Q32 Bio Inc. (QTTB) September 2026 Conference Transcript

All right. Good afternoon, everybody. Thanks for joining our next session. My name is Derek Archula. I'm one of the senior biotech analysts here at Wells Fargo, and I'm very happy to have Q32Bio for our next fireside. So from the company, we have Jody Morrison, CEO, Sheila Violette, CSO, and Lee Kowalski, CFO. So thanks, Dean, for joining us.

Thanks for having us. We appreciate it.

So maybe, Jody, starting with you, if you want to just kind of give us a high level, what you guys are working on, kind of state of the business. You had some data, positive data, earlier in the year. So kind of walk us through what kind of transpired. If we can kind of get into the more granular questions after.

So a big year for us, obviously, with the readout from the Part B of our Signal program. So an exciting turn for us, I think, as that data matured and we were able to really show that we're in the jack class, sort of as far as the efficacy goes. That was what we were looking to accomplish with the program, and we certainly did both on the MITT and the ITT data, now showing that 30% and 40% SALT 20. So really exciting for the company and for patients. So we're excited to move to the registration program next for LP Shariata. That'll be the next step, and then beyond that, we're internally starting to think about what indications we can target next with lots of opportunity, both in the Durham space and you know sort of non Durham adjacencies as well got it so maybe just you know looking at the the data from Part B and maybe talk us through they're kind of the two populations that you looked at kind of the MITT so modified intent to treat and the intent to treat populations and you I guess what will you be really pointing to regulators in terms of like you know the data and the path forward here yeah the good news for us right both data sets look really good so we're very pleased with that we thought it was really important to put the ITT data out we had a pre-specified MITT population defined in our statistical analysis plan so that included in the end two cuts that were applied to the program the first was patients who had not received at least 50% of the doses so in a 36 week dosing regimen they needed to have received at least 18 weeks so that was five of the patients that were removed fell into that category and including two that actually didn't even get past a couple doses. I think one had transportation issues and the other had a needle phobia that hadn't been disclosed to the treating physician in a sub-Q trial, so that was unfortunate. And then we had three others for various reasons, mostly like moving states, moving sites. I think one patient that went to jail, that was the first one for me, wanted to stay in, was actually a responder, but for reasons you can imagine, we could not keep dosing them. So we lost that patient and then we had another cut that got applied for unstable disease defined in the SAP as more than a 25% worsening of disease in the early part of the program really representing that these patients needed to be stable under the criteria of inclusion exclusion those three cases two of them were patients at a single site that were transfer patients to the site that did not come with the records on their stability they should have provided those the physician took patient report for that stability and and likely they were in a hair loss kind of contingency or a period of time where they lost their hair and so unfortunately those two were not appropriately eligible for the trial and then the third was actually a patient who had a medical history of NASH reported that they'd come off their NASH sort of diet that kept their disease in check and in tandem with the worsening of NASH for a period of time they lost their hair which can happen during NASH so those were the three that were cut for that.

Understood you know I guess as you think about going forward in other trials like How do you control for some of these variables? And ultimately, I guess the question being how translatable, which population is probably more representative of what we would see in the phase three trial?

Yeah, I think ultimately what happens is in small studies, you apply these criteria because one patient can really throw your data set. In a large phase three trial, we're not as concerned about that. But there are some learnings. So if we think about the patients with unstable disease, we are obviously going to require that there's a paper trail of their stability provided and as part of our central review we'll do confirmation steps of that moving forward for diagnosis and stability of data so that is manageable I think needle phobia is an obvious question that they need to ask you know and we'll have more sites in this program so that'll allow us to sort of address patients who move locations when you have other you know if you cover more of the states in the United States and if a patient moves from one state to another you may have optionality of another site for that patient. So there are ways we'll address that within the program. But expectations are you would lose some patients to things like that. But in a larger trial, it doesn't really impact your data. So ultimately, the ITT ends up being your primary analysis set, and then you apply the endpoint to that.

Understood. So that's noisy, but that's kind of table stakes.

Some learnings, though. But it's some learnings that can get applied to the phase three. Gotcha.

And I know you were talking about kind of JAK-like efficacy with BEMPY in this trial. So maybe talk about the response rate on SALT20 relative to those JAKs and kind of where, you know, what do you think that means in terms of potential commercial opportunity?

