Hello, and welcome to the Corbus Pharmaceuticals Third Quarter November 10, 2020 Earnings Conference Call. Please note that this conference is being recorded at the company's request and will be made available on the company's website following the end of the call. I will now turn the conference over to your host, Ted Jenkins, Senior Director of Investor Relations and Corporate Communications. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Thank you for joining us today. At this time, I'd like to remind our listeners that remarks made during this call may state management's intentions, hopes, beliefs, expectations, or projections of the future. These are forward-looking statements and involve risks and uncertainties. The forward-looking statements on this call are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements are based on Corbus' current expectations, and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Corbus files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Joining me on the call today are Dr. Yuval Cohen, our Chief Executive Officer; Dr. Barbara White, our Chief Medical Officer and Head of Research; Sean Moran, our Chief Financial Officer; and Craig Millian, our Chief Commercial Officer. With that, it is now my pleasure to turn the call over to Yuval.

Thank you, Ted. Thank you, everyone, for joining us this morning for our third quarter 2020 earnings conference call. This past quarter has been, by far, the most challenging period for this company since we started it in 2014, with disappointing top line data in both RESOLVE-1 Phase III study in systemic sclerosis and our Phase IIb cystic fibrosis study. In each one of these studies, lenabasum did not meet its primary endpoint. This is a simple and rather brutal fact and is part and parcel of the inherent risks of drug development. What is now relevant is, where do we go from here? Our plan to rebuild shareholder value revolves around three simple concepts. The first one is, we believe lenabasum is an active compound. These trials yielded valuable data that provide us with insight into potential clinical benefits associated with lenabasum in each one of these diseases. Barbara will walk you through the summaries of each of those shortly. We believe that the data from these recent studies demonstrate that lenabasum had clinical activity in both systemic sclerosis and cystic fibrosis. They will allow us to map out a potential path forward that starts with us engaging with experts in these fields and other stakeholders. We continue to believe that there is real potential in these indications that could create value for Corbus. The second concept is, dermatomyositis represents a potentially significant value driver for next year. With 30,000 patients in the U.S. with clear unmet need, dermatomyositis represents an attractive market opportunity that could create substantial shareholder value. A positive outcome in our Phase III DETERMINE study of lenabasum in dermatomyositis could increase the value of our company. We note recent changes in the dermatomyositis competitive landscape, with Phase III studies that are shorter than one year. Therefore, we plan to shorten the duration of the DETERMINE Phase III study from one year to just 28 weeks, accelerating top line data readouts to the spring of 2021. We are leveraging our pipeline to create value beyond lenabasum; that is our third concept. Corbus is more than just lenabasum. We have a pipeline that is being developed both internally and with external assets. We believe our pipeline contains real value. We are prioritizing development of those preclinical assets that we believe can deliver a data value inflection point in 2021, either in the form of a potential partnership or a meaningful increase in our enterprise value. We are evaluating options for expanding our pipeline further with external assets that offer synergy with our current pipeline and our expertise in taking programs from preclinical development all the way to complex Phase III studies. We look forward to our next Research and Development Day, at which we will showcase our pipeline beyond lenabasum and the value we believe can be unlocked from it. We are committed to rebuilding the value of Corbus for our shareholders. We have the expertise and the cash runway to do so because of the dramatic restructuring we undertook that significantly extended our cash runway into mid-2022 and with the shortening of the DM study potentially even further than that.

