Satellos Bioscience Inc. (MSLE) September 2026 Conference Transcript

Good morning, everyone. Thanks for joining us to have a conversation with the management of Centros. Here with us is Chief Financial Officer Liz Williams and Chief Medical Officer Weldon Farweb. So thanks for coming down.

Thank you for having us.

So I guess to kick off the conversation, could you guys work out through how ferroazepatin could treat DMD without either replacing or patching the dystrophic, which is very different from the current mainstream treatment for the DMD?

Yeah, absolutely. Well, thank you for having us here this morning. We're glad to be at the conference. So yes, Sotelos has a very unique approach for treating DMD. And that approach is based on a discovery that was made by our co-founder, Dr. Michael Renicki. And as you pointed out, the current therapies in Duchenne are focused on restoring dystrophin, particularly in the muscle fiber. And that has historically been accepted as the primary issue in Duchenne. Dystrophin is missing in the muscle fiber, and this leads to the fiber being weak and more susceptible to damage. But what Michael could never reconcile as a stem cell biologist is why boys with Duchenne lose their muscle over time. So yes, the muscle is fragile and susceptible to damage, but a healthy individual has the ability to repair and regenerate the muscle. And in individuals with Duchenne, that is not happening. They're actually losing their muscle over time. And so when Michael's a stem cell biologist, he spent his career studying muscle stem cells in particular. And when he started digging into the issue, what he identified is that dystrophin has a secondary role. So yes, it is a structural protein in the muscle fiber, but it also plays a signaling role in the muscle stem cells. And in its absence, the stem cells are not able to polarize and create the progenitor cells that go on to create new muscle tissue. So there's two problems, at least two problems in Duchenne, the structural issue, but also the regenerative of a deficit issue, which we believe is the more substantial issue in Duchenne. And so Michael and Frank Gleason, our CEO, set about to come up with an alternative way to replace this missing signal in the stem cells. And it was really important to them to not take a genetic approach. They wanted to take a small molecule approach to have a drug that could be dosed orally, making it easier for patients. And so that's the genesis of forazapidin. They were able to identify an alternative pathway upstream of dystrophin in the stem cells that regulates polarity in the stem cells. And that pathway is AAK1. And we determined by inhibiting AAK1 with a small molecule oral pill, we could reset the regenerative deficit in the stem cells, go on to create new progenitors and repair the damaged muscle. So dystrophin is still missing from that muscle. And a question that we get asked often is, well, okay, you're going to create new muscle, but it still doesn't have dystrophin. So is that muscle going to be any good? And what we see, we find this question interesting because boys are born with Duchenne and they're born without dystrophin, but that muscle is functional at birth. The boys can grow, they learn to walk, they learn to ride a bike often, play sports, all of that on muscle that does not have dystrophin. The issue becomes over time, the damage to the muscle accumulates, leading to a tipping point where they start to lose function. So we believe that if we can help the body reset the regenerative cycle in the stem cells, the body has the potential to repair and regenerate and keep up with that damage and potentially, hopefully, lead to a meaningful improvement in the progression of disease.

Oh, thanks, Liz, for that. And I guess the question, I think, naturally, with these kind of dystrophic independent and the mechanism of action, how you guys think about the development strategy for the drug?

Yeah, I'll start then you add on. One of the things that's really exciting about our approach is it's not an or, it's an and. So yes, dystrophin will continue to be missing in the muscle fiber. So there's potential for our drug to be used in combination with dystrophin restorative drugs. So exon skippers, gene therapies, our clinical trial, as Wilden will discuss, is treating patients concurrently with steroids, as well as patients who have previously had gene therapy, previously had exon skippers. So we believe there is room for azapadine on its own because it is not a genetic approach. It has the ability to treat all patients regardless of their exon status, regardless of their ambulation status, regardless of their antibody status. But it also could be used in combination with these dystrophin-focused approaches.

What are the answers to that?

I guess what I would add to that is that, you know, the exon skippers, the gene therapy, they've been available now for several years, and they're still very significant unmet need. There's still patients who are not achieving much improvement in function. Some of the newer generation Exxon skippers are seeing some improvement in function, but still these boys and young men are profoundly weak, have lost lots of muscle, are not able to live their best lives with full function. And unfortunately, they're dying in their late 20s and 30s. So very profound, unmet need. And we believe that a therapy targeting the satellite cells to improve muscle regeneration may be able to improve the life of these boys and young men, to be able to restore muscle regeneration to a level to allow them to achieve even greater function than they've ever been able to achieve. So that's what we've set out to do, to really evaluate this very thoroughly within both an adult population as well as a younger population to see what the overall benefit could be.

Gotcha. And let's dig a little bit deeper into the pipeline here. So you guys just updated very encouraging data for six months data from Trailhead. Maybe, Weldon, can you give us a big highlight about the update there?

Yeah, happy to. So, Sotelos initiated their clinical program with a phase one study that was conducted in two basic parts, one in healthy volunteers and then five adults with the shift. The healthy volunteer included the single ascending dose, the multiple ascending dose, included overall PK. All of that was very reasonable, acceptable, no safety signals were identified, the PK was as predicted. The five DMD adults also were evaluated for safety, tolerability, PK. Again, safety profile, very reasonable, no concerning safety signals identified. The PK, very similar to what was predicted based upon the preclinical, similar to what was seen in the healthy volunteer. here. So all of that was very consistent with what was projected based upon the non-clinical data. In that first study, there was also the opportunity to begin to evaluate efficacy. And so what was observed in this 28-day study, and it was 28 days because that's what the tox profile allowed at the time. In that 28-day study, Sotelos evaluated strength, they evaluated respiratory function and they evaluated different biomarkers what they saw was that in the first 14 days there was an improvement in the biomarker profile so this is the proteomic soma scan analysis what was saying was a very significant decline in many different proteins that are known to be abnormal in people living with Duchenne so this was a very encouraging sign of biologic activity very soon after initiating the drug. What was also observed was a stabilization or improvement in respiratory function. So the FEC improved by 5% to 6% over this period of time. So again, we know, especially in adults, respiratory function is a very significant aspect of the disease. And so to be able to see the stabilization or improvement was very encouraging. Then what was also observed was a near doubling in hand grip strength. and this was observed to be multiple fold in a few participants and when we looked deeper into that what we saw was that improvement was associated with drug concentration so those participants who had a higher drug concentration measured either by c max or auc those were the ones who were more likely to have an improvement in hand grip strength it was also associated with baseline creatinine. Now, why that's important is because we know baseline creatinine is a surrogate for muscle mass. And so those participants who had more muscle when they started on the drug were more likely to have the improvement in hand grip strength. So both of these factors bode well for our ongoing study now in boys between the ages of seven and 10 years of age, because in that study, we're testing the 60 milligram dose, which is what we have tested in that first phase one and continuing to test in an ongoing open label study among adults with Duchenne. But we're also testing 120 milligrams. So we'll have the opportunity to see if higher drug concentrations can also improve function more in boys living with Duchenne. We also know that boys with Duchenne have more muscle mass than do adults. And so the two things that predicted a greater response in the adults are present in our study among boys, base camp, which we'll speak to here in just a minute. But just to continue on the results that we saw in the adults. So later, after a seven to 11 month break, we started what we're now calling the trailhead study. And so those five participants were invited back. Four of the five were enrolled. And we began to follow them now with muscle MRI, with assessments of their upper extremity function. And what we reported at ICNMD earlier in the summer was that all four participants had a decline in muscle MRI, in fat fraction of their bicep. This is completely inconsistent with the natural history. The natural history consistently shows an increase in fat fraction over time across different muscles. And so what we saw was a 3.7% decline across the four participants, anywhere from 1% to over 6% decline. And this is in the four months of observation within Trailhead. In the natural history, over a year, what's typically seen is about a 6% increase in fat fraction in this muscle. So this is very encouraging. This, again, supports biologic activity and allows us to have confidence in the Base Camp study. What we also saw was improvement in function. And this was measured by what's called the Total Effort 99th Centile, TE99C. This is a digital assessment where an Apple Watch-like device is placed on the wrist, are then able to assess movement, assess different strengths during that movement. And what we saw was an improvement of over 30% over the time on drug. Again, very encouraging. We saw improvement in all four participants. So again, this now gives us even more confidence as we're entering into the base camp study, which is ongoing. This will be a study in 51 boys between the ages of seven and 10. We're on track to complete enrollment in that study this month. And we can speak to more of what we're looking forward to seeing in that study. But we believe that study plus what we're seeing in Trailhead may allow us to speak with the agency about paths to accelerated approval for Zapidin in people living with tissue.

Thanks, Werden. So I guess you guys are also guided, you're getting more updated from the trailhead by the end of the year. And also we probably could look at, see some data from new dose to patient. So could you give us a little bit of expectation about what the data readouts could be?

So with the Trailhead data, we are planning to have 12-month data on these four participants that are currently in the study. Our goal is to increase the participation in Trailhead. We're opening sites in the U.S. We'll have additional sites in Australia. We'll be able to enroll participants between the ages of 16 and 25. And so it may be possible to also provide early data on some newly enrolled participants in Trailhead by the end of the year. So we believe this will then give us the opportunity to see what has happened with more time on drug for muscle MRI in the bicep in these four participants where we presented data earlier, see what's also happened with the upper extremity function, see how that has advanced with more time on drug and then potentially in new participants begin to see how their strength is progressing as they initiate on drug all while continuing to evaluate the safety profile in this older adult population.

I see and at the same time you also let shift to the to the base camp there you also got to present some data from the base camp by the end of year but i believe last week you guys guided like you will spread the data updated in two phases i guess so maybe could you elaborate like first of all why you split that and for the first part what kind of data set we could expect?

Sure. So Basecamp, this is our study, randomized placebo control in boys between the ages of 7 and 10. It's a three-month placebo control portion followed by a nine-month long-term extension. The boys will be randomized placebo, 60 milligrams, 120 milligrams. And so, as I said, we're on track to complete enrollment in that study this month and so that will then give us the opportunity to provide an update on that data this year the full data set will be available early next year so that's when we'll have all the data evaluated and be able to present the full data set this year we may be able to provide an update on different aspects of the data but the full data set will be available early next year and so in this data we will have the opportunity to evaluate the muscle biopsy so for the first time look at the histology in non-clinical studies we see a very profound effect on what we call the regenerative index so the percentage of embryonic mice and heavy chain to IgG, really describing what is the biologic activity of the drug in the muscle. We'll also have muscle MRI. This time it'll be on the vastus lateralis which is a very well characterized muscle in this age range. Fat fraction in this muscle predicts function as measured by NSA, measured by ambulation, So we'll be able to evaluate that. We'll be evaluating strength in the lower extremities as well as the upper extremities. And then functional assessments like stride velocity, 95th centile, NSAA, PROs. It'll be a very robust data set that we collect within the Basecamp study. So as I mentioned, we believe that because of this robust data, because of the high quality data set that we're generating, that this may be an opportunity to have conversations with the agency about paths to accelerate approval, depending upon what the results of that data look like.

I see. So speak of the endpoint-wise, you mentioned you have MR, the fat fraction, you have the regenerative index as well in combination with also the function test. So for that, so what's the reasonable expect we could see those change within the 12-week treatment window? And what's the other expectation you think beyond that?

Right, so within Trailhead, what we saw was that the near doubling in hand grip strength occurred within the first month on treatment. So in the non-clinical studies, we see a very profound effect in the animals very soon after the drug is initiated. So we do believe that it's possible that we may be able to see an increase in strength early. And if you go back to the historical literature, the steroid trials showed an improvement in function early. So we know that with effective therapies, it is able to see change in these assessments early in after starting treatment. So we are planning to have conversations with the agency to talk about paths to accelerated approval based upon what we've seen in Trailhead. We'll then adjust our analyses for Basecamp to account for these conversations and depending upon what we believe is the right path forward and then be able to conduct the analyses for Basecamp to have the conversations with the agency once the full data set's available next year.

I see. So when you are taking the data set to have a conversation with the FDA, so what kind of the package do you expect to convince the agent to give you guys an XR approval pathway there?

So the 2018 guidance for Duchenne called out myometry, which is the same thing as dynamometry so strength as an intermediate clinical endpoint so they already acknowledge that with improvement in strength if one can show correlation to function that that is potentially a path to accelerated approval in that document they also talk about mri now they don't talk as explicitly about fat fraction as they do about dynamometry but since that guidance document there has been a lot of natural history showing correlation with function there has been many sponsors that have been able to show change in fat fraction and how that's associated with the function so with the trailhead data we're planning to have the conversation with the agency about these paths to accelerated approval we'll then incorporate that into our analysis plan for Basecamp. And we believe that is a potential package that could support accelerated approval depending upon the outcomes of the study.

Let's look beyond DMD. You guys also got to initiate the clinical trial in the FSHD. I guess the biggest question is why you picked that as a second indication you'll pursue and could any data from the trailhead or the base camp can relatively de-risk the clinical risk for the FSHD?

Yeah, so FSHD is a very serious muscle disease. It's actually a larger population than is Duchenne. The mechanism that Michael discovered is completely independent of dystrophin. This is a mechanism that exists in all of us. And what we know is that people living with FSHD, they have a decrease in muscle regeneration. Their muscle turnover is not able to keep up with all of the loss that is occurring. And so in preclinical models, when we administer forzapidin, we see an improvement in the strength in the FluxDux4 model. This is a standard model that everyone in the FSHD field uses to evaluate their drug. And so we believe that initiating a program in FSHD makes good sense. We know that there's a very significant unmet need. We know that there is a need for additional muscle regeneration. We have the preclinical data to support it. We do believe that there are learnings from Trailhead that further de-risk that program. The ability to see the improvement in a number of different biologic markers, the ability to see improvement in fat fraction, both of these are also abnormal in people living with FSHD. So that gives us additional confidence to move into this additional indication. And actually, we're thinking of other indications that this drug and this program could be applied to. Yeah.

So I guess to close, Liz, could you remind us what's the cash position for the company and what's the wrong way included and not included?

Sure. Yeah. So our last report of June 30th, we had just over 60 million US. We are a very capital efficient organization. So that takes us through 2027. So when we factor or when we build that forecast, it includes the operating the trailhead study, the base camp study, as well as the FSHD clinical study. So funded well past our next set of significant milestones.

Gotcha. Yeah, these are great. Thanks for coming. Thank you. Thanks for having us. Thanks, Arthur.

Yeah, thank you.