So we can talk about the JAKs, and then we'll talk about the commercial opportunity. I would say in the JAK phase two trials for the approved drugs, it ranges from a SALT20 of sort of 21% at the low end to like 31, I think, for Sun's asset at the upper end. So that's your range of SALT 20s. Here in the MITT, we saw 40%, and then in the full ITT set, we saw 30%. So right in the range of where we wanted to be overall in the ITT alone. So really encouraging finding from that perspective. Obviously, we think that puts us in an incredible position for, you know, getting out into the market. The reality is, though, we don't really view JAX as the thing you've got to benchmark against. All the data tells us the same thing. Patients don't want to be on JAX. It's a small population of patients that are currently on it. It's a small population of physicians that are willing to write JAX. Our data shows us that about 50% of the patients currently on JAX are covered by 5% of the derms, right? So that's, you don't have a huge subset of docs that are comfortable with the JAX. So from a commercial standpoint, I think what this market continues to be waiting for is a safe biologic option. Efficacy is critical in that context, and I think we've delivered that in our phase We would anticipate delivering that in our phase three. and I think that will incredibly well position us to take the first-line position here. The data we've seen in post-JAC encourages that patients who are on JACs at the time we launch could move over to the drug, so that's encouraging as well. But I think we have both kind of the best of both worlds here with JAC-like efficacy and a solid safety profile, so we're really excited about that combination in the setting of this. We think it has the opportunity to be effectively at the dupixent for alopecia areata, just like you see in a topic where despite jacks having great efficacy depicts and takes 90 percent of the market yeah maybe you can describe you know the efficacy for bempi in that kind of post jack exposure i mean there are some patients i think that had maybe prior jack exposure and just curious you know do you have the ability to kind of play in the entire population or kind of broadly yeah it's i think more to come on that as we put more data out later this year i think ultimately what we've seen is certainly patients who had shown prior response to JAKs, we feel like we have access to those patients. We are still evaluating patients who either were non-responsive to JAK or partially responsive to JAK, so we'll gather that data and provide more detail. It's a small data set, though, right? It's a 33-patient arm. It's 40% of that had seen prior JAKs, so we want to make sure we're not jumping to any major conclusions on response or non-response, but ultimately, we're very confident that post-JAK responders are going to be good responders here. Gotcha.

And then based on the data you guys have already generated from Part B, I mean, how should we be thinking about, you know, placebo response going forward? Like, what would you kind of be underwriting for a phase three trial and how you power that trial?

Yeah, I think we're going to be very conservative with our estimates there. The data for the phase threes that have been run today kind of range in that sort of 2 percent to 5 percent range. I think we'll be sort of pushing up towards 10 percent in our estimates just to cover ourselves there. I expect we're going to overpower this trial to make sure that we're both, you know, ensuring success in the program as best we can, but also building in enough of a safety database for the purposes of a single trial registration.

Gotcha. And then you talked about it a little bit before, but, you know, one of the big things is whether or not you can just have better safety than a Jack, right? So, like, you know, thus far, BEMPY looks pretty clean, but maybe you can just kind of elaborate, you know, in terms of, you know, the safety profile that you've seen across the entire program, even, you know, what you've seen with prior and ultimately the overall kind of exposure, you know, experience.

