Fractyl Health, Inc. Common Stock (NASDAQ:GUTS) Q3 2024 Earnings Call Transcript

Fractyl Health, Inc. Common Stock (NASDAQ:GUTS) Q3 2024 Earnings Call Transcript November 14, 2024

Operator: Good afternoon, and welcome to Fractyl Health’s Third Quarter Financial Results and Business Updates Call. As a reminder, this conference call is being recorded. [Operator Instructions]. I will now turn the call over to Stephen Jasper. Stephen, you may now begin.

Stephen Jasper : 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. Before we begin, I would like to remind everyone that statements made during this conference call that do not relate to matters of historical fact, including statements about our objectives and anticipated clinical milestones, preclinical or clinical trial data, the impact of any of our product candidates, the design initiation, timing and results of clinical enrollment in any clinical trial or readouts, the potential launch or commercialization of any of our product candidates or products, the sufficiency of our cash, cash equivalents and investments to fund our operating activities for any specific period of time should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. Actual results could differ materially from those indicated by the forward-looking statements due to the impact of risks, uncertainties and other important factors. Participants are directed to the risk factors set forth in Fractyl’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 12, 2024, and the company’s other filings with the SEC. Any forward-looking statements made today speak only to Fractyl’s operations as of today. Fractyl disclaims any duty to provide updates to its forward-looking statements even if subsequent events cause the company’s views to change. It is now my pleasure to pass the call over to Harith.

Harith Rajagopalan: Thank you, Stephen, and good afternoon, everyone. Thank you for joining us on today’s call. This is an exciting time for Fractyl as we approach multiple critical milestones over the next few quarters. I’m immensely proud of the progress we have made across both of our platforms, Revita and Rejuva as we develop transformative therapies that can prevent and reverse metabolic disease. Q3 was another quarter of excellent performance and accomplishment. A few key highlights. First, we began enrollment in our REMAIN-1 pivotal study for weight maintenance after GLP-1 discontinuation, and this study is progressing rapidly. Second, we anticipate reporting data from the REVEAL 1 open-label cohort of this study beginning in Q4 2024.

Third, we began enrollment under the expanded protocol for the ReVITALIZE-1 pivotal study for Revita in type-2 diabetes, and we expect to report top line data in mid-2025. And fourth, we continue to present compelling weight maintenance and blood sugar data from Revita and Rejuva at multiple medical meetings. We are confident in our ability to continue to execute against our upcoming major value drivers, and we continue to be laser-focused on demonstrating the potential for our therapies to transform the treatment landscape in obesity and diabetes. To begin, let’s talk about the rapidly evolving landscape of obesity and GLP-1 drugs. These drugs have clearly had a positive impact on treatment options for people with obesity and diabetes, but they also carry significant challenges that affect both patients and health care systems.

There are three main concerns that have emerged in the past year, and they are all intertwined. First, the durability of weight loss effects over time with GLP-1 drugs is beginning to be a major problem as discontinuation rates and weight rebound are major challenges for the class. Second, there is an obvious and growing gap between the impressive Phase III results from these drugs versus their substantially less impressive real-world performance. And third, despite their expense, these drugs are not delivering discernible clinical benefit to payers, leading to fundamental and crucial questions about value. No one doubts the importance of durable, clinically meaningful weight loss, but the question is, why are these drugs not delivering on their promise in the real world and what will?

We’ve spoken before about poor persistence or durability of therapy from GLP-1 drugs. It’s essentially the same issue that has already been seen with other drugs for every other chronic non-acute disease, including hypertension, high cholesterol and diabetes. Investors were assured that in obesity, unlike in other chronic diseases, patients will want to stay on therapy because they can see the benefits, but this is not the case. Discontinuation rates from GLP-1s are high even when controlling for cost, access and side effects. In addition, the real-world effectiveness of GLP-1 drugs is not matching data shown in Phase III trials. A study from the Cleveland Clinic published in the JAMA Open Network Journal in September 2024 showed that in nearly 2,000 patients who are prescribed semaglutide in their Ohio and Florida hospital networks, mean weight loss at one year was only 5.1% or roughly one third of the amount of weight loss that was seen from their registrational clinical studies.