Thank you, Yuval. As you know, our Phase III study of lenabasum in systemic sclerosis and our Phase IIb study of lenabasum in cystic fibrosis did not meet their primary endpoints. In both studies, the safety profile of lenabasum remained unchanged and favorable, without evidence of immunosuppression. Post-hoc analysis showed what we believe to be evidence of clinical activity of lenabasum in both studies. In the Phase III systemic sclerosis study, improvement in the placebo group was greater than expected and occurred mostly in subjects who started new immunosuppressive therapies within the last two years, compared to subjects who were on more established treatment regimens. Subjects on mycophenolate, an immunosuppressant used in 51% of the subjects in this study, were especially associated with improvement in the placebo group. When post-hoc analyses were done in subjects treated with immunosuppressants for at least two years, improvement was seen in the lenabasum-treated groups compared to the placebo group in forced vital capacity, a measure of lung function, whether assessed as percent predicted or in milliliters. Fewer subjects in this subset treated with established immunosuppressant had declines and more had stability in forced vital capacity compared to subjects treated with placebo. Please refer to yesterday's press release for specific data. Despite the improvement in subjects in the placebo group in the Phase III study of lenabasum in scleroderma, it remains clear that patients with systemic sclerosis still need new treatments for their overall disease and major organ-specific manifestations, especially new treatments with favorable safety profiles. We are encouraged about the analysis that suggests that lenabasum may improve lung function in patients already on established immunosuppressant treatments, given the importance of controlling decline in lung function to the overall health and mortality of systemic sclerosis patients. Our next steps include additional analysis of the data to confirm these findings, and then, if warranted, consideration of another Phase III study. In our Phase IIb study of lenabasum for treatment of pulmonary exacerbations, or PEx, in people with cystic fibrosis, we found very low pulmonary exacerbation rates in 21% of total subjects from five Eastern European countries without regard to treatment assignment. Pulmonary exacerbation rates were about 85% lower in subjects in these countries than those in study participants from other countries. These low rates precluded observing a meaningful difference in pulmonary exacerbation rates based on treatment assignment in subjects from these countries. Post-hoc analyses were done that excluded subjects in the five countries with very low overall pulmonary exacerbation rates. In these analyses, we saw substantial differences in pulmonary exacerbation rates in the placebo group, depending upon baseline lung function and background treatment with CFTR-modulating drugs. When comparing subjects with similar baseline function and treatment with CFTR modulators, lenabasum treatment was associated with a range of numerical reductions in pulmonary exacerbations, up to a 62% maximum reduction depending upon the comparison. These findings suggest activity of lenabasum in cystic fibrosis. Additional analyses are under way to extend these findings. The additional analyses will be done with input from the study steering committee of experts in cystic fibrosis and the Cystic Fibrosis Foundation Therapeutics Development Network. We are pleased to report that DETERMINE, the Phase III study of lenabasum in dermatomyositis, is progressing well, with more than 60% of subjects completing Week 28 already. Baseline characteristics of the subjects in this study were reported at the American College of Rheumatology Annual Meeting this year. DETERMINE is the first study to enroll the full spectrum of patients with dermatomyositis, with 82% of subjects with the classic form of dermatomyositis, with clinically apparent skin and muscle manifestations, and 18% of subjects with the amyopathic form of dermatomyositis, with skin involvement but without clinically apparent muscle weakness. Stable use of background immunosuppressants was allowed in the DM study, but differs from usage in the scleroderma Phase III study. Mycophenolate was used at baseline in only 19% of the dermatomyositis subjects, compared to 51% of subjects in the scleroderma study. Use of intravenous immunoglobulin has been reported to improve dermatomyositis, especially during the first few months of treatment. In our dermatomyositis study, about 18% of subjects were receiving intravenous immunoglobulin at baseline, and only 5% of subjects had started that treatment recently, in the last year. We look forward to the results of this important study in patients with dermatomyositis. As Yuval mentioned, given recent industry developments, we plan to change the timing of the primary endpoint from one year to 28 weeks. This change would allow us to address, earlier than we originally planned, the question of whether lenabasum provides benefit in dermatomyositis using a treatment duration consistent with other recent or ongoing Phase III studies in dermatomyositis. Of note, recent findings in dermatomyositis skin biopsies further strengthen the case for lenabasum as a potential treatment for DM. As presented in abstract at the ACR Annual Meeting, expression of CB2, cannabinoid receptor type 2, was increased on immune cells in lesional skin from dermatomyositis subjects in the lenabasum Phase II study. Treatment with lenabasum was associated with a reduction in immune cell infiltrates, CB2 expression, and inflammatory cytokine production in lesional skin from these people with dermatomyositis. The NIH-sponsored 100-patient Phase II study of lenabasum in systemic lupus erythematosus has enrolled 93 of 100 planned subjects to date. We remain optimistic that enrollment may be complete by either year-end or early next year, with top line data in the first half of 2021. We have promising preclinical programs that we view as a key component in rebuilding shareholder value. We are especially encouraged by preclinical data we've generated with a novel family of CB2 agonists that inhibit tumor cell growth in vitro and in a xenograft model of human cancer. This potential antitumor activity of several of our own CB2 agonists is supported by a robust literature testing other CB2 agonists in animal models. We are preparing to submit this data to an upcoming medical conference and will be increasing internal resources devoted to this program. Regarding our CB1 inverse agonist program, we have recently identified several compounds with more promising physical, chemical, and pharmacokinetic properties than CRB-4001. We are shifting our focus to prioritize the development of these compounds and are not continuing to develop CRB-4001. We look forward to disclosing more details about these compounds at a future R&D Day.