Yeah, I mean, I think ultimately the biologics in general will be a step, sort of a step removed from any of the black box issues that you see with JAK inhibitors. So, the risk of cardiac issues, the risk of cancers, like we think will be outside of all of that, certainly from a mechanistic standpoint. So then what do you look at, right? ISRs, because it's an injectable, that's an important one, and I think it differentiates us from the other biologic that's in development right now. We're seeing 4% ISR rates in the trial overall, and where we see them, they're mild. They appear and resolve within a day, and they really follow the characteristic of a 2 mil injection site reaction, which is, this is a 2 mil injection at the moment in the trials, but we'll be dropping that to 1.3. So even with the 4%, which I could live with, I think we actually could see the numbers come down even more. So we're really encouraged by that. The other thing we're tracking closely is the lymphocyte reductions. That's on target and on mechanisms, so we expect to see that occur. We're seeing a flattening of that between 24 and 28 weeks. We saw no patients discontinue from the drug as a result of it. We also saw no patients discontinue for ISRs, by the way. So we aren't seeing any patients discontinue for adverse events overall. we saw no effect infection correlation with the lymphocyte drops that we're seeing so there's no association there so overall we're really pleased with the safety profile here so mechanistically what's really interesting about BEMP is the opportunity to potentially have these deep responses and have them be quite durable so do you want to walk through not only the biology but like what you've actually shown in terms of like you know I'm not saying there's like a remission on the table but some sort of a bit of effect that we're seeing yeah I mean overall and it always important to start here we do expect this will be chronic dosing. What we're testing with these off-drug periods is how long could you go between doses. Right now we're dosing every two weeks in the primary study. As we're moving into open-label extension for the Part B patients, we're actually looking at both monthly and every two weeks, so we're going to gather some data there. In the sort of remittive period, right, we're moving into a four-month period of no drugs. So from 36 weeks to 52 weeks in the program, those patients that elect to go into that, you know, we're following those patients during an off-drug period. So the expectation we'll be looking for is that durability. Do we hold that durable response? So patients who showed a response, do they hold it? The second question we'll be asking is whether patients who didn't respond move into a response cycle. We did see one such patient in the last trial that we ran. It was a pretty remarkable case that was in our deck for a while. We have new pictures we're showing now, but it was a pretty encouraging finding in that patient. And so we're looking to see, could we see another of those? Is there a phenomenon where you do see these late responders convert in the off-cycle period? So collectively, that data will be put together to think about long-term cycling for the chronic dosing.

I mean, mechanistically, what's going on there? What are we actually seeing? And I guess, is it really just kind of specific to this mechanism potentially?

Yeah, I think we definitely believe it's mechanistic in nature.

Maybe I'll kick this to Sheila to talk about some of the preclinical models that actually support seeing this and and the why of that yeah so you know there's been a number of studies that have shown these long-term durable responses that you dose in preclinical studies for a period of time stop dosing and then follow the animals for a long period and see that you could get suppression of disease long after the drug is out of circulation so we knew lots of preclinical data to support that then there have been studies that have shown that if you take tissue in a DTH model and baboons and isolate the cells that are responsible for the durable response, the understanding in that model is it's these antigen-specific T-memory cells. And so we know that IL-7 is important not only for the regulating the generation of the effector cells but also the maintenance and survival of the T-memory cells. So that's sort of the leading hypothesis. But I think that, you know, there could even be more going on there in terms of the effects on shifting the ratios in favor of the Tregs, how long we can sustain that. We have collected optional biopsies from our Part B, and it gives us an opportunity to look deeply at the biology there. And we're encouraged by what we're seeing. And I think it will really put a little bit more of a different lens on how we think that we're maintaining this durable response.

Gotcha. So I guess when you think about, you know, phase three, will you continue to just kind of dose like you were doing prior in part B or, and then kind of let the remittive effect kind of be something, you know, down the road in terms of how doctors want to do the dosing or taking drug holidays, I guess, or would you work that into a phase three design looking at another type of regimen?

Yeah, two different studies that will run effectively. So you'll see the phase three, we anticipate a primary endpoint of 36 weeks. We will dose patients to 52 though. We want to see what that additional tail might look like with actual dosing and then the expectation is patients who elect to will roll into an open label extension and within that we can start to evaluate different dosing regimens. Obviously if recruitment all happened on one day that would be amazing but that's not how it'll work in the phase three so we'll see patients who come in on the front end actually moving through those regimens before we submit for the BLA so we'll have a wealth of data on that that dosing paradigm and obviously we can do additional work in open label studies that will be running in parallel with this, which will both expand the database, expand the population of alopecia areata patients we look at, so including moderates, maybe patients who aren't eligible for the phase 3, pediatric patients. We anticipate adolescents will be in the phase 3, but that's a question for the agency. But overall, we'll gather more data there, and we can be looking at those dosing paradigms there. So we don't anticipate after phase 3 patients would go through a four-month holiday before continuing dosing. They would roll right to the next regimen.

Understood. Okay. And you covered this a little bit already, but I mean, you know, what are some of the remaining questions that you want to have answered when you kind of have the meeting with the FDA, particularly around the trial design?

So I think there's a few. I think number one, can we include adolescents? As I just mentioned, we want to confirm that. We believe the data is supportive and most of the programs have moved to adolescents for their phase three. So we think that's a reasonable assumption. Single phase three for approval. Given the C criteria, we think that's obviously pretty reasonable to assume we also have fast-track and there's two precedent in the space between Pfizer's lit Fulo as well as most recently NACTAHR's announcement of a single phase three so we think that's a reasonable assumption but we will look to confirm that dose ranging whether it's required will be the other question I think largely we need to answer here we believe the PK PD model of the sum total of the data we have will support why 200 megs is the right dose moving into it if the agency requires a default dose ranging. We have a design for that that is still encompassed within the fundraising we've completed already. So either way, we can still run that program on existing dollars. And then lastly, what's the sample size we need for the safety database? We'll need to confirm that. Our expectation is we'll be running this phase three alongside that safety study. Collectively, that would be the sample size that we'll need. And we need to confirm that number with the agency.

Gotcha. So maybe just thinking about the overall landscape, you know, for alopecia areiotic currently so you know jack's there a couple of them uh other emerging biologics i mean you know obviously il7 t-slip one mechanism we also have cd-122 that's also being investigated and others i guess how do you think it all kind of breaks down from a biology standpoint and like are there you know multiple winners here because the big market or do you think there's going to be you know a certain go-to and what do you think is really going to be driving that as more safety efficacy uh or again just kind of you know cycle through a variety of different mechanisms yeah i I mean, I think this is an indication where safety sells, right?

You can look at the data that's out there to say that that's certainly something that will move the needle in the setting of derms in general and patients who have to be on chronic therapy. There's not a lot of tolerance, I think, for these drugs that have compounding risk over time if you have to be on it for 30 years, right, to keep your hair. And if you think about this versus a topic, right, it's even worse, right? In atopic, where you see 90% going to a biologic versus staying on a JAK, I think the issue is with atopic, you can have a resurgence of the disease and take it and get it under control. Contemplate the fact that you lose all your hair if you come off a JAK very rapidly, typically. So if you come off, you lose all your hair. Okay, I decide to go back on. I need five more years to grow my hair out, right? It's not like you can just immediately get enough hair for coverage, especially for women. You think of, like, this is like five years of hair growth, right? So it takes a long time to grow hair for patients. So it's not something where cycling on a jack is even an option. But we see 90% even when that is tolerable going to the biologics. So I think overall there's a lot of room for the biologics to move into this space. But efficacy will matter, right? Speed doesn't matter as much. We can play around with speed. But speed only matters once, right? If you do this right and it's a safe and tolerable drug that you can stay on for life on a cycle, then it doesn't matter once you get there, right? So we'll look at 36. We believe we're quite quick and we can get there at 36. We'll also look at 52 and look at both from that perspective. But I think ultimately when I look at the competitive space, you know, I think it's going to be a blend of those two. From a biology standpoint, anything you'd want to add on the other drugs that are in development?

No, I mean, I think that what we can see here, at least from the data that's published now with ResPeg and the data that we've generated, is that we've always sort of understood this to be a T cell mediated disease. And I think they will, you know, everybody will now be figuring out how can you go after particular pathways that are important in regulating. I think one of the questions always was for our program early on, IL-7 signals through JaxDat signaling. And so what's the likelihood that this particular pathway is an important mediator? And I think this has really highlighted that, yep, the JAKs do work, but this pathway seems to be an important regulator of the pathogenic T-cells. I agree with what you're saying. I think it's going to be safety. The speed is less important, but also maintaining if you miss some doses.

So I know you talked about, you know, putting out some more data for Part B, you know, later this year. So what should we be paying attention to and ultimately, you know, what specifics that will you provide that, you know, either further de-risk a phase three or at least give us some direction on, you know, maybe what that phase three design will ultimately look like?

Two separate things, putting the data out and then the phase three. I would say the phase three design and details as far as runway and timelines, all of that will be provided when we complete the end of phase two meeting. We anticipate being able to guide to the market by the end of this year, early next year at the latest based on FDA schedule and the back and forth conversations we have with them at the end of phase two. So more to come on that, although we have a general sense of what the design is, as I mentioned. I think as far as new data that's coming, we do have an expectation of data at EADV, which is coming up in about a month. So we anticipate having data there that is more fulsome data of the 36 week end point. This would include biomarker data, including some biopsy data. We're pretty excited about that, so we're putting that out, as well as the 52-week data in the majority of patients. I'm not sure I'll have every single patient, depending on schedules, but it's going to be pretty close. So we anticipate having that. In the 52-week data, what we're looking for is really making sure we're seeing good stability off drug. That's the goal in that portion of the program. We'll also look to see if we see any of those patients who had originally been non-responder convert. harder bar, but we're hoping to see, you know, somebody in there as well.

Gotcha. And so you started this conversation also saying that, you know, exploring new indications and where you can go from. So like, you know, I guess what, what are you kind of contemplating and ultimately what indications make sense for you guys as a small company, you know, with, you know, resources that are finite, but like you, your number one priority is alopecia areata, but like, what can you generate proof of concept in and how do you do that in a reasonable fashion?

Yeah, I think first and foremost, our primary goal is alopeciariata. We are not going to take our eye off that goal of getting the right trial running, getting the right operations team executing that. So that's going to be a critical point for the company. But I think as we think about additional indications, there's a wealth of opportunities. This is definitely one of those drugs that is sort of the pipeline in a pill, or in this case, an injection. We have a huge amount of opportunity to take this beyond alopeciariata. I think we need to be strategic about how we do that. There are adjacencies within DERM that are particularly interesting to us that obviously we could do sort of expansion at the existing sites we're working through. So that's attractive. That would include things like vitiligo, like in Planus. So those are a couple of the areas we're thinking about there. And then there are areas that are sort of outside of DERM that certainly we believe there's opportunity here, some of which are easier for us to run as a small company. Others might take a partner to take forward. So those include the respiratory indications on the T-slip side. There are a couple indications where both IL-7 and T-slip are both in play. So COPD comes to mind, RA. Celiac is another option we could move towards. There are other indications. But clinical trial designs, endpoints, duration to an endpoint, you know, whether you need a placebo-controlled trial or whether open-label data is meaningful, those are all things that will be contemplated within the strategic decision. And I would anticipate that, you know, first half of next year we should have some more guidance on that.

So, I mean, when you talk about guidance for that, would that be, you know, again, providing the proof of concept trial and, like, the design and, like, what your approach will be? Or is it, you know, just kind of like, hey, we're going to go into the syndication and then we'll give another follow-up update? Like, how fast are you trying to move is essentially.

Yeah, I think we need to move fast. I think we would like to move fast and come out in the first half with more details about what we're going to do. But it depends on capital raising strategy, right? If we, depending on what design we get completed with the agency, we may have more runway that we could use towards that, or we may need to think about other approaches like partnership for some of these indications. So I think we want to make sure we're being really thoughtful about that. We don't want to burn our runway yet until we know what the design of the phase three is going to be, or else Lee's going to come and give me a hard time.

There you go. And then I guess in terms of like thinking about kind of the OSCE program, and they were kind of exploring IBD, and they had some interesting results there. Is that kind of something that you guys are contemplating as well, or is that more of a partner or something like that?

No, I mean, I think it's an interesting one. UC is an interesting indication from the perspective for IL-7. It's already been de-risked, right? And with They Were IV, we've got a sub-Q asset. We feel very confident there's great opportunity here. Spending some time really thinking through what the design of that would look like and how the competitive landscape tees up against what we could provide there.

So I think we want to make sure we're thinking about it through that lens. but it is one i think we could take forward on our own should we choose to gotcha and then maybe just you know the other pipeline agent so you talked about 80x914 um kind of an extended half life i mean how do you i mean is that necessary or is that just more life cycle like i guess and ultimately you know how do you want to develop this without kind of you know you know be still just going through to phase three so like um you know how do you kind of balance that or stage it out, at least, you know, kind of having that in the background.

I'll start and then I'll hand it to Sheila to talk through because she's leading that I would say we think of it really as life cycle management as a starting point. Obviously, with a drug like this where we already think we're going to have nice dosing paradigms on the back end of this, we don't necessarily need an Excel. But I think from a sort of defensive standpoint, it's a good place to go as well. So life cycle management and defensive positioning, I think, are the two things I would say. The overarching goals for the program is to really push beyond what we're seeing now for the duration between dosing. We think what we have now for alopecia areata is wonderful and a great setup for those patients. But if we can improve that as a life cycle, that's something to think about once we're, you know, through and on the market.

Yeah, I mean, I'll emphasize what you said. What we learned about BEMPY is that we do think it's a best-in-class asset, in large part because of the PK properties. we're getting really excellent coverage of the target in circulation as well as in the tissue based on biomarkers and there are ways you know you can extend the dosing interval just even around what dose you give you go to a 300 you could extend that way so the way i think about the excel is that it's a defensive strategy but i would want something that is not a small an incremental it would it would have to be really meaningful to the patients for us to really bring something like that forward so we're looking at it it's in pre-clinical development now to see what what might be the advantages with the next gen molecule gosh i mean do you think there

is you know is better efficacy on the table like with the molecule like this it beyond just kind of the dosing advantage i think it's less about efficacy it's more about the sort of convenience considerations i think at this point we feel like we're seeing the efficacy that that this can deliver I think more of looking at the 52 week might see some tail efficacy that we could get there but I think we're we're doing a really good job of I think addressing this and not seeing sort of patients that just don't seem like they have enough it's I think we're doing a really good job on that front so we're very confident and bumpy from an efficacy standpoint I think you'd add yeah no it to me it's just about yeah and then just in terms of like so I know it's so not an efficacy play but I guess when you think about development in the future do you would you go straight into alopecia or would you look to do other indications like what would be your plan um you know once the guys get into the clinic yeah i think it's it's early to make a strategic decision on that but i think our intent for ben pickabard is to move that forward for alopecia areata so i don't see us making a shift for alopecia areata at this time i think from a life cycle management we could consider that later um but we're proceeding with the phase three because that is the registration path we're taking them beyond for alopecia um i do think there's an opportunity for those you know for an excel to move to other indications over time and then potentially to be lifecycle and alopecia got it let me you know to wrap up just in terms of funding so you guys did a raise you know seem well funded but you know what's that get you through this get through all the way from the phase three and ultimately you know some of these other opportunities that you were talking about in terms of indication expansion you know is it enough to kind of fund through proof of concept for for some new indications so we aren't guiding on whether we can get through the other indications until we complete the end of phase two and have the final design so that we can actually lay that on a piece of paper and tell us how much do we need to get there from a runway and capital standpoint and that'll be impacted by the safety study and the safety size and then the single phase three approach whether it's a single dose or multi-dose once we have that answer which is coming very soon I think then we have the opportunity to really see how much of the additional capital that we have can be deployed for other indications for expansions we certainly will get the opportunity within the safety study to expand on alopecia indications as a minimum and that's baked into our assumptions already on the moderate alopecia areata which is a huge population of patients that are underserved right now obviously pediatric will be part of that adolescence will be part of the phase three most likely so within the capital we have now you're going to get the alopecia areata phase three and these additional alopecia indications beyond that thinking about things like like in plan is vitiligo other indications like you see all of that will guide in in the first half Lee anything to add to that well said I think just to be crystal clear we are funded through phase three with runway beyond in any circumstance that could be contemplated well any so

maybe you know last question just sketch out you know the next 12 to 18 months some of the updates that we'll get and you know ultimately where you kind of see the inflection points.

Super busy. That's what the next 12 months are going to be. So I think we'll be seeing obviously this data at EADB. So we're looking forward to providing more mechanistic data on week 36 biomarkers and biopsies. We're looking forward to showing the durability data at the week 52 endpoint off drug. And then we're looking forward to providing guidance sometime near year end to the beginning of next year on the phase three design and the tee up and lineup of of milestones that might come from that and then in addition we'd have the open label extension for both two weeks versus a month and we would look at that data at the second half of next year for the patients in Part B who have moved into the open label extension and we'll also be providing details on the design for the open label study that'll be run in tandem in these other alopecia indications and so we'll have all of that over the course of the next 12 weeks we're building the team we'll be having some new hires announced as we build out the team and really fulsomely build this this engine that will that will power the operations of the program excellent well jody we'll leave it there sheila thank you thank you so much thank you