Good afternoon, and welcome to Fractyl Health’s Fourth Quarter and Full Year 2024 Financial Results and Business Updates Call. As a reminder, this conference call is being recorded. At this time all participants are in a listen-only mode. There will be a question-and-answer session following management’s prepared remarks. I will now turn the call over to Brian Luque, Head of Investor Relations and Corporate Development at Fractyl. Brian, you may now begin.

Thank you. This afternoon, we issued a press release that outlines the topics we plan to discuss today. The release is available at www.fractal.com under the Investors tab. Joining us on the call today are Dr. Harith Rajagopalan, Chief Executive Officer; and Lisa Davidson, Chief Financial Officer. During this call we make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, including the Annual Report on Form 10-K filed today, which I encourage you to review. Any forward-looking statements on the call are subject to substantial risks and uncertainties speak only as of the call’s original date and we undertake no obligation to update or revise any of the statements, even if subsequent events cause the company’s views to change. It is now my pleasure to pass the call over to Harith.

Thank you, Brian, and good afternoon everyone. Thank you for joining us today. GLP-1 drugs have undoubtedly transformed people’s ability to achieve short-term weight loss. However, real world data reveal the significant unmet need in obesity that remains. Nearly 65% of patients discontinued these treatments within the first year with many experiencing rapid weight regain thereafter. According to a recent study in JAMA, only a minority of individuals who stop taking GLP-1 drugs reinitiate therapy within one year. So while these drugs deliver initial success, long-term weight maintenance remains elusive for too many people caught in an unending pattern of loss and regain. Even as more drug options become available, it’s becoming clear that non-drug options will play a crucial role in long-term weight maintenance. This is the single largest gap in obesity care today. Fractyl is pioneering the first potentially durable solution to address the weight maintenance crisis, not just managing symptoms, but tackling the root cause of obesity in the duodenum with Revita and developing a potentially one and done Smart GLP-1 gene therapy with Rejuva. The unmet need is clear and we are driving as rapidly as possible to deliver important data sets to demonstrate the potential of our solutions to address this need. Today I’ll take you through the defining milestones of 2024 and why we believe 2025 marks a pivotal step forward for Fractyl as we are laser focused on our efforts to deliver long-term metabolic health solutions to patients who need them. We made tremendous strides across clinical, regulatory and financial milestones in 2024. We completed our IPO debuting on the NASDAQ under the ticker symbol GUTS strengthening our financial position. Secured FDA IDE approval for a pivotal study of Revita’s role in weight maintenance following GLP-1 drug discontinuation, setting the stage for a…

Thank you, Harith. In the fourth quarter of 2024, revenue was generated from our commercial pilot in Germany and enabled patients to enroll in the German Real-World Registry study. Turning to operating expenses. Research and development expense in the fourth quarter of 2024 was $20.3 million, compared to $10.1 million for the same period in 2023. The increase during the quarter was primarily due to the progress made in our REMAIN-1 clinical study, the REVITALIZE-1 clinical study, continue development of the Rejuva platform and increased personal related expenses including stock-based compensation. Selling, general and administrative expense in the fourth quarter of 2024 was $4.9 million compared to $2.8 million in the same period in 2023. The increase during the quarter was primarily due to the increased cost associated with operating as a publicly traded company and increased personal related expenses including stock-based compensation. For the fourth quarter of 2024, we reported a net loss of $25 million compared to a net loss of $19.2 million for the same period in 2023. The increase in net loss was primarily attributed to the increase in operating expenses discussed above, partially offset by the non-cash gain from changes in fair value of warrant liabilities, as well as an increase in net interest income. As of December 31, 2024, Fractyl had approximately $67.5 million in cash and cash equivalents. Based on our current development plans, we believe that our existing cash and cash equivalents will be sufficient to fund our operations through key anticipated company clinical milestones into 2026. I will now turn the call back to Harith.

Thank you, Lisa. We are not just participating in the obesity revolution, we are defining it. These are the earliest days in this market with products that show tremendous promise and yet large unmet needs that remain. This is our moment to lead and we are moving with urgency. 2025 will be the year that we show the world that weight maintenance is possible. The work we are doing today has the power to change millions of lives offering real, lasting solutions beyond temporary fixes. The demand is clear, the science is strong and our path forward is bold. It takes GUTS. I want to take a moment to express my deep gratitude to the patients and physicians who place their trust in us. To the dedicated employees at Fractyl who are relentless in their pursuit of life changing therapies. And to you, our shareholders, whose support fuels our mission. Your belief in our work drives us forward and we have never been more confident in our ability to deliver on our promises. And with that, we will now open the call up for questions. Thank you.

Thank you. [Operator Instructions] Our first question comes from the line of Jason Gerberry of BofA Securities. Your line is open, Jason.

Hey, guys. This is Chi [ph] on for Jason. Thanks for taking our questions. I guess, the first one I want to touch on remain one. So you are expecting a 12-week midpoint analysis late in second quarter. We are say right at the start of second quarter now. So presumably you have a line of sight on how many patients who have achieved the prespecified 15% total body weight loss and those who have subsequently been randomized two to one to receive Revita or sham. So I’m hoping you can elaborate if you have randomized – already randomized roughly 40 patients or so that are expected for the midpoint analysis. And curious, what are the dropout rates so far that is patients getting free tirzepatide, but don’t follow through with the randomized portion of the study.

