MoonLake Immunotherapeutics (MLTX) Q1 2023 Earnings Report, Transcript and Summary

Welcome, everyone. Good morning, good afternoon. Thank you for joining today's webcast. My name is Matthias Bodenstedt, I'm the Chief Financial Officer of MoonLake Immunotherapeutics. As usual, I'm joined here by our Co-Founder and CSO, Kristian Reich; our Co-Founder and CEO, Jorge da Silva. We are also honored to be joined today by Professor Alexa Kimball, a leading [indiscernible] in HS. We will go through the data and then look forward to the thoughts and reflections of Professor Kimball on the VELA data that we will be presenting today. In the end of the session, as usual, we will open up for Q&A. Please take note of our disclaimer on the forward-looking statements. [Operator Instructions]. The presentation document and the replay of this presentation will be made available on our IR website on moonlaketx.com. With that, I'm handing over to Jorge.

Thank you, Matthias. Also from my side, welcome all. Good morning, good afternoon, depending on where you are. Thank you for making the time to join our presentation today. I'll start very briefly with a quick summary of the points that we're going to be hitting in the call today, most of which obviously has been covered in the press release that was sent out yesterday. The main messages are that obviously, the VELA-1 and VELA-2 trials formed the VELA program, which, as you know, has been testing sonelokimab in adults with moderate to severe HS to a primary endpoint readout at week 16. Importantly, from a regulatory perspective, and obviously, for all of us, the combined VELA program demonstrated clinically meaningful and obviously, significant improvements across all primary and secondary endpoints at week 16 using, of course, prespecified strategies with the regulators with a very, very low p-value. Obviously, as you know, there are two big differences between VELA-1 and VELA-2. VELA-1 met all primary and secondary endpoints, as you saw the delta to placebo at week 16 between sonelokimab and placebo for HiSCR75 reached a delta of 17%. We fully understand that for the street, maybe the expectations were a little bit higher. Obviously, ours were too. But obviously, a 17% delta in our minds is very much in line with what is needed. And as you know, for us, there's many other elements about HS that matter more than a delta to placebo. VELA-2, as you know, hit an issue. We had a higher-than-expected placebo arm. It's meant that we needed to dig deep into our statistical analysis plan as agreed with the regulators to really understand the significance of the primary endpoint at week 16. And from the perspective of the company, we feel that the trial has all the merit to proceed in clinical development. I want to make clear that the company does not agree with the statement that the trial failed, but it does require us to do a bit more investigation with the regulator. Very, very importantly for us, because obviously, we're doing this because we believe that more drugs and more solutions are necessary for these patients, VELA-1 and VELA-2 demonstrated very strong responses across endpoints that really matter to us, not just HiSCR75 or HiSCR50, but very importantly, pain scores, quality of life, which really matter to patients and we continue to see a very favorable safety profile. Obviously, the convenient subcutaneous scheme continues to be an advantage that we think is important for physicians and patients. As I told you already, the VELA trial will progress. We will now seek advice from the regulators and continue the process. And obviously, we're continuing to drive several other catalysts in other indications. I want to quickly remind you of the design of the VELA trial, just to make sure that we're all on the same page. On the left side of Page 5, you see the common design between VELA-1 and VELA-2. We ended up with a total of 838 patients across the two trials. And on the right side, I want to remind everyone of the hierarchy of endpoints and why some of these things matter. Number one, you obviously see in the dark pink color, the endpoints that relates to lesion counts and in the lighter color, the patient-reported outcomes. As you know, in agreement with the regulators, we use HiSCR75 as the primary endpoint first time in a Phase III. And we would also like to call your attention to the pain response and to the high score, which were specific requests from the regulator to include here because they reveal something that is very, very important in clinical practice. So obviously, there's a hierarchy, but there's a lot of richness in the endpoints that were chose. No news on VELA disposition and many of you have seen disposition charts for sonelokimab across many trials. It's the usual story. The patients tend to stay in great numbers as we progress through the clinical trial into the endpoints and beyond. The other element that obviously, we need to cover upfront, but it's also [indiscernible] no new slide is that the patient characteristics are very well balanced across the trials. As you remember, it was very important for us that both VELA-1 and VELA-2 had very close set of patient characteristics that tells you a lot about the validity of the trial and as you can see, the differences are minimal. I think very importantly, it's very well aligned with our Phase II program, MIRA, which, as you all know, is very important also from a regulatory perspective. But also all the small differences of a few percentage points that you see between placebos and those or between the two trials, VELA-1 and VELA-2, in our mind are all relatively small and definitely within the range of what we've seen for other Phase III programs. Now because of the VELA-2 placebo, I'm pretty sure lots of people are using a magnifying glass to try to see these numbers, try to see if something is happening that we have not been able to detect. But what I can tell you is that there's no smoking gun, if you allow me to use that expression in any of this to reveal anything regarding the placebo and the patient characteristics are exactly as we wanted. Before I hand over to Kristian and to the data, allow me to show a little bit of a deep dive into our statistical analysis plan with the regulators. Now I know this is unusual for many of you. This is always something that happens in the background. You don't see it, you don't need to see all this detail. But to understand the valid data and to understand what happens next in terms of our regulatory path, we feel that it is important to spend a couple of minutes here. What you see here is two strategies, the composite strategy and the treatment policy strategy. These are different strategies to analyze our data. They apply to the whole population that we intended to treat. They both use multiple imputations to analyze missing data. There's a little bit of a difference on how you impute the responders. However, what is really important to remember here is that both of these strategies are must-see strategies by both the FDA and EMA for any scenario for any I&I drug. I want to be very clear about this because: A, this is not an optional set of strategies that we use; B, is not something that MoonLake decided to use just to make the results look better. This is something that is required by both regulators. Why are they required? To test robustness. So essentially, what you need to do is that you need to use your primary strategy, which in our case is the composite strategy to evaluate the significance of those endpoints and then you need to test the robustness of that significance. And you need to see concordance between the two strategies. If there is no concordance, if the p-value analysis is different, which is the case for our VELA-2, then you need to discuss all this data with the regulator to see how you progress forward looking at the data. And this is where the absolute numbers of response, for example, in a drug like sonelokimab, the safety, the concordance between primary endpoints and secondary endpoints, the concordance between trials, this is when it all becomes important, right? It is rare that we need to go to this level of detail, either trials fail or they don't fail. But there's a series of trials where the p-value is just at the border line and this type of analysis is necessary. But again, not something that MoonLake decided to use, but something that is specifically discussed with the regulators at all times. So I hope that she had some clarity of why you're seeing different strategies here and why it's important that you know about them. And I think this is a good time to pass on to you, Kristian, to go through the data.

Yes. Thank you very much, Jorge. On the first slide, I want to show you the kinetics of our primary endpoint, HiSCR75. We show you this using both of the methods that Jorge has just explained. You see in the upper panel always our primary analysis strategy, so-called composite strategy. The lower panel, you see the treatment policy. We show you this for VELA-1 and for VELA-2 and for the combined VELA program. First of all, I want to highlight this again, both methods are very conservative valid methods. There's not a first class and the second class. If you look at the VELA analysis, you immediately see that the results generated by applying these two methods are actually very similar. You see that in VELA-1, whatever method you use, you see a high statistical significant delta between active sonelokimab and placebo. If you look at the delta at week 12. at week 16, which is, of course, the primary endpoint, you see that the numbers are actually identical. So in VELA-1, very robust study, primary endpoint met with whatever strategy with high p-values below 0.001. What you see in VELA-2, and Jorge already discussed this, that at the primary endpoint, applying the composite strategy, our primary analysis strategy, you see a borderline p-value of 0.053. For those that are familiar, you know that this is driven by a single patient. This is a scenario where your second method becomes relevant and you need to, I think, also show to the world. This is why we decided to do this, show the results with the second method. And as you can see and probably highlighting how border line this finding really is using the treatment policy, you see a statistical difference also in HiSCR75 at week 16 with VELA-2, and this is where we will seek clarity with regulatory authorities on what this means. We also see, of course, in the combined program that primary endpoint is met with high statistical significance, very similar to VELA-1. I want to take a step back and highlight some other findings that you see on this slide. Number one, if you look at the blue curves, so the efficacy obtained during treatment with sonelokimab, the lines between VELA-1 and VELA-2 are almost identical. So very clearly, this is not an issue with [indiscernible], this is an issue with placebo. And when you take a closer look at VELA-2, you actually see it's an issue mostly at week 16. You see that the delta to placebo in VELA-2 at week 12 is 17 percentage points. You see that it narrows at week 16. You also see a double whammy, if you will, a double hit. You not only see this dramatic increase, unexpected increase to a number we have never seen before in the Phase III trial, 25% at week 16, but you also see that the response to sonelokimab is actually coming a little bit down. I think both phenomena together explain the borderline significance. I think what arises from this is the immediate question, well, what's going on then with sonelokimab treatment? What if you treat longer, do these patients gain more response? Or does this little drop between week 12 and week 16 and VELA-2 indicate that the response has kind of expired. And you see the answer to this question on this slide. And there's a couple of important things here. Number one, there's really a very fast onset of response. HiSCR75 is already significantly different between sonelokimab and placebo from week 4 on. HiSCR50 actually from week 2 on. So as we saw in other indications, a very fast onset of response. Secondly, you see again that the curves for VELA-1 and VELA-2, if you look at the blue curves, the sonelokimab arms are almost identical with the exception of this dip in VELA-2 at week 16. What you can clearly see is that if you continue treatment and not every patient in our trial has yet achieved the week 20 and week 24 endpoint, but you see the numbers below the X-axis, the vast majority of patients have. So I think this is a valid analysis to share with you. You see that the response continues to go up. And I think this 50% HiSCR75 response at week 24 is remarkable, thinking about a 50% HiSCR50 response that has been a wishful outcome for other drugs in HS. The second and really important thing you see on this slide is that this high placebo response does not stop the patients in VELA-2 to get exactly the same benefit from treatment to sonelokimab after the switching compared to the patients in VELA-1. Actually, within 4 weeks in VELA-1, the patients show an increased HiSCR75 response of 13 percentage points. It's almost identical 14 percentage points in VELA-2. So whatever your starting point from a placebo response perspective was, you gain the same benefit from the switch to sonelokimab and within 4 weeks, the patients coming from placebo basically have the same response in the patients that started on sonelokimab at baseline. What does this indicate? I think it clearly indicates and it could be different. We could have the same placebo response across both trials and have a wobble and/or active response. I think that would be a far worse outcome. But what we clearly see here is very valid, very similar responses across both trials on sonelokimab. And the placebo, if you allow me to use this nontechnical word, the placebo wobble pretty much exclusively in one study, one time point, one outcome, which is the lesion count. You can see this again reflected here on this slide. The gray horizontal bar in the background is the range where we saw HiSCR75 placebo responses in Phase III trials in HSV4. A range between 13% and 18%, you see that in VELA-1, our placebo response at week 16 was on the high end, 17.5%, but within the historical range, if you will, you clearly see the outlier here is this unexpected high placebo response at week 16 in VELA-2. However, what you also clearly see, and you think this is -- what in the end characterizes sonelokimab in this trial probably best is that the drug really delivers on the HiSCR75 responses, whatever method you use and whatever trial VELA-1 or VELA-2 you look at. For fairness of comparison, only we had HiSCR75 as the primary endpoint, all the other trials you see on the right-hand side had HiSCR50 as the primary endpoint. So then let's look at the HiSCR50 response and you see the same type of analysis. We will not go into details. You see in pink the responses in VELA-1 and VELA-2 to sonelokimab. And again, I would say that not only are the responses also with regard to HiSCR50 identical, but I would also think that the active drug, sonelokimab really delivers not only on HiSCR75, but also on the HiSCR50 response. Now counting lesions in hidradenitis suppurativa is obviously a complicated business. I'm looking forward to what Professor Alexa Kimball has to say about this. This is not the first time the HS community is discussing placebo responses. So I think these three important patient-reported outcomes we have as key secondary endpoints, I look at them as a very important validation of what's really going on in the trial because if you have a reduction of pain, if your quality of life dramatically changes, I would think it's very rare to see this on placebo and not on active. And this is exactly what we see. You see here the pain reduction. I remind you, we use the FDA recommended somewhat more conservative pain reduction, which is not 2, but 3 points or more on a worst pain numerical rating scale. You see a very clear separation between sonelokimab and placebo, again, similar in both trials. And for this pain outcome, the delta between VELA-1 and VELA-2 is very similar and you see the statistical analysis yourself. If I would have to choose from all the outcomes we present, I would probably think that this is the most relevant for patients. If you're not familiar with the hidradenitis suppurativa quality of life score, this is a tool HS specific quality of life tool that was validated in the U.S., validated in Europe that includes 17 questions covering four domains that really ask patients about all the different aspects of the disease burden in profession, in relationship, in sport, symptoms like pain, everything is included in here. It's very interesting for me to see that on the 280 patients that received placebo in our study, uniformly between VELA-1 and VELA-2, the patients said, I see very little improvement in the HiSCR. My disease continues to bother me. From the 560 patients that received sonelokimab across VELA-1 and VELA-2, you see a very similar and highly statistically significant difference. Now patients say, I'm no longer bothered that much by my disease. I can do sport again, I can go to work again, I can have a relationship. So this is probably a pretty fair view on what's happening in the study. I should also say that these reductions of HiSCR are actually higher than what we saw in MIRA, our Phase II trial, and they also seem to be higher than what currently available treatments for HS are able to demonstrate. Our third key secondary PRO outcome was the DLQI. We show here the patients. This is a more-broader tool that looks into quality of life in association with dermatological diseases. Overall, it's not HS specific. You see the percentage of patients that achieved a meaningful improvement of the DLQI. For me, this is very reassuring on top of the HS specific that I just showed you that indeed quality of life dramatically improves. You see the same delta to placebo across VELA-1 and VELA-2, around 20%. This is very much in-line with what we saw in MIRA. And again, I would think it indicates a potential advantage over what other drugs available for HS were able to show when it comes to DLQI. This is a complicated table, and by no means I will take you through this table. But just to share very transparently, all data I was talking about in the last minute as analyzed with both the methods that you are now familiar with. So you see on the left-hand side, our primary endpoint in both. You see all the key secondary endpoints. You see in the upper part of the table, the analysis done with our primary analysis strategy, the composite. You see on the lower part of the table, all analysis done with the treatment policy. There's just a few things I want to highlight here. First of all, if you look at the p values in VELA-1, I would think this is one of the most robust -- when the just robust -- if I just look at the statistic analysis, Phase IIIs ever done in HS when I look at the p values. You see the problem, if you will, at week 16 in HiSCR75, but it's interesting to see that even in VELA-2, when you look at all key secondary endpoints, nominal p values were achieved. If you use the treatment policy in VELA-2, all primary all key secondary endpoints met statistical significance, and I already talked about the VELA combined finding. Just so that you know why we presented it this way in the press release and why we, as a responsible managers in MoonLake are convinced that the study by no means shows that sonelokimab does not work in HS, which we think it does show that it works in HS. And looking at the patient-reported outcomes, we even see a potential for a competitive advantage. Super important is the safety. I'm a dermatologist myself, but I will say that dermatologists are probably not the bravest physicians in the world. They want -- they need chronic treatment for their patients. They want safe treatments. They want a safe long-term control. The safety profile is shown here for the combined VELA-1 and VELA 2 study. Actually, the very favorable safety profile that we saw before, no new safety signals. To me, there is evidence in here for an even differentiated safety profile in the sense that some of the warnings we see with competitors, suicidality, hepatic. In our analysis, we saw no evidence for a reason to get a similar warning. So we would think that the safety profile is actually very favorable safety profile. I want to remind you that all of this is achieved with a dosing scheme. And again, coming back to something that is not so much in a Lancet publication or in the presentation to investors, but what really matters for patients and physicians in the doctor's office. And that is how convenient is this? How long does an injection take? How much needles do I need to get before I go to a maintenance scheme? We have 1 milliliter of 120-milligram SLK. It's injected in a few seconds. We need 4 injections for the induction -- from then on, it's the monthly maintenance scheme. We always thought that this is a little competitive convenience that we already have in our pocket and of course, these days.

Thank you, Kristian, for walking us through the VELA week 16 results. Now as introduced earlier, we are very honored to have Alexa Kimball -- Professor Alexa Kimball join us here today to discuss the results with us. Now, you see her disclosures on the screen. Professor Kimball is one of the leading KOLs in hidradenitis suppurativa. Probably she doesn't need any introduction because all the audience will be familiar with her. Again, thank you so much for joining us here today. And I would say, a very, very simple question to you. We would be very, very keen on hearing your thoughts, your reflections on the VELA data that Kristian just presented.

So thank you so much for having me here this morning. And what I'm going to try to do, having been working in this area now for 15 years more is give you a little bit of context of what we expect to see in HS studies, how this data fits into that context, what the regulatory precedent has been a bit from some of the other studies because of some of the common occurrences that are a little unusual that we see in these studies. So as I said, I've been thinking about HS for about 15 years. And I have been along with MoonLake for their entire journey as well. And it -- we have evolved incredibly, right? So back in 2009, when a group of people, including myself sat down to think about HS assessments and how we could actually get drugs through regulatory approval because we saw that there was a signal when using TNF inhibition that we thought was worth pursuing. We knew it was going to move forward. And remember at that time, we didn't even think HS was a common disease, but we thought there was value in patients to figuring out a regulatory pathway. And it was that process that ultimately led us to the HiSCR or the HiSCR50, which is not a perfect measure by any means, but has proved a valuable addition and has been the basis of all the regulatory approvals to date in terms of efficacy assessments by clinicians. Now, very important in development of the HiSCR50, which is a 50% improvement in nodules and abscesses without a conversion [indiscernible] is that we created that system to correspond to the PROs. So the inflection point that we took at 50% was related to both the efficacy that can be achieved, but also where we saw meaningful differences for patients on our array of PROs. [indiscernible] was not available at that time, but we were using things like a DLQI and a pain measurement. And I say this is important because as you look at the totality of all the data presented, you would want those to be internally convergent, and I'll talk about that in a bit. But clearly, in this study, as you heard, they are. Now flash forward 15 years, and we are starting to move people to HiSCR75. And that is a tremendous goal. And hopefully, one day, we will see HiSCR90s and HiSCR100s, just as we've seen in other fields. But as we'll talk about, that evolution does create some other trade-offs as you think about the design of all of these studies. So as you have seen, I have been involved in almost all of the Phase II programs for HS and all of the Phase III programs. And I've learned, of course, as have we all along the way about some unusual things that happen in HS studies. And I will also just reference I have conducted over 150 studies in every disease from acne to cutaneous T-cell lymphoma. And there are something in HS that happen that are unusual in most things. The first is that assessing lesions is difficult, and that's why we knew it was hard. Why is that? It's because some of these areas are deep underneath the skin, they can't be seen. They have to be palpated. They are in regions of the body that are hard to access in a way that is consistent. And so it is challenging to do clinical assessments. And again, we evolved to a set of metrics that help us to assess them, but it will always be somewhat challenging. And despite having looked at every alternative available, there is no more straightforward way to do the assessments, I think, than the way that we were doing good. Other things that we've seen from across the study portfolios are that treatment arms can perform differently even when as you see, there are not large differences in the demographics. And what's interesting about that is we've seen that in some programs where the loading doses with 2 different arms are the same, and yet you can see the arm performing differently very early in those programs as well. Again, often, there is not a smoking run means it's not just one factor or another. It may be a combination of factors. It may be a combination of patients, it may be a combination of studies. It is absolutely true that HS patients can both worsen and improve spontaneously in pretty dramatic ways. And that leads to a lot of underlying variability in our assessments and in the studies. So -- and it's also true, you can see in some of these cases that other biomarkers for these patients improved as well. So they are truly improving during the course of the disease. And that's why when we are using 12- to 16-week endpoints, it can be very hard to interpret in the studies what is happening with these patients. And I will also say in every program to date that we've seen, continued therapy does lead to continued improvement for patients. I expect you will see this in this program as we go on further. And that's because actually 12 to 16 weeks is very important in the course. We use it because that's really the longest period of time that we can manage a placebo group. But really in the clinical setting, I am looking for improvement over a 20 to -- 24- to 48-week period of time, and that's what I tell patients as well. Other unusual things we see in HS studies are sometimes lower doses are outperforming higher doses. Again, that probably has to do with some underlying variability in how the patients are doing, what their underlying characteristics are and other factors that, again, as an aggregate probably have an impact. But on an individual basis, we've not been able to get them. And then I think the HiSCR75, as you see in this program has creates another nuance, which is although it is clearly where we want to be from an efficacy standpoint because fewer patients make it to a HiSCR75, variability in just a few patients can change the dataset in a way that maybe at the HiSCR we don't see. So all of these are trade-offs in study design that we have to manage and have proven a little bit unpredictable on the margin in all of the programs. And certainly, we have seen in other large Phase III programs that some of the key endpoints were not met even though the bulk of the endpoints were. And again, this has to do with some of the underlying variability out in the process. So I'll kind of conclude in my lessons learned by talking for just a second about a term that I coined that you heard this morning, which is the data model. And this is, again, I have never seen in other programs, but happens in HS, which is that 10th ultimate endpoint, the 12-week endpoint in this case and others is actually not as strong as the 16-week. And again, this has been repeated across some studies. This placebo model as it were that you see here, I've seen less frequently, but really had major impact in the statistical analysis of that final one. But factors that seem to lead to do that while the treatment group are, again, related probably to some of these more so convergence of demographics and other risk factors that lead to different outcomes. And again, we have seen uniformly patients continue to improve with further treatment, but this is a model that we do see at week 16 in some of the earlier studies. So lots of lessons learned here, and I hope you can take away that the variability that we sometimes see in some of these endpoints is a common occurrence in these studies, and we have not been able to completely mitigate that even as we have tried to refine our design and refine our metrics over time. It is just how this disease presents itself. In terms of this set of data, it is very clear, right, that IL-17A and F inhibition is an effective mechanism of action for HS. You see this across the programs. This medication is no different in terms of having proven and established role efficacy in this area. And I think as you look at the collection of this data, it is highly convergent. This was a well-conducted study. You can see that the PROs and the efficacy metrics line up. You can see that the endpoints in terms of the treatment group are almost identical in terms of their achievement. And you can also see that the treatment, the placebo arms as they shift to treatment have highly predictable responses as well. And you can see that the PROs are lining up with all of these measures as well. So the internal consistency in this study is exactly what you would like to see for a study like this -- and I also want to point out that the pain data in particular, is excellent, and this has been, in particular, an endpoint that has been hard for some other programs to move and it's been one of the least reliable in some. So again, a lot of convergence to the data that we see. I'll also add that the safety data in, again, this early phase of the trial is very strong. The things that I look for as an investigator and a clinician, in particular, to all the usual things are the IBD rates, dermatitis rates and immune-rates. And this profile is very compelling as we bring this forward. No surprises and within the spectrum of what we'd like to see and in some cases, below that, particularly, again, or in this study with 0 IBD cases that have been looked. So in conclusion, it's clear that there will need to be regulatory conversation about this data given how the primary endpoints were designed. But the convergence in totality of the data demonstrate that it was well conducted and that there is compelling aggregate data that demonstrates that this drug is working in the high efficacy range of the therapies that we have to date available. I will also say that the unmet need for HS patients still remains acute. You can see that as many programs are in the field for HS, and they are enrolling rapidly and successfully because there are a lot of patients out there still looking for both current treatment options and better treatment options going forward. There are programs sprouting up across the United States at almost every academic medical center and in the community with an emphasis on HS and those programs are filling up almost immediately. And we're seeing large cohorts being prescribed from multiple centers, which again demonstrates how much unmet need there is there in terms of the patient population that is [indiscernible]. So I am -- I was very much looking forward to starting the study for my clinical trials patients here, and I'm very much looking forward to having this medication available for patients in the future. I think, again, the totality of this data demonstrates a clