Conference Transcript - STTK 2026-09-08

Mohit Bansal, Analyst — Wells Fargo

Awesome. Thank you very much for joining us today. My name is Mohit Bansal. I'm one of the biotech and pharma analysts here at Wells Fargo, and I'm joined by Shattuck Labs. With us today, we have Taylor, and we have Andrew with us, CEO and CFO of the companies. Thank you very much for joining us today.

Taylor Schreiber, CEO

Thank you, Mohit.

Mohit Bansal, Analyst — Wells Fargo

Great. So a lot of excitement in Shattuck lately as you are turning into an IBD company a little bit. So let's talk a little bit about the story right now. What is the investment case and what are the company's core pipeline assets that investors should care about right now?

Taylor Schreiber, CEO

Sure. So Shattuck is, these days, entirely focused on blocking DR3, which is the sole receptor for TL1A. This is a very simple axis where you have a single ligand TL1A binding to a single receptor, DR3. We'll get into this in a lot of detail, I know, but right now we are the sole company that is focused on blocking DR3. And that comes with pretty significant advantages versus blocking TL1A related to immunogenicity and also target stability.

Mohit Bansal, Analyst — Wells Fargo

So let's just talk about DR3 a little bit more because, you know, TL1A has been a hot topic since Prometheus days. And there have been some deals as well there. You talk about DR3 being a more complete blocking of TL1A. Talk a little bit about that, and then what clinical evidence do you have so far to back that up?

Taylor Schreiber, CEO

So the relative potential durability of axis blockade assertion relates to the fact that DR3 and TL1A have very different biology as proteins. So DR3 is primarily expressed by circulating lymphocytes and also endothelial cells. And when a cell has undergone a fate decision where it has decided to turn on DR3, that cell never turns DR3 off again. And so it represents a stable target. TL1A, on the other hand, is not constitutively expressed. It's expressed by tissue-resident antigen-presenting cells, but only when those cells have been exposed to immune complexes or different toll-like receptor stimuli. And when that happens, TL1A gets turned on and off in very short pulses. And the implication of that is that when you're trying to block TL1A, you are chasing a moving target. When you're trying to block DR3, you are not. and so you know let's talk about the aspects of our existing data that might speak to this. So when when folks who have developed TL1A blocking antibodies are trying to derive a pharmacodynamic marker that might help inform their dose, the way that they have gone about this is by measuring the magnitude by which the circulating concentration of TL1A goes up after treatment with an antibody so you can think about what that whether that's a good or a bad thing but that's sort of separate from from the logic I'm walking through here and so you're measuring whether you reach a maximal plateau in the amount of TL1A that is in circulation right that's not telling you what's happening within the tissue and it's also not telling you whether the antibody is actually occupying all available TL1A. When you're measuring whether we have achieved blockade of DR3, the way that we're doing that is using a TL1A binding assay. So we're collecting samples from the subjects that are treated with our antibody and we're measuring whether there is any ability of TL1A to bind a DR3 expressing cell. And so it's an assay that is much more directly speaking to the pharmacodynamics of the axis and is telling us not just that all cells are occupied with our antibody, but that there is no ability of TL1A to bind cells that have been bound by our antibody.

Mohit Bansal, Analyst — Wells Fargo

Got it. Got it. That's very helpful. So one question, I mean, that comes up a lot is that, I mean, there's so much focus on TL1A development, but not so much on DR3. So what is your secret sauce that you could do it while others could not do it?

Taylor Schreiber, CEO

Yeah so I mean though there's a couple layers to why this might be the case. Number one until relatively recently with the Tula Sokobart positive data and ulcerative colitis all we had for the Axis was a failed trial of Duvacatug in asthma right? So there wasn't proof of concept for the axis until fairly recently. The other variable here is that when you're trying to build a TL1A blocking antibody, all that antibody has to do is provide steric hindrance for the ligand blocking to the receptor because TL1A itself doesn't signal. When you're trying to build a DR3 blocking antibody, you have to have an antibody that binds an epitope which interferes with TL1A binding and that doesn't cause what's known as residual agonism for DR3. And that is a significant challenge in picking a good antibody. Many many many of the antibodies that we moved through preclinical development you get them into certain sensitive cell-based assays and all of a sudden an antibody that you thought was a blocker ends up having this residual agonist liability. 325, we were confident based on the preclinical data that it wasn't an agonist. That's why we put it into monkeys. And now we've proven that in humans.

Mohit Bansal, Analyst — Wells Fargo

What is the theoretical risk if there's an agonism for DR3? What could be the safety issue with that?

Taylor Schreiber, CEO

You could exacerbate any inflammatory disease that TL1A is driving.

Mohit Bansal, Analyst — Wells Fargo

Got it. Very, very helpful. So then the other question is, you know like ultimately IL-23 is this you know gold standard right now so to speak like still it causes only 30 percent or so endoscoping improvement but that's those are the best drugs out there so how do you think DR3 targeting versus IL-23 in terms of like could you could there be an efficacy advantage over even IL-23 as well the prevailing wisdom as of now for TL1A is that's probably a good combinator agent rather than something that replaces IL-23 so yeah like how do you think about this argument so you reference 30% and so so this involves sort of thinking through on an intent to treat basis what is the what happens to

Taylor Schreiber, CEO

the proportion and number of patients in clinical remission from induction to maintenance and the TL1A class has stood out from dial 23 class so far because it looks like it achieves a higher rate of clinical remission at induction than the IL-23s do. So let's just say IL-23s are roughly 15% placebo-adjusted remission at induction. But then when the IL-23 class, what happens is that between induction and maintenance, you have about a doubling of the absolute number of patients in remission, right? So that's where goes from 15% to 30% from induction to maintenance and IL-23 antibodies have have fairly low rates of anti-drug antibodies. When you look at the available data from induction to maintenance for Tula Sokobart, Afimkobart and Duvacatug, there is no numerical improvement in the number of patients in clinical remission from induction to maintenance. On a percentage basis there is, but it turns out that that's due to dropouts in the denominator, not increased numbers of patients in the numerator. Got it. And this is a phenomenon of re-randomization trial designs. So then you have to ask yourself, well, what evidence might there be that somebody treated with a TL1A or DR3 inhibitor should have improved efficacy from induction to maintenance? and where that comes from is the two of the Artemis UC trial that was run for Tula Sokobart phase two study in UC and that trial included a re-induction arm so what they did there is they took the patients who are non responders after the first three months of Tula Sokobart and gave just those folks another three months of a thousand milligrams of Tula Sokobart and in that case they converted the same proportion of patients into response as responded to first the first time around yet the folks that achieve response the first time around in induction and then moved on to low dose maintenance response waned by a third okay right so the only logical explanation for those two data points is that there is a higher probability of dosing through rising ada titers when you keep folks on a continually high dose of antibody right but that it also then proves that you should have a doubling of the absolute number of patients in remission from induction to maintenance. And you also might expect that because the TL1A DR3 axis is upstream of IL-23s and so absent ADA it should perform more like IL-23s. So what might that mean? To get back to your original question, let's say that it holds that the TL1A DR3 class achieves between 20-25% placebo adjusted remission at induction. But then in the absence of ADA, that does double from induction to maintenance. That means you're going to be in the 40 to 50% range of remission from induction to maintenance, which would beat the IL-23s. And that's exactly what we believe 325 will achieve because of its low ADA rate.

Mohit Bansal, Analyst — Wells Fargo

Got it.

Taylor Schreiber, CEO

And then, so going back to this, so if you keep the patient on the high dose to maintenance they're not seeing doubling at least with Tullisopart right when you are basically seeing same like what they haven't shared their phase three data yet what we have from their phase two data all of the developers is no accumulation on an ITT basis of patients in clinical remission from induction to maintenance right and then this re-induction arm where when you kept the initial non-responders on high-dose tool of Sokobart, you converted about 40-45% of those patients into remission which would have doubled the overall number of patients in remission.

Mohit Bansal, Analyst — Wells Fargo

Got it. So basically when you go from induction to maintenance you go on lower dose and you just increase the risk of ADA basically at that point. Very helpful. So just talk about this ADA then like because at least with ASLT 325 we have seen very low rates of ADAs in phase one So how do you like so what is the biological rational here? That makes you comfortable that in bigger trials you'll probably see a lower rate as well here.

Taylor Schreiber, CEO

Yeah So the high rates of ADA that are seen with all of the anti-TL1A antibodies Are due to immune complex formation. It is not a Liability necessarily of the antibodies themselves and so when TL1A is expressed it is initially a membrane bound protein that assembles into a homo trimer and as one of the natural means of down regulating TL1A signaling is that there's a protease cleavage site proximal to the membrane in those trimers and that leads to liberation of the extra site a homo trimer of TL1A that is then measurable in the blood. And so when somebody is treated with a TL1A blocking antibody, the antibodies bind those circulating trimers probably before they bind the TL1A that still remains membrane bound in the target tissue of interest. And so when you have these antibodies that are bound to these circulating trimers, that creates high molecular weight immune complexes that are the source of immunogenicity for all the TL1As and you simply can't engineer around it. With DR3, there is no shed form of DR3. There is no risk of immune complex formation. So the ADA rate that we see of 3.7%, exactly what you should expect to see going forward.

Mohit Bansal, Analyst — Wells Fargo

Got it, very helpful. The other element is that DR3 occupancy with SL2325 should be durable, so can you talk a little bit about that? Yours is not a YTE molecule but still you could probably have a better durability. What is the mechanism behind that.

Taylor Schreiber, CEO

Yeah. So we have a YTE molecule, we call it SL425, but 325 is the antibody that's been through phase one and is now in phase two. We made the YTE because until we had the phase one data, we didn't know, you know, how durable might the occupancy be, what might that translate to for dosing frequency going forward. But we did know that we picked 325 in part because it bound an epitope on DR3 that did not cause internalization of DR3. And we believe that that could lead to to highly durable occupancy and so what the phase one data has now shown is that first of all DR3 became fully saturated even at the lowest dose of 0.1 milligram per kilogram and at the two lowest doses we gave 0.1 and 0.3 milligram per kilogram there was no loss of occupancy whatsoever for more than 30 days and as when we got up to that one milligram per kilogram dose and higher there was no loss of occupancy for at least to 76 days, which was the last time point we measured in the phase one. And what we were able to do is look at the relationship in that 0.1 and 0.3 mg per gig doses between when receptor occupancy began to fall and what was the circulating concentration of SL325 at the time receptor occupancy began to fall. And so it coincided with when the serum concentration of 325 falls below about 150 nanogram per mil and so that becomes a trough that is required to maintain full receptor occupancy and so you can look at the one and the three and every higher dose and project out you know when might we lose occupancy at those doses which are still relatively low doses and so those are the the analyses that underlie the assertion that with 325, we think quarterly dosing will be achievable at a dose and volume of less than 2 ml, which would be compatible with a subcutaneous auto-injector pen.

Mohit Bansal, Analyst — Wells Fargo

Got it. That's very helpful. And then, so like, I mean, there's this phenomenon, there's a thought process from some doctors we talk about that they like trim fire because it is it can be used those more frequently than sky risi somehow at least in ibd doctors do not mind treating more is this like in your experience in your talking to doctors is this because these drugs are not necessarily every eight weeks or every quarter drugs that's the reason or it's just like these patients are really sick that's why they need to be dosed more frequently yeah i don't really know to be honest I think, you know, the community is pleased that they've moved from antibodies that have to be dosed every two weeks to antibodies that have to be dosed every four weeks.

Taylor Schreiber, CEO

That's a huge benefit for patients. Is that really where the field still is two, three, four, five years from now? I don't know. and when we picked the doses of our antibody that have advanced into phase two you know the middle dose is at the high alt we expect full receptor occupancy throughout the dosing interval for all three doses the middle dose is at the high end of what we can give in a in less than a 2 ml volume in a sub kiwato injector pen the low dose is a much much lower dose than that and so what we believe is that when we come out of the phase one we will definitive sorry the phase two we will definitively answer the question of whether maintaining full receptor occupancy of dr3 is the predictor of maximizing efficacy or not we believe it should be and should that be the case we'll have flexibility within that dosing range to dose quarterly at, you know, a higher end of dose that's compatible with a sub-Q auto-injector pen, or maybe more frequently at a much, much lower dose should market research suggest that that's the right way to go.

Mohit Bansal, Analyst — Wells Fargo

Got it. So talk about the ongoing trial, the Deceptor CD1 trial, like what are the timelines and what do you expect to learn from that trial?

Taylor Schreiber, CEO

Yes, of course. So first of all, the decision to begin with Crohn's disease rather than ulcerative colitis is based upon a few things. Number one, we believe there's proof of concept in Crohn's similar to what we have in ulcerative colitis with the other TL1A programs. Secondly, the translational association between single nucleotide polymorphisms in Crohn's disease in TL1A and Crohn's disease has always been stronger than the association of SNPs in TL1A and UC. Crohn's is quite a bit less crowded these days than UC from a trial execution standpoint. And you talk to most docs and what they will tell you is that you have a positive signal in Crohn's, you'll get credit for UC, it doesn't necessarily work the other way around. And importantly, you don't have to run phase two trials in both UC and Crohn's in order to run phase three trials in both UC and Crohn's. So we would go into phase three in both indications following positive data and Crohn's into phase two. The final reason is that again this relates to sort of target stability of DR3 versus TL1A. If there is efficacy to gain by going after the more stable side of the axis we would expect our ability to detect that to be greater in diseases that have more foci of inflammation and that's more so the case in Crohn's than it is in UC. So this study is now open and we expect that we'll share so it's a typical three active dose versus placebo phase two design endoscopic response at induction as the primary endpoint. We've done something a little different from the TL1As in that we've this is a treat through study design rather than a re-randomization and we've done that because it allows us to maintain power at the efficacy at the maintenance endpoint as well and so our what we've guided toward is unblinding the induction data in the first half of 2028 in this study and I think that this will allow folks to make a cross-trial comparison to how SL325 stacks up against the TL1A antibodies, not just at induction, but also in maintenance.

Mohit Bansal, Analyst — Wells Fargo

Got it. So in first half 28, you'll have maintenance data as well, not just?

Taylor Schreiber, CEO

First half 28 will be induction. Got it. Maintenance data will come later in the year. So do you expect to have differentiation on induction, or do you think the anti-ADA differentiation will play out more in the maintenance phase of the trial it'll play out more in the maintenance phase you know that's where we you know there's a flat line for the TL1As we expect to see a doubling but that's based solely on sort of the immunogenicity part of the analysis if target stability is playing a role that could be could lead to better responses early as well we also can look at published data for a FIMCA BART, the Roche-TL1A antibody, and what they shared in a paper in the Lancet last year was that in the data supplement for that manuscript, they broke down efficacy at the time of induction by anti-drug antibody quartiles. And what they showed is that from the lowest ADA quartile to the highest ADA quartile, there was a 50% drop in efficacy at induction. That translates to between five to eight percentage points of remission that are left on the table at the time of induction.

Mohit Bansal, Analyst — Wells Fargo

Got it. So that could be the benefit you can provide. Okay, we'll see. Very helpful. And then like in the meantime we'll have bug data and you'll see probably some other companies will also report their data in the meantime. So what are you looking at from those data set that will help you inform or think about like whether or not DR3 is differentiated or not.

Taylor Schreiber, CEO

Yeah I mean so first of all it's great that the Merck phase three data is positive for Toulouse-Socobart at induction. It's a great point of validation for the class. Right. Now we're seeing that there is activity in hydrogenitis superativa outside of IBD for the class as well that's fantastic. And so and also very consistent with what was in phase two right so our expectation is that those induction data sets will continue to hit our expectation is also that we will see a flat line of remitters from induction to maintenance Merck will probably have that data later this year or early next and when they have those maintenance data I think if it is a flat line people will want to know why.

Mohit Bansal, Analyst — Wells Fargo

Got it.

Taylor Schreiber, CEO

Right.

Mohit Bansal, Analyst — Wells Fargo

So we'll see. Got it. Very helpful. Another argument is that you see, especially for TL1A mechanism, you see, like you also pointed out, Crohn's may be a better trial given that there's a fibrotic component as well in Crohn's, not so much in UC. Can you talk a little bit about the fibrosis and disease modification aspect of TL1A DR3 and then how that could play out and which diseases it could play out in.

Taylor Schreiber, CEO

Sure, so there is a very strong preclinical corpus of data that describes an antifibrotic role of interfering with TL1ADR3 signaling. Studying that in Crohn's disease is not straightforward because there are there are no standard endpoints for evaluating a reduction in fibrosis in these patients the field will evolve and someday we'll be able to see that but it's not part of our or anybody else's trial designs and UC or Crohn's right now because there just aren't any standard endpoints. I think from all of the trials we will get glimpses as to you know whether there's reduced strictures or fistula formation or you know other complications when patients have been treated with an antibody in this axis but it will remain anecdotal for some period of time. The diseases where you might get more anti-fibrotic information faster obviously systemic sclerosis was negative for Merck but I don't think that's a referendum on the axis because that antibody has high rates of ADA and looking at delayed endpoints related to fibrosis for antibodies that have high ADA is complicated.

Mohit Bansal, Analyst — Wells Fargo

Merck is also saying it is disease as well because the disease doesn't progress that quickly so that could be part of it.

Taylor Schreiber, CEO

That's the other thing you have to monitor these patients for a long long time. Another disease that the TL1A DR3 axis is very strongly implicated in is something like primary biliary cirrhosis that's more of a rare disease obviously but that would be a place where you might get a good indicator of antifibiotic activity for the axis as well so this will this will emerge but it's going to take longer to emerge than the pure anti-inflammatory aspect of the axis got it very very helpful.

Mohit Bansal, Analyst — Wells Fargo

So, I mean, RA did not work, but hydrogen titer support EY did work, so like there are there are indications where beyond UC and Crohn's where these drugs are working. Are there any indications where you could be, like you could probably have an edge there, like are there any indications where you think beyond that you could go? So, PBC you mentioned, anything else there?

Taylor Schreiber, CEO

We think that anywhere a TL1A antibody works, DR3 antibody will work better. Got it. Full stop. And so our strategy has been to go into the diseases where there is clinical proof of concept for the axis and prove that out. So we're you know where we're going in IBD, HS is something we've been thinking about for a long time where we could be part of the first wave.

Mohit Bansal, Analyst — Wells Fargo

Got it. No, that's very, very helpful. Now, so AbbVie is moving into SkyRisee plus strategy going forward, so plus alpha 4 beta 7 or TL1A. You also have a bispecific program there, so talk a little bit about the DR3 plus IL-23 drug, and how do you see this market in five, seven, ten years, like where you can actually position yourself?

Taylor Schreiber, CEO

I mean, you had a good, great antibody company so you can just probably tailor something around that so yeah so you know and there's wide widely held views that in IBD the future of therapy will be combos combos of mechanisms you know whether that's with multiple antibodies or with bispecifics is a little bit to be determined but that should be the base case and as I mentioned before with 325 if you have a doubling of the absolute number of patients in remission from induction to maintenance on an ITT basis that would put you into the 40 to 50 percent range at maintenance for remitters. That's better than what AbbVeVac's put up. That'd be better than what J&J has seen so far combining IL-23 with TNF inhibition. We'll see where the AbbVe combo stacks up, but that's an interesting combo. So we'll get the result with 325, and if as a single antibody that number is better than what's been seen with other antibodies that will I think allow 325 severe DR3 blockade broadly to be viewed as a desirable backbone of future combination therapies. And so 846 is our first compound that will start to look at combining mechanisms and there we decided to go after DR3 and IL-23 receptor, number one because IL-23R is also validated through the icotrakinra experience, but importantly it's very hard to find IL-23 receptor positive cells that do not also express DR3. So you have a cis-binding advantage of going after both receptors in cis and you also have theoretically an immunogenicity advantage by not having an antibody where one or both arms binds a soluble protein. We've just finished our chronic GLP talk studies. We'll be sharing those data in a few months time and putting that antibody in the clinic early next year. So we're really excited about that. There's a number of places that could go not just an IBD.

Mohit Bansal, Analyst — Wells Fargo

Got it. Exciting time. So I'll turn it over to into now. So you have $208 million of cash as of this year. Taylor has a lot of things going on here. So like what does, like you talk about the cash run way into 29. So what does this include and what it doesn't include in terms of which programs are included here?

Andrew Neill, CFO

Yeah, sure. So following our phase one data set, as you know, we executed on a follow-on offering of 75 plus a 15% green shoe. You know, at the same time, we received a bolus of cash from the exercise of our outstanding common stock warrants which we fully expected but it's it's nice to see that so as you note our last reported cash balance is about 208 million and so you know when we were executing on that financing we were doing so with the receptive CD1 trial design in mind and so you know we believe we're fully funded for that trial we have cash into 2029 and you know we will see not only the induction data set but also the maintenance data set from our phase two in Crohn's we also anticipate putting with our current balance sheet being able to put the SLA for six the dr3 bio 23 receptor you know into and through phase one and we anticipate sharing those data at some point next year we also retain some level of capital flexibility to potentially evaluate other indications outside of IBD but that remains TBD so we feel quite we feel quite good about where we are from a cash perspective at the moment and looking just simply toward executing on our current plans got it one last question for both of you whoever wants to take it so fast forward one year 2027 Wells Fargo conference you are here I'm here hopefully you you decide to come here what would make you look at look back at the year and say it was a great year for us your first sure first and foremost we we need to execute that and you know we fully anticipate and all of our plans are going as we expect secondly I think you know we will see continued validation of the TL&A axis outside of IBD mm-hmm thirdly we hope to get more clarity on the potential impact of immunogenicity in the ongoing phase three studies and from from our competitors and we hope that there is more clarity about that impact and you know we hope to have shared data from the from the phase one from a four six and be in a position to have a portfolio of

Taylor Schreiber, CEO

opportunities in front of us to be best in disease and best in mechanism across the board so I think we're in a good position to do that Taylor yeah I agree with everything Andrew said got execute got to keep our timelines I think the the TL1A class will from our perspective continue to find itself in sort of a Goldilocks zone where the induction data look good and maybe the maintenance data leaves something that's left to be desired that we can capitalize on and have some additional clinical data points on the roadmap that that aren't there right now awesome on that high note thank you very much for

Mohit Bansal, Analyst — Wells Fargo

joining us and thank you very pleasure