Thank you, Barbara. I will now provide an update regarding our financial position. As mentioned previously, in October, we announced a significant restructuring of our operations designed to reduce costs and reallocate resources towards our lenabasum clinical development program in dermatomyositis, as well as our early-stage pipeline. The restructuring, which included layoffs and other cost reductions, was designed to extend our cash runway of $82 million to mid-2022. Lastly, a valued member of our senior leadership team, our Chief Operating Officer, Bob Discordia, has resigned from the company to pursue other interests. Bob played an important role and made many contributions during a critical period for the company, and his presence will be genuinely missed. On behalf of the senior leadership team, I would like to personally thank Bob for his leadership, service, and commitment. We wish him well. In closing, we continue to believe the endocannabinoid system is a key target for the development of therapeutics for the treatment of debilitating diseases. With these unique clinical databases now in hand, we will continue to collaborate with both systemic sclerosis and cystic fibrosis experts and explore the roadmap to potential follow-on confirmatory studies for both programs. We are excited for the completion of our Phase III clinical trial in DM next year, with an anticipated top line data readout less than one year away and potentially sooner than initially planned. We also look forward to data from our SLE program next year. We are actively prioritizing our pipeline to focus on those programs that we can deliver, with the earliest data inflection points, and look forward to providing you with an update at an upcoming Research and Development Day. With that, I want to thank you all for your time and attention today. I now turn the call back to the operator, and we will open the call to questions from the audience.

Our first question comes from Brian Abrahams with RBC Capital Markets.

I guess my first question is on the dermatomyositis study. I'd love to hear a little bit more about the rationale behind shortening the study. Obviously, you can get a quicker readout, but I'm just wondering what this means for the overall conduct and powering of the study, if you're expecting most of the effects will be observed within those first six months? And is there any additional FDA or regulatory signoff that you need to amend the protocol and have it potentially still enable an adequate safety database to enable registration?

Thank you for your question. Several things have changed since we initially planned this study. We were the first to conduct a large Phase III study in dermatomyositis, and since then, several other studies have been conducted. We originally anticipated a study duration of 52 weeks, but Octagam recently reported Phase III results with a duration of just 16 weeks, which is significantly shorter than our planned duration. Additionally, when examining other Phase III studies in dermatomyositis, we find that those available are also less than 52 weeks, varying from 16 to 24 weeks. Our study is therefore an outlier in terms of duration, and I believe it's reasonable to evaluate our efficacy at these earlier time points, considering competitive data. In our blinded data, we've observed significant progress, with over 60% of patients having completed Week 28, and many already finishing the study. This allows us to estimate the overall response rate based on the primary outcome, which is the total improvement score. Analysis shows that approximately 85% of improvement is evident by Week 28, suggesting that while improvements continue after that, most occurs within the initial six months. I believe that shortening the study will not result in a significant loss of efficacy, and importantly, this aligns with what other studies are doing. The advantage of completing this sooner is substantial. We expect to have the last patient out at 28 weeks around the first and second quarter of next year. If results are positive, it could offer significant value for the company and will not eliminate the possibility of seeking approval based on the data. We will need to amend the protocol and revise the statistical analysis plan, but these adjustments are feasible. Ultimately, a study outcome of less than 52 weeks is consistent with trends seen in other Phase III studies.

Thank you, Barbara, that's very informative. I have one more question. Could you elaborate on some of the limitations you found with 4001, particularly regarding the formulation and the blood-brain-barrier penetration? Also, could you share any details about the characteristics of the next-generation CB1 inverse agonists and when we might receive more information on those as we move into clinical stages? Thank you.

Thank you, Brian, for the question. We encountered both of the issues you mentioned regarding 4001. Our excellent CMC team has been able to create formulations of 4001 that allowed us to start our clinical testing. However, it is a challenging compound to formulate due to its low solubility. Additionally, we extended the initial toxicology and pharmacokinetic studies that had been sufficient for Phase I testing to address safety concerns. During this process, we discovered levels of 4001 in primate brains that led us to believe further development of 4001 was not viable. The other compounds we are developing have better physical, chemical, and pharmacokinetic properties than CRB-4001. Therefore, we are shifting our focus to prioritize these compounds and will not proceed with CRB-4001. We look forward to sharing more information about these compounds at our future R&D Day.