Hi, Chi, thank you for the call and the question. I think that as of this morning there were nearly 100 patients who’ve achieved either 15% body weight loss or close to it. A substantial number of the – proportion of the 45 have been randomized and/or procedures are being scheduled. What I can – I don’t know the exact number off the top of my head. But what I can tell you is that there’s not a single patient who has dropped out of the study because they have not wanted to undergo the procedure so far. So every patient who has hit 15% body weight loss and who’s had a procedure that has been scheduled has undergone that procedure. And we’re gratified by that fact because as you know, there’s a question about whether patients might just enroll in the study in order to get tirzepatide and then not be interested in the procedure itself. That has not been an issue that we have observed thus far. And with respect to the exact timing of the midpoint analysis, we will be giving updates along with REVEAL-1 data at the end of this month, but we remain on track based on what we’re seeing right now.

Great. That’s a good segue to my second question. And thanks for the color on REMAIN-1. So on REVEAL-1 data expected later this month. What sort of format and venue do you have in mind for the data disclosure? Can you remind us your expectation of the REVEAL-1 data? I know you’ve referenced tirzepatide 3% weight gain up to four weeks. So remind us what your expectation of the REVEAL-1 first data set and do you expect a lot of data variability from the 10 patients or so worth of data?

We’re having some background from the operator, but I’ll go ahead and answer your question. I’ll repeat your question Chi and then we will go. So what you’re asking is, what is the expectation for how we’re going to present the data and then also the variability there? I can tell you that this is a more heterogeneous patient population than REMAIN-1. As you may remember – as for the audience, as you may remember, in REMAIN-1 we’re taking individuals who are obese, who are GLP-1 drug naive. We’re providing tirzepatide, titrating them to 15% body weight loss and then randomizing them. And in the process of after stopping their tirzepatide and what that allows is a more or less homogeneous group of individuals who’ve lost a little bit over 15% total body weight loss. In REVEAL, we are enrolling subjects who have already been on either semaglutide or tirzepatide. The majority of them have been on tirzepatide, but they have lost varying amounts of weight relative to what you would expect to see from the REMAIN study. What we’ve shared already is that a single individual who lost between 17% and 18% total body weight who was followed through her one-month visit in January and roughly six weeks after tirzepatide discontinuation and little bit more than a month after the Revita procedure, she had not regained any body weight and had not been feeling any ill health. So what we hope to be able to show with the press release in the end of the month is a clear picture of this group of open-label patients in REVEAL-1 and to be able to give enough information to be able to unpack how you might translate that into what you would expect to see from REMAIN.

Got it. And just last quick one from me on Rejuva. Can you talk about what are the gating items you need to complete before the CTA submission in first half 2025, I know you talked about this before, but I’m hoping you can fine tune where you are at with the process. And are you still planning to initiate a first-in-human study in first half?

Right. So we provided additional clarity on that in our guidance today. We are going to be filing our first CTA module in the first half of the year. There’s a device module and a drug module. The device module is going to have certain preclinical verification testing that needs to be completed in addition to the in vivo testing and CTA-enabling studies that have been done like aging and biocompatibility. So those are the sorts of things that remain on the device side of the house. And on the drug side of the house we have some remaining CMC assay test and final testing to be completed before the drug is complete, and we are going to initiate that submission in the first half of the year as we had previously discussed.

Okay, great. Thanks so much.

Thanks.

Thank you. Our next question comes from Mike Ulz of Morgan Stanley. Please go ahead Mike.

Great. Good afternoon and thanks for taking my questions. Maybe just a follow up on Revita and the REVEAL-1 open-label portion of the study. You mentioned planning to give an update sort of end of this month. Just curious number of patients you plan to share. I think in the past you were suggesting maybe around 10 patients. Is that still the case?

Yes, that’s still the case. We’ve actually just been constraining the size of that study as we’ve been also focusing on enrolling remain and so we are continuing to – we’ve enrolled north of 10 patients so far and we are planning on sharing about 10 patients worth of data by the end of the month.

Okay, great. And then maybe just a Rejuva question more on 002 if you could just remind us or give us an update there on the status of that program and next steps there? Thanks.

So Rejuva-002 is a smart GIP GLP-1 dual incretin. It’s a – it’s the same delivery catheter that we developed for 001 and it is the same AAV9 backbone. The difference is that it’s a plasma that will express both GIP and GLP-1 that’s still in pre-clinical testing and we have not provided guidance at this time on when that will go to the clinic. We do believe that Rejuva-001 in preclinical studies has demonstrated efficacy on both blood sugar and on body weight. We are planning to enroll patients who have obesity and type 2 diabetes in the first-in-human study. And we believe that we’re going to learn a great deal about dosing from Rejuva-001 that will inform how we plan to dose 002 in patients as well. And so you’ll – as we make more progress on 001 in the clinic or path to the clinic and then into the clinic, we’ll give you guidance on 002’s timeline to a first-in-human as well.