In addition, a Reuters article from October 24, 2024, highlighted data from Pharmacy Benefits Manager, Prime Therapeutics. Key highlights from the analysis, only one in four patients are still taking their GLP-1 drug at two years and drug switching rates are extremely low. Despite the drop-off in utilization, the insurance costs for patients who are using Wegovy rose significantly, leading to a nearly 50% increase in the total cost of care for these individuals. Critically, this analysis found no decrease in obesity-related medical events in the patients who are prescribed GLP-1s, such as heart attacks, strokes or new diagnoses of type-2 diabetes. So, in summary, what the data are beginning to show are poor durability, higher cost and absence of real-world clinical benefit.

In conversations with key payer stakeholders, a recurring theme has emerged. The primary concern is finding a way to deprescribe GLP-1s because of the disparity between increased pharmacy costs and lack of consequent medical benefit. There are many drugs in development for obesity today, but if they all lack durability like today’s GLP-1s, they will all have the same essential weaknesses as the drugs that already exist. And all of this underscores the biggest unmet need in obesity today, finding a pathway to durable, reliable weight loss maintenance. This is precisely what our therapies aim to accomplish, and we do this by offering patients therapies that are designed to provide them a durable metabolic reset. Let’s move on to discuss our progress across our platforms, starting with Revita, an outpatient endoscopic procedural therapy targeting the duodenum.

We recently presented compelling weight maintenance data from Revita at two medical meetings, DGVS in Germany and Obesity Week in San Antonio, Texas. At DGVS, we presented clinical results from our German real-world registry, showing that Revita can deliver sustainable weight loss and metabolic benefits to patients for up to one year post procedure. These results confirm earlier observations from Revita clinical trials of the potential for a onetime Revita treatment to have real-world results that can actually match or exceed clinical trial results. In addition, in the presentation, we highlighted some new information on patient-reported outcomes and quality of life, which were remarkably favorable for Revita even one year post procedure. Last week, at the Obesity Week medical meeting, we presented a new analysis of pool data from five Revita clinical studies tracking participants for one year after a Revita procedure.

These patients who had poorly controlled type-2 diabetes and advanced age typically face significant challenges in losing weight. The pooled data post-Revita showed that 90% of participants lost weight one month after the procedure with 84% maintaining weight loss for a full year even in the absence of any prescribed diet or lifestyle changes over the course of the year. Compare this to the only 16% of patients who maintained at least 80% of their lost body weight one year after stopping tirzepatide in the SURMOUNT-4 study sponsored by Eli Lilly even when all of the patients were prescribed a diet and lifestyle change. The data we presented at Obesity Week in addition to the data from our German registry were both presented to the FDA as part of our breakthrough device designation application for Revita, which was granted earlier this year for weight maintenance after the discontinuation of GLP-1-based drugs.

Revita is the only device or drug to our knowledge to have obtained breakthrough device designation from the FDA for a broad obesity indication. Our pivotal weight maintenance study, REMAIN 1 is moving rapidly. As a reminder, REMAIN 1 is our randomized, double-blind, sham-controlled study testing Revita against a sham procedure. This is the first pivotal study of an intervention that aims to demonstrate durable weight maintenance after discontinuation of GLP-1-based drugs. People with obesity and a BMI between 30 and 45 kilograms per meter squared who have not been on GLP-1 drugs will be started on tirzepatide to achieve 15% total body weight loss. Once they have achieved that weight loss, they will discontinue tirzepatide and be randomized to either Revita or sham in a 2:1 treatment allocation.

All patients will be prescribed a diet and lifestyle program. And we believe that if the pivotal study is successful, the data from this study can support a PMA application for approval in the United States. We are announcing today that we have already completed enrollment of a sufficient number of patients for the midpoint analysis of the study, and we continue to expect to report this midpoint analysis in Q2 2025. We believe this will be a crucial catalyst for the program, marking the first demonstration of randomized data in this patient population. In addition, our enrollment rate in REMAI-1 is on par with those for GLP-1 drug studies in obesity, demonstrating the substantial interest from patients and clinicians in this much-needed weight maintenance therapeutic option.

In the REMAIN 1 study, we are implementing a comprehensive approach to handling the patient experience, providing GLP-1 drug to clinical trial sites, referring patients to Revita centers of excellence for the endoscopic procedure and offering a diet and lifestyle counseling program. This integrated obesity solution entails the use of, one, best-in-class pharmacology; two, a Revita metabolic reset; and three, a diet and lifestyle program on the heels of Revita. The combination of these elements for obesity is quite unique, and it positions us as experts in the implementation of an integrated care solution for people with obesity and related diseases. It also creates for us an exciting opportunity for a unique and compelling commercial model that can replicate the clinical pathway for REMAIN 1 in a real-world setting post approval.

More on this potential commercial model later. Moving to the REVEAL 1 open-label cohort of the REMAIN 1 study. REVEAL 1 is an open-label study that aims to enroll patients who have already lost at least 15% total body weight on GLP-1s, but who need to stop taking these drugs. Patients will discontinue their GLP-1 drug, undergo Revita and subsequently begin a diet and lifestyle program. The response to this study has exceeded our expectations. What we are hearing from clinical trial sites and from obesity KOLs at Obesity Week is that there is a large and growing pool of patients on GLP-1s who are looking for an off-ramp for a variety of reasons, and this is a population that REVEAL 1 aims to target. We anticipate that we will begin sharing the first tranche of REVEAL 1 data at year-end.

As mentioned above, we believe that 1-month data, while early, will be a key leading indicator of longer-term results. After this initial tranche of data, we plan to provide incremental updates in this open-label cohort as longer-term follow-up accrues over the course of 2025. Moving from weight maintenance to type-2 diabetes with Revita. In our REVITALIZE 1 study for type-2 diabetes, we’ve expanded our study criteria to include patients who are not yet on insulin. There are a large pool of patients who would rather live with poorly controlled type-2 diabetes than start on insulin, and that’s who Revita aims to target. In fact, patients with type-2 diabetes who are on two or three agents to lower their blood sugar often avoid insulin therapy for an average of five years and have an HbA1c of nearly 9% before initiating insulin despite the high risks associated with their condition.

What this means is that in the type-2 diabetes market, there is a huge prevalence pool of patients who have high blood sugar and are needing alternatives to insulin, alternatives that do not exist today. And we estimate this prevalence pool to be approximately 10 million people in the United States. REVITALIZE 1 is positioned to address this critical unmet need by offering a viable and compelling treatment alternative to medication escalation and in particular, to insulin initiation. The choice is simple: one, start insulin, gain weight, constantly manage your diabetes; or two, try Revita and potentially improve your blood sugar, lower your body weight and prevent the need for insulin. We are enrolling under the expanded version of our protocol and expect to report top line data in mid-2025.

Moving to our Revita German commercialization plans. The past quarter has been focused on setting ourselves up for controlled expansion in Germany in 2025. The first step is to obtain German government reimbursement approval to offer Revita at additional centers around the country. We have seen encouraging interest in Revita from numerous hospitals and have worked with GI endoscopy clinical leaders and hospital administrators across Germany over the last several months to submit NUB applications for reimbursement approval. We are excited about the positive feedback we’ve received on the considerable amount of data we have accumulated in our registry and are looking forward to next steps in the German market, and we will provide further updates when we are able.

Many people ask who would be a candidate for a procedure like Revita? You can think of Revita as like LASIK, but for obesity. People with poor eyesight can wear glasses or contact lenses, which are easy and necessary for proper vision and yet nearly one million people a year undergo a onetime procedure that targets a laser to their eye in order to free themselves from the burden of managing their poor eyesight. A substantial fraction of the population simply wants freedom from ongoing disease management burden even if that burden is simply wearing glasses. Now think about obesity. There are 10 million people in the United States with obesity who will be on a GLP-1 this year. Roughly 8% of these individuals or 800,000 people will also undergo an endoscopy this year for other reasons.

Before their procedure, an endoscopy nurse will call the patient to help them prepare for their visit and part of that preparation would be to ask them if they are already on a GLP-1 drug in order to advise them to stop taking that drug at least one week prior to endoscopy. What fraction of these 800,000 patients can be converted to Revita to offer them an off-ramp to their GLP-1s as they are being scheduled for their otherwise already planned endoscopy? Revita is purpose-built and developed over the past decade precisely to fit seamlessly into this high-volume, highly scalable GI endoscopy workflow. Given that Revita has breakthrough device designation from the FDA, given the desire for patients for persistent and effortless weight loss without drug therapy and given the favorable economic model for GI endoscopy practices to perform Revita, we believe that a substantial fraction of patients and GI physicians would choose Revita.

Now, let’s shift our focus to Rejuva, our innovative pancreatic gene therapy platform. As a reminder, Rejuva is enabled by a proprietary endoscopic device that can precisely deliver AAV gene therapy vectors directly to the pancreas and opens the door to gene therapy medicines for the pancreas for the very first time. At the beginning of the year, we nominated Rejuva 001 for type-2 diabetes, an AAV9 vector containing the human insulin promoter driving a human GLP-1 transgene. We presented data over the past several quarters, showcasing the drug candidate’s innovative smart GLP-1 mechanism. The candidate is designed to autoregulate GLP-1 levels, amplifying normal GLP-1 signaling rather than mimicking drug action. Think of it as you, but better, making enough GLP-1 to be able to survive and thrive in our modern world.

Our work to support the submission of a clinical trial application, or CTA, for Rejuva 001 is progressing well. There are three key in vivo experiments in the pipeline, all of which have been substantially derisked already. The first study is durability in wild-type mice through 12 weeks. The second is dose-ranging efficacy in the DBDB mouse model of type-2 diabetes. And the third is safety and biodistribution in yucatan pigs. During Obesity Week, we presented new Rejuva-001 data on sustained weight maintenance and lowering of blood sugar levels in the diet-induced mouse model. The data from Dr. Randy Seeley’s lab at the University of Michigan demonstrated significant durability in DIO mice over 13 weeks, marking the longest evidence of durability with Rejuva-001 we’ve recorded in an obesity model to date.

These data are incredibly exciting because they show how to translate the promise of GLP-1s to the real world. This is a onetime therapy that potentially has efficacy that can exceed that of semaglutide and also offer benefit that lasts long enough to actually see effects on cardiovascular disease, kidney disease and diabetes prevention in the real world. And this is something that we are not seeing with GLP-1 drugs today because of their high rates of discontinuation and lack of durable effect as we discussed before. We plan to communicate more data on the execution of these studies at upcoming scientific meetings, but what we are seeing so far gives us confidence that we are successfully checking off key boxes for our regulatory filing. We anticipate completing these key CTA-enabling studies by the end of the year.

And if the CTA is approved, we plan to initiate a first-in-human study for Rejuva001 in the first half of 2025. Last week at Obesity Week, we also announced the nomination of Rejuva-002 as our first smart GIP/GLP-1 dual agonist gene therapy lead candidate designed for the treatment of obesity. Rejuva-002 is a locally administered AAV9 viral vector that expresses human GLP-1 and GIP hormones from a human insulin promoter. Rejuva-002 is designed to activate both GIP and GLP-1 receptors, which both play crucial roles in regulating blood sugar and body weight when combined as we have seen with many of the injectable dual agonists that are in the market or under development. The nomination of Rejuva-002 represents a significant milestone in the development of the Rejuva platform as it reflects the ability to combine multiple therapeutic modalities within the same construct.

And with that, I will now turn the call to Lisa to provide an update on our third quarter financials. Lisa?

Lisa Davidson: Thank you, Harith. In the third quarter of 2024, revenue was generated from our commercial pilot in Germany and enable patients to enroll in the German real-world registry study. Turning to operating expenses. Research and development expense in the third quarter of 2024 was $19 million compared to $9.4 million for the same period in 2023. The increase during the quarter was primarily due to the progress made in our REMAINE-1 and REvITALIZE-1 clinical studies, continued development of the Rejuva program and increased personnel-related expenses, including stock-based compensation. Selling, general and administrative expenses in the third quarter 2024 was $4.8 million compared to $4.5 million in the same period in 2023.

The increase during the quarter was primarily due to the professional service expenses and other costs associated with operating as a publicly traded company and increased personnel-related expenses, including stock-based compensation. For the third quarter of 2024, we reported a net loss of $23.2 million compared to a net loss of $15.7 million for the same period in 2023. The increase in net loss was primarily attributed to the increase in operating expenses discussed above and the noncash loss from changes in fair value of notes payable, offset by a noncash gain from changes in fair value of warrant liabilities as well as an increase in net interest income. As of September 30, 2024, Fractyl had approximately $84.7 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 expected key company milestones into the fourth quarter of 2025. I will now turn the call back to Harith.

Harith Rajagopalan: Thank you, Lisa. As the obesity market continues to evolve, we have found that losing weight and maintaining weight loss are two very different problems. The market has now largely solved the problem of short-term weight loss, but there remains an incredible need for durable weight maintenance and an off-ramp to GLP-1 drugs. Obesity is a chronic disease, but it’s only a chronic disease because we do not have therapies today that can truly have durable effect on the condition. And unless we are able to address the root cause, we will never break the pattern of chronic maintenance therapy in obesity. While most next-generation GLP-1 therapies face fierce competition to improve on existing drugs, Revita and Rejuva stand alone as we pioneer a new weight maintenance category.

Since Fractyl health began to focus on weight maintenance in the first quarter of this year, there has been a very interesting dynamic with both Revita and Rejuva. The size of the problem that we are addressing is coming into focus. the size of the opportunity is becoming clearer as major players are beginning to see how differentiated the profile of Revita and Rejuva are. It’s been encouraging to see large companies intrigued by the unique value proposition these therapies will represent in the market. Fractyl is reaching a critical inflection point. Over the next several quarters, we look forward to sharing data from our two pivotal studies of Revita in weight maintenance and type-2 diabetes in addition to advancing our RejuVa-001 pancreatic gene therapy candidate into the clinic.

We are grateful for the continued support of our employees, our physician partners, our patients and our shareholders as we aim to free people from the relentless pattern of metabolic disease progression. And with that, we will now open the call up for questions. Thank you very much.

Operator: [Operator Instructions] Our first question comes from the line of Jason Gerberry of BofA. Your question please, Jason.

Q&A Session

Jason Gerberry: Hey. Hello everyone. This is Chi on for Jason. Thanks for taking our questions and congrats on all the progress. And I have three, if I may. The first question is regarding REMAIN-1. You have mentioned the enrollment for the midpoint analysis has been completed. Can you remind us the sample size enrolled and also the duration of follow-up for the midpoint analysis? If I recall correctly, correctly if I’m wrong, I think the last time we spoke, we could be looking at around 45 subjects at 2:1 randomization between Revita and sham with a 12-week follow-up. And along the same line, can you also talk about expectation for the midpoint analysis?

Harith Rajagopalan: Sure, Chi. Very good to speak with you. You’re correct. The sample size is 45 subjects with a 2:1 treatment allocation of Revita to sham. And we will follow these patients for 12 weeks after the discontinuation of tirzepatide and randomization to either Revita or sham. We expect that based on prior data from SURMOUNT-4 and from step one extension of tirzepatide and semaglutide, respectively, that the sham arm should be regaining roughly 3% body weight over the course of that 12-week period of time. And we would expect that Revita would hold weight steady over that 12-week period of time. And the objective would be to begin to demonstrate a treatment difference that is emergent between the two arms that we believe will be predictive of the likelihood of success of the full data set, which has a six-month primary endpoint.

Jason Gerberry: Got it. And just a quick follow-up on that. You’ve already completed the enrollment. It’s a 12-week follow-up. Should we expect some level of update early in the second quarter?

Harith Rajagopalan: Well, remember, Chi, you have — the way that the study is designed, we’re taking people who are de novo not on tirzepatide yet. We are actually starting them on tirzepatide ourselves, getting them to 15% total body weight loss and then we will be randomizing them. And so what we are accounting for is that we have to enroll enough patients that we know that we’re going to have 45 of them who will have achieved 15% body weight loss by Q1 in order to be able to randomize them and then see the data in Q2. So the weight maintenance trials, because you got to get the weight loss in the first place, do have that added time at the beginning, which is what explains the difference between your understanding of completing of enrollment and when the data will actually be available.

Jason Gerberry: Got it. Thanks for the clarification. And my second question is on REVEAL-1. What’s the current thinking on the venue for the initial data at year-end? I’m curious, can you also talk about your latest expectation for the initial REVEAL-1 data? I think in terms of the size and the makeup of the data, I think last time we spoke, we may be looking at initial data in the range around maybe 10 patients after four to eight weeks of follow-up. Can you talk about that? Thanks.

Harith Rajagopalan: Yes, that’s right. So, we will have initial 10 patients at least four weeks of follow-up, and we’re going to be showing you what’s happening to their weight. And our aim is to demonstrate that we’re able to hold weight steady. As you may know from prior studies of REVEA in Type-2 diabetes, one-month results are actually pretty predictive of what happens at three, six and 12 months afterwards. And so we feel like the one-month time point can be quite informative for us here as well. And we think that the REVEAL-1 data in general, give an open-label view on what the REMAIN randomized data might look like. And so, it does help from that perspective as well.

Jason Gerberry: Got it. And last one for me. Just want to quickly touch upon on Rejuva. How is the program tracking towards CTA filing by year-end? Are you close to wrapping up all the in vivo studies needed for the filing? And if we were to assume CTA approval by year-end, what’s the typical turnaround time for CTA review and approval and setting up clinical trial sites subsequently? Curious what level of human data can we expect from Rejuva in 2025? Thanks so much.

Harith Rajagopalan: Yes. So the key point here, Chi, is the key CTA-enabling studies will be completed by year-end. And then we aim to file for that CTA in the first half of 2025, just for clarification. And what I was — what we shared earlier was that there are three key CTA-enabling studies. One of them is durable demonstration of Rejuva activity in a wild-type mouse out to 12 weeks. A second one is dose-dependent efficacy in the DBDB mouse model of Type-2 diabetes. And then the third one is safety and biodistribution studies through — with our proprietary needle catheter with our route of administration in the Yucatan pigs. And what we’re seeing — all of these studies are underway or various stages of completion. But what we are seeing so far gives us a lot of encouragement that we’re heading in the right direction, and we feel confident in our ability to complete these three key studies by the end of the year, and we’ll be giving further updates as we enter into the first half of ’25 on time lines.

Jason Gerberry: Got it. Thanks so much.

Operator: Thank you. Our next question comes from the line of Mike Ulz of Morgan Stanley. Your question please, Mike.

Michael Ulz: Good afternoon. Thanks for taking the question. Maybe just a follow-up on the REVEAL-1 open-label update expected by the end of the year. You mentioned about 10 patients, at least four weeks of follow-up. I guess, what are you expecting for the, what you’d expect for sort of a control arm at four weeks, would you expect to see any difference at that point or not?

Harith Rajagopalan: Yes. I mean looking at what you know from SURMOUNT-4 and SEP 1 extension, as I mentioned, with tirzepatide and semaglutide, respectively, you’d expect 3% body weight gain by the end of that four-week period of time. And so — and importantly, the trajectory of weight will also be important. And so what we’re hoping to be able to show is that we’re holding weight constant. You’ll be able to see the trajectory of that weight from baseline out to four weeks versus what you would expect from a control. And we can walk you through that as we — as the date comes up on what prior studies have shown as a point of comparison. Of course, it’s always hard to do cross-trial comparisons, but we’ve endeavored to do everything we can to mimic what those trials have done for those patients when they stop GLP-1s.

Michael Ulz: Yep, makes sense. That’s helpful. Thanks. And then maybe just on the controlled expansion in Germany, maybe talk a little bit more about the rationale there. Is it to generate more data or just get more experience in more centers prior to a potential launch?

Harith Rajagopalan: Obviously, you can satisfy both, and we are excited about the opportunity to satisfy both. We’re going to be — why we say it’s controlled is because we’re going to be careful about our spend going into 2025. But we have a list of hospitals that are eager to offer Revita for their patients, some of whom have patients who they would like to be able to offer this for already. And we see an opportunity to be able to ensure that the stuff that we’re seeing in Dusseldorf in our clinical trials, we can expand that commercial model and footprint in order to be able to penetrate the German market. And we feel optimistic about our ability to prove out the commercial model of driving patients into Revita centers of excellence in order to be able to give them a treatment alternative to medication escalation in diabetes. And in the process, we’re obviously going to be able to generate revenue and additional clinical data.

Michael Ulz: Got it. Thank you.

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

Michael DiFiore: Hey guys, thanks so much for taking my question and congrats on all the progress. Three questions for me on Rejuva. The first one regarding the presentation at ObesityWeek. I noticed that a slightly lower dose was used in the 12-week analysis compared to the eight-week analysis. I think in the 12-week analysis, it was 7.5 to 12, whereas in the eight-week analysis was 1x either 13x. I was wondering why that was done. And a similar question is that I noticed that the mean body weight reduction is maintained, but the error bars start to get really wide by 18 weeks. And curious to see if this was due to expiration of the mice over time or weeding of effect? And then I have one more follow-up. Thank you.

Harith Rajagopalan: Great. So this is a study conducted by Randy Sealy, a collaborator in — at the University of Michigan. And he selected the dose based on what we had seen from the work that we had done before, which you highlighted. And he’s doing a bunch of other mechanistic work that we’ll be publishing next. We’re looking to present and/or publish next year. So it was his selection of dose, but I think it proves the point that we’ve been making, which is a low dose of virus can deliver a very meaningful clinical effect. You’re right to point out that the error bars get wide. I was confident that you would ask the question about that actually. The wild-type DIO mice really begin to gain — like really begin to have pretty variable weight when they’re fed effectively a McDonald’s diet for over 90 days.

And so what you’re seeing there is a reflection of just the dispersion that’s happening as DIO mice are seeing that weight gain over time. And what we showed was placebo-adjusted weight. And that’s what — that’s the reason for the error bars there.

Michael DiFiore: Got it. Very helpful. And my last question is regarding the RGVA-002 candidate that you just nominated for obesity. At this point in the game, Harith, are you able to comment on the relative affinities for GLP-1 versus GIP relative to the native ligands as well as any comments on beta resin recruitment?

Harith Rajagopalan: At this point in the game, I’m not able to comment on any of that. But of course, we’re looking at these things, and we’ll be able to share that with you as we get further along in development.

Michael DiFiore: Got it. Thanks so much.

Operator: Thnak you. Our next question comes from the line of William Wood of B. Riley Securities. Your line is open. William.

William Wood: Thanks so much for taking our questions and congratulations on a very nice quarter. Just maybe one from us to start. I was just kind of curious in terms of your RGVA-002 in terms of how closely it mimics in design 001 just in terms of the machinery use, the overall design, essentially, the 001 derisk 002 in the terms that it’s essentially just a plug and play now with a GLP added in?

Harith Rajagopalan: It’s the same delivery catheter. It’s the same AAV9 and it’s the same insulin promoter. So yes, RGVA-001 does derisk RGVA-002. And it has the same smart mechanism, which is to leverage the fact that the insulin promoter allows the proportionate release of the hormones in response to the body’s needs, which we think is a clear differentiator for the strategy compared to the drugs that are out there today or the other drugs that are in development. And I think that what you’ll see as the data mature and as we reveal them publicly over the course of the next several quarters, is that you’re able to leverage both the GIP and the GLP-1 mechanism simultaneously with RGVA-002. And we have conviction that based on what you see with tirzepatide and with the dual GIP/GLP-1 agonists that are in development that you can achieve superior potency with better tolerability compared to GLP-1 alone at higher doses.

And I think that that’s a good reason for why we went there with obesity.

William Wood: Got it. I appreciate that. And then one secondary. You’ve obviously got your post-market registry ongoing in Germany, and maybe I’ve missed this in the past. Are there any additional plans to try to expand into other EU countries? Or has there been any interest in doing that? Or is this sort of a focus to target with Germany and then sort of moving back into the states with your ongoing FDA studies?

Harith Rajagopalan: Well, we are doing work to be ready to have a global launch at the time that we’re ready to launch in the United States. There’s this unique opportunity in Germany to be able to generate real-world data earlier in a market that has many similarities to the U.S. market and to do so under a reimbursement schema that the German government has set up called the NUB, but we are actively working to make sure that we’re set up to be able to launch in other countries in key geographies as well, but that will be more in line with the U.S. launch.

William Wood: Got it, makes sense. I appreciate you taking our questions and hop back in the queue. Thank you.

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

Harith Rajagopalan: Well, thanks, everyone, for your time. You’ve been patient with us and very happy to continue to share the progress that we’re making every quarter here through our earnings calls and look forward to continuing to show some very exciting results that are going to be coming in the next several months. Look forward to following up with you all then.

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