Gossamer Bio, Inc. Stock

Hello, and welcome to the Gossamer Bio Business Update Call. [Operator Instructions] I would now like to turn the conference over to Bryan Giraudo, CFO and COO. Please go ahead.

Thank you, operator, and thank you all for joining us today. Earlier today, we issued a press release announcing several important updates for Gossamer. The outcome of our pre-NDA Type B meeting with the Food and Drug Administration and receipt of the official minutes, the reacquisition of worldwide development and commercial rights to seralutinib from Chiesi and stockholder approval of the previously announced proposals related to our convertible note exchange and reverse stock split. The press release is available on the Investors section of our website.

Joining me today are Faheem Hasnain, our Chairman, Co-Founder and Chief Executive Officer; Caryn Peterson, our Chief Development Officer; Bob Smith, our Commercial Officer, will also be available during the question-and-answer session.

Before we begin, I would like to remind listeners that today's discussion includes forward-looking statements, including statements regarding our planned NDA submission, potential regulatory review and approval timing, the development and commercialization of seralutinib, the anticipated benefits of the rights reacquisition, our capital structure and our financial position and runway.

These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings and today's press release for a discussion of these risks. We undertake no obligation to update these forward-looking statements except as required by law.

With that, I'll turn the call over to Faheem.

Thanks, Bryan, and good morning, everyone. Today marks an important step forward for Gossamer and for seralutinib. We now have a clear regulatory path toward an NDA submission in PAH, worldwide control of the program and stockholder approval of the capital structure actions needed to support the company's next phase.

I'll start with the transaction with Chiesi. We made the decision to reacquire Chiesi's rights and consolidate worldwide ownership of seralutinib under Gossamer. This was a deliberate decision to invest in our own program at an important moment in its development. Based on the totality of the clinical evidence, the progress we have made with FDA and our view of seralutinib's global commercial potential, we believe the right decision is to bet on ourselves. We wanted Gossamer and its shareholders to own substantially more of the program's future value.

The outcome is exceptionally compelling for Gossamer. We regain worldwide development and commercial rights, secure full global strategic and operational control and retain the substantial majority of seralutinib's worldwide economics with no upfront cash payment. In fact, Chiesi will make a $5 million payment to Gossamer shortly after signing. Under the prior collaboration, Gossamer shared U.S. profits equally with Chiesi and participated outside the United States through a royalty. Under the new structure, Chiesi will remain entitled to a capped royalty on worldwide net sales and specified success-based milestone payments, giving Chiesi defined participation in the program's future success while allowing Gossamer to retain the substantial majority of the worldwide value.

Importantly, Chiesi's remaining economics are tied to the future success of seralutinib. The royalty is payable from commercial sales and ends once the agreed cap is reached, while the milestones are payable only upon achievement of specified success-based events. This replaces the prior perpetual sharing arrangement with defined finite and contingent obligations. Put simply, we are buying back substantially more of seralutinib's global upside at a point when our conviction in the program has never been stronger.

We're also consolidating all decision-making within Gossamer. One team will set the worldwide strategy across regulatory, manufacturing, pricing, market access, commercialization and life cycle development. This should allow us to move faster, maintain clear accountability and respond more flexibly as we approach the planned NDA submission and consider the potential of seralutinib beyond PAH.

This was a negotiated outcome that both parties determined was appropriate for their respective organizations. Chiesi retains defined participation in seralutinib success while Gossamer has secured worldwide control and the substantial majority of the program's long-term economics.

Caryn will now walk through the regulatory update and what we've heard from the FDA. Caryn?

Thank you, Faheem. Following the PROSERA readout, the central regulatory question was whether the complete body of evidence could support an NDA filing. Based on the clinical benefit observed in PROSERA, the independent confirmatory evidence from TORREY and the consistency of the broader data set, we believed it could. We then took that question directly to FDA.

We rapidly developed a clear submission strategy, requested a formal pre-NDA Type B meeting and presented FDA with a proposed evidentiary framework built around PROSERA's one adequate and well-controlled clinical investigation, together with the confirmatory evidence from TORREY and other supportive analyses.

We held that meeting in person in mid-June and have now received the FDA's official written minutes memorializing the discussion. In those minutes, FDA characterizes the degree of statistical significance and the magnitude of the treatment effect observed in PROSERA as review issues rather than filing issues.

The discussion also provided feedback on the format and the content of the planned submission. The acceptability of the individual elements of the application, including the efficacy and safety evidence, will be determined by FDA during its review of the complete NDA. As the basis of the submission, our approach is to have PROSERA serve as an adequate and well-controlled Phase III study with TORREY providing independent confirmatory evidence from a separate randomized placebo-controlled study.

We believe the supportive analyses provide additional evidence of the consistency, clinical relevance and biological coherence of the overall seralutinib data set. We are on track for the planned NDA submission in September 2026.

To be clear, FDA has not accepted our NDA for filing or completed its substantive review of the application. The degree of statistical significance, the clinical meaningfulness of the treatment effect and the overall risk-benefit profile will be evaluated during that review. The key outcome of the meeting is that these are review issues rather than barriers to a filing. If the NDA is accepted for filing and the review proceeds on the expected time line, seralutinib could be eligible for an FDA approval decision in the third quarter of 2027.

Reaching this point reflects years of work and contributions from patients, investigators and employees around the world. It is a very important moment for our company, and we are optimistic about the future of seralutinib.

With that, I'll turn the call back to Bryan to discuss the capital structure update.

Thank you, Caryn. At our Special Meeting of Stockholders held on July 14, 2026, stockholders approved the proposals related to the previously completed exchange of our 5% convertible senior notes due 2027 and authorize the Board to effect a reverse stock split.

Through the exchange, we exchanged approximately $181.1 million of the $200 million aggregate principal amount of the 2027 notes for approximately $65.2 million of 7.5% Convertible Secured Notes due 2030, together with the applicable equity securities and warrants.

The transaction reduced the aggregate principal amount of our debt by approximately $115.9 million. Eligible holders that tendered by the applicable early deadline also received purchase warrants. The details of the new secured convertible notes, equity consideration and warrants are included in our prior announcements and SEC filings. Stockholder approval authorized the shares issued in the completed exchange and gives the Board flexibility to affect a reverse stock split.

The reverse stock split authorization is intended to support compliance with the NASDAQ's minimum bid price requirements and an improved capital structure. The timing and ratio of any reverse stock split remains subject to final board action. These actions provide flexibility as we execute the NDA submission and prepare for the potential next phase of seralutinib.

As of June 30, 2026, cash, cash equivalents and marketable securities totaled approximately $57 million.

With that, I'll turn the call back over to Faheem for some closing remarks.

Thanks, Bryan. So stepping back, today's updates bring together 3 important pieces of the Gossamer story. First, FDA confirmed that the degree of statistical significance and the magnitude of the treatment effect observed in PROSERA are review issues rather than filing issues. We are, therefore, proceeding with our plan to submit an NDA for seralutinib in PAH in September 2026, supported by PROSERA together with confirmatory evidence from TORREY and other supportive analyses.

Second, we have reacquired worldwide rights to seralutinib, giving Gossamer global control of the program and the substantial majority of its long-term economics.

Third, our stockholders have approved the capital structure actions designed to reduce near-term debt and better position the company for the work ahead.

We enter the second half of 2026 with a clear regulatory objective worldwide rights to seralutinib and a stronger capital structure. We are focused on executing the NDA submission and working to bring a new therapy that targets an important pathway implicated in the underlying pathology of the disease to PAH patients who need better options.

I want to thank our employees, investigators, patients and caregivers as well as our shareholders and partners for their continued support.

Operator, we're now ready to open the line for questions.

[Operator Instructions] Your first question comes from the line of Yasmeen Rahimi of Piper Sandler.

Congrats to the incredible great news, and I know a lot of work went into it. Maybe as you're preparing to September for the filing, maybe give us a little bit color around a lot of additional analyses have been completed to be part of the filing that maybe you haven't had a chance to disclose to us yet. So how do you envision sort of the cadence of additional data to really strengthen the positioning of seralutinib and educating investors around the high reward and low-risk profile of the drug?

And then two, second question for you is, do you anticipate -- and I don't know at this point, an AdCom discussion came up or not? That would also be really helpful if you could shed some light.

And then the third one is, do you have any financial obligations to Chiesi by taking seralutinib back?

Yes. Thanks, Yasmeen, for your questions. I'll answer the last question first, and then Caryn, I'll turn it over to you for the first 2 questions. As it relates to financial obligations to Chiesi, fundamentally, no financial obligations to Chiesi other than the royalty on worldwide sales and some success milestones. But really, that's fundamentally it. So it becomes a fairly clean break, which, as I said in my earlier remarks, really allows Gossamer to retain a substantive portion of the seralutinib opportunity, far greater than what was available to us when we were in the partnership. Caryn?

Thank you, Faheem. So with regard to the additional analyses that we'll be conducting, there are a number of prespecified subgroups that have probably characterized best as continued disease burden. Those analyses all very much support the efficacy of seralutinib.

In addition, FRI is very supportive of the underlying -- seralutinib's effect on the underlying pathology of the disease. And we have a number of different translational medicine approaches that we took during PROSERA and those analyses are all ongoing. Those are all confirmatory evidence of what we've seen in both TORREY and PROSERA.

With regard to the AdCom, this is something that we would not probably hear until the middle of the review. It's nothing that we discussed at the FDA meeting.

Yes, as to your question about when that data may be available, we are expecting a robust presence at the European Respiratory Society. And for much of what Caryn did as far as the supportive data for the discussion with the FDA, much of that foundation has already been disclosed publicly. It's been really, as Caryn said, diving into those subgroups, and we plan to disclose those at major medical meetings as well.

Your next question comes from the line of Joe Schwartz of Leerink Partners.

Congrats on the progress. It's great to see the hard work paying off. I had a few questions, namely, I was just wondering how much insight you were able to obtain into how the FDA views the appropriate p-value threshold and how sympathetic they appear to your analyses suggesting that a limited number of sites who relaxed enrollment criteria disproportionately contributed to the miss.

And then did you get the sense that the FDA is willing to look beyond the headline result and evaluate the consistency of efficacy in the appropriately enrolled population and how much they view an unmet need remaining?

Caryn, do you want to jump in on that, and we can add in.

Sure. I'd be happy to. There wasn't very much discussion at all around the p-value. It was really around the continued unmet medical need in PAH, the totality of evidence that we presented to them across the entire population and obviously, looking at regional differences. There's really -- there was no discussion at all on the p-value per se.

That's helpful.

Go ahead, Bryan.

I was going to say, Joe, I think the other piece that's helpful is 3 days after our meeting with the FDA, the FDA did put out guidance where, again, they were suggested that in orphan diseases, rare diseases and things with a high unmet medical need, an appropriate p-value is 0.05. So clearly, there has been a shift when it comes to situations like ours that the FDA provided guidance on. So I do think that as opposed to them having a direct conversation with just Gossamer, they have provided the industry with a very robust update.

Your next question comes from the line of Ellie Merle of Barclays.

This is Jasmine on for Ellie. Congratulations on all the updates and the hard work. Just one question. What are the plans for PH-ILD now that you've regained the rights to seralutinib?

Yes. Thanks for the question. Look, we actually have even greater conviction now with the data that was generated in PROSERA. We have greater conviction around the ILD opportunity given the really, I think, striking results that we've seen with the connective tissue disorder subgroups in this study. That really gives us confidence and belief that this drug can have a meaningful impact for patients with PH-ILD.

So from our view, obviously, we need to get the PAH indication approved first, which we would hope would be sometime around August 2027 would be the PDUFA that we'd be looking at.

Subsequent to that and that approval happening, we would be looking to initiate a PH-ILD study shortly thereafter. And it is even possible, and of course, much conversation still needs to be had with the FDA, but it is possible that as part of a confirmatory process, the FDA would look for further confirmatory data post approval. We would see PH-ILD, and we've had past conversations with the FDA about PH-ILD as being part of that confirmatory component. So we'd be very, very happy with that outcome.

Your next question comes from the line of Patrick Trucchio of H.C. Wainwright.

This is Luis in for Patrick. Going back to the Chiesi reacquisition of worldwide rights from them, did their view change -- did the Chiesi's view change on PAH approvability, the commercial opportunity and development risk? And how does your current financial position support commercialization and launch, assuming approval? And then I have a follow-up.

Great. Bryan, do you want to jump in? And I'll add where necessary.

Yes. So the practical reality is our friends at Chiesi are going through a bit of a reorganization of their own business and are really with the recent acquisition, pivoting their business really towards the very rare ultra-orphan disease marketplace. And ultimately, I think you can see some recent announcements which include some significant management changes on their end. And so that, combined with the effort that would be needed to commercialize seralutinib globally, it just felt like the right time for us to part ways.

But Faheem, any other thoughts?

Yes. I mean, look, I don't really think that their perspective on the opportunity changed as much as what really has -- appears to be changing, and I really can't speak for Chiesi. But certainly, from our perspective, as Bryan said, their focus has shifted in the context of how they think about the U.S. opportunities given what was in their pipeline and given some of the challenges that they've had in the context of their pipeline.

So from Chiesi's perspective, I think it's more about their focus and their shift towards the ultra-rare orphan disease. And of course, they are needing to juggle many more priorities than our singular priority here at Gossamer. And in the context of their strategic decision-making, they made the decision that they wanted to reprioritize towards some of their other assets in their pipeline.

Look, from our perspective, and it's really -- we can only speak from confidence about how we view things. We are tremendously excited about regaining the economic profile that we've got around seralutinib. Obviously, we've got conviction around the potential for approvability here, this drug. We have conviction around the meaningfulness of this drug. And with that conviction, being able to get back worldwide rights gives us substantially greater upside. And so we're absolutely thrilled with the outcome here.

Yes. And Luis, this is Bob Smith. I think you put also a question on the commercialization and launch readiness. Obviously, we had slowed many of those activities once we got the top line data while we're kind of sorting through what all of that looked like in order to preserve our capital as much as possible. We fully expect to resume the launch readiness on the back half of this year, which will give us a solid year to prepare the organization for a successful launch in, call it, August or September of 2027.

Great. That's really helpful. And for your NDA strategy, what are you going for in the label? Are you going for the broad PAH population and intermediate high risk, maybe CTD-focused? Or -- yes, how should we think about it given the subgroups and prespecified activity analyses?

Yes. I'll ask Caryn to jump in. But obviously, many of those questions are very much linked to future conversations with the FDA as we negotiate the label. But Caryn, do you want to comment?

Yes. Thank you, Faheem. Obviously, label negotiations towards the end of the review will dictate what that indication statement is. But we do believe the data supports a broad indication. And obviously, we'll -- this is what we are planning to have in the NDA is a broader indication, but that is up for negotiation with the agency.

Did the agency raise any safety issues on the data available? Any box warning expected, REMS?

That is not something that they discuss at a pre-NDA meeting. That will be discussions that will be had throughout the review of the NDA.

Just to add on to that, I know Caryn mentioned the broad label, and that's what our anticipation is. But even if you look at the numbers from PROSERA and the intermediate to high-risk group represented over 80% of the population in PROSERA. We know that, that patient population did extraordinarily well. And as it relates to the connective tissue disease population that Bryan had mentioned earlier, really, the results there are unprecedented in PAH with a walk of, I think, up to 37 meters. So the totality of the patient population that benefited from seralutinib will be a very, very high percentage of the overall market potential.

[Operator Instructions] Your next question comes from the line of Paul Choi of Goldman Sachs.

I was just wondering, in your meeting with the agency, did they perhaps any offer direction or guidance on filing for a specific subpopulation? Just if you could provide some clarity there if they were more favorably inclined for one subgroup versus the entire ITT population.

And then second, just with regard to the global opportunity, can you provide your latest thoughts on potentially filing in Europe and any other major geographies?

Yes, I'll take the last part of that question first, and then Caryn, you can handle the first part. As it relates to filing in other locations, yes, that's very much in our sights. Obviously, the discussions -- the ensuing discussions with the FDA are first and foremost, the highest priority for us. But shortly thereafter, we would be setting our sights to EMEA and other appropriate locations. So that's very much part of our plan as we go forward.

Caryn?

Yes. Thank you, Faheem. We did discuss with the agency all of the various subgroups that Bob just spoke about. But the basis of the NDA is the intent-to-treat population with PROSERA and all of the prespecified subgroups are supporting. So until we get again to label negotiations, it is not clear whether or not that the label will be specific to a subpopulation or to the intent-to-treat population, which is the totality of the evidence in PROSERA.

Yes. In Europe, we're already reengaging the team over there and the assets that we have over there just because based on -- if you look at the regional differences, we know that particularly Western Europe did extraordinarily well. So we feel confident that there is going to be a sizable market, particularly with some of the pricing we're seeing over there with these newer clinical pathways such as Sotatercept. So I think that makes it a very viable and robust market that we can walk into in Europe.

Paul, and again, I think you should take comfort in the fact that when you look at the combination of the 2 subgroups that really mattered, which is North America and Western Europe, we had a 6-minute walk distance north of 25 meters at a p-value of 0.02. Those are the geographies that the FDA has acknowledged that the practice of medicine in PAH have been consistent for the past 35 years.

So the geographical differences that you recall, we saw in PROSERA specifically some of the activities we saw in Latin America have been acknowledged as well by the FDA. So again, what's really important here is that, as Caryn said, the totality of the evidence -- they have gone soup to nuts, if you will, on everything that we have submitted with them. We believe that, that is, again, the foundation for not only the basis for approval, but we think a very, very robust opportunity for seralutinib.

Your next question comes from the line of Vamil Divan of Guggenheim Securities.

Two follow-ups, if I could. So one, the comments on the PH-ILD side, I was just trying to understand that a little better. It sounds like you're saying that may be using some ways to help confirm the PAH approval or support it in some ways. So can you just clarify, I assume this would be on the PAH side, a full approval, not some of accelerator continued approval? Or is it in some way tied to the PH-ILD data later on?

And then second, just back to the ex U.S. opportunity. I'm curious how you're thinking about the commercial side of it. I think you gave some updates on the regulatory progress now, but is this something you'd look to continue to do on your own? Or would you look to bring in another partner to help with that effort?

Yes. So as it relates to PH-ILD, just to be clear, the question that was asked is, are we still interested in PH-ILD? And as I mentioned, we have even greater conviction. So think about as it relates to PH-ILD, there's 2 scenarios. One is we get the approval on PAH and with no further confirmatory evidence needed, we would still -- we would proceed with initiating a PH-ILD study in that context -- in the context where the FDA makes a decision that they need further confirmatory evidence, so post-approval study, we'd be very happy with that outcome as well because we would initiate a PH-ILD in that study in that scenario likely. Obviously, it relates -- it's linked to discussions and confirmation with the FDA, but we'd be happy to do a post-confirmatory study and use PH-ILD patients in that process. So I hope that answers that question. It's not -- at this point in time, it's not linked, but those are possibilities.

The other part of your question was related to would we establish partnerships. Our intention is to proceed as an independent company. We've got the capabilities. And certainly, we believe, given the U.S. opportunity is substantial, but also quite manageable in the context of our commercial effort. So at this point in time, we don't have in our sights the need to be able to establish another partnership.

I would say I was going to give timing on regulatory. Vamil, the EMA process is about a year behind where we are with the FDA. So we have time to get things very right outside the United States for commercialization. But go ahead, Bob.

Yes. And just to add on, and we -- despite Chiesi's position on previously taking the lead in Europe, we had done ourselves a lot of market assessment. We did a lot of work on pricing strategy. There's a number of resources and assets and people over there who have just a ton of experience in PAH, most notably a lot of the people that were at Actelion and then J&J over there. So we have a lot of expertise that we're able to leverage as we move forward and think about particularly Europe and then other regions such as Japan.

There are no further questions at this time. I will now turn the call back over to CEO, Faheem Hasnain, for closing remarks.

Okay. Thank you, and thanks for all of your questions. We greatly appreciate you participating with us on this call today. I'll just close it by reiterating our conviction and enthusiasm for this path forward. Obviously, much conversation to be had in the context of approval and discussions with the FDA around label. But nonetheless, we've gone through some really important milestones here through our first conversation with the FDA, and we remain incredibly encouraged and excited about the opportunity going forward.

So thank you all, and thanks for spending time with us today. Take care.

This concludes today's conference call. You may now disconnect.

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Gossamer Bio Q1 2026 Earnings Call. [Operator Instructions] It is now my pleasure to turn the call over to Bryan Giraudo, Chief Operating Officer and Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining us. Before we begin, I'd like to remind listeners that today's discussion includes forward-looking statements, including statements regarding our regulatory plans, potential NDA submission and approval timing, commercialization, expectations, cash runway, capital structure and the potential therapeutic benefit and future developments of seralutinib. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings and today's press release for discussions of these risks. We undertake no obligation to update these forward-looking statements, except as required by law.

We are very excited this morning to have on our call today, Faheem Hasnain, Caryn Peterson, Dr. Rob Roscigno. Additionally, we have Dr. Jean-Marie Bruey, Dr. Rainer Zimmermann, Dr. Megan Flynn, Dr. Robin Osterhout; and Bob Smith, our Chief Commercial Officer, to speak about our exciting results this morning. Today, we plan to cover 3 topics: First, a regulatory update, including our Type B pre-NDA meeting; Secondly, we will discuss results from our PROSERA CT FRI substudy; and third, an update on our capital structure, including the convertible note exchange. Our financial results for the first quarter of 2026 are included in this press release, and I will come back to briefly discuss these at the end of the call.

With that overview, let me hand it over to Faheem to discuss our recent progress. Faheem?

Yes. Thanks, Bryan, and good morning, everybody. In February, we reported top line results from PROSERA, our Phase III study of seralutinib in patients with PAH. At a high level, PROSERA showed a clinically meaningful placebo-adjusted improvement of 13.3 meters in 6-minute walk distance at week 24, with patients on seralutinib improving 28.2 meters from baseline versus 13.5 meters on placebo and a p-value of 0.032. That p-value met the traditional 0.05 threshold for statistical significance, but it did not meet the prespecified 0.025 alpha threshold.

At the same time, all 4 key secondary endpoints favored seralutinib over placebo, and we saw a stronger effect in the prespecified risk-enriched subgroup. Taken together, we believe the totality of the PROSERA data supports a real and clinically meaningful treatment signal. Now since the PROSERA top line readout, we've been focused on 3 work streams in parallel. First, we engaged with the FDA on the path forward for seralutinib.

That process advanced from the previously disclosed Type C meeting to a Type B pre-NDA meeting, which is the most formal pre-submission meeting type. The meeting has been confirmed as in person and the briefing book has been submitted. Caryn will cover that in more detail shortly. Second, we completed the analysis of the prespecified CT FRI substudy, which enrolled 162 patients with 125 evaluable paired scans at week 24. Those results showed multi-compartment structural reverse remodeling across arterial, venous, fibrosis-like and vascular complexity parameters. You will hear the full data shortly in the FRI section of the call.

Third, we moved quickly on capital stewardship. We recognized immediately that while the top line results were clinically meaningful, it also created uncertainty, and we needed to act decisively to protect the company's financial position and preserve our ability to get seralutinib to patients. That included a significant reduction in force affecting approximately half the company, a sharp reduction in operating expenses as PROSERA winds down and the pause of other development activities and broader cost containment across the organization.

At the same time, we engaged constructively with our convertible noteholders to address the upcoming 2027 maturity. Bryan will cover the outcome of that process later in the call. All of these actions were taken for the same reason, to make sure this company has the runway, the focus and the resources to pursue an NDA submission and ultimately get an approved treatment to patients with PAH. Our conviction in seralutinib has increased since the top line readout, not decreased. That conviction is based on the totality of evidence, consistent drug arm performance in PROSERA, confirmatory data from TORREY, multi-compartment mechanistic evidence from the CT FRI and the regulatory path we are advancing with the FDA. This is a first-in-class inhaled tyrosine kinase inhibitor for a rare and fatal disease with high unmet need, and we believe we owe it to patients to pursue this path with discipline and urgency.

Now I'll turn it over to Caryn to discuss our regulatory interactions and next steps. Caryn?

Thanks, Faheem. Let me start with the regulatory pathway we are pursuing. We are pursuing an NDA submission under the framework of one adequate and well-controlled clinical investigation plus confirmatory evidence. This is consistent with FDA's recent guidance to articulate the flexibility in the amount and type of evidence needed to meet the substantial evidence standard in place since 1998. For Gossamer, that approach is supported by the totality of the Phase III PROSERA data set together with the Phase II TORREY study. We also believe the seriousness of PAH, the high unmet medical need and seralutinib's novel mechanism of action, complementary to existing PAH therapies all support this regulatory pathway. We plan to file the NDA based on the totality of the PROSERA and TORREY data sets and any adjustments to patient population will be guided by regulatory feedback.

Turning to our engagement with FDA. We are now moving forward with a Type B pre-NDA meeting rather than a Type C initially under consideration. A Type B meeting is a formal pre-submission interaction with FDA where we provide an overview of the NDA in the form of a briefing book that FDA will provide written responses with a defined time line and formal meeting minutes. We submitted the meeting request in April 2026 and an in-person meeting has been granted by FDA and will be held in mid-June. Based on that timing, our NDA submission target remains in September this year, subject to the outcome of the pre-NDA meeting. If that process proceeds as expected, a potential approval could follow in the third quarter of 2027.

So to summarize, we believe PROSERA provides one adequate and well-controlled study. TORREY provides the confirmatory evidence and the seriousness of the disease, the unmet medical need and the novel mechanism of action all support this NDA pathway. The Type B meeting is an important step in that process and supports our current NDA timing of September 2026.

With that regulatory context in mind, I'll hand it over to Dr. Rob Roscigno to discuss the CT FRI substudy findings. Rob?

Thank you, Caryn. I will now spend the next few minutes walking through the PROSERA CT FRI substudy and what it adds to our understanding of seralutinib's effect in PAH. So let's focus on what CT FRI adds to the PROSERA story. Clinical endpoints can tell us whether patients improved. And CT FRI helps us to understand the anatomical basis for that improvement. These analyses were performed with Fluidda's functional respiratory imaging or FRI platform, which allows us to quantify anatomical changes in the pulmonary vasculature and surrounding lung parenchyma. That is especially important for seralutinib because it is not simply a vasodilator. Its mechanism is designed to address remodeling biology in the lung.

In TORREY, the FRI substudy gave us an early hint that seralutinib could drive arterial reverse remodeling. The PROSERA substudy was designed to go much deeper. It was a much larger prespecified exploratory substudy designed to test whether the TORREY signal held up at scale and whether the effect extended beyond the arterial compartment. I want to acknowledge that this is the largest and most comprehensive CT FRI data set ever generated from a controlled therapeutic trial in pulmonary hypertension. A total of 162 patients enrolled in the substudy and 125 patients had paired baseline and week 24 CT scans available for analysis. These effects were observed on top of highly intensive background therapy, including patients receiving double, triple and quadruple PAH therapy.

The substudy was balanced across arms and representative of the broader PROSERA intent-to-treat or ITT population on demographics, hemodynamics and risk profile. The clinical endpoints in the substudy were also consistent with the broader ITT population, including improvement in 6-minute walk distance, NT-proBNP and REVEAL Lite 2. I'll walk you through what we found and why we think it matters. This slide gives a high-level result. Seralutinib showed statistically significant treatment effects across arterial, venous and fibrosis-like parenchymal parameters.

The CT FRI signal was not confined to one vascular compartment. The breadth and internal consistency of these effects go beyond the arterial-specific signal we first saw in TORREY. Importantly, the imaging parameters correlated more tightly with clinical endpoints in PROSERA, including 6-minute walk distance, NT-proBNP and REVEAL Lite 2. The overall pattern is biologically coherent and consistent with seralutinib's inhibition of PDGFR, CSF1R and c-KIT. In other words, the findings form a coherent anatomical pattern that maps back to seralutinib's mechanism of action. So I want to point out the patient image on the right side of this slide is illustrative, but it gives a first visual sense of what we mean by reverse remodeling.

At a high level, you want to see more red appear than blue. We'll come back to this case a little later and go through it in more detail. So let's first discuss the pulmonary vasculature. To interpret the CT FRI findings, it helps to start with the biology. PAH affects an integrated vascular and parenchymal system. PAH has historically been treated as an arterial disease, but it is not only an arterial disease. The pathology involves arteries, the capillary bed, venous filling, inflammation and parenchymal remodeling around the vascular bed. Those compartments are connected. If the arteries are obstructed, the capillaries are underperfused, transpulmonary flow is reduced and the veins become underfilled, inflammation and fibrosis add to the problem throughout the system.

So if a therapy is truly modifying disease biology upstream, you would expect downstream effects to move in a coherent direction as well. If you look at the right-hand side of this slide, you can see each pulmonary vascular compartment, its structure and function, how it is affected by disease in addition to calling out what CT can actually detect.

So this next slide maps each target of seralutinib, PDGFR, CSF1R, c-KIT and its anti-proliferative, anti-inflammatory and anti-fibrotic effects to each compartment of the pulmonary vasculature where we would expect it to act and to the imaging signal we observed. Starting in the pulmonary arteries, PDGFR inhibition maps to the arterial reverse remodeling signal, including reduced large atrial blood volume proportion. Next, in the parenchyma, PDGFR, CSF1R and c-KIT inhibition map to reduced fibrosis-like parenchymal ProACT features. The parenchymal signal is important because it points to potential anti-fibrotic effects beyond vasodilation. Finally, in the veins, we see increased venous volume and branching, which we view as an integrated downstream readout of improved upstream arterial parenchymal and capillary bed biology. The key point is that each compartment moves in a direction that is consistent with seralutinib's mechanism of action.

With that, I'll walk through each compartment individually. So PROSERA reproduced and extended the reverse remodeling signal we first saw in the TORREY study. In the figure on the right, seralutinib significantly reduced BV10A percentage, which measures large arterial blood volume as a proportion of total blood volume. That is consistent with proximal arterial decompression and blood volume redistribution away from larger remodeled proximal vessels towards smaller peripheral arteries.

This is the compartment where we would expect PDGFR inhibition to show up most clearly. BV10A percentage also demonstrated among the strongest clinical correlations of any FRI parameter. Towards the bottom of the slide, we show these clinical correlations. Importantly, changes in this arterial parameter correlated with improvements in 6-minute walk distance, NT-proBNP, REVEAL Lite 2 and ESC/ERS risk. So this arterial signal is not only statistically significant, it is also clinically connected and consistent with the signal we first observed in the TORREY substudy.

Next, we look at the parenchymal signal. This may be one of the more important new findings in this data set. In the figure on the right, seralutinib significantly reduced fibrosis-like parenchymal volume and also normalized fibrosis-like parenchymal volume, while placebo progressed. To our knowledge, this is the first demonstration of a statistically significant reduction in fibrosis-like parenchymal features in a controlled PAH trial. These measures are CT-derived imaging metrics. They are not histology, but they quantify voxel-level features characteristic of fibrotic tissue using a deep learning algorithm trained on confirmed IPF patient data sets analogous to high attenuation area or HAA approaches reported by Insmed.

The reductions were consistent across subgroups, including non-CTD patients, which supports a broader anti-inflammatory and antifibrotic effect rather than a CTD-specific phenomenon. This signal is consistent with seralutinib's PDGFR, CSF1R and c-KIT biology and supports a potential effect on inflammatory and fibrotic remodeling distinct from vasodilation. Clinical correlations are noted at the bottom of the slide. One important point is that CT likely underestimates the full remodeling burden in PAH because much of this relevant perivascular and capillary bed biology occurs below the resolution of the CT. So the detectable reduction in fibrosis like parenchymal features may capture only part of the total remodeling effect. The same fibrotic and inflammatory pathobiology is also relevant to PH-ILD and other fibrotic lung diseases, which supports the potential relevance of seralutinib beyond PAH.

Finally, the venous compartment then gives us an integrated view of how these upstream effects may translate into improved blood flow.

Let's look at seralutinib's effects on the pulmonary veins. In the figure on the right, seralutinib significantly increased total venous blood volume while placebo decreased. Clinical correlations are noted on the bottom of the slide. We also saw consistent increases across venous vessel sizes and vascular branching, including fractal dimension. To our knowledge, this is the first demonstration of venous vascular recovery in a controlled PAH trial. Why does that matter? In PAH, venous underfilling reflects reduced transpulmonary flow. It is not primarily a venous disease. If upstream arterial obstruction, parenchymal remodeling and capillary bed impairment begin to improve, the downstream consequence should be improved venous filling.

This is why we view the venous signal as more than another isolated parameter. It may be an integrated readout of the broader treatment effect upstream. The increase in venous branching is also important because it suggests improved vascular complexity, not simply passive volume redistribution. The next question is whether these anatomical changes relate to clinical trajectory. In the PROSERA substudy, the correlation support that connection. The tables at the bottom of this slide show a baseline arterial, venous and vascular complexity parameters correlated with hemodynamic and clinical measures, including pulmonary vascular resistance, mean pulmonary arterial pressure, cardiac output, NT-proBNP and risk scores. Changes in FRI parameters also correlated with improvements in 6-minute walk distance, NT-proBNP and risk scores. These relationships were not detectable in the smaller TORREY substudy.

In PROSERA, the larger sample size and updated algorithm allowed us to see a stronger link between anatomical imaging findings and clinical outcomes. That gives us confidence that these are not just imaging observations. They are biologically and clinically relevant measures that help connect structural remodeling to clinical benefit. So this table pulls the compartment level findings together all in one place. In the arterial category, BV10A percentage decreased, consistent with reduced large artery blood volume proportion and proximal decompression. In the parenchymal category, both fibrosis-like parenchymal volume and normalized fibrosis-like parenchymal volume decreased. In the venous category, total venous blood volume, small venous blood volume, midsized venous blood volume and venous fractal dimension all increased.

The key point here is not any single parameter in isolation. It's the consistency of the signal across arterial, parenchymal and venous measures. This pattern is what we would expect from seralutinib's mechanism, arterial reverse remodeling, reduced fibrosis-like parenchymal features and improved downstream venous filling and vascular branching. More broadly, the pattern is directionally supportive across the data set, including parameters that did not individually reach statistical significance. Again, I want to remind you this was a prespecified exploratory substudy. The p-values are nominal and unadjusted for multiplicity.

So to make the concept more tangible, this slide shows 2 patient examples. These are individual patients, not the trial result, and they are not representative of the full study population. Both patients were on triple stable background therapy and were functional Class III at baseline. In the placebo case on the left, the patient remained on intensive background therapy, but the vasculature worsened over time. Total venous volume decreased, proximal arterial volume increased and 6-minute walk distance stayed essentially flat.

Let's compare this to the seralutinib case on the right. I showed this image to you earlier. Here, we see the visual pattern we mean by reverse remodeling. Large arterial volume decreased, small arterial volume increased, total venous volume increased, 6-minute walk distance improved and NT-proBNP declined. The important point is that the visual pattern lines up with the population level data, arterial decompression, venous filling and clinical improvement, all moving together. This next example focuses specifically on the fibrosis-like parenchymal signal. The images on the left are from a single seralutinib-treated patient on double background therapy who had a visible reduction in fibrosis-like CT features from baseline to week 24.

The patient also had improvement in 6-minute walk distance and NT-proBNP. The important point is not the individual patient alone. It is that the visual change is directionally consistent with the broader parenchymal treatment effect seen in the substudy. So fibrosis volume was quantified using FibroNet, a deep learning algorithm trained on confirmed IPF patient data and analogous to high attenuation area or HAA approaches used in ILD imaging. Again, CT only detects changes above a certain resolution. It likely understates the full burden of remodeling, particularly around the capillary bed. This supports the potential relevance of seralutinib in diseases where vascular remodeling, inflammation and fibrosis overlap, including PH-ILD and other fibrotic lung diseases.

So to summarize, if we step back, PAH is a multi-compartment disease and seralutinib appears to affect these compartments in a coherent way even on top of intensive background therapy. The importance of these data is the consistency of the signal across anatomy, mechanism and clinical outcomes. Multi-compartment, vascular remodeling effects of this breadth have not been shown by traditional vasodilator therapies, which suggest added structural benefit rather than something redundant with existing vasodilator therapy. The arterial remodeling signal we first saw in the TORREY substudy is now reproduced and extended in a much larger Phase III substudy and the parenchyma seralutinib-reduced fibrosis-like features supporting potential anti-fibrotic activity that is distinct from vasodilation.

In the vein, seralutinib showed what we believe is the first controlled trial evidence of venous vascular recovery, including gains in venous blood volume and branching. Taken together, these imaging signals point to a mechanism-based effect on disease biology consistent with PDGFR, CSF1R and c-KIT pathway inhibition. The clinical correlations are also important. These structural imaging findings correlated with improvements in 6-minute walk distance, NT-proBNP and Reveal Lite 2. That links anatomical remodeling to clinical benefit.

These data strengthened the cumulative weight of evidence for seralutinib across the program, including the placebo-controlled Phase Ib, the Phase II TORREY study and the Phase III PROSERA study. Taken together, we believe the CT FRI data provide important anatomical support for the clinical benefit observed in PROSERA and reinforce seralutinib's differentiated profile in PAH.

With that, I'll turn the call back over to Bryan to discuss our financial position and recent capital structure actions.

Thanks, Rob. As of March 31, 2026, we had cash and cash equivalents and marketable securities of $99 million. Based on our current plans, we expect our cash runway to extend to the first quarter of 2027. Operating expenses will come down now that the PROSERA study has wound down. Additionally, we have implemented a reduction in force and broader cost containment measures. To this end, the first quarter included onetime charges and our go-forward quarterly burn should be lower. I will leave the detailed financials to the press release and our 10-Q filing that we did on Friday afternoon.

Moving on to the bond exchange. We have $200 million of aggregate principal amount convertible senior notes approaching maturity in 2027. With that maturity coming closer, addressing the capital structure proactively was a necessary step to keep the company focused on NDA execution and potential commercialization. We've been working constructively with our noteholders since the PROSERA top line readout in February, and both sides recognize the value of aligning the capital structure with the path forward as soon as practical. We were able to come to terms efficiently, and we view the outcome as an important step in removing the overhang and improving our focus on execution. Under the exchange for each $1,000 of existing notes tendered holders will receive a combination of equity consideration, new secured convertible notes and for those who tender early warrants.

The new notes are secured by a priority -- first priority lien on substantially all the company's assets and bear cash interest at 7.5% paid semiannually. On a fully subscribed basis, this takes our outstanding convertible debt from $200 million down to $72 million, a reduction of $128 million and extends our debt maturity from 2027 to 2030. The exchange requires a minimum participation of 98%, which may be waived. We are also running a concurrent consent solicitation to remove substantially all restricted covenants from the existing indenture. Cantor Fitzgerald is serving as dealer manager and Latham & Watkins is serving as our legal counsel. Additional details are included in the press release and our Form 8-K that was filed with the SEC this morning.

With that, let me turn it back over to Faheem for some closing remarks.

Thanks, Bryan. So stepping back, the key point today is that our conviction has strengthened. We've taken the balance sheet actions needed to align the company with a path forward. We now have a confirmed Type B pre-NDA meeting and expect to submit the NDA in September of 2026. We also have CT FRI data showing multi-compartment reverse remodeling across arterial, venous, fibrosis-like and complexity parameters with clinical correlations that support the biological relevance of those findings. Taken together with the Phase III PROSERA data and the Phase II TORREY data, we believe the overall evidence supports an NDA path for seralutinib.

So with that, operator, we're ready to open the line for questions.

[Operator Instructions] And our first question comes from the line of Yasmeen Rahimi with Piper Sandler.

This is Dominic on for Yasmeen Rahimi. Congrats on all the great updates in the PROSERA CT FRI data. Could you help us understand how this data not only helps for the upcoming pre-NDA Type B meeting, but also potentially support a differentiated label? Kind of what are your thoughts on that and the plan with those data?

Yes. Caryn, we'll ask you to take the first part of that question.

Sure. Thank you, Faheem. The data that was presented today is going to go into the NDA. We did not get it in time to put it into the pre-NDA briefing package, although we will highlight it at the meeting. We believe it's going to be very important in terms of confirmatory evidence as we look at the biology and mechanistic plausibility. So the data set once fully complete, will be a big part of the NDA. And we -- if we do get it in the label, it will be in the pharmacodynamic section of the label. Those discussions will occur at the meeting in June.

And Bob Smith, can you handle the last part of the question around differentiation?

Sure. Absolutely. We feel like, first of all, the profile of seralutinib between the data in Phase I and Phase II is extremely strong. I think it even gets stronger with our Phase III data. With the FRI imaging data, this is unprecedented in the market. To my knowledge, we have not seen any other PAH therapy have this sort of information to clearly in humans show a strong reverse remodeling capability. And so we expect the label to be highly differentiated because of this.

Your next question comes from the line of Joseph Schwartz with Leerink Partners.

This is Heidi on for Joe. Can you walk us through the time line between now and a potential September filing? What steps are getting to a potential NDA filing in addition to the Type B meeting?

Caryn?

Yes, sure. We're actively working on the NDA submission as we speak. Obviously, it's a very large dossier and all of the analyses are ongoing and will be completed late August so that we can get the filing in mid-September. Everything is happening in parallel to the meeting, and we have been planning this for quite some time. So we're on track, and we'll be ready to file in September.

And it's Bryan. I would just add the following that the decision to go from a Type C to a Type B meeting, again, not only was on the basis of the totality of the evidence that we've seen through all of the clinical work with seralutinib, but at the recommendation of a number of our FDA advisers and consultancies that we have been using that upon their review of the data as well as the competitive landscape suggests that we should move aggressively forward because of the high unmet medical need. So again, I think it's very important that you take into consideration that it's not just Gossamer making this decision, but really robust support from those who have walked the walk, if you will, with the FDA within cardiorenal for many, many years.

Your next question comes from the line of Ellie Merle with Barclays.

This is Jasmine on for Ellie. Congratulations on the data. I'm trying to understand the clinical relevance of these CT FRI measures. Is it common for physicians to do imaging like this when they manage these PAH patients to measure progression or when diagnosing? And then secondly, would you expect the imaging results to deepen over time? And will patients in the substudy have more imaging done at a later time point?

Jean-Marie?

So to answer the question, I think when we look at the standard endpoint, the PVR, the 6-minute walk, the NT-proBNP, they measure the functional hemodynamic consequence of disease, but you don't visualize underlying structural change. So the clinical endpoint can be affected by placebo or background therapy. So what we have, the data we have with FRI, it provides a mechanistic insight. It separately quantify arterial, venous and fibrotic like feature and vascular complexity change.

So we're trying to directly tie those markers with the disease pathology. I think the value is biological plausibility, FRI strengthen understanding of how seralutinib works. So we have a structural reverse remodeling versus acute vasodilation. So it's not a surrogate endpoint. I want to make sure that it does add mechanistic credibility to support totality of evidence for regulator and clinician. Concerning the questions at 48 weeks or 72 weeks, we don't have the data yet, but we will look into it.

And just to be clear, this technology is not something that's standard in the context of physician and clinical practice. But as what Jean-Marie said, is it really does bring the mechanistic evidence and the structural evidence to the table as to what seralutinib is doing in the context of the lungs. We will certainly be looking at the possibility of repeating some of this imaging in -- at later time points. And then obviously, when we have that data, we'll present it back to you.

And I think to add to what Faheem said, what's most important here -- I think what's most important here is no other sponsor has ever done this robust level of analysis using CT. So we do think that what Gossamer has achieved with this Fluidda CT study is going to set a new standard for how the community will look at a pharmaceutical intervention in PAH to see, as Rob laid out, all 3 compartments having statistically significant effect, we think is not only very beneficial for patients, but it's certainly setting a new standard for drugs in pulmonary artery hypertension.

Your next question comes from the line of Vamil Divan with Guggenheim Securities.

Maybe 2, if I could. So one, just curious in terms of communications post the meeting with the FDA. Should we assume to hear back sort of once you get the minutes, I don't know, I guess, maybe in the July sort of time frame or next updates we'd get from the company there. And then my other question is sort of tied to one of the earlier questions and just sort of based on the results here, I guess there's a couple of parts to the question.

One, you mentioned that these patients in general seem to do similar to the patients in the broader study population on the clinical endpoint. Maybe you can provide a little bit more detail on that just in terms of the PVR 6-minute walk results you've seen with these patients. And I'm sort of curious what this means in terms of how you think about commercialization? Like are there certain patient types or patient severities that you think may be better candidates for seralutinib than others based on the competitive dynamics out there and the other options that doctors have available?

Bryan, do you want to take the first piece?

Yes. So Vamil, we'll provide an update on our FDA disclosures during our second quarter results that we'll do later in the summer after the meeting. But Faheem, I'll let you direct the more important question for Vamil.

Yes. Rob, do you want to handle the second piece?

So the second question, I believe, was how these patients, if you will, perform regarding their clinical endpoints as compared to the overall PROSERA intent-to-treat population. These patients did show significant improvement in 6-minute walk and significant lowering or decrease in NT-proBNP, exactly what we would expect and very if you will, supportive of this cohort. As far as your second question?

Yes. Well, I think the last part of your question was about commercial utilization and how would seralutinib get used in a commercial context. Bob, you can add in. But basically, clearly, you can see a very pronounced effect in the intermediate to high-risk subgroup. That's pretty clear. But the story doesn't end there. When you see the CT FRI data, you realize that something profound is going on in the context of the lung and even through the TORREY data, the ECHO data showing us what's going on in the right heart, that kind of so-called reverse remodeling context.

I would like to tell you that the clinical community is quite intrigued about using this drug across the spectrum of patients because even in the lower-risk patients, the patients that are otherwise functionally quite capable, there is the potential to be able to use this drug earlier to prevent longer-term progression. And given the safety profile of the drug, not impact quality of life and that quality of life component becomes very important as you're using it in a patient that has otherwise pretty good functional capabilities. So we do see the potential for seralutinib to be used across the spectrum of PAH patients.

Yes. Faheem, that's exactly what I was going to say. I would just say with this data, I think it will motivate the market to start patients sooner on seralutinib. And as Faheem said, because of what we're seeing from a safety and tolerability standpoint and efficacy standpoint now as imaging data that they'll be able to stay on for a much longer time with that, hopefully portending better outcomes for these patients.

Yes. I don't think we can stress enough how important a new mechanism is for these patients, especially a new mechanism that doesn't carry the significant burden of toxicities that many of the current therapies do.

With no further questions in queue. I will now hand the call back over to Faheem Hasnain, CEO, for closing remarks.

Yes. Thank you very much, and thanks all for listening into the call. I just want to end this call by, first off, thanking the patients that participated in the PROSERA study. Obviously, without that participation, we're not able to advance treatments here for PAH. I'd also like to thank the patient advocacy groups that have been very supportive of Gossamer and the opportunity that seralutinib represents to their patients. And I want to thank the investigators and more broadly, the clinical community where we have been experiencing, I'm here at ATS now as we speak in Orlando, just the tremendous amount of support that we're getting and encouragement and quite frankly, the expectation that we will continue to push forward and get this drug approved. So thank you, everybody, and we look forward to further updates.

Thank you, again, for joining us today. This does conclude today's conference call. You may now disconnect.

Thank you for standing by. My name is Dina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Gossamer Bio Inc. PROSERA Phase 3 Topline Results Call. [Operator Instructions] It is now my pleasure to turn today's program over to Bryan Giraudo. Please go ahead.

Good morning, everyone, and thank you for joining us today. Earlier this morning, we issued a press release announcing top line results from PROSERA, our Phase III study of seralutinib pulmonary arterial hypertension. The press release is available on the Investors section of our website. Joining me today are Gossamer executives, Faheem Hasnain, Dr. Richard Aranda, Bob Smith, Dr. Rob Roscigno and Caryn Peterson.

Before we begin, I'd like to remind you that we'll be making forward-looking statements on today's call. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied. For a discussion of these risks, please refer to our SEC filings and today's press release. We undertake no obligation to update or revise these forward-looking statements. With that, I'll turn the call over to Faheem.

Thanks, Bryan. This morning, we announced top line results from PROSERA, our Phase III registrational study of seralutinib in patients with pulmonary arterial hypertension or PAH. At week 24, seralutinib demonstrated a numerical improvement in 6-minute walk distance of approximately 13.3 meters versus placebo with a p-value of 0.032. While we saw an improvement relative to placebo, the p-value did not meet the prespecified statistical alpha threshold of 0.025, and therefore, the study is not statistically significant. And all other p-values we'll be discussing today are nominal.

The overall treatment effect and statistical parameters were materially diluted by an outsized placebo response and meaningful regional heterogeneity, which compressed the pool placebo-adjusted difference. Now consistent with the Phase II TORREY study in the prespecified intermediate and high-risk subgroup, which was an N of 234 patients as defined by REVEAL Lite 2 Risk Score, seralutinib demonstrated a clinically meaningful placebo-adjusted improvement in 6-minute walk distance of 20 meters at week 24. The p-value was equal to 0.0207.

Across key secondary endpoints, including time to clinical worsening in NT-proBNP results consistently favored seralutinib. And in that intermediate and high-risk subgroup, 3 of 4 key secondary endpoints also had a p-value below 0.0125, underscoring seralutinib's activity in patients with higher baseline risk. And to be very clear, this is not a novel or post hoc subgroup. This is a well-established clinically relevant patient population.

In sotatercept's label expansion study, HYPERION, newly diagnosed patients were required to be intermediate or high risk at baseline as defined by REVEAL Lite 2 or its European cousin to compare a score. And this increased separation between drug and active arms on 6-minute walk distance is a finding that we see across all populations of increased risk in disease, including functional Class III amongst others.

And although we won't get into the slides today, we also had compelling results in the subgroup of patients in the study with PAH associated with connective tissue disease. This patient group accounts for roughly 30% of the U.S. patient population and their disease is typically more difficult to treat than other etiologies. That was seen recently in the STELLAR study of sotatercept where PAH associated with connective tissue disease patients were the worst performing subgroup, demonstrating an 8-meter improvement on drug.

In contrast, the subgroup with CTD was actually the top performer in PROSERA with a 37-meter placebo-adjusted improvement. Now this makes sense biologically given the anti-inflammatory and antifibrotic components of seralutinib's mechanism of action and the fibrotic nature of connective tissue disease. So certainly more to come here as we dig into the data.

Furthermore, in the patients that were on background sotatercept, we also saw a dramatic placebo-adjusted 6-minute walk result, consistent with the theoretical biological synergy between the 2 mechanisms of action, but we must acknowledge that was a very limited single-digit patient set. Also, safety was generally consistent with prior experience.

Now given this outcome, we are now focused on 3 priorities. Firstly, fully understanding the PROSERA data set. secondly, engaging with the FDA to discuss the results and their implications and certainly carefully evaluating our strategic options and resource allocation as a company. To ensure we are prioritizing our resources on the Group 1 PAH opportunity and fully understanding the PROSERA data set, we've made the decision to pause the SERANATA Phase III enrollment.

Importantly, this decision does not reflect our belief in seralutinib's potential in fibrotic disease. In fact, just the opposite, which PROSERA, of course, reinforced. Given the strength of the signal we observed in patients with connective tissue disease, this especially makes sense. This population has significant overlap with the Group 3 pulmonary hypertension population.

Now before I hand it over to Richard to walk through the data in more detail, I want to say a sincere thank you to the patients, caregivers, investigators and study teams who made this program possible. Their contribution to the advancement of PAH treatment is absolutely incredibly meaningful, and it's deeply appreciated. With that, I'll turn it over to Richard.

Thanks, Faheem. PROSERA was a randomized, double-blind, placebo-controlled global Phase III study in patients with WHO Functional Class II and III who were already on background therapy. The study was designed to enroll 175 patients per arm, though we ultimately enrolled 390 patients randomized 1:1 to seralutinib or placebo and treated for up to 48 weeks.

The primary endpoint was change from baseline in 6-minute walk distance at week 24 in the intent-to-treat population. Key secondary endpoints included time to clinical worsening, clinical improvement, change in NT-proBNP and reduction in REVEAL Lite 2 Risk Score. The study enrolled a heavily treated prevalent PAH population, including 55% on triple or quadruple therapy and 61% on background prostacyclin. Turning to patient disposition, we randomized and dosed 390 patients in total across the study with 193 assigned to placebo and 197 to seralutinib.

There was a slight differential in patients that completed week 24 between the placebo and seralutinib arms with more patients withdrawing prior to week 24 on the seralutinib arm driven by protocol-specified criteria for liver enzyme elevation, which tended to occur early on in the treatment course, consistent with past studies. After week 24, more subjects from the placebo arm dropped out as compared to the seralutinib arm with the leading cause being disease progression.

Notably, over the course of the study, no subjects from the seralutinib arm withdrew early due to disease progression as compared to 12 subjects in the placebo arm. Overall, retention across both treatment groups was strong through week 24 and end of study. In the appendix of this deck, we have a set of baseline demographics and disease characteristics. Generally, we enrolled the patient population we sought to enroll and the treatment arms were well balanced. As a reminder, our primary endpoint is the change from baseline in 6-minute walk distance at week 24 in the intent-to-treat population.

At week 24, we saw improvement of 28.2 meters in the seralutinib arm versus 13.5 meters in the placebo arm. The placebo-adjusted improvement using the Hodges-Lehmann approach was 13.3 meters with p-value equal to 0.0320. The prespecified 2-sided alpha was 0.025, and as a result, the primary endpoint is considered not statistically significant. The magnitude of the placebo response was unexpected and greater than what has been seen in past PAH studies, which we'll cover in more detail in a couple of slides.

In looking at 6-minute walk distance at weeks 12 and 16, the Hodges-Lehmann treatment effect is 9.6 meters at week 12 and 11.9 meters at week 16, respectively. Notably, at week 16, the p-value achieved the prespecified 0.025 threshold. As many of you know, many clinical trials reference a p-value less than 0.05 as a common benchmark.

For PROSERA, we set a more stringent threshold of p-value less than 0.025. That reflects the higher level of statistical certainty typically expected in a single registrational study where regulators generally look for strong evidence. Even though we didn't cross the prespecified statistical bar, we did see a measurable separation versus placebo that's consistent with drug activity. A p-value of 0.032 is still below the more commonly cited 0.05 benchmark, which signals a degree of statistical confidence.

This slide is a visual representation of the 6-minute walk distance results that were generated in the study through week 48. The lines represent the observed mean changes at week 12, week 24 and week 48. The triangles represent the imputed median values used in the primary analysis at week 24. As you can see from the observed means, those who remained on study through week 48 continue to improve, and there appears to be continued separation of the curves.

We need to acknowledge the limited sample size out to week 48, given the rollover into the open-label extension by study design and any early withdrawals. These data out to week 48 are consistent with the longer-term TORREY Phase II data with seralutinib, and they may be in part reflective of seralutinib's mechanism of action as a potential reverse remodeling agent that can lead to increased improvements over time.

Here, we put the PROSERA placebo performance into context. As you can see, in PROSERA, the placebo arm showed a larger improvement that is often seen in many other Phase III PH trials where placebo frequently remains near baseline or declined slightly over time. The unusually strong placebo improvement in PROSERA reduced the placebo-adjusted difference and is an important factor in interpreting why a numerically positive effect did not clear the prespecified statistical bar.

To further understand our placebo response, we evaluated the placebo response by prespecified geographic region groupings and noted it differed across the regions. In North America, the placebo performance was more aligned with typical modern PH trials and the overall treatment effect was most pronounced with a 25.9-meter placebo-adjusted improvement in 6-minute walk distance. In other regions, particularly Latin America, outsized placebo improvements materially compressed the pool treatment difference.

Turning to a summary of our key secondary endpoints. The results consistently favored seralutinib across all key secondary endpoints, including time to clinical worsening, NT-proBNP, reduction in risk score and clinical improvement. NT-proBNP at week 24 showed an estimated location shift of negative 124 nanograms per liter versus placebo with a nominal p-value of 0.002 and separation favoring seralutinib was evident as early as week 4. Time to clinical worsening, clinical improvement and REVEAL Lite 2 Risk Score measures also favored seralutinib. The consistency across functional, biomarker and clinical endpoints strengthens the overall efficacy profile.

Now let's focus on the prespecified intermediate and high-risk subgroup as defined by REVEAL Lite 2 Risk Score greater or equal to 6, which was comprised of 234 patients in PROSERA. Here, we see a more pronounced and clinically meaningful effect at week 24. In this subgroup, seralutinib demonstrated a 20-meter placebo-adjusted improvement in 6-minute walk distance at week 24 with a p-value of 0.0207.

Importantly, these patients represent a readily identifiable population with considerable unmet need and mortality risk, making the signal particularly compelling from a clinical perspective. In contrast, in the low-risk patients, while patients on drug showed a change from baseline in 6-minute walk distance of 29 meters, patients on placebo showed a change from baseline of 20 meters at week 24, materially compressing the ability of the drug arm to show a noteworthy placebo-adjusted improvement.

As before, this slide represents the data in a more visual manner. The line represents the observed mean changes at week 12 and 24 and the triangles represent the imputed median value used in the primary analysis at week 24. Focusing on the intermediate and high-risk group, one can see that seralutinib treatment results in continual improvement over time. The placebo improves modestly at week 12 and then it plateaus. This allows seralutinib to demonstrate a clear difference from placebo.

In contrast, in the low-risk subgroup, seralutinib treatment also results in continual improvement over time. However, there is a high placebo response at weeks 12 and 24, which obscures any treatment effect.

The data in these 2 subgroups based on risk score shows that the drug effect itself is actually quite consistent across risk groups, but the placebo behavior is very different. So this slide helps reinforce an important point. The PROSERA outcome is less about a lack of drug activity and more about where and how placebo performance influence detectability, particularly in a heavily treated lower-risk population.

To help put the PROSERA 6-minute walk distance results into broader clinical context, we thought it would be useful to step back and compare what we observed with seralutinib against other approved add-on therapies in PAH. This slide summarizes reported 6-minute walk distance changes from select pivotal studies, recognizing upfront that cross-trial comparisons have important limitations, including differences in patient populations, background therapies, study designs, endpoints and statistical approaches.

With that in mind, there are a few points worth highlighting. First, when we look at the active arm 6-minute walk distance improvements, the magnitude we observed with seralutinib is consistent with and comparable to approved PAH therapies. This is especially relevant given the degree of background therapy in PROSERA, where the majority of patients were already on triple therapy and many were receiving prostacyclins and a few on sotatercept. In that context, we believe the elevated placebo response represents a meaningful headwind when interpreting placebo-adjusted outcomes.

Importantly, when we focus on patients with higher baseline disease severity where placebo effects are more muted, the treatment effect with seralutinib becomes clearer and the observed delta in 6-minute walk distance aligns well with therapies that are now standard of care. Concordant with the 6-minute walk distance data, we were pleased to see that in the prespecified intermediate to high-risk subgroup, we see clear evidence for clinically meaningful and statistically significant treatment effects with seralutinib across key secondary endpoints compared to placebo.

Starting with NT-proBNP, the magnitude of reduction increases substantially in this population with a decrease of approximately 266 nanograms per liter, which is more than double what we observed in the overall study population. Given the strong relationship between NT-proBNP, right ventricular stress and long-term outcomes in PAH, we view this as particularly meaningful signal and clinically important. We also see this enhanced effect play out in clinical improvement where patients treated with seralutinib were over 3x more likely to improve compared to placebo.

Similarly, the likelihood of achieving a greater or equal 1 point reduction in REVEAL Lite 2 Risk Score was approximately twofold higher with seralutinib versus placebo in this subgroup, supporting the potential of seralutinib to address morbidity and mortality risk based on REVEAL Lite 2 Risk Score improvement. Finally, for time to clinical worsening, the hazard ratio again numerically favored seralutinib. This convergence across multiple measures is a key reason we believe the PROSERA results are clinically meaningful and it directly informs our confidence in seralutinib.

Next, reviewing our safety. Overall, seralutinib was generally well tolerated in PROSERA. This table is an overall summary of treatment-emergent adverse events, or TEAEs. TEAEs reported in 86.5% of patients receiving seralutinib and 80.5% of patients receiving placebo. Severe AEs were similar between treatment groups. TEAEs leading to discontinuation in AESIs were greater in the seralutinib arm compared to placebo. The majority of these events were related to hepatic adverse events and transaminase elevations, which will be discussed further.

Serious adverse events occurred in 16.0% of seralutinib treated patients and 18.9% of placebo treated patients and deaths were similar between the groups. This slide summarizes the incidence of serious adverse events by preferred term that have been reported in greater than 2 subjects receiving seralutinib. Review of the terms did not reveal any unexpected events or new safety signal.

The most frequently reported TEAEs occurring in greater or equal to 5% of patients on seralutinib are summarized here. The most frequent adverse event for seralutinib was cough at 37% and 13.7% with placebo. Higher rates of ALT and AST increases were also observed, 14.5% and 14.0% on seralutinib versus 0.5% each on placebo. Other events such as headache, nausea and diarrhea were generally similar between arms. Taken together, these data support that seralutinib is generally well tolerated with a safety profile that is manageable and consistent with prior experience.

Based on laboratory analysis, liver transaminase elevations of greater or equal to 3x the upper limit of normal were observed in 13% of patients receiving seralutinib and 1% of patients receiving placebo. These elevations generally occur during the first 3 months of treatment and resolved with drug interruption or discontinuation. In the context of existing treatments, we find that the overall safety profile of seralutinib is favorable as an add-on therapy in the PH patient population.

In considering transaminase elevations greater or equal to 3x the upper limit of normal, bosentan, for example, an endothelin receptor antagonist carries baseline and monthly liver tests monitoring under a REMS program, because at the 250 milligram b.i.d. bosentan dose, 14% of patients had ALT or AST elevations greater than 3x the upper limit of normal and 7% had elevations greater than 8x the upper limit of normal. Clinicians are well accustomed with routine monitoring when using therapies with potential hepatic effects given that ERAs are part of frontline combination therapy in PAH. Overall, seralutinib was generally well tolerated and the safety profile is broadly consistent with prior experience. Now I'll hand it back to Faheem to discuss next steps.

Yes. Thanks, Richard. All right. Let me summarize the key takeaways from the PROSERA study. Those study just missed its primary endpoint, we firmly believe the results show clear evidence of efficacy, especially in a patient population that has already been heavily treated. Importantly, PROSERA confirmed what we saw in the TORREY Phase II trial.

Patients with more severe baseline disease experienced a greater distinction between seralutinib and placebo. This enhanced separation highlights the potential benefit seralutinib can offer for those with advanced forms of disease.

Now when it comes to safety and tolerability, seralutinib appears to be acceptable as an add-on therapy in pulmonary arterial hypertension. The main safety findings such as cough and liver enzyme elevations are well understood by PAH clinicians given the established profiles of existing therapies. Taken together, the results from both PROSERA and TORREY support a positive risk-benefit profile for seralutinib. This is especially important as it represents a new mechanism of action for a progressive disease where there is still significant unmet need.

Now from a commercial perspective, we believe seralutinib continues to represent a meaningful opportunity in PAH, particularly in patients with higher baseline risk who face the greatest morbidity and mortality. In PROSERA, we saw a clinically relevant effect on 6-minute walk distance and consistent benefit across multiple endpoints in this identifiable population, achieved without vasodilation or hemoglobin-mediated mechanisms. And importantly, these results also highlight potential differentiation in patient groups such as those with connective tissue disease who have historically derived less benefit from existing therapies.

So as we tried to make clear this morning, PROSERA did not deliver the results we had hoped for, but it does provide substantial evidence of a clinically meaningful effect in high-risk patients living with PAH. Our immediate next steps are to complete our deeper analysis of the PROSERA data across endpoints and subgroups and of course, to engage with regulators to discuss the results and understand their perspectives.

We also await the results from the CT FRI study, the lung imaging study, which will assess blood volume distribution in the lungs. We believe this will be an important piece of context as we interpret the overall data set. Now I want to close by once again thanking the patients, investigators and study teams who contributed to the development of seralutinib as well as our employees, partners and shareholders for their continued engagement. We thank you again for your time today. Operator, you may open the line to questions.

[Operator Instructions] Our first question comes from the line of Joe Schwartz with Leerink Partners.

So given you enrolled PROSERA to include REVEAL Lite scores of 5 or greater in order to avoid enrolling mild patients who you expected to respond less to seralutinib and you narrowly missed the more rigorous p-value of 0.025 there in the overall population and now we're doing the subgroup analysis in patients with REVEAL Lite of 6 or greater. I'm wondering a few things. First, if you can help us understand the practical differences between these 2 different patient populations. Second, what does each patient population represent relative to the total PH population in treatment today? And how did you decide to choose the cutoff of 5 when designing PROSERA while including a cutoff of 6 for the prespecified analysis?

So Joe, let me start. In the plan that was agreed to with the FDA, we had used REVEAL Lite 5 as an entry criteria. In our statistical analysis plan, we were able to look at the median of REVEAL Lite as a subgroup of prespecified subgroup analysis. That median was 6. So 5 and greater was an enrollment criteria, 6 was what the data actually -- or the patient population and the data generated. So that's the reason why 6 being the median of all patients was where the line was cut. So...

And remember, the patients in this study that were 6 or greater represented the higher-risk patients -- represented 2/3 of the patient population in PROSERA.

And your second part of your question, Joe?

No, I think that...

He wanted to know the difference between 5 and 6....

This is Rob. 5 still includes the upper end of low risk. So some of those patients filtered into the study by being a REVEAL Lite 2 of 5.

And then another one on efficacy. I'm just wondering how many patients in PROSERA were on sotatercept? And how did they perform?

So 6 patients, we had 5 on drug, 1 on placebo. Those that were on drug had a mean improvement of over 70 meters.

Okay. And then on safety...

It's very consistent with what we saw in our preclinical work, where we think the -- this combination represents not just an additive effect, but actually a synergistic effect, not only did we see that preclinically, but there were a lot of anecdotal evidence of that, and now we're starting to see it in the trial setting.

And to your question about patient population and commercial as far as the more intermediate and high-risk patients as part of the pie, Bob?

Yes, Joe. Yes, the commercial opportunity is significant in this high-risk patient population. We're seeing a large number of the patients that are treated with triple or four therapies are typically functional Class III patients, which fit into this analysis.

And I just want to make one thing really clear because Joe, it's a great question, and it really stimulates an important point. That is that we clearly have now proven that in the higher-risk patient population, the sicker patients, this drug shows [indiscernible] in that 24-week window. But the data also suggests that over time, even the lower-risk patients, the less sick patients improve over time.

And as we take a look at our 48-week data, we see the trend that we saw in TORREY, where over time, patients got better, not just the sicker patients, but also the patients who were less sick in TORREY improved over time. So it's not like this drug would only be used in the most sick patients, physicians would want to use this drug even in the lesser sick patients to prevent longer-term progression because of the underlying effect we're having in both lung and heart.

Our next question comes from the line of Yasmeen Rahimi with Piper Sandler.

Two questions for you. I guess the first question is, you had -- when you originally designed PROSERA, it was enriched for this high-risk population where we found really the robust results. So at the time when you engaged with the agency, did you ask, yes, you want us to include a broader population, but prespecified. Was there a communication around saying, yes, even if you hit stat sick on your prespecified high-risk population, you can file, but we would like you for a consistency basis on an overall population. Would love to kind of understand at the time when you designed it, what the FDA's view were on the high risk population, which obviously is the highest unmet need. And Faheem, thank you for the comments that ultimately the drug could be used across.

So that's one. Sorry, for the long commentary. Two -- second question is 48-week data as well as the CT substudy is going to be really helpful. Maybe help us conceptualize how much visibility do you have currently on a blinded basis on the -- or any color on when that data could come and whether you need that data as a gatekeeper to engage with the agency in terms of next steps. So if you could provide some color on when we could get that and which you want to wait for that before you discuss next steps. I appreciate color on these both topics.

Thank you, Yasmeen. This is Caryn Peterson. In terms of the enrichment strategy and the discussions with FDA prior to initiating the Phase III trial, they were in full agreement with our target population and our eligibility criteria. So high-risk population, it's well identified, and they were in agreement with our selection criteria.

And Yas, in regards to the FRI data, we have not seen those results. As you know, they had to be adjudicated by central read. We anticipate that we'll be able to have those results early in the second quarter.

Yes. And Yas, back to the FDA and our approach there. We believe that -- well, first off, I think we would all recognize that this is a disease of incredible progression. Mechanistically, the need for a new mechanism, it attacks this disease in a different way, that affects the underlying mechanics of this disease is important. The evidence that we've got in place, we think, combined with the TORREY study together will represent a compelling package for the FDA. We have 2 studies now that are in concordance with one another, both meeting the statistical threshold for 2 studies that the FDA would -- we think the FDA should consider as clinically meaningful and relevant for this patient population.

The next question comes from the line of Paul Choi with Goldman Sachs.

My first question is in terms of the precedents in the sort of broader cardiovascular space and PAH in particular, can you direct us to any regulatory path or precedents that where you've seen subsets of patients approved, including in your case, such as a higher-risk population relative to a study that may have studied evaluated a broader population?

And my second question on the financial side, with your decision to pause enrollment in SERANATA, can you give us an updated view on what your cash runway might look like? And then any updated thoughts on how to treat the convertible due in June of next year?

Yes, Paul. So again, we will end the first quarter with roughly $105 million of cash on the balance sheet. In regards to runway, we are obviously going through the exercise right now to evaluate what that will allow us to accomplish as well as time lines for potential interactions with regulators. So more to come on that. But again, about $105 million on the balance sheet at the end of March. Caryn?

Yes. With regard to the patient population in the high-risk group here, there's probably not precedent, but this represents a high unmet medical need. And I think that in itself is a very important subset that the FDA looks at in the overall population. So we believe that there is a place for this drug. I think the FDA will probably see the data and support that high unmet medical need.

And Paul, there is, of course, plenty of precedent on FDA approving drugs that miss their primary endpoint, but it's typically in diseases where the unmet need is high, and it's first-in-class drug.

Our next question comes from the line of Andreas Argyrides with Oppenheimer.

I was hoping for more clear-cut results here, but clearly an active drug. Just if you can give us a little bit on the placebo response here, just how the geographical breakdown compared to expectations at the time of enrollment? And then I have one follow-up.

Yes. So I think, Andreas, you recall that we made a significant investment in Latin America following the very, very significant results that we saw in the STELLAR study for sotatercept, where that was a geography that patients benefited the most. So certainly, for us to see an almost parity between the placebo rate and the treatment rate and how the statistical plan using Hodges-Lehmann works where that ended up reducing the treatment effect by 8 meters.

So adding 8 meters on the placebo side was extremely, extremely disturbing to our team because, again, we expected to have an effect that has been seen in most PAH studies where Latin America is the best performing geography. We're still early in the investigation of what happened in Latin America, and we certainly will have more to come as we continue that work.

And even in other geographies, we saw a higher-than-normal placebo rate. Importantly, in the places where PAH treatment has been quite frankly, the most mature in North America and Western Europe, Australia, we are seeing what would be historically comparable placebo rates. So certainly, there is something that happened in Latin America. We have to understand it, and we will obviously engage not only with the investigators there, their sites as well with PPD who you recall was also CRO that did the STELLAR study. So more to come, but that was probably the most surprising and disappointing finding. Faheem?

Yes, Paul. What's really fascinating about what happened in Latin America, we saw a substantial number of super responders on placebo with over 100-meter walk improvements, which is really kind of quite fascinating. But what I think is really interesting, which really shows the impact of this drug is that over time, we start to see a separation. Even though we had that substantial placebo effect, as we look at the Latin America data out to week 48, we actually see improvement on the drug arm, just to give you kind of a sense, when we do an apples-to-apples comparison, the placebo effect starts to catch up on these patients at week 48. So they have a 40-meter improvement on placebo at week 48, that drops to 15 meters. But the drug effect goes from a 50-meter improvement up to a 66-meter improvement.

So you start to see the separation of placebo and drug over time. And we think that might be related to and consistent with what we see in the less sick patients that as we're affecting physiological -- having those physiological effects in the lung and the heart, the sicker patients will take a little longer for that response to occur. And we saw that in TORREY, and we seem to be seeing it here again.

So what we need to do, Andreas, is really unpackage where, in fact, those patients that were enrolled in Latin America, a REVEAL Lite 5 or greater, it's obviously disappointing. It's obviously extremely frustrating, and it is incumbent upon the Gossamer team with our friends at PPD and Chiesi to understand what happened because this result and all of our KOL thought partners upon seeing this were stunned by what happened in Latin America.

Thanks for your question...

I was going to ask a follow-up on the -- on any feedback on KOLs. But before I do, can you just also and you mentioned this in the press release, but talk a little bit about how kind of this geographical discrepancies impacted SERANATA. So I mean, I know it's a pause. You're partnering with Chiesi. There's a communication there. Is there an opportunity to continue in ILD, but focusing on certain geographies? Just maybe some kind of thoughts just because we know that there's a big opportunity in ILD.

Yes. Look, as I said in my remarks, we are absolutely convinced that seralutinib may play and should play an important role treatment in patients with PH associated with interstitial lung disease. not only because of the fact that we know that we are having effect in PH, but also our antifibrotic effect, the anti-inflammatory effect seems especially well suited for that patient population. So our decision to pause is not related to our conviction in the drug in that patient population. Just the contrary, we continue to be quite optimistic about that.

But it's really about resourcing and making sure that our first priority is getting PROSERA over the finish line and getting it approved by the FDA. And that is -- at this point in time, this is where all -- I mean, obviously, we're going to go through all of the financials and making sure that we are prioritizing everything for that effect first. At the point in time where we think we've got financial resources to be able to initiate SERANATA again, that will be something that we will be very excited about.

And Andreas, I think to underscore that point, if you look at the results we had in the CTD population, where, again, fibrosis and inflammation are significant, that benefit in CTD is a read-through to what could happen in PH-ILD. Quite frankly, the results that we showed in that connective tissue disease population are unprecedented when it comes to efficacy, just look at what happened with the STELLAR study, which only had an 8-meter improvement to our 37 meters.

So ultimately, the pause for SERANATA, as Faheem said, is to understand not only the financial implications and what we need to do to get the PAH indication over the finish line. But importantly, to your point, when you have issues like we had with study conduct in places like Latin America, we need to understand that and revisit those assumptions when it comes to starting another significant Phase III.

Our next question comes from the line of Olivia Brayer with Cantor Fitzgerald.

On week 48 data, can you give us any actual details around what that number is, both in terms of treatment effect and p-value? It looks like it's in the high 20s, maybe even close to 30 based on the slides in terms of treatment effect, but would be curious if you guys can put some numbers around that.

And then on time to clinical worsening, how important is that going to be as part of your conversation with the FDA? I assume they'll have some questions just around that p-value. Obviously, it is a secondary, not a primary. But I know that they look at TTCW pretty closely in this patient population. But it would be great to hear your thoughts on just the importance of that endpoint considering that it wasn't stat sig in either the overall or the intermediate to high-risk subgroup.

Rich, why don't you start with CTD and then I'll get some of the numbers for Olivia. But need on time to clinical worsening question, how important that is...

Time to clinical...

Yes, so I think that the -- overall, the time to clinical worsening in CTD, we didn't really look at that yet. We just looked...

No, I'm sorry, the question is the implications of -- how important is time to clinical worsening to -- overall.

Okay. Apologies. It's -- it was one of our key secondary endpoints. It's a different way beyond 6-minute walk to look at the effect of the drug. It's around hospitalizations, escalation of therapy. So it will -- it is an important endpoint, particularly for the European regulators. It's something that will be considered by the FDA, but we do have, I believe, other than time to clinical worsening, other secondary -- our primary and other secondary endpoints that would be adequate to get approval.

Yes. And I would just add on, too, on the time of clinical worsening, Olivia, is in the study, there was only 39 events. It was a low number of events at week 24. We probably need to see an event rate up in the 50s to be able to show any sort of statistical significance. But in that higher-risk patient population, those with REVEAL 6 and above, we saw a very strong trend in time to clinical worsening. But again, the event numbers were just too small to show statistical difference.

Yes. And I think that is also compounded by, again, the high placebo rate. That is also probably an implication of some of these patients not having clinical events. So again, it comes back to placebo. In regards to your question about patients at week 48, so you can see on the slides that we have the numbers, 57 on seralutinib, 65 on drug. It was roughly a -- on the overall patient population, a 30-meter improvement the statistical value -- a different statistical test is using ANCOVA without imputations at -- run at 0.02. So statistically significant and more importantly, very clinically meaningful.

Our next question comes from the line of Patrick Trucchio with H.C. Wainwright.

Just a clarification question from us and then a couple of follow-up questions. First, I was wondering what the prespecified placebo assumption was in your power model and how far the observed 13.5 meter placebo deviate from that assumption? Secondly, in the REVEAL greater than 6 subgroup, I was wondering if the treatment effect was consistent across regions and background therapy strata.

And then just lastly, I was wondering, as you've had discussions with the FDA, did they indicate an openness to a risk-based label? And what could the scenarios around a path forward to approval look like -- could one of those look like an approval with a confirmatory trial? Or how should we think about the pathway forward and in which population?

Thanks, Patrick. So the -- in regards to the placebo assumptions we had, we based our assumptions based on the STELLAR study. So we were expecting a placebo rate of plus/minus 2 meters. Your second question?

It was about the risk score geographic distribution.

Yes. So we're still unpackaging that, but certainly, we saw higher risk in Western Europe and North America. That being said, I think we also saw, frankly, better study conduct in those geographies, which is why we see the placebo rate that was near the bounds of our assumptions. In regards to regulatory, I'll let Caryn speak to that.

Path -- the approval path.

Yes. We're going to have obviously a conversation with FDA. We believe that we have between TORREY and PROSERA identified a high-risk population, certainly with an unmet medical need. And regards to how that looks as an indication statement, hard to know at this point, but I do believe that we have a compelling package to put in front of the FDA and determine a population where this drug is needed.

And I'll say, Patrick, as it relates to the need in the marketplace, we did have a confidential discussion with our steering committee, represented 15 of the top KOLs across the globe that reviewed this data with us. And I can tell you that there was an unequivocal support for the profile that we have here with seralutinib and all of the members saying that we absolutely need to go for approval to get this drug to their patients.

So we -- part of our -- a big part of our confidence lies in the fact that we believe we have tremendous support in the clinical community for the profile of this drug as it stands today. And it speaks to the unmet need. It speaks to the fact that sotatercept is not a cure. We only have vasodilation, and we have a lot of drugs to use on these patients, but it still isn't having the desired effect, which is trying to delay progression, slow progression and improve patients' quality of life. This drug has the potential to make a big difference here.

Your next question is from the line of Ellie Merle with Barclays.

How do you interpret the imbalance in liver enzyme elevations? And does this suggest that there is systemic exposure of seralutinib? And if you could clarify what grade the liver enzyme elevations were? And then turning to the imaging substudy as we sort of relate those near term, how should we interpret what good data would be from this and the implications for the conversations with the FDA?

Yes, I can address the liver enzymes. It's -- first of all, the liver enzymes is consistent with small molecule TKI that's metabolized by the liver. Our mechanism is because of its profile thought to be immune mediated. So the percentage you see that we saw is very consistent with other TKIs and even other drugs such as bosentan. We also know that once you remove drug or interrupt drugs, the enzymes resolve completely and fairly rapidly.

In regards to the FRI data, we think it will be very, very important. Our expectation would be to replicate Ellie, what we saw in the TORREY study. Obviously, we've disclosed that while TORREY was limited to about 18 patients, a little over 120 patients of images, which we think will be very important because it will be a second check, if you will, on an objective view of what's going on with the patients. If you look at both the overall patient population as well as the -- those that had a REVEAL Lite of 6 or greater, the one objective endpoint that we were highly statistically significant on was the change in NT-proBNP, which is the biomarker for right heart health and function.

We do believe that, that FRI data could be a very important assist in helping to explain not only the placebo effect, but also bring a level of objectivity for our discussions with regulators about what happened in the PROSERA study. So we, one, are very confident that, that data should be good like we saw in TORREY, but also is an important pillar to our regulatory strategy.

Our next question comes from the line of Laura Chico with Wedbush Securities.

So one more on the placebo response. Slide 9, you had that great picture of 6-minute walk distance placebo results from other studies at week 24. Do you have any sense as to how the week 48 placebo responses for other programs might fare? And I guess I'm just trying to understand if the week 48 placebo response you're seeing is also elevated or if that is more in line with what we would be expecting from other trials? And then just a housekeeping question. The PVR data was not collected in PROSERA, correct?

So PVR was not collected. In regards to other studies, 48 weeks, not a lot of folks did what we did, where you kept placebo-controlled data to week 48, it would be really an apples and oranges comparison because you'd be comparing it to open-label extension data, right? So for example, in the sotatercept data sets, most of their 6-minute walk data is open label.

We were one of the first sponsors to go out to week 48 on a placebo-controlled basis. But what we can say is across all geographies over time, placebo starts to behave normally, specifically, as Faheem said, in Latin America, where when you look at those patients that had a week 24 walk and stayed in the study to week 48, which is roughly about 29 or 30 patients, you see placebo at week 48 starting to behave like you would have expected. So I also believe that, that week 48 data is another important pillar for our discussions with regulators because it starts to meter out the placebo effect and also continues to show continued improvement for patients on drug.

So ultimately, we do think that, that week 48 endpoint is really, really important for our ability to say this drug has an important place in the marketplace for patients because of that long-term efficacy. And again, that placebo effect starting to normalize longer term.

Yes. And just on that placebo effect, I just want to bring everybody's attention back to specifically the North American results where we saw minus 3.9 meter, which was kind of more in line -- minus 3.9 meter placebo effect, which was more in line with our assumptions. And it's really quite interesting in North America. We obviously had a pretty substantial improvement on the seralutinib arm of almost 26 meters, almost 26 meters in North America, and that's on an n of 75 patients. So more normalized placebo effect, you really then get to see the true drug effect that is going on here.

Yes. And I think to add to that, quite frankly, the drug did what we asked it to do.

Absolutely...

The drug performed. We wanted to go north of 20 meters. And in the geographies where the study was run as well as it could be, we were well north of 25. It is placebo and is Latin America that has made this challenging.

And just to be clear, in every region, we were north of 20 meters on the drug effect.

Our final question comes from the line of Vamil Divan with Guggenheim.

So I got a couple of questions following up on some of the prior commentary. So one on the safety side, following on Ellie's question earlier on the liver safety. I noticed also on one of the slides that for the treatment-emergent adverse events leading to discontinuation of the drug or the investigational product and also for a special interest, the rates were quite a bit higher, about 3x higher for both of those in the seralutinib arm as compared to placebo. So just curious if you can give any more details there in terms of what is driving the discontinuations, especially.

Second was around -- you mentioned your partner, Chiesi. I'm just curious if you've had any conversations around how they're thinking about the program now on a go-forward basis? And if they had any hand in also pausing the ILD trial. And then my last question was just again, going back to the question that was asked earlier around the debt coming due next year. I know, Bryan, you mentioned the cash on hand right now. Just curious if you can share any thoughts on how you're thinking about at this point, kind of navigating things through the debt payment in June next year.

Yes. So I'll take the Chiesi, the debt piece, and Rich could talk about the AEs. So clearly, we have a debt obligation due in May of 2027. We'll engage with both shareholders and bondholders to see what options we have. I would say that Chiesi remains very supportive of the seralutinib program. And certainly, as we are unpackaging this data, they have affirmed their commitment both commercially and financially. So that will also obviously play into the financing piece of that. And yes, they agreed with Gossamer about pausing SERANATA because, again, we need to interpret the PROSERA results and to see if we need to change some of the assumptions around the SERANATA study. But Rich, do you want to answer the question about the TEs?

Yes. So I think the question was around we had specifically for the hepatic, there's AESIs and then there's AEs and then there's the transaminase and the numbers are different. That's because they're looking at different components of liver safety. So the real value that we should be looking at is the 3x laboratory value because that's what's typically most relevant. The adverse events, that captures everything that exists, for example, that is related to the liver.

I think the question was also around the discontinuation rate due to hepatic events, which was 7%. So we had protocol-specified discontinuation or withdrawal rates. And I'm going to say upfront that, that we were a bit more conservative in our trial because we wanted to understand the liver safety. So typically, you don't need to withdraw the trial unless you're above 8x. What we did is under certain circumstances because of monitoring or lapse of monitoring at sites, we recommended that the patient would withdraw after their enzymes come down because we weren't confident that they were going to be followed appropriately.

Okay. So maybe just a quick follow-up. So about 7% of discontinuations were due to liver. Can you comment on because it's a total 15% in the seralutinib discontinued due to treatment-emergent AE. What can you comment on what the other 8% were due to or a sense of what they're from?

No. So one is the AE table is 15%. So that's reported by the sites, right? And then the other number is the discontinuation rate, which is 7%, right? So the discontinuation rate is really reflective more of the 12% transaminase elevation that is based on laboratory parameters.

There are no further questions in queue. I will now hand the call back to Faheem Hasnain for closing remarks.

All right. Thank you very much, and thank you all for participating, and thanks for all the thoughtful questions. Look, I'll just close by saying we are absolutely confident that we have a drug that is making a difference and has potential to make a huge difference for patients living with PAH. Certainly, we've got very strong evidence in the fact in the 24-week period that this drug makes a difference in the high-risk patients.

But I also fundamentally believe -- we believe, and most importantly, I think the clinical community believes that we are seeing with this drug a reverse remodeling effect, having an effect both in the lungs and the heart, a drug that has both antifibrotic qualities as well as anti-inflammatory qualities and a drug that will be used certainly in the higher-risk patients, but also a drug that will be used in patients to prevent longer-term progression.

And this disease area, these patients are so desperately in need of another solution because, unfortunately, the solutions we have really aren't sufficient. And even after seralutinib, we will continue to need to innovate as an industry. I want to thank you all. Thank you for the time you spent with us and look forward to follow-up questions and dialogue with you as we go forward.

Thank you.

Thank you again for joining us today. This does conclude today's presentation. You may now disconnect.