Our next question comes from Dr. Maury Raycroft with Jefferies.

This is Kenny Chen on for Maury Raycroft. I have a question on the systemic sclerosis trial. How do you see the greater-than-two-year IST mark from the recent post-hoc press release incorporated in the FDA label? Has there been precedent for approvals based on years of background therapy failure, or would you run additional trials either in-house or with a partner?

Hi, Kenny. Thanks for the question. To be clear, we do not think that this current Phase III study that was just completed is adequate to support regulatory approval, so we've taken that off the books. We didn't meet the primary and therefore we didn't meet the secondaries, and we just don't think that that's a path forward to approval. At the same time, we think the data are very informative, not only to us but to the clinical community, and may provide a very rich database from which we can further discern how to design an additional Phase III study that then could be used for approval. So again, the one that was just finished is not adequate for approval. We are in the process of determining a path forward, and if we do move forward, that will, by necessity, involve another Phase III study.

And one more question on CF. You'd previously mentioned that you will talk to the CF community regarding approvability and potential trials. Have you any feedback?

Yes, we've had some discussions and will have more. Right now, it's a bit early to consider that, but I want to emphasize that we did not meet our primary endpoint, which typically prevents this trial from being used as the basis for approval, even though it could potentially support approval.

Got you. And maybe just one last question. For DM, was the trial shortened based on competitors or did you feel there was efficacy read-through from CF or SSC that contributed to that shortened decision?

I think it was more the former, that we've assessed and continue to assess the evolving status of trials in dermatomyositis. We've observed that theirs are all at least half as short as ours, and we believe that at that time point, if lenabasum proves effective, physicians would use it to evaluate efficacy against other available compounds, which may have data at an earlier time point. Therefore, we considered it reasonable to examine what the lenabasum data looks like, enabling us to make that assessment.

Our next question comes from Leland Gershell with Oppenheimer.

First, a question on the systemic sclerosis. With the identification of the pulmonary function improvement potential that you've seen with lenabasum from the RESOLVE data, it sounds like you're contemplating going forward, potentially, with a focus on that. Just wondering, Barbara or Yuval, if you can comment on when we might hear clarity on the decision process to move forward in SSC with a focus on FVC and what further you may need to go into that consideration as you make that decision? Then I have a follow-up. Thanks.

So I'll start and then pass it to Yuval. And thank you, Leland, again for your question and your interest. We will do some additional data analysis; as you can appreciate, these are post-hoc analyses, and post-hoc analyses are fraught with that, that they are after the fact, although we did certainly call out the need to look at forced vital capacity ahead of time. That was one of our secondary endpoints. We just hadn't known the impact of background immunosuppressants ahead of time. So we will continue to analyze the data to convince ourselves and experts that this improvement that we're seeing in FVC is indeed as robust as we think it is in these analyses to date. And when we've done that, and that shouldn't take too much longer, then our next step is to design an additional study and to gain agreement from regulatory authorities that such a Phase III design would be appropriate to support approval. We know that forced vital capacity has already been used as a primary efficacy endpoint in a successful Phase III study. OFEV has been approved for treatment of lung function, of lung involvement, in patients with systemic sclerosis recently, so the regulatory path forward focusing on lung function, to us, seems pretty clear.

Okay. That's helpful. And then with regard to the 4001 program, just curious if, in the earlier-stage compounds that look to be more attractive versus that one, given that finding, wondering if you plan to announce multiple development candidates that could be evaluated in parallel in the clinic, or if it'll be the case that you'll settle on one that you'll take forward based on the preclinical profile, just in terms of hedging your bets on that opportunity?

Thank you, Leland. That's an interesting thought. Our current plan is to advance the compound that appears to be the best candidate into clinical development. While we have the option to move several compounds forward, focusing on one would likely be more prudent in terms of our resources. We aim to gather sufficient preclinical data to identify the most promising compound among several options that currently look promising.

Thank you. We have reached the end of our question-and-answer session. Ladies and gentlemen, that concludes today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation.