Good afternoon, everyone, and welcome to Shattuck Labs Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to your host, Conor Richardson, Senior Director of Finance and Investor Relations at Shattuck Labs. Conor, Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to the Shattuck Labs conference call regarding our third quarter 2022 financial results and recent business updates. A press release reporting our financial results was issued after market close this afternoon and can be found on the Events & Presentations section of our website, shattucklabs.com. During this afternoon's call, the Shattuck leadership team will provide a business overview of the third quarter of 2022, including clinical development updates from SL-172154, our lead program and SL-279252. We will refer to these as 154 and 252 throughout today's earnings call. Speaking on today's call will be our Chief Executive Officer and Scientific Co-Founder, Dr. Taylor Schreiber, who will review our pipeline progress and upcoming key milestones; followed by our Chief Medical Officer, Dr. Lini Pandite, who will provide an update on our clinical activities and then our Chief Financial Officer, Andrew Neill, will review our third quarter 2022 financial results and financial guidance. We will then open the call for questions after Dr. Schreiber makes some closing remarks. Before we begin, I would like to remind you that today's webcast contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. For more information on these risks and uncertainties, please refer to our most recent Annual Report on Form 10-K for the year ended December 31, 2021, and our other filings with the SEC, which are available from the SEC's website or on our corporate website, shattucklabs.com. Any forward-looking statements represent our views as of today, November 8, 2022. With that, I will now turn the call over to Dr. Schreiber, our Chief Executive Officer. Taylor?

Thank you, Conor. Good afternoon, everyone, and thank you for joining us today. 2022 has been an operationally focused year for Shattuck, and our clinical team has done an excellent job of advancing 154, our lead clinical stage agonist redirected checkpoint or ARC compound. As a reminder, 154 is a SIRP-alpha Fc CD40 ligand bi-functional fusion protein, which serves to both block the macrophage checkpoint molecule known as CD47 and also activates an important immune-stimulatory receptor known as CD40. Linking these two functions within a single therapeutic differentiates 154 from all other CD47 inhibitors in clinical development. As you will hear from Dr. Pandite in a moment, our clinical team has made excellent progress and we completed enrollment in the monotherapy dose escalation portion of our Phase I trial for patients with advanced platinum-resistant ovarian cancer in the second quarter of this year. 154 reached a maximum administered dose of 10 milligrams per kilogram, which was the highest anticipated dose level in the study. In the third quarter, we began enrolling patients in the first chemotherapy combination cohort in ovarian cancer, and we have selected 3 milligrams per kilogram as the starting dose level for 154 in this combination cohort. As for the chemotherapy combination agent, we selected the combination with liposomal doxorubicin because preclinical studies demonstrated that ovarian cancer cells express prophagocytic or eat-me proteins on their surface following exposure to liposomal doxorubicin. These eat-me signals are essential to initiating an antitumor response in the setting of CD47 inhibition. In addition, several decades of clinical experience in the platinum-resistant ovarian cancer setting has established a single agent response rate in the range of 10% to 12% for liposomal doxorubicin. Thus, this trial design allows us to decipher the contribution of components with a relatively small number of patients. In…

Thanks, Taylor, and good afternoon. I'm extremely pleased with the execution of our clinical programs and the progress we have made throughout the year. Let's turn first to 154, our differentiated CD47 inhibitor and CD40 agonist. Our first clinical trial of 154 is a multicenter, open-label, dose escalation trial intended to assess the safety, tolerability, pharmacokinetics, antitumor activity and pharmacodynamic effects of intravenous administration of 154 as monotherapy in patients with platinum-resistant ovarian cancer. Initial clinical data from this trial presented at SITC 2021 demonstrated a favorable safety profile, high-target occupancy and on-target pharmacodynamic activity driven by CD40 activation. As you will recall from the last quarter, we announced that we have completed enrollment in the maximum administered dose level of 10 milligrams per kilogram. To date, we have not observed any evidence of destructive anemia, which we attribute to the design of the Fc portion of 154 and the absence of binding to Fc gamma receptors. We believe that the current safety profile of 154 provides us with a therapeutic window in which we can potentially maximize the biology of CD40, while reaching near 100% target occupancy of CD47. We expect to report the full data from the dose escalation portion of this trial midyear 2023. Enabled by our progress in the Phase I trial, I'm pleased to say that in the third quarter of this year, we dosed our first patient in a Phase Ib clinical trial of 154 in combination with liposomal doxorubicin in patients with platinum-resistant ovarian cancer. This multicenter, open-label trial is intended to evaluate the safety, tolerability, pharmacokinetic, antitumor activity and pharmacodynamics of 154 in combination with liposomal doxorubicin. We expect to report initial combination data from this trial midyear 2023. Now, let us turn our attention to our 154 clinical trial in hematologic…

Thank you, Lini. Good afternoon, everyone. As Conor mentioned at the outset of our call, the full financial results for the third quarter of 2022 are available in our earnings press release and in our forthcoming 10-Q. Today, I would like to focus on a few key points from our disclosures. We continue to be well positioned financially. As of September 30, 2022, we have cash and cash equivalents and investments of approximately $185.1 million. In the third quarter of 2022, our research and development expenses were $18.9 million compared to $15.1 million for the third quarter of 2021. In the third quarter of 2022, our general and administrative expenses were $6.6 million compared to $4.3 million for the third quarter of 2021. Our net loss for the third quarter of 2022 was $24.6 million, or a loss of $0.58 per basic and diluted share compared to a net loss of $17.4 million for the third quarter of 2021, or $0.41 per basic and diluted share. Based on our current operating and development plans, we reiterate our financial guidance for 2022 and beyond. We expect our existing cash and cash equivalents and investments to be sufficient to fund our planned operations into the second half of 2024. We continue to operate with strong financial discipline across our entire company, including in our ongoing clinical programs. And given our projected rate of cash burn, we are in a healthy position as it relates to our balance sheet and expected clinical data readouts for our 154 and 252 clinical trials. With that, I'll hand the call back to Dr. Schreiber for final comments. Taylor?

Thank you, Andrew. As you have just heard, 2022 has been a year in which we have kept our heads down to focus both on clinical execution with the ARC platform and further broadening our pipeline with the GADLEN platform. Both of those opportunities are now ripening quickly, and we are pleased to be approaching key clinical data in 2023. As you heard from Lini, clinical updates from the 154 program, including complete data from the monotherapy dose escalation study in platinum-resistant ovarian cancer patients and initial data in combination with liposomal doxorubicin, also in ovarian cancer patients, are expected midyear 2023. Additionally, initial data from our study in patients with relapsed/refractory AML and higher-risk MDS are expected in the first half of 2023. I want to thank, everyone, for participating in today's call. We believe the combination of our experienced team, transformational science and protein engineering, as well as financial resources puts us in an incredibly strong position to move beyond our next set of milestones. We will keep you apprised of our progress as we continue to execute our strategic and corporate objectives. With that, we would now like to open the call for your questions. Operator?

[Operator Instructions] Our first question comes from Marc Frahm with Cowen.

Thanks for taking my question. Last quarter -- last time you guys spoke on an earnings call, you talked about the 3 milligram dose being advanced into the doxo combo trial, and it seems unlikely that the 10 milligram while was still being pursued in the monotherapy was going to need to be reported over. Do you have enough data now from that cohort in the monotherapy to confirm whether you think you will or will not be using the 10-milligram dose in the combo at all?

Marc, thanks for the question. Let me ask Lini to take that.

Marc, all our PK/PD analyses support the 3 milligram per kilogram dose being evaluated in the combination. Our protocol allows us to go up on the dose, but the 3 milligrams is a very solid dose for evaluation in combination.

Okay. That's helpful. And then also in the early experience with monotherapy, there were some infusion reactions and you've extended the dosing time to help with that. Can you update us on kind of how that's continued to evolve? And then can you confirm, are you using the longer infusion time in the combo trials?

Yes. We are using longer infusion time, which is two hours, over two hours instead of over one hour.

Okay, thank you.

Thanks Marc.

Our next question comes from Jon Miller with Evercore ISI. Mr. Miller your line is live.

Hi, this is Eric here, asking on for Jon Miller. On SL-154, looking at the monotherapy trial in platinum-resistant ovarian cancer… [Technical Difficulty]

This is Taylor. You trailed off there. Could you repeat the question? Operator, maybe we can go to the next question and come back to Evercore?

Absolutely. Our next question comes from Gil Blum with Needham & Company.

Hi good afternoon everyone. Just a quick question on the 10 mg per kg dose, was there any sign of toxicity at that dose or purely this is a decision based on PK/PD?

Hey Gil, I'll turn that over to Lini as well.

Yes. It's a decision based on PK/PD. We did an analysis across all the dose -- the entire dose range and the 3 milligrams per kilogram dose gives full receptor occupancy, gives on-target pharmacodynamic activity, and it is a very good dose actually to take forward. And there is not much that you gain from going up to 10 milligrams.

Okay. That's very helpful. And may be a speculative one, do you guys have any view on kind of the abstracts that were published for magrolimab ahead of ASH? I mean, I'm sure you guys looked at it. It doesn't looks like there's not much more benefit for CD47 in the high-risk MDS. I would appreciate any thoughts you guys have.

Yes. So, I'll start and Lini may want to chime in with some additional comments. I think recently, we've seen some updated abstracts, both from ALX for magro heading into ASH. And with both, I guess what I would say to caveat my response is that there's not quite enough detail in the abstracts to make a full assessment of the patients that were studied in each trial and what it necessarily means. And the other statement that I would make is that I think the trends towards the activity of CD47 inhibitors, at least single-acting CD47 inhibitors being most convincing in the TP53 mutant AML population is where we believe the field will continue to evolve. And the activity of azacitidine alone in the non-TP53-mutant HR MDS patients and then the combo between AZA and len in the non-TP53-mutant AML, I think it's -- so far, the data we've seen is really on the margins as to whether a single-acting CD47 inhibitor adds something beyond what you would expect from that chemotherapy-only backbone.

All right, I appreciate the color and I'll step back in the queue. Thank you.

Thanks Gil.

Our next question comes from Yigal Nochomovitz with Citi.

Hi, this is Carly on for Yigal. Thanks so much for taking our questions. I just have one on the 154 update for AML and MDS in the first half of next year. I guess, can you comment at this point on roughly how many patients we should expect for both the monotherapy and the combination cohort. And I know you mentioned in the prepared remarks that sort of like any complete responses in this population would be meaningful. But can you elaborate a bit on sort of what you're looking to see with the azacitidine combo specifically on efficacy?

Great. I'll ask Lini to take that also.

Yes. So the dose escalation part. So there's a monotherapy dose escalation and then there's a combination with azacitidine dose escalation. And so we anticipate anything from between 10 and 20 patients across the dose escalation. And then your second question regarding the complete remissions. So in the relapsed/refractory patient population, it's usually -- it's unusual to see complete remissions in that patient population. So if we were to see any complete remissions, that would be differentiating for this agent.

Okay. That's helpful. And then we just had one quick clarification question also. I think previously, you were also planning to do a combination with venetoclax, with azacitidine, but it looks like now you might be just doing azacitidine. Could you just clarify if there was a change and what the reason was?

Yes. So the dose escalation is with azacitidine, once we get to a dose of azacitidine and 154, then there is an expansion cohort in combination with azacitidine, SL and venetoclax. So there is a safety running, followed by an expansion. It's a safety running followed by an expansion.

Okay great, thank you very much.

Thank you.

[Operator Instructions] Our next question comes from Kaveri Pohlman with BTIG.

Yes. Good afternoon. Thank you for the updates. For 154, can you talk about how the approach is different from ILT4 targeting, which also repolarizes macrophages? I believe Merck has expanded its efforts into this space with multiple tumor types, including ovarian cancer.

Sure. So this is -- the CD47 axis addresses a particular aspect of macrophage biology, which enables macrophages to consume or phagocytose tumor cells that are in their proximity. And so that activity in and of itself is not an activity that is directly addressed by something like an ILT4 specific agent. There are a number of ways to influence the polarization of macrophages. Some macrophages can be immune-inhibitory. Some macrophages can be immune-stimulatory. And certainly, ILT4 can play a role in that phage decision. Interestingly, CD40 does as well. And when you stimulate CD40 on a macrophage, it helps guide that cell toward that immune-stimulating M1 phenotype. And so I believe that an agent like 154 addresses on the CD40 side, a somewhat similar aspect of macrophage biology as some of the ILT4 agents, whereas the CD47 inhibitory part is purely a prophagocytic function.

That's very helpful. Thank you. And for AML, any thoughts on combining it with cytarabine because based on the ovarian cancer data, the safety profile looks benign enough? Or is cytarabine too immunosuppressive?

So the dose of cytarabine matters also. It is immunosuppressive, just as you said. So, you could actually deplete the cells that you're trying to activate.

Got it. And maybe last one on GADLEN. So, you have multiple programs for ARC asset. And for GADLEN, a target like B7-H3 could be used for several indications. I guess my question is, is GADLEN a potential partnering opportunity? Or do you ultimately have aspirations to really independently develop both ARC and GADLEN assets?

I mean it certainly could. The GADLEN platform is quite broad and B7-H3 is just one of the agents that we have in our pipeline these days. And we think it's a compelling one. B7-H3 is a tumor antigen that's widely expressed. Daiichi Sankyo has recently shown some interesting data with one of their programs targeting B7-H3. And I think a gamma delta engager could offer something that's distinct from what an antibody drug conjugate type molecule can offer in a number of tumor types. So two tumors that are interesting from a B7-H3 expression standpoint where gamma delta T cells are also relatively abundant, include tumors like melanoma, non-small cell lung cancer, bladder cancer, a number of others. And so for now, we're proceeding along with the development of this agent toward IND. And so I'll just leave it at that for now.

Makes sense. Thanks for taking my questions.

Thanks Kaveri.

And our last question comes from Zhiqiang Shu with Berenberg.

Great, thanks for taking my questions. I have a few. So first one on Slide 4 and are you willing to discuss a bit more details around the 3 mg per kg dose and 10 mg per kg dose, the APD dynamics there? I wonder -- since you did a call last year around this time, a lot of things have changed and I guess if you're willing to discuss a little more at this time.

Sure. So, I'll start and then Lini can fill in any of the gaps if I missed them. So the thing you might remember from our prior conversations that what we were hoping to achieve over the course of the monotherapy dose escalation study was to identify a dose where 154 was well tolerated, where CD47 was fully saturated, where CD40 was fully saturated and where the pharmacodynamic effects that we attributed to CD40 biology were maximal and had achieved the maximal plateau. We shared some of that data in the SITC presentation and the types of things that we see as a consequence of CD40 binding include the rapid migration of CD40 expressing B cells and monocytes out of the blood within an hour or 2 of infusion, as well as pretty impressive inductions of a number of CD40-driven cytokines in the peripheral blood. And when we moved from the 3 milligram to the 10 milligram per kilogram dose, we were fundamental -- we knew that we were at saturation of CD40 and CD47, and we were starting to see large spikes in those cytokines and near maximum margination of CD40-expressing cells by 3 mgs per kg. And so fundamentally, what we're asking is when we go to 10, do we see a further potentiation of those pharmacodynamic effects, a stabilization and a maximal plateau of those effects or a reduction in some of those pharmacodynamic effects? Many of you likely are aware that with other CD40 agents, you see this odd bell-shaped dose response curve that indicates that it might be tough to maximally drug the pathway. And what we saw from 3 milligram to 10 milligram is that all of those pharmacodynamic effects remained at a maximal plateau. And so as Lini alluded to before, in looking at between that 3 and 10 milligram per kilogram dose, there wasn't any discernible benefit based on those endpoints to continue with the 10 mg per kg dose.

Great. That's helpful. And then second question is around the combination with folate receptor ADC, I think it was disclosed last time, was posted on clinicaltrials.gov. Given your update today, I was wondering if you're willing to discuss the plans there?

Sure. So first of all, we're eagerly awaiting, hopefully, an accelerated approval for mirvetuximab by ImmunoGen any day now. I think it's an exciting opportunity for patients with platinum-resistant ovarian cancer that haven't had a new therapy available to them in quite a long time. And one of the interesting things about mirvetuximab is that the label is expected to be at least initially in patients that express very high levels of folate receptor alpha on their tumor, 75% or greater. But along the way, ImmunoGen has seen tumor shrinkage in about 80% of patients or so with lower levels of folate receptor alpha expression, starting at about 25%. And it really begs the question, could the durability -- could that initial tumor shrinkage lead to greater durability if it was combined with something that potentiated that initial tumor killing signal that mirvetuximab clearly delivers. And that's exactly where we see an opportunity for a drug like 154. And I think I need to sort of leave it there until we hopefully get news of the accelerated approval and then we'd love to continue that conversation.

Great. And if I can, just final question on 252. You're still dose escalating the drug and will provide an update in first quarter of '23. So I wonder, should we still operate under the assumption that if you are not seeing 20%, this program will wind down?

Yes, that should be your operating assumption.

Okay, thanks very much.

Thanks Zhi.

That concludes the question-and-answer session. I'll turn the call back over to Taylor Schreiber, the Chief Executive Officer of Shattuck Labs.

Thank you. This concludes the Q&A session of the call. Thank you, operator. Thank you all for joining Shattuck Labs Third Quarter Financial Results and Business Updates Conference Call. We appreciate your continued interest in Shattuck, and we look forward to updating you on our milestones throughout the remainder of 2022. Thank you.