Great. Thanks again for taking my questions.

Thanks.

Thank you. Our next question comes from Michael DiFiore of Evercore ISI. Please go ahead, Michael.

Hi guys. Thanks so much for taking my questions and congrats on all the progress. Just two quick ones for me regarding that first patient in REVEAL that maintained her body weight. Is there any updates on that patient in terms of how far, how much further along she is and whether she still has maintained or not gained any weight back? And have you done any further workup or even biomarker analysis on that patient to maybe shed some more light on durability or even mechanism [ph] for that matter? Thank you.

Thanks, Mike. I don’t have any additional information to share at this time. I don’t – we will have more information in due course. And one of the nice things about the REVEAL-1 open label study is that we plan to continue to follow these patients beyond early follow-up as you know. So we’re going to share one month data in a cohort, but we certainly will be following that up with 3-month and 6-month data when we have it. But I have no specific additional information to share at this time.

Got it. And just one quick follow-up, more of a commercial type of question. Are there any plans assuming the REVEAL-1 and the REMAIN midpoint analysis is stellar in [indiscernible]? Are there any plans to seek potential strategic partnerships or collaborations to maybe bolster commercialization efforts and share development costs?

Great question. Mike, we’re talking to a lot of the major players in the space. I believe that this is a study and an endpoint and an unmet need that is very much on a lot of people’s minds. And I think that there are a lot of people who would be interested in this therapy and the opportunity.

Got it. Thanks so much.

Yes.

Thank you. Our next question comes from the line of William Wood of B. Riley Securities. Please go ahead, William.

Thank you so much and congratulations on a very nice year and quarter. A couple from us, maybe just one brief one on or actually I guess sort of a combined two on the REVEAL-1. I’m just kind of curious as we move throughout the year, you said you’d be providing additional data points in weight loss or weight maintenance, I guess. But when upon those readouts, would we expect sort of increasing data including biomarkers, possibly body composition or other events or other additional data analysis? And then additionally, do you think and I understand at least in remain, it’s all tirzepatide based population, but do you or would you potentially expect differences in weight regain based on whether the patient originally took Sema or tirzepatide just with differences in body composition after those two drugs or any other differences in those weight loss dynamics? And I have a follow-up. Thank you.

Thanks William. Appreciate it. So we are collecting blood and doing lab work on assessments on blood sugar parameters, cardiovascular parameters and also measuring leptin as a biomarker for body fat mass content. And so we will be compiling those data and then sharing them over the – later on in the year for REVEAL. And while we expect top line data for REMAIN at the end of Q2, we do plan to continue to investigate blood sugar and other assessments as well for reporting later on, although I can’t guarantee that all of that will be available right up front. With respect to the weight regain, our analysis, and we’ve looked at this extensively is that the weight regain from semaglutide and tirzepatide does not depend so much on the drug that they’re on, but rather on the time course since the discontinuation of the medicine. And so that’s part of what we think is important to share as we walk through the REVEAL data set so that people can understand how to think about what Revita may be doing from the Open-Label cohort as a prelude to the randomized data coming thereafter.

Excellent. Appreciate that extra color. And then in terms of you mentioned that there’s been a couple of states or I guess maybe even new numerous states that have either rejected insuring or covering obesity treatments. And then there’s been others that have sort of put it on the table and either accepted it or then, sort of turned back the clocks on it. Have you gone to any of the states or bodies that have potentially had these sort of back-and-forth thoughts on obesity treatments and sort of seen what their idea is on the DMR sort of treatment? And if this is something that they look at and they’re like, oh, this is, we’re actually very interested in this. So sort of apart from say an FDA or a broad insurance program, just curious about those thoughts.

Yes, we’ve had some conversations with public payers and I think we have a good understanding for what they view their pain points to be. I think that the proof will be in the data that we generate from REMAIN and in the pivotal study in order to be able to articulate a value proposition more crisply. But what I can say is that the desire to be able to address obesity in a holistic way and in a cost-effective manner is now very clear. I do not believe that that was perceived to be a need by payers five years ago, but I do believe that that is a groundswell that is occurring currently and I believe that the public payers see that as much as the employers do. So what we are aiming to be able to do with the REMAIN study, which and I think it is incredibly well designed to do that, is to demonstrate a holistic strategy for durable weight maintenance that we believe will be highly attractive. But we’ll have more to say about that with data in hand as we pursue the program over the coming quarters.

Got it. Understand. Yep. I’ll stop there and hop back in the queue. Appreciate you taking our questions and congratulations again.

Thank you.

Thank you. [Operator Instructions] I would now like to turn the conference back to Dr. Rajagopalan for closing remarks. Sir?

Thank you very much. Thanks to everyone for joining us this afternoon. As always, we appreciate your continued interest in and support of Fractyl and we look forward to continuing to sharing updates on our progress as we address weight maintenance in the coming months. Look forward to speaking with you again shortly.

This concludes today’s conference call. Thank you for participating. You may now disconnect.