we'd be moving that on into efficacy studies. So I think there's limited we can do on the bench with these agonists to tease out trying to thread the time on receptor loop.

And lastly, just a question as you have all this wonderful work you've been doing on the science and looking at different ligands of -- have you looked at or do you plan to perhaps look at the formation bio compound, KMR 301, which has been reported in the literature under, I think, a different name, but that's also a small molecule miR-124 inducer, may be more potent the nobofesmod has based on the same kind of core structure. Just wondering if you looked at any mechanistic activity of that compound?

Yes. And again, I think this comes down to sort of what our objectives internally is, I think uncovering the relationship between miR-124 and AhR is really important. I think that moves the needle. It helps us rationalize therapeutic effects. It can help you think about the design of molecules that can help you think about biomarkers as we've discussed on the call, looking at miR-124 now, given that's a clinical biomarker, right? There's a lot of value in that. I don't think what we're interested in doing is making analogs of other compounds. I think we're very confident in that we spent a lot of time looking for HR modulators. We settled on the analogs of IT again because they're naturally derived, right? So the parent molecule is the molecule that circulates in the lungs and guts of humans. It's a very strong and nontoxic agonist of AhR. We've developed analogs of that. So I think that we believe that we have a potent selective modulator with good drug-like properties. It has all the attributes that we're looking for. We now know that it can induce miR-124. And similarly, we now know that ABX464 is an AhR modulate. I think that relationship has been strengthened. I think from here on in, it really doesn't change what we do with EQ504.

We have our plan. We understand what our molecule does. We understand how we want to deliver it. We're currently formulating that for the Phase I. So generating other molecules or whatever, I think has limited value to us and our development programs, I think from here on out, we'll just be focusing on what downstream pathways such as miR-124, for instance, and how that relates to clinical efficacy, how that might inform our own drug development program. Expanding formation Bio has a very similar molecule to ABX461. I'm not aware of any other molecules developed and sort of marketed necessarily as pure miR-124 inducers. But I think from today's presentation, one could assume that if you're an AhR modulator, you're also miR-124 and do so.

Our next question comes from William Wood at B. Riley.

I really appreciate the thorough data here today, Steve. Maybe just thinking about -- we've discussed a number of cytokines today in which you presented here. And then priorly, you -- a lot of focus has been on IL-10, IL-22, but also Abivax has been more focused a bit more on IL-17. IL-6. With just sort of the number of families here and the number of cytokines that you presented and discussed even just today, how should we think about what combinations or even what individual specific cytokines we should be thinking about possibly even families of cytokines, which may provide the best support for downstream clinical benefit? And then I have a follow-up.

Yes. So there's probably buckets, and that's why I put the top 4 because in reality, there's a lot more than -- the other part of this is that if I promised 50 things to show you 50 things move, you'd hold to it, right? So we've really tried to distill this, I think, to IL-10 and 22. And I'll walk you through the reason why. -- naturally derived HR ligands from the tryptophan metabolites in dolls, right? They're very strong inducers of IL-10 and 22. Those are typically referred to as hallmark cytokines of HR modulation. They're also very widely studied. ITE and indirubin, two naturally occur in one in one exogenous AhR model too much widely studied AhR modulators in the literature. Very strong induction of IL-10 and 22. And when you block IL-10 and 22, you lose efficacy, suggesting they're pretty dominant, right? But they're also play atrophic cytokines. So there's things that happen downstream. They're also very proximal to AhR activation. So we think about IL-10 and 22 as being directly transcriptionally derived from AhR activation. Whereas inhibition of pro-inflammatory cytokines is probably a little more distal, right? You're probably modulating NFKB and that's modulating other things and T cell differentiation. That's further downstream. I like to pick biomarkers that are very proximal to the activation event and they are really important to think about clinical efficacy. We know that if you knock out IL-10, IL-22 in animal models, they undergo a lot of gastroenteritis. There is some conflicting data with both of those. But I think in the context of looking at the barrier function and immune regulation effects, it's very clear, they're very important.

We also know that in patients who have IBD, they have lower levels of IL-10 and 22. And when treated with molecules that derive efficacy, even SKYRIZI, I think there's some data here, too. is that they tend to improve levels of IL-10 and 22 because the system is starting to repair and restore. So I tend to think about things is that we have IL-10 and 22 because they seem to be centrally important to mucosal, biology and health and immune homeostasis and barrier function. But then you've got things like clouding, which are clearly very much regulated by the AhR access. People have studied those very widely. I think that's the second set of tissue markers would be looking at. And then you've got your phenotypic changes. Do you reduce levels of Th17 cells? Well, that wasn't a direct consequence of HR modulation. That's a consequence of the molecules or proteins that were transcribed by HR and a little bit further distal from the activating event. So I think really here, IL-10 and 22 are things that we'll focus on very heavily in the clinic. But in today's realm of being able to do transcriptomics and get tissues from the colons, we'd probably look to expand that set because it would always be more helpful if we had put more biomarkers to think about efficacy or patient population target selection -- but you can think about IL-10 and 22 is the sort of central access for how we think about AhR modulation and its therapeutic value proposition.

Appreciate that. And then I know we've been looking forward a little bit on our side, thinking about maintenance data coming up and then also there their data later this year in Crohn's. In terms of what you'll be looking for in that data set, those data sets that may give you confidence either in UC or possibly even Crohn's. What specifically might you be looking for, whether at the top line or digging down into the biochemical or biomarker data sets that really think you will really support your advancements going forward?

Yes. Well, first, there's a lot of kudos owed to here and those data sets. And the nature of ABX464, I think is game changing for ulcerative colitis, specifically, the maintenance data. Now what's interesting to us about the maintenance data is it's reflected in the Indigo Nitriles treatment data sets as well. So in the Indigo Naturalis treatment, they had very strong induction of remission rates that we gate. I think it was 40% to 50% depending on which one of those Phase II studies you look at. That's very strong. And that was still in a patient population that was mixed almost 50-50 between biologic-naive and biologic exposed. So pretty reflective of a contemporary population.

When they did the longer-term studies of they saw deepening of those responses. They have more clinical remission in those patients, whereas typically for biologics or some of the other small molecules, what you get around a week 8 and 12 may not necessarily get better. So I think the maintenance data is super important for ulcerative colitis patients from something like Abivax because you see that if you can stay on drug longer, you can see those results improve. I think that's coming from things like IL-22, and that was demonstrated in the data sets, where R22 was correlated with mucosal healing, but it's a long-term value proposition, which continues to drive barrier function repair, regeneration, immune homeostasis -- so you'd expect something like IL-22 to have the properties of allowing the tissues to heal. When you use a JAK inhibitor and you're just blunt all of the immune responses, right? I mean I think there's diminishing returns from that -- from an efficacy perspective. And I think with something like IL-10 and 22, you're talking about restoring to a natural balance to mucosal health. So that is very intuitive to see why results get better over time, right?

We use week 8 and 12 often, I wouldn't say arbitrarily, but that's how we test things in ulcerative colitis. But the week 52 clinical remission data is game changing for fast. And I would expect that given the data that we've seen today, knowing that it's modulating HR is I would expect that that's likely coming from pathways modulated by the HR. So I hope to see that they are successful in demonstrating very, very deep maintenance data. And I would expect that part of the value proposition of EQ504 going forward is that strong induction of early remission rates at week 8 or 12.

I think that's where we can win. There's still obvious room for improvement. About 16% for oblafasmod Indigo naturals in the week 8 to 12 was getting 40% to 50%. So there's room for improvement there. But I think having that continued improvement to mucosal healing endoscopic remission and clinical remission by week 52. I think is the thing that really changes the game for patients and physicians.

So our final question comes from Adam Walsh at ROTH.

Stephen, amazing presentation. I appreciate all the detail. A couple here. The first, is there a publication strategy around what you've been presenting today and what would be the time line there? And kind of follow-on to that, is there an IP strategy that can be derived from this in terms of composition of matter, method of use or anything like that?

Yes. Well, -- last but not least, appreciate you joining, Adam, was good to hear from you. The kudos goes to the team here. I feel like this is a little bit like thanking the salesman for building a great car. It really goes down to the group here who did all this fantastic work. From a publication strategy, we will look to publish this data through additional conferences, potential publications around our own molecule where we might compare against other AhR modulators like -- and now we can add to that ABX464 and that's important because it's a molecule that's shown great efficacy at Phase III.

IP strategy, we don't really ever discuss IP strategy here for obviously good reason. We're always very aware of what we can do from an perspective. I think we're more focused on our molecule than generating IP around anybody else's molecule. And I think largely, what we're doing is cooperating and further expanding work that's already out there in the public domain. People have tested overfasmod as an AhR modulator. People have shown that relationship. I think what we sought to do was really solidify that with some good mechanistic data orthogonal approaches antagonism, over to just sort of really understand the relationship. And now we can learn from clinical data, mechanistic profiling pathway analysis of other molecules, which I think is to the benefit of patients and general drug development. So I think that's all I can say at least from the publication strategy and IP. And remind me if I missed anything else in your question.

No, that's totally fair. That's great. Appreciate that. And then just one final one. In terms of the Phase I trial, you mentioned that SIP 1A1 is kind of the key induction to look at there with the downstream IL-10 and IL-22 potentially being more seen in UC patients, -- does that impact your decision point on whether to include Part B UC cohort? And will we -- and when will we hear information on whether that Part B UC cohort will be included or not?

Yes. So maybe working backwards on that. We are still working with our advisory board that we more recently put together with Bruce Sands, Get to Hans, Florian Reader, Simon Travis and Vipal Jira, we think a sort of really experienced team. We've engaged them early. We've got plenty of time to think about design. So I think you'll hear from us probably sometime in and around the Phase I, what we would be doing afterwards. Now you raised a point which is would we learn anything in the Phase I that may change Phase II. Again, I think that's something that we'll have to carefully consider as part of the long-term development plan. what we want to achieve in the Phase I is that we have a molecule that's safe, well tolerated, activates HR and colon tissues. And from a SIP 1A1 prospective, this really isn't about hitting a certain level because every AhR modulate it actually induces to a different level, it's levels of SIP 1A1. So we shouldn't see this as we have to hit the same as another molecule, really what you'd be looking for is that plateau.

When you hit that plateau, you fully occupy the receptor, you fully turned on all the transcriptional machinery. And from our translational work in the lab, we know that correlates to maximized induction of all of these other downstream markets. So I think that's a win for us is showing that we can save, well tolerate, deliver drug to the colon, get to good drug concentrations of the drug, so we can engage SIP 1A1. And then I think it will be about selecting dose doses and moving that forward into an ulcerative colitis patient population. So I think more to come there. We're laser-focused on getting that Phase I up and running. We have at least received very strong feedback from the ulcerative colitis community that should this get into the realm of treating ulcerative collates patients. This would be a mechanism of high interest to them, given the experience they've seen and/or had with Indigo Naturals, which is the natural botanical HR modulator.

And then lastly, I think we recently brought on Singhal, who recently came from Ventec. She was previously at me arena. She really adds to the experience, expertise and the brain trust era Equillium as it relates to ulcerative colitis trial. So super excited to have brought her on and she'll be leading the clinical development. So I certainly don't want to take any of her thunder this early in the game.

Great. Thanks for the question, Adam. So this concludes today's Q&A session. I'll now turn it back to you, Steve, for some closing remarks.

Well, thank you for everybody who joined and perhaps stayed on 20 minutes past. We do very much appreciate everybody's time. Please do visit the website in the next few hours. The presentation will become live. There will be some additional data. Should you wish to engage in any of the conversations that have been had here, please do reach out via the appropriate channels to Equillium, and we'll be more than happy to take additional questions. But once again, thank you, and good day.

Good afternoon, and welcome to the Equillium Bio Virtual KOL Event. [Operator Instructions] As a reminder, this call is being recorded, and a replay will be made available on the Equillium website following the conclusion of the event.

I'd now like to turn the call over to your host, Bruce Steel, Chief Executive Officer at Equillium Bio. Please go ahead, Bruce.

Thank you very much. Good morning and/or good afternoon to everybody for joining today. We greatly appreciate you taking your time to learn more about the aryl hydrocarbon receptor and our EQ504 program. We will, during the course of the day at the company side, be making potentially some forward-looking statements, so we refer you to our disclaimer here.

We are very pleased today to have Dr. Francisco Quintana and Dr. Brian Feagan, who are experts in their fields covering immune-mediated disorders and gastroenterology, respectively. We will be discussing an overview of the aryl hydrocarbon receptor and why this is such a compelling drug target across a range of potential immune-mediated diseases. Obviously, our focus as a company with EQ504 will be directing this program initially into the treatment of ulcerative colitis, where despite an enormous amount of investment in many approved drugs across different modalities, there remains a very high unmet medical need with remission rates remaining still below 30% despite available therapies.

So, very pleased to have this opportunity and for you joining the team. Importantly, my colleague, Dr. Steve Connelly, who will be leading our overall event today. And so we appreciate your time. I will turn this over to Steve. And as discussed, we will have time following the presentations for Q&A to address questions you may have towards the end of the session. Thank you very much.

Thanks, Bruce, and it's my pleasure to introduce our first speaker, Dr. Francisco Quintana, who holds the Kuchroo Weiner Distinguished Chair of Neuroimmunology at Harvard Medical School and is associate member of the Broad Institute of Harvard and MIT. His research investigates signaling pathways that control the immune response and he is most well known for his research into the aryl hydrocarbon receptor and key contributions in this area include the role of AhR in modulating effector and regulatory T cell functions through both IL-10 and IL-22, which both play a really important role in mucosal immunology. As an adviser, Dr. Quintana was also involved in the development of Tapinarof, as we know VTAMA, the first FDA-approved AhR modulator for the treatment of both psoriasis and atopic dermatitis. Overall, Dr. Quintana's research in immunology has resulted in over 230 peer-reviewed articles and book chapters.

And I'll hand it over to you, Dr. Quintana.

Thank you so much, Steve, for the intro. So, what I'm going to do today is actually to give a brief overview on the role of the aryl hydrocarbon receptor or AhR and its relevance and importance as a candidate target for immune regulation. So -- the way we found AhR was actually started with a very basic question, right? We know that the immune system has accelerators and brakes, right? It has mechanisms that regulate its activity. So, our idea was to come up with a novel method to identify unique regulators of the immune response and in particular, regulators that could be targeted therapeutically.

So, in order to do so, we decided to take an unorthodox approach at the time, we decided to develop the [indiscernible] as a model where to study the genetics of autoimmune disease and also as a model where to identify regulators of the immune system. At the time, we were probably the first ones doing that. And that led us to identify the carbon receptor AhR as a unique regulator of the balance between effector and regulatory T cells. And that is -- that initial study was published in 2008. And over the years, we have actually kept studying the role of AhR in the regulation of the immune response and actually extended our initial investigations to define the effects of AhR directly mediated signaling within T cells, but also signaling in other disease-relevant disease cells, not only in the context of autoimmunity, but also in the context of infection and tumor responses.

So, first of all, what is AhR? How does it work? When you want to think -- when you think about AhR, the easiest example I can give you is actually think about the signaling that we know is mediated by steroid receptors. And what I mean by that, AhR is a protein, right, that when inactive, it sits as part of a complex within the cell cytoplasm, complex with other proteins.

Now one important thing about AhR is a ligand activated transcription factor, meaning that under most circumstances, if there's no ligand, if there's no chemical that binds to AhR, nothing happens. However, when AhR binds its agonist, and we're going to discuss them briefly, what happens is that AhR undergoes a confirmational transformation. It actually is released from this protein complex that keeps it in the cytoplasm. And then it migrates into the nucleus where it binds to a specific regions of DNA in order to control the expression of specific genes.

So here, what we are talking about is a gene or is a protein that is activated by small molecules and can control the expression of genes relevant for the regulation of inflammation and immune response. So, the moment we found that, we thought this was a very exciting target because we immediately thought potentially you could design small molecules, chemicals that regulate the activity of AhR and hence, regulate the expression of inflammation out to immunity relevant genes. Obviously, when AhR is activated, there are multiple mechanisms that act as feedback -- negative feedback loops, right, like to suppress this overactivation. The simplest one is that actually AhR is degraded, also AhR activating chemical agonist or ligands that activate AhR also degraded.

What I just showed you is the canonical is a classic way by which we understand AhR controls the immune response. However, there are additional mechanisms that have been described, yet it's not very clear how important they are for the regulation of immune response. The simplest one to consider is that, as I mentioned, AhR is part of a complex, a protein complex in the cytoplasm. And one of those proteins is actually a kinase. So, when AhR is activated and then is released from this complex and goes into the nucleus, this kinase is actually released and then it triggers a cascade kinase that can also mediate some of the effects of AhR associated with inflammation.

In addition, AhR can trigger the degradation of some proteins and that could help, for example, in the balance between pro and anti-inflammatory T cells. And finally, what we have shown is that also AhR establishes complexes with other transcription factors that are central for the regulation of the immune response -- for example, it regulates the activity of NF-kappa B, which is your classic transcription factor driving pro-inflammatory responses.

By binding to and interfering with NF-kappa B driven transcriptional responses, AhR directly suppress pro-inflammatory gene expression. As I mentioned, AhR is a ligand activated transcription factor. So, what about those ligands that activate AhR in the context of physiology?

Well, those ligands are provided by multiple sources. Some of them are provided just by the diet without any further processing as it has been shown to some ligands or small molecules provided by the diet. In addition, our own metabolism, right, the host metabolism can produce multiple AhR agonists. Many of them are actually associated structurally and in their synthesis with tryptophan because one characteristic we know is that AhR ligands, they have to have a certain planner structure to really fit into the pocket that is needed for AhR activation.

One of those ligand produced by the host is called ITE, which we and others have investigated extensively, particularly in the context of the ability of the gut in order to limit inflammation. And with regards to the gut, another important source of AhR agonist is actually the gut microbiome. It has been shown that the gut microbiome can actually process -- it can metabolize dietary products for dietary components. For example, it can process tryptophan in order to generate additional tryptophan metabolites, which act as AhR activators, as AhR agonists and by doing so, limit inflammation.

Now when we think about the effects of AhR in the gut, right, as we are talking about today in the context of inflammatory bowel disease, which are the cells that are known to be responsive to AhR signaling. I'm not doing that, one sec, somehow I'm not in control. If you could direct me to my presentation?

Yes. Bear with us a second, and we'll try to get back to that.

Perfect, there. Okay. So, when we think about the gut, right, and the potential use of the gut of AhR to regulate gut pathology to treat gut pathology. So, I think that one of the advantages and a unique characteristic of AhR that it can control both immune cells, right, cells that are known to promote inflammation, but also non-immune cells, cells that are actually targeted by the inflammatory response.

When we talk about the immune cells, right, in the gut, we talk about your classic T cells, both effector and regulatory cells are responsive to AhR, and we're going to discuss that. As you know, T cells in order to be activated, they require what we call antigen presenting cells, for example, dendritic cells and up to a certain extent, macrophages. Both of these cell types, dendritic cells and macrophages are also regulated by AhR, we're going to discuss it. And in addition, AhR also controls innate lymphoid cells, which are a type of immune cell, innate immune cell, which is very important for the regulation of gut pathology, for example, via the production of the cytokine IL-22.

In addition, AR also controls central extremely important components of the gut that are relevant for gut physiology and pathology, epithelial cells, cognet cells, which are important for the production of mucus, [ planet ] cells, which are important for the production of antimicrobial products and also the stem cells that debris to many of these cells. Why is that important? Because now if we have the appropriate AhR ligand, the appropriate AhR activator, we can modulate both inflammation in the gut and also the ability of the gut to heal, to regenerate after inflammatory pathology in the context of inflammatory pathology.

So, when we look into the effects of AhR in the immune and non-immune components of a gut, I think that there are 2 cytokines that we and others have shown are central for its ability to control gut pathology. On the one hand, IL-10. IL-10 is a classic cytokine thought to be anti-inflammatory, known to act on immune cells. In other words, IL-10 is produced by cells of the immune system and usually acts on other cells of the immune system in order to suppress inflammation.

In the specific context of AhR in the gut, IL-10 or IL-10 AhR-driven IL-10 production has been shown to limit pro-inflammatory responses in macrophages and dendritic cells also to limit the pro-inflammatory activity of Th1 and Th17 cells. And indeed, something that is very notable is that we described that AhR drives the differentiation of specific subset of T cells, which are called TR1 or type 1 regulatory cells, which actually produce IL-10 as a way of dampening gut inflammation.

In addition, IL-10 is important to limit not only what we would call out immune or self-inflammatory responses, but also to modulate our responses to the commensal flora. So, we do not promote or react with excessive pro-inflammatory responses to our own microbiome.

In addition to IL-10, AhR drives the expression of IL-22, which is extremely important in the ability -- in its ability to control the activity of non-immune cells. To put it short, IL-22 is a cytokine that acts on non-immune cells to promote barrier integrity and barrier repair through multiple mechanisms. And those are associated, for example, with the establishment of tight junctions between epithelial cells. Actually, it's important to promote the proliferation, survival and repair of those epithelial cells and actually promote wound healing after inflammatory damage.

And finally, IL-22 is also important in driving the production of antimicrobial peptides that are going to keep pathogens at pay in the gut. Now how does -- how can we get a little bit more into the effects of AhR in the regulation of autoimmunity or in particular of gut inflammation? Well, what AhR does is it acts both in parallel, its activation regulates both the activity of innate immune cells and adaptive immune cells, in particular, T cells and the innate immune cells that activate them.

The classic activator of T cells or autoimmune T cells, pro-inflammatory T cells is the antigen presenting cell in this case shown here dendritic cells. And dendritic cells control the differentiation and activation of T cells via the production of cytokines. What we and others have shown is that AhR signaling in dendritic cells. First of all, promotes or drives the expression of cytokines such as IL-27, which are known anti-inflammatory cytokines. These are cytokines that are going to drive the differentiation of anti-inflammatory cells and actively suppress the differentiation of pro-inflammatory cells.

Similarly, AhR can drive the production of metabolites that will do the same. They will promote the differentiation of anti-inflammatory cells, while suppressing the activation of pathogenic T cells. In addition, AhR also acts directly on regulatory T cells, both those expressing FOXP3 and those expressed and those producing IL-10.

And when it does so, AhR stabilizes these anti-inflammatory T cells, these regulatory T cells. It makes them resistant to pro-inflammatory environment, so they can still bear anti-inflammatory activities. And indeed, AhR also drives the expression of molecules that mediate anti-inflammatory mechanisms. AhR drives the expression, for example, of a molecule called CD39, which is very important for our ability to regulate pro-inflammatory responses in inflamed tissues, for example, in the inflamed gut.

In addition, AhR can directly drive -- AhR activation can directly drive the differentiation of pro-inflammatory cells into anti-inflammatory cells. Indeed, it has been shown by us and others that AhR activation in a classic pro-inflammatory cell in the gut, Th17 cells, AhR activation in Th17 cells can actually drive the differentiation into anti-inflammatory cells that produce IL-10. And one of those works or one of the works describing that, it's a beautiful paper published in nature by Rick Flavell.

So now in addition to its effects on T cells, right, if we step back, what does AhR do in the gut? And when does it does it do it? First of all, AhR activation in the gut is part of homeostasis. In all of us healthy humans, AhR is constantly tonically activated in the gut by, as I mentioned, endogenous metabolites, metabolites produced by the gut flora metabolites produced by the diet and that results in the production of IL-10, IL-22, which basically keep pro-inflammatory responses under control. This also actually promotes the repair and promotes the health of our epithelial barrier.

And on top of that, AhR also will act on additional non-immune cells of the gut in order to promote stem cell health, goblet cell health, so on and so forth.

Now one important point I want to highlight is that when you target AhR, right, not only do you deactivate pro-inflammatory responses, not only do you promote anti-inflammatory responses, you can also induce beneficial activities in nonimmune gut cells, in particular, stem cells. And in particular, it has been shown that AhR activation by multiple ligands can promote stem cell development, can promote their differentiation into goblet cells, can promote the production of mucin and what is important also can induce all those activities while keeping at bay potential detrimental effects of stem cells such as their malignant transformation.

So AhR and stem cells really operate as a regulator promoting tissue repair while at the same time, limiting the occurrence of malignancy or malignant transformation. And then all of these functions, right, have prompted or suggest that we can actually exploit these homeostatic mechanisms in order to treat autoimmunity. As I mentioned, we and others have shown that the gut flora and other sources activate constantly AhR in the gut. And what is important to mention is that, that regulates inflammatory responses that regulates also responses mediated by non-immune cells.

But the last point I want to make is that these responses occur not only in the gut, but can also permeate or benefit other tissues, for example, we have shown that some of these AhR agonists, right, can also make it to several tissues, including the brain, just to give you an example of how far away they can go in order to limit inflammation. Why is that important? Because although obviously, the initial focus is to develop AhR agonist that treat gut inflammation, you might foresee in the future targeting this pathway also to limit inflammation outside the gut, for example, in the CNS.

So just to summarize what I told you today, basically, AhR is a central regulator of inflammation and pathology, and it does so by acting both on immune and non-immune cells. AhR limits pro-inflammatory responses, promotes the reestablishment of the epithelial barrier and actually regulate intestinal stem cell function. The combined effects on these 3 important components of gut physiology and pathology identify AhR as an attractive target for therapeutic intervention. And as we are going to hear later on, this is a target for which we already have clinical validation.

The last point I want to make, although initially, you might want to focus and you want to focus on the gut, you might foresee developing a pipeline with applications for inflammation and autoimmune diseases in other.

Thank you.

Thank you very much, Dr. Quintana. A really helpful overview there of the AhR pathway. Now I want to remind listeners that we will have a Q&A session at the end. But for now, we'll move on to our next speaker, Dr. Brian Feagan, who's Professor of Medicine at the Schulich School of Medicine and Dentistry, a gastroenterologist at the London Health Sciences Center and Senior Scientific Director Alimentiv, formerly Robarts Clinical Trials, Inc. As a gastroenterologist we're training in clinical epidemiology and biostatistics. His research is focused on the design, conduct and execution of large-scale randomized controlled trials in both Crohn's disease and ulcerative colitis. And over the past 30 years, he's been the principal investigator for over 140 randomized controlled trials. His research has been devoted to the development and validation and optimization of outcome measures to assess the efficacy of both -- of novel therapeutics in both ulcerative and Crohn's disease.

As such, Brian's deep experience in the development of therapies for inflammatory bowel disease and despite the war scars that, that carries, he remains passionate and optimistic about the early-stage development of novel therapeutics that could improve outcomes in inflammatory bowel disease.

Brian, over to you.

Well, thank you, Stephen. I've been charged with giving a brief tour of therapeutics in 2025 in 10 minutes. So, this will be somewhat superficial, but I'll try to do justice to the following topics, and that is just give you a state-of-the-art, state of the union address of IBD therapy in general, try to speculate where we're headed and then summarize the opportunities that are available for new compounds.

So, if you're a cynic, this is kind of a litmus test. Is the glass half full in 2025 or half empty. I am a bit of the cynic and I'd start out with that case by saying that here we are 30 years beyond the introduction of TNF antagonist. And in the best of cases in a naive patient, we're lucky if we get 50% of patients in remission. And if a patient has failed advanced therapy, the numbers are very low. So, if you're concerned that the needs are all met in IBD therapeutics, that's definitely not the case.

And another problem is that personalized medicine, which has been so transformational in oncology has failed in rather spectacularly in IBD therapeutics. And -- so unfortunately, in 2025, we still don't know the basic causes of IBD, ulcerative colitis and Crohn's disease. So, we're kind of fighting with one hand tied behind our back given that situation.

Now on the positive side, we've developed multiple MOAs. We have multiple drugs now. And we have 2 MOAs that many other clinicians who treat autoimmune disease would give the right hand for, and that is anti-integrin therapy in vedolizumab and 1223. And these are completely safe molecules. So, the message being we don't have to have systemic immunosuppression to treat IBD. And we must be doing something right because surgical rates have fallen in both UC and Crohn's disease. And there are many more MOAs on the horizon.

So where are we headed given that background? And I'll talk about Horizon agents, and it's hard to ignore the TL1As. And important distinction, this is not TNF. This is a regulatory type cytokine, which broadly serves to amplify the immune response and it affects many T cell pathways and may have an antifibrotic effect. And we've seen now multiple trials. This is the initial experience with a synthetic control group, which is actually the Roche drug currently. And generally, in patients who have severe UC, and these are the type of patients who go into new chemical entities, we see clinical remission rates between 5% and 20% at the outside and a good -- well, that's in a naive population at the very extreme. And with an effect size of 30 plus is about as good as we get with our conventional agents.

And this signal was replicated in a study we just published in the New England Journal back a few months ago in a controlled study with the drug that was acquired by Merck, Tulisokibart. And here, we see very consistent data -- and again, we now have data from Crohn's disease with the Teva compound confirming activity in Crohn's disease. So, their last count, I stopped counting at about 7 TL1As and a very high chance of success given the background.

Now alternatively, oral alpha 4 beta 7 would be a great addition to our therapeutic armamentarium because vedolizumab has been a very successful drug, completely safe, effective in ulcerative colitis. And in many other conditions as well. So unfortunately, our initial experience with this morphic data showing that you can get receptor occupancy with the alpha 4 beta 7 positive T cells in peripheral blood with this compound. But the initial experience, which was just reported at ACO, a Phase IIa study failed with a dose that saturated the receptor.

The trial had a very high placebo rate and maybe we can come back to that in the discussion. It's something that we thought we had completely under control in UC trials, but we're finding there's still exceptions to the rule.

Now I wanted to talk about the 23s because this has been a very important new intervention in Crohn's disease, particularly, and you're all familiar with the psoriasis story where 23 has been transformational, surpassing the experience with Ustekinumab, which is a very good drug and superior to TNF antagonists. So, we hope that this would play out with -- in Crohn's disease. And in fact, it has with regard to the agents. There are now 3 agents approved. I'm showing some data for induction in risankizumab, where we're seeing better induction results for endoscopic endpoints than we've seen with our traditional agents. And this is just the initial -- I showed you the Phase II data. These are the Phase III data and this drug is now being broadly used in Crohn's disease, where arguably, it's a preferred agent.

And that raises the issue, well, could you get oral therapy with this? And J&J has developed an oral peptide for psoriasis targeting IL-23. And they've released a press release and again, at the ACO meeting -- sorry, at the UAGW meeting a few weeks ago, they showed positive results in IBD therapeutics. So, this is very attractive to think about partnering for other agents.

And then the newest MOA is RNA silencing, and this is Obefazimod. We previously have seen positive Phase II data, and there's been a press release from the Phase III program where 2 independent induction studies were positive with an effect size similar to what was observed in the Phase IIb study, with no safety signal at this stage in the game. Now it's still early days, but on the basis of those data, the 3 positive induction studies, I would say the chance of failure in maintenance is very low, less than 5% for sure.

So, this will be potentially a new agent oral therapy. But having said that, none of our existing monotherapies really have turned the corner, and we've had ways of really dealing with that in other conditions in GI and hepatitis C therapy would be a good example, where combination therapy over a period of many years actually evolved to cure the condition.

So, this is a potential example of how we improve the current situation. And we have a very good example where the combination of azathioprine and infliximab in both Crohn's disease, the SONIC results shown here and in ulcerative colitis, you see success has shown additivity. And that's led us to explore additivity with biologics and J&J probably pioneered this area guselkumab, golimumab and you see the VEGA study. And here, we see the results for response and remission at week 12, where we get clear additivity. And this has been followed on by a Phase IIb study in both UC and CD, exploring this concept with exposure to both agents out to a year.

So this readout will occur in the first half of next year. And this should really either put a damper on the enthusiasm for combination therapy or just fuel the fire. And I just wanted to come back with TL1A, the notion that it is antifibrotic is a very intriguing one. Fibrosing Crohn's disease, fibrosenosing disease is a signature of Crohn's disease, and we have no current therapies that are validated for that purpose. And so TL1A will be explored in that indication. And recently, we've seen a signal from Agomab with an ALK class, ALK5 inhibitor where there's direct interference with TGF-beta, which is the cardinal cytokine in fibrosis. So this is very encouraging that we've seen an initial signal that maybe antifibrotic therapy is possible, and that's quite a breakthrough.

So, I'll just conclude. We have multiple new agents. However, they have their limitations. I've talked about the Horizon agents, and apologies if I've left off your favorite agent. Combination therapy is new black. And I think there's 2 competing visions of this, oral polypill, Gilead model for many years or extended half-life fixed-dose combination monoclonals that you could envision dosing a couple of times a year. And I don't know which of those visions is going to play out. I suspect they're mutually compatible, and we'll have to see. And there's certainly huge opportunities for new MOAs to provide novel combinations. So overall, the future is complicated but bright.

So, I'll close there.

Thanks, Dr. Feagan. Appreciate that overview. And we can dive deeper into some of those concepts as we think about meshing new MOAs, combinations and/or how one tackles the unmet need here in the Q&A session. So maybe with that, we'll move on to EQ504 presentation that I'll give myself, and I'll try to give you an overview of really what we're trying to do with EQ504 on a background that has already been fleshed out in terms of mechanism of action by Dr. Quintana as well as really where the need is in ulcerative colitis.

Now we've already talked about the MOA. We've already talked about the need. So let's just dive straight into it. So, the modulation of AhR is actually clinically validated in both skin and GI disease. On the left-hand side, you can see VTAMA or tapinarof, which is an AhR modulator, which is administered topically as a cream, and that's been able to derive biologic-like efficacy in both psoriasis and atopic dermatitis.

So really moving the needle for something that is a small molecule applied topically and having biologic-like efficacy. And it's really that perhaps dual mechanism of the modulation of the inflammatory component as well as the barrier function that leads to such profound results there.

Now similarly, in the field of inflammatory bowel disease and ulcerative colitis, there have been multiple Phase II trials conducted with a botanical called Indigo Naturalis, which is actually enriched for AhR agonists such as indirubin. And this has been tested in multicenter placebo-controlled trials. And in one of those trials, they saw clinical remission rates up to 50%. And more recently, in a study conducted at Stanford University in patients who had failed multiple lines of biologic therapy, combinations of biologic therapy and/or JAK inhibitors, what we call perhaps refractory patients, there was a 27% remission rate at week 8.

Now those studies are highlighted here in these 3 panels. The first study by the [ Magnuma ] group, that was in Japan, a multicenter trial, placebo-controlled dose-ranging study, and they saw over 80% clinical response rate and a 50% clinical remission rate. Now in the more recent study where that botanical was then added to an enterically coated capsule to deliver that drug directly to the colon, they saw a 90% clinical response rate and a 42% clinical placebo-adjusted clinical remission rate.

So again, very strong clinical remission rates indicative of endoscopic healing, mucosal healing driving the scoring there. And as I pointed out, there was a small open-label study conducted at Stanford University by [ Sakira ]. And what they showed there in patients who are failing multiple lines of therapy and/or combinations that they too were responsive to Indigo Naturalis or HR modulatory therapy in that 27% of those patients who are considered treatment refractory achieved clinical remission by week 8.

And in many of these studies, not only did they show clinical remission, but they correlated that with induction of HR pathways by induction of CYP1A1 as well as showing that there were increased levels of IL-22 in those patients.

Now let's talk about EQ504. So, we talked about the wide variety of ligand sources here. And some of those are exogenous unnatural chemicals and some of them are endogenous natural chemicals. And really what we have in EQ504 is an analog of ITE, a molecule that's a synthesis of tryptophan and cysteine. It's made in the guts and lungs of humans, and it's a very strong inducer of T regulatory function through IL-10, as well as reducing Th17 cells and cytokines. And the really important element here, as we've discussed, it's a very strong inducer of IL-22 in tissues.

Now EQ504 is very potent in its activity. And on the right-hand side, you can see in a reporter assay here comparing the potency against Indigo Naturalis as shown in blue. And Indigo Naturalis is at the 16:1 indigo indirubin ratio that was described in the Stanford University study. So this is a synthetic surrogate. And that EC50, there is about 138 nanomolar, whereas the EC50 of EQ504 is sub-nanomolar at about 0.67, which makes it alongside Eli Lilly's AhR agonist is some of the most potent AR agonists developed de novo to date.

So, let's quickly highlight some of the key elements of the mechanism that are related to the mucosal homeostasis. So, I've not listed all of the cells and pathways that are important here, but a few that I want us to function on that I think are really important when we consider ulcerative colitis. And that is on the immune cell side, EQ504 can modulate both macrophages and it reduces pro-inflammatory cytokines and activity of inflammatory M1 macrophages and polarizes them to an anti-inflammatory subset of macrophages listed as M2. And here, we see high levels of IL-22 secreted from these macrophages in situ amongst these epithelial cells.

Now on the T cell side of things, we can boost T regulatory cells, and I'll show you some data here in just a moment where we can induce T regulatory cell number, frequency and function more specifically in its ability to induce the expression of IL-10 and IL-22. Now not shown here but published by Equillium at various conferences is our suppression of Th1 cells and cytokines as well as the induction of IL-22 from Th22 cells.

Now on the barrier function tissue repair side, we know that modulation of HR the activating ligands can maintain barrier protection by inducing tight junction maintenance mucus production, as well as regenerating those cells that have become damaged to accelerate wound healing and repair. And really, there's a very intricate crosstalk between IL-10 and IL-22, the immune component and the tissue component that maintains immune homeostasis in tissues.

Now one of the experiments we conducted is an epithelial wound healing assay. So, we take intestinal cells, we score them and then we add either PBS vehicle or EQ504 or Indirubin, the active component of Indigo Naturalis. And what we see shown here is that those AhR modulators are able to induce CYP1A1, so that's a positive activation marker. And then from a wound area, so sort of think about this as the sort of clinical endpoint of this assay, which is how quickly and how deeply can you repair tissues, the AhR activators are able to induce much stronger, much quicker wound healing of those intestinal cells versus vehicle alone.

And commensurate with that, what we see when we look at those cells is that they're expressing high levels of IL-22 receptor alpha to absorb and take on that IL-22 cytokine expressed in that millium.

Now on the cell side of things, we won't go into all of the cell subsets, as I pointed out, but perhaps we'll talk about T regulatory cells given that this is the recipient of the Nobel Prize this year, and we're very lucky at Equillium to have Dr. Fred Ramsdell  one of our founding advisers, who won the Nobel Prize this year for T regulatory cells as an important contributor to this work is that when you take naive T cells and you add AhR agonist to these, you can induce T regulatory cells. And here, we're looking at the CD39 high TIGIT high Tregs. And we can see that compared to vehicle alone, we're strongly inducing the frequency of those T regulatory cells.

And we've shown in assays, not shown here but published, that these T regulatory cells have greater suppressive effects against Th1 and Th17 cells, reducing their frequency and pro-inflammatory cytokines.

Now when we take those T regulatory cells and we look at the cytokine output, again, we're seeing very strong induction rates of both IL-10 and IL-22, the green for EQ504 and the blue for indirubin, again, the active component in Indigo Nautralis. So the take-home message from here is that from the regulatory perspective in GI cells is that we can induce regulatory function and suppress effector function.

Now a classical model that's often conducted for ulcerative colitis or IBD in general is the DSS colitis model, where mice will ingest a chemical that causes colitis in their GI tract and then you intervene to see if you can rescue this phenotype. Now we've compared here against cyclosporine, which is generally considered the molecule of Letrozole clinically at high clinically relevant levels. We compared against Indirubin at 10 mg per kg, which is the published data dose out there from folks who've studied this. And we did a dose-ranging study where we identified 1 mg per kg as the effective dose of EQ504 in this model. And that's about equivalent to a 5 mgs total in humans.

And what you can see on the right-hand side here by body weight change, which is one of the classic outputs here from in-life and terminal of the termination of the mice is body weight. And those who just get vehicle lose a lot of weight up to 20% before those animals are sacrificed. But if you intervene there with cyclosporine, Indirubin or EQ504, you can see that you can protect those mice from weight loss.

And if we look at the tissues, and this is very similar to what we aim to do in our clinical studies is if we look at those colon tissues in those mice, those treated with vehicle have no CYP1A1 induction, indicative of no AhR activation. The same can be said for cyclosporine and no AhR activation. But when you look at indirubin or EQ504, you see strong levels of target engagement of AhR. And similarly, if we look at IL-22 expression or IL-10 expression, the AhR activators, you see large amounts of IL-10 and IL-22 expression, certainly more so for EQ504 in this particular experiment.

Now that's important because these are the key drivers, we believe, of efficacy and activity in this model. And when we look at the histology, one of the perhaps more intuitive ways to think about this is what's actually happening to those tissues. This is vehicle. We see a lot of lymphocyte infiltrates. We see a lot of crypt structure, hypertrophy edema in these colon tissues, mucosal erosion and just an enormous amount of lymphoid aggregate and infiltration.

But in the cyclosporine treated positive control, you can see that there's reduced lymphoid aggregation, the morphology is preserved and those animals are losing less weight. And similarly, when we think about EQ504 administered at 1 mg per kg in these animals, we see, again, preserved morphology of the cryptin [indiscernible]. We see reduced lymphoid aggregate and a preservation of weight in those animals.

Now moving on, one of the things that we aim to do with EQ504 is deliver this molecule directly to the colon. And I'll talk in just a moment about how we intend to do that. This is an experiment where if we give the molecule orally as a suspension via the oral gavage or we take rats and we cannulate them and we deliver it directly to the colon is that by delivering it directly to the colon, we can create higher peak exposures in colonic tissue versus the peripheral blood versus oral. And that's intuitive. When you give a drug orally and it goes systemically, then you're going to be out into the peripheral blood and eventually into the colon, whereas if you give it directly to the colon, you can create higher peak tissue exposures before that then subsequently moves into the systemic at typically much lower levels.

Now how we intend to do this in humans is nothing new. People have been using coating and targeting mechanisms for many decades. In fact, many of our conventional therapeutics in the field of IBD are already enterically coated and directed to the colon. So by using tri-tested clinically and commercially validated technologies, we will formulate EQ504 to deliver directly to the colon to start dissolving at the ascending colon through the traverse and through the distal colon regions.

And by doing this, we hope that we can optimize dosing in the target tissues to create higher tissue levels and lower systemic exposures. And that's what's shown on the right-hand side is that when you give a drug conventionally and systemically, that drug will naturally diffuse out ubiquitously, whereas if you can give a drug enterically coated, targeted to the colon, you can create these higher local tissue concentrations with much lower levels of systemic exposure.

And so this hopefully will manifest in our ability to deliver a drug that has a greater potential of engaging the target more fully in those colon tissues with a much lower level of safety and tolerability challenges that may occur as does with any drug.

Now how we think about this molecule to Dr. Feagan's sort of overview here is where is the state of play and where is the opportunity for drugs. We don't have a panacea drug where we have a functional cure like we do in things like psoriasis. And so there's still a lot of opportunity in a field that is typically treat to target. And so the classical place that an oral molecule will be deployed as an oral prebiologic. So, a molecule like EQ504 that is oral, GI targeted and non-immunosuppressive makes a lot of sense to deliver this after failure of conventional therapy or potentially in combination with conventional therapy to those patients who have more severe disease.

Now what we've seen additionally in the studies like the Stanford University study, where you're looking at patients who failed multiple lines of advanced therapy and/or combinations or JAK inhibitors in that advanced therapy category, you can still drive fairly compelling rates of clinical remission, suggesting that this molecule does have enough in its mechanistic armamentarium to be able to attenuate very severe treatment refractory disease. So, you could anticipate that this molecule could be deployed in those patients who've been failing multiple lines of advanced therapy.

Now perhaps the more intuitive and compelling way to think about a molecule that is, again, GI-targeted non-immunosuppressive and has a differentiated mechanism of action is in combination. And so you could anticipate this being used in oral pre-biologic setting and then the ability to layer on additional levels of immunosuppression from a wide variety of approved agent, be it from the ENTYVIO-like molecules, the alpha 4 beta 7s, all the way through to TL1As and perhaps at the worst-case scenario, perhaps alongside JAK inhibitors. So there's a very compelling case to think about a mechanism such as EQ504 and AhR modulation as a very good candidate for a polypill, as Brian would say, but certainly in the idea of combination therapy to really try to lift the ceiling of efficacy that we see.

Now lastly, what are we planning to do in the clinic? So, in clinical development, we plan to create data and value early. So, there's multiple clinical studies of Indigo Naturalis that we believe establish strong proof of concept in the efficacy of AhR modulation and target engagement through CYP1A1 and elevation in the levels of IL-22. So our initial study will be a SAD/MAD study in normal healthy volunteers, where we'll look at safety, tolerability, blood and tissue pharmacokinetics and pharmacodynamics as well as taking biopsies from those patients and looking at target engagement and activity in the colon, where we aim to demonstrate that we can engage AhR, but also elevate the levels of IL-10 and 22 in those normal healthy volunteers. And that's a Phase I that's planned to initiate in mid-2026.

But we have the opportunity with the funding on hand to potentially achieve proof of concept with the addition of UC patient cohorts following the SAD/MAD study, in which case then we can move on from proof of mechanism to perhaps a more stronger proof of concept, demonstrating that the selected dose from the SAD/MAD studies is efficacious in patients.

So, in summary, AhR agonism and modulation, we believe, is a very compelling target for tissue-based immunology, one that is also clinically validated in both the skin and the gut. And for EQ504, we have a specific and selective multimodal mechanism of action that modulates AhR and promotes mucosal healing while dampening inflammatory responses. And that this will be formulated as an oral medication targeted to the colon with the ability to maximize tissue exposure and minimize systemic exposures. And that this as a target product profile would be very interesting in the treatment of ulcerative colitis in many different ways. But the broad positioning of both an oral pre-biologic with biologic failures as well as potentially in combination with various other agents, really sets this up as a potential medication that could really start to move the needle in ulcerative colitis patients and therapeutic paradigms.

So that's the end of the presentation section.

I think from here, we can move on to the Q&A session with Dr. Quintana and Dr. Feagan. And perhaps with that, maybe I'll take my opportunity to ask the first 2 questions individually. And so perhaps starting with you, Dr. Quintana. You were an adviser to Dermavant and we're familiar with the development of tapinarof, the first FDA-approved AhR modulator, a small molecule that we know when applied topically generates biologic-like efficacy. What were some of the key findings and takeaways from that, that sort of differentiated AhR modulation as a mechanism against some of the more targeted immunosuppressives that might be cytokine targeted or JAK inhibitors, for instance?

I think that one of the advantages offered by AhR targeting is the fact that it's acting not only on immune mechanisms, but also on mechanisms of tissue repair. That differentiates AhR targeting compounds, right, or approaches from those that are solely targeting the immune system.

Excellent. And maybe switching from skin to the GI, Dr. Feagan, the skin is not the only area AhR modulation has been tested in. And we talked a little bit about those Indigo Naturalis studies, we're specifically focusing on perhaps the more robust Phase II placebo-controlled studies. But what's your sort of takeaway from those studies in terms of AhR modulation as a potential approach to ulcerative colitis as well as the data that was generated and how that may stack up to other earlier-stage trials?

Well, the 2 bona fide a randomized placebo-controlled trials, a Japanese study, which was reported, I guess, about 7 years ago and then more recently, the Israeli study. And I think when you look at the totality of the data, there's no question that there's an effect there. And the magnitude of the remission data. And I always like to look at clinical remission, which is the regulatory endpoint as a benchmark. We're seeing roughly a 30% effect size, which is good as anything we have, including some of the newer agents I mentioned. So, I think overall, it was pretty compelling. And if you look at the data from the Japanese study originally, which was approximately 80 patients, 30 per group roughly, they shouldered -- it looks like they shouldered the dose response curve as well.

And the lowest dose was not very effective, and the 2 highest doses had clear-cut efficacy. And that study was terminated early because of a case of pulmonary hypertension with galenical type product. So, I think your approach is sensible to try to limit systemic exposure and that, that should be feasible. And we have other examples of that approach being successful.

And maybe just to build on that, one of the things that I thought was quite compelling from that data was mucosal healing. And as we think about the armamentarium that is approved and/or in development, how important do you think it is to have a molecule with bringing not only the anti-inflammatory effects, but effects that can drive mucosal healing to what is essentially classically dominated by just pure anti-inflammatory immunos.

There's a number of aspects to your question. I think that the notion of mucosal healing is somewhat of an ethereal concept in that we, for years, used mucosal healing to indicate that patients had achieved a Mayo score of 01 endoscopic subs score of 0 or 1, having started with 2 or 3. Well, obviously, if you still have a 1, you're not healed, even though that was the -- it still remains a component of the clinical remission definition. So, we're thinking beyond that now.

And the histopathology has been reinvigorated. It was a component of the first randomized controlled trial in IBD Therapeutics in 1955 by Sidney Truelove. And we've reinvented it that now histopathology, we think, is a more meaningful endpoint than perhaps endoscopy having for a gastroenterologist that's antithetical, but it looks like that is the way things are going. And there's a very large controlled trial just testing that hypothesis, which what is the treatment target you see.

And my prediction is that things are going to move towards histopathology. And of course, what that will do is accelerate interest in mechanisms that actually have adjunctive effects on healing in distinction to just blocking cytokines. And I think Francisco's outline really show the potential of that and raises the whole issue, can we get there with a single agent or can we get combinations. And there's a number of really good potential oral combinations that you could think of with this agent.

Excellent. Perhaps at this time, I can hand it over to moderators at live side to pull questions through from our forums.

Great. Thanks, Steve. So please hold for a brief moment while we poll for questions from our analysts. So our first question comes from Tom Smith at Leerink.

And for putting together this really comprehensive event. Maybe if I could just start with a question for Dr. Feagan. I was wondering if you could elaborate a little bit on your thoughts with respect to the Obefazimod Phase III induction data and how you see that agent fitting into the treatment paradigm? And then how do you think about the potential similarities and differences between that compound and EQ504 and perhaps the proposed mechanisms between those 2 compounds?

Yes. Well, you've touched on a number of issues. I guess there's no denying that Obefazimod has an effect. As I said, the effect size is in the middle of the pack. It's not sort of our best agent you see is Upadacitinib. And that the point estimates from the 3 studies of induction aren't in that magnitude. They're more like 15% and 30%.

The mechanism has been a sticking point, I think, for many people. It's claimed that it's anti-cytokine and there are some limited data to support that. There's an effect on IL-6, which I think might raise some concerns. Having said that, with the monoclonals, we ran into problem with GI diseases with perforation with IL-6 being protective and Francisco could maybe comment on that.

But I think there's enough there, and we haven't seen a safety signal so far. And I'll put the caveat we need to see 1,000 patients followed for a year to really exclude a rare event, but it looks pretty clean. So, that opens up the possibility that it's anti-cytokine. So, any other mechanism that isn't anti-cytokine could be in play. And that's why I think it's really exciting that we have a number of oral agents coming down the pike that are different mechanisms, MOAs in distinction to just blocking Alpha 4 Beta 7. Alpha 4 Beta 7 is chocolate and peanut butter for anti-cytokine therapy. I mean that's an ideal combination potentially, but the Morphic results were sobering.

Got it. Yes, that's helpful. Appreciate that color. And then just maybe one for the Equillium team here. I was just hoping you could talk about the work that needs to be completed here prior to starting the Phase I study and maybe elaborate a little bit on the gating factors there? And then, how quickly do you think you could advance this compound into the proof-of-concept cohorts?

Yes, sure. So, we are currently developing the formulation. As Dr. Feagan has alluded to, these are not new, by any means. These enterically-coated, colon-targeted formulation are already deployed not only in ulcerative colitis or Crohn's disease, but in other areas, IgAN, for instance, that you'll start to see these creep up into other areas. And so, we're at a stage where we've completed all of the key IND-enabling work. We are now just taking our API, moving that in through the development and the manufacturing phase.

So, we generally view this as sort of a low risk but somewhat time-consuming set of processes as we move through to get ourselves clinical trial material to start a trial mid next year. So that's where we are. I think in due course; we can provide a bit more clarity on exactly what that formulation is and what the trial design will be as we approach that trial next year.

Tom, Bruce Steele here. I think part of your initial question was somewhat focused on the thesis that we know is in sort of play on obefazimod as a potential AhR modulator based on independent research that has been conducted.

Steve, do you want to comment further and then some of the things that we're working on.

Yes, sure. I mean there are a number of molecules out there either in development or approved drugs that have AhR modulatory properties. That's just a byproduct of the fact that AhR combine a wide variety of ligands. And more recently, I guess there was some discussion and data are out there in the scientific community that obefazimod does indeed activate AhR.

We recently tested this in-house alongside them, and we do this with dozens of different molecules and AhR modulators, and we have also recapitulated and reconfirmed that obefazimod does have AhR modulatory properties that can induce CYP1A1, slightly less than Indigo Naturalis and certainly less than EQ504, but very much more and very much clearer AhR activation effect. So, we'll continue to do additional work there as we think about comparing this. But our thesis with EQ504 has been to develop a very potent, very selective molecule and to deliver this directly to the colon tissues where we can optimize target engagement.

Our next question comes from Cha Cha Yang at Jefferies.

This is Cha Cha on for Roger Song. I was wondering if you could give some more insight into baseline characteristics for your UC patients as you go into your POC trial. And then I also have a question about how long you expect your enrollment for your Phase I healthy volunteer study to take and whether you think the requirement for biopsies is a gating factor for that?

Yes, sure. So, let's work backwards because that's certainly where we spent most of our time, it's the Phase I, as you can imagine. We believe that the Phase I, like most Phase Is could be fairly rapidly enrolled. We plan to initiate this study in Australia. That will be a classic SAD/MAD study. We will do sigmoidoscopies in those patients. And our understanding is that it's not a gating item. That is fairly routinely done. That is an outpatient procedure. It's very different than when we think about colonoscopies that require a lot of prep, a lot of additional work-up.

So, we believe we'll be able to get normal and healthy volunteers, dose them in a multiple ascending style and then also colon biopsy them in a somewhat frequent basis, and then we can actually look at optimizing target engagement in the tissue. We think it's really important to understand what's going on in the tissues because that's really where we're treating the disease.

We can understand what's going on in the blood, but that may give us a sort of false sense of what's happening in those colon tissues. And I think that's a truism of any drug, biological or oral. If you're just looking at the blood, you really don't have a good sense of maybe target engagement in the colon. So, as we are -- a priority going to be delivering this drug directly to the colon, we want to basically ensure that we're selecting a dose on optimizing colon tissue exposures versus what we can just read from the blood.

Now in terms of patient characteristics for an ulcerative colitis study, we have not defined any of that moving forward. That's something that we'll be looking into in the new year as we think about what might be the right approach here to get some sort of Phase IIa or Phase Ib like proof of concept out of the capital we have on hand. So, I can provide further updates when that's resolved.

Stephen, maybe I could just add that the ability to do flex sig in the normal healthies, given the work that's out there about PK/PD if there is not drug in the rectum, that's a problem for the formulation. So, this would be a really critical thing to do at an early stage to validate that your release properties are ensuring adequate exposure in the distal bowel because patients won't be happy with active ulcerative colitis if the rectal inflammation is not controlled.

Yes, absolutely.

Our next question comes from Ram Selvaraju at H.C. Wainwright.

Thanks for providing such a comprehensive overview of so many different topics. I think for Dr. Feagan, I wanted to revisit what you had said earlier about the challenges associated with achieving complete healing of the intestinal mucosa. And I was wondering if you could opine on to what extent you think this goal might be achievable through the use of combination therapies. And based on the totality of the data that you've seen so far clinically, which combinations are most likely to get closest to that goal?

And then the second question is for the Equillium team. When you look -- and this is perhaps somewhat provocative and premature, given where you are in development with 504. But when you look at the obefazimod clinical development program, what do you think are the most relevant takeaways from that, from a clinical trial design parameter standpoint, like, for example, but not limited to, efficacy endpoint selection that would be most applicable as you think ahead beyond the Phase I to potential efficacy studies with EQ504?

Okay. Well, I'll start with the notion of what is healing, and I've alluded to the fact that we're increasingly thinking about histopathologic healing. There is a very large multicenter study sponsored by Takeda, which is actually randomizing patients with active UC to 1 of 3 treatment targets. That's cessation of bleeding, symptom-based. The second arm is cessation of bleeding plus endoscopic response, which is the clinical remission, endoscopic definition plus symptom resolution. And the third is the trifecta of adding on histopathologic remission.

And we've reported results from the study of 760 patients that will be followed for up to almost 3 years. And what we've discovered actually is that histopathologic remission is much more prevalent than we thought traditionally. The old adage was, symptoms resolved first, then endoscopy and then histopathology. And what we've demonstrated already in this very large study, which was quite methodologically rigorous is that histopathologic healing occurs more frequently than we thought. And so, it's not a bridge too far to think about this as a therapeutic target.

And with regard to which combinations are going to get there, unfortunately, we don't have really mucosal healing or mucosal immunologic data that predicts in animals, which combinations are synergistic. I mean, J&J shows guselkumab plus golimumab on the basis of number of gene pathways intersected with the combination. And potentially, that's a way forward.

But mostly, it's been empiricism based on orthogonal mechanisms. And that's where I think this mechanism is so attractive because you could imagine it being combined with, as was suggested earlier by Stephen that, say, an oral, a 23, potentially augmenting the anti-cytokine effect, but it's -- there's going to have to be a lot of healthy empiricism here.

Thanks, Dr. Feagan. Ram, appreciate the questions. To your second part, I'd say, first and foremost, we're focused on getting through the SAD/MAD. And as Steve identified our plan to get to some rapid early proof-of-concept work with patient level data. That would then inform further development. Obviously, there have been dozens and dozens of UC studies over the last several years. So, pretty well-developed clinical/regulatory pathway already.

I don't know that we will be reinventing that wheel, but I'd say we'll want to get through our early stage of development, see what we observe there and then spend appropriate amount of time with our key clinical advisers, including Dr. Feagan and others to fully flesh out our more advanced development program and planning.

And just to elaborate on that, I was wondering if you could just briefly comment on; A, the way in which one would define achievement of clinical remission, if you expect to utilize sort of the classical paradigm there? And B, if you have any views on induction versus maintenance therapy paradigms for defining what the therapeutic impact of 504 would be?

So, Ram, I think we'll be looking at sort of all of the above. And certainly, the obefazimod data, I think, is in part compelling because of the longer-term results that have been observed there. So, again, we'll certainly be looking at clinical remission with a focus on clearance of disease in the GI tract and the other parameters that go into the standard assessments.

I think, Ram, early on, we'll have an opportunity to -- in these smaller targeted trials is to really consult the KOL community and think about well, where is the puck going here? What should we be collecting and validate that early.

I think so often the challenge with later-stage trials is that once you've selected something that you built a thesis on it, it's sort of hard to change that later on, right, and try to convince somebody that all your assumptions on prior data will hold on a new way of thinking about things. So, we are blessed in having a very good KOL network. We've been a company that's focused on mucosal immunology for quite some time with Brian, with Bruce Sands and a number of other advisers who we've been very close to.

So, we'll consult them about how we think about that going forward. But I think we'll be very open-minded about how we approach that. Given the premise of what we're trying to achieve, which is to really change the mucosal barrier function, to change the mucosal immunology environment there. So, I think a lot of biomarkers, a lot of histopathology and really taking a look at those tissues.

Now, one thing I'd like to do is to bring Dr. Quintana to this conversation about maintenance. Now one thing that came up when we were looking at -- and doing diligence here with modulating the AhR pathways is the ability to think about this in a maintenance paradigm where you can sort of prime or change -- fundamentally change the inflammatory milieu there, the T-cell subsets there, their tolerogenic capacity, where this is also a mechanism where a dose de-escalation or some sort of lowering of therapeutic paradigm might lend itself to the fact that this does fundamentally change the T regulatory cells, the antigen presentation, et cetera. And in some of the early animal models, you could actually provide protective effects prior to the ulcerative colitis or the colitis insult in animals without having to dose.

So, Fran, perhaps you can walk us through some of that data that you think is germane here to how we might think about a maintenance paradigm in ulcerative colitis patients.

Yes. I think it's interesting. I mean there are very -- there are similar pieces of data that are actually exciting, I would say. There's data, for example, on humanized mice where it was clearly shown that you have mice harboring human T cells, right? And those T cells induced via -- those Tregs actually, induced via AhR activation were shown to not only to suppress active inflammation in models -- in mouse models of IBD, but actually to retain their phenotype. And that's a very important point. Many of the technologies or approaches we have might even be able to induce Tregs, but usually, they are not stable enough in order to withstand the challenge of being in an inflammatory environment.

So that's point number one. Based on that, you could, on your one hand, think of combination therapies where you can actually block, right, ongoing inflammation with very acute strong interventions and then provide maintenance of that anti-inflammatory response and actually maintenance of epithelial integrity via AhR activation, particularly when you consider it's the lack of side effects, right, or of adverse events. I think this is something very important to consider. You are not inducing wide immunosuppression.

And -- so because of that, I think that at the end of the day, what you are doing with EQ504 is actually mimic what I was saying earlier, AhR activation is actually part of gut homeostasis. It is actually a mechanism that we -- most of us have functioning as a way of preserving epithelial integrity, the function of stem cells and regulating inflammation in the gut. This is what we are mimicking. This is what we're actually exploring when dosing EQ504. So, in terms of that, it seems like a very physiological approach to induce and maintain anti-inflammatory responses within the gut.

Our next question comes from Catherine Novack at JonesTrading.

Just I have a question on some of the risks of enteric-coated delivery for ulcerative colitis drugs. Do these patients have alterations in pH that could potentially disrupt drug ability to deliver to the correct site?

Yes. That is a known challenge, so to speak, between normal healthy volunteers and those with ulcerative colitis. There are 3 main ways people think about delivering a molecule to the colon. The classic, probably the oldest way to think about this, I think, is PH. And as you point out, in a proportion of patients, that pH can change, but it also might change individually within a patient over time. It's not like this subset of patients is always sort of at dysregulated pH.

Another way people have tried to tackle that was to add a time component, but also GI transit times changed quite considerably. More recently, and this is sort of published data out there in molecules that they actually use a combination of approaches, for instance, pH and microbiome. We've got a number of prodrugs that are out there leveraging the microbiome is that the drug comes into the colon that the microbiome will be able to digest this and release the active metabolite.

Well, there's similar mechanisms there available for enteric coding where you can use a -- like, for instance, a dual pH and microbiome. So, in patients who have a normal physiologic pH where you get to a more neutral sustained pH in the colon, that the pill will dissolve. For patients who have an acidic environment, then you have a second fail-safe trigger that allows you to release that drug. And those drugs are on the market, they're approved and the clinical data to date in those does suggest that they have a more robust, more accurate way of delivering drugs to start dissolving at the ileocolic junction or the start of that colon.

So, I think that those levels of variability in patients, there are mechanisms out there that are clinically and commercially validated to overcome those. And it's probably no secret here the way that I'm sort of elaborating on those; those are ones that Equillium is currently considering.

Okay. But is it not fixed yet, the strategy that you plan to use for Enteric-coating?

It's fixed, but we just haven't provided public guidance or data on that at this time. And that's something certainly we would do ahead of the Phase I, is to provide more details on the formulation, more details on the Phase I design.

Okay. And then just one more question on the DSS mouse model. Obviously, understanding why it doesn't make sense to deliver systemically in humans given the broad expression of AhR. But as this was systemically delivered in the mouse model, is there any indication that there's immune modulation outside the gut that contributes to the resolution of colitis? Any thoughts on that?

Yes. It's really challenging to give the molecule directly colonically to the DSS colitis mouse in a formulation. The formulation beads are usually too big. So, we give this just sort of either orally or through IP and then we resolve the disease that way. So certainly, there will be some systemic exposure there. We can show that we can enrich colonic exposure, but those don't sort of mesh exactly over with the DSS colitis model.

So, we do not believe that we are driving efficacy in DSS colitis because of systemic immune modulation. We believe it is all happening locally. This is driven by the fact that when we look at the cells that are producing large amounts of IL-22 or the cells that are being modulated, they're almost all, if not exclusively gut resident. Now it's a question perhaps Brian can weigh in on is, how does the community think about ulcerative colitis -- is it a local disease or is it a systemic disease?

And I think ulcerative colitis generally precedes the extra GI manifestations. And once you can get full mucosal healing and remission, then those extra GI manifestations go away. So whether those extra GI manifestations are really causative to the underlying ulcerative colitis and that you would need to modulate them or in our DSS colitis model where the disease tends to be more localized and that we have systemic exposure in the mice, but we won't have systemic exposure in the humans is that I truly believe that this is a local disease and that the expression or the exposures of our drug in DSS colitis in the peripheral are not contributing to the efficacy.

When we look at the mouse disease model and we look at how much drug is in the mouse disease tissues, that also correlates with dose response.

Steve, I'd say that it shows how boring our lives are in IBD-ology that this is one of the hot topics, chicken and egg type analogy. And my view is that, some of these will probably overlaps and its different diseases. But most common extraintestinal manifestation is arthralgias, joint aches. And if you look at the direct comparison of TNF antagonist Adalimumab in ulcerative colitis to vedolizumab, one drug works systemically. The other doesn't work systemically. And the control of extraintestinal arthralgias in that trial, they were highly similar. So I'm with your view.

And Fran, I know that for as many mouse models I've done here, you've done not only far more and across all the different, call it, the adoptive transfer, the TMBS, the DSS. So, do you have any sort of thoughts here as giving these molecules is where do you think that these molecules are really providing their therapeutic benefit given systemically or locally in these animals? Do you think that there's benefit systemically that we should be targeting? Or do you think local modulation of AhR should be sufficient?

So, on the one hand, I think that local modulation, right, theoretically might be extremely helpful because you would be enforcing or you would be regulating, right, this regulated activity of innate immune cells, you would be promoting epithelial by recovery and healing. Having said that, right, if you go for a systemic mode of delivery, that should also be extremely beneficial. Indeed, we have shown that those, for example, TR1 cells I was talking about, right, they are very important in their ability to arrest gut inflammation.

The second point I would like to make is that if you have epithelial disruption, some of that compound might potentially make it into circulation and that can only be beneficial from my point of view again because you're going to be inducing cells -- cell types and cell responses that are known to deactivate inflammation and actually promote tissue healing.

Thank you.

So our next question comes from Min Lee at Guggenheim.

Just a quick one for me. I want to ask about the mechanistic differences between your AhR targeting versus Immunic's SIRT6 modulator. I understand that they are 2 different pathways, but they do have a similar convergence in the sense that they both lead to epithelial cell survival, repair and anti-inflammatory gene expression such as IL-22 and IL-10. I mean, I know that they are currently advancing their SIRT6 into celiac. But given the overlapping mechanism, there could be a path forward into UC. Could you maybe please help reconcile the differences between these 2 MOAs, whether there is a robust evidence in one of the other?

And next one, is there any good comps that we can look at that is also going specifically into gut epithelial tissue healing as opposed to a traditional inflammatory targeting like TNFs and IL-23s?

Maybe I'll start with the mechanism question, and I'll ask Fran to sort of weigh in here. I'm not an expert in SIRT6, so I'll provide that caveat upfront. The way I think about AhR is that we know that those patients with Crohn's colitis celiac disease appear to have less AhR activation or less AhR activating ligands.

And that as Fran pointed out, the AhR physiologic response is important for maintaining mucosal biology. So, the way we think about AhR is sort of a system evolutionary can serve to maintain barrier function, whereas SIRT6 might just be a way to help in a sort of more directed narrow way to modulate barrier function. Now AhR, one of the important things about modulating AhR and specifically IL-10 and 22, there are other pathways. But if we just focus on those 2 cytokines, is there's a very strong interplay between IL-10 and IL-22, call it an immune epithelial crosstalk.

And so, when we modulate AhR, we're modulating really a system aimed at maintaining barrier function, maintaining the immunology around that barrier function. So, it's improving mucosal, it's producing antibacterial peptides that help with pathogen responses. It's tightening up those junctions. It's helping cells repair. It's not just sort of helping strengthen tight junctions.

And I think if you were to take just a molecule that would modulate just barrier function, one might argue that it's hard to modulate barrier function with a persistent onslaught of immunological insult. And so, something that we've always been very attracted to with AhR modulation is that we're bringing the anti-inflammatory side that has been sort of tried and tested there with the numerous molecules that have been tested, approved in ulcerative colitis. But what we are bringing to it is the ability that once we've arrested the inflammatory insult is the ability then to help restore barrier function.

So Fran, perhaps you've got some opinions here, too.

Yes. So, as you know, SIRT6 has been described to lead or to favor barrier reestablishment. If you look at the biology of it, they have very important roles in gene expression, right, and very basic roles in gene expression. And I think that something that differentiates it a bit from AhR is actually its potential. There is less clear association, for example, with malignancies.

So, in that sense, again, I go back to what I mentioned earlier, AhR is actually a mechanism that operates in all of us. It's constantly activated at tonic levels [ finding ] gut flora by products -- by dietary components, right, in order to bring homeostasis. And it does so by acting in multiple aspects or multiple components of gut physiology and pathology, inflammatory components, epithelial components, stem cells.

You can target SIRT6 and try to replicate that. But in that sense, it's not something that is so physiologically regulated. So, in other words, my impression is that on the one hand, AhR activating compounds are closer at replicating what undergoes -- what happens or what is of healthy physiology of the gut and then also are less likely to be associated with adverse events, at least theoretically.

And maybe you can repeat your second part of your question because perhaps that's something Brian can.

Yes. My second question was, is there any good comps that we can look at in this area that also targets the epithelial barrier integrity and tissue generation as opposed to those traditional inflammatory targeting?

There have been several programs targeting various agonists designed to improve barrier function, which failed. I'm not familiar with anything that's directly comparable.

Great. That will be the end of our Q&A session. I'll pass it to Bruce for some closing remarks.

I would again like to thank everybody for joining the call today. Sincere thanks to Dr. Quintana and Feagan for joining us and providing such interesting color on the program and the unmet need here in ulcerative colitis. We're very much looking forward to advancing EQ504 towards patients. And if we were not able to get to your question today, please feel free to reach out to us directly, and we'll do so in that form. And again, thank you very much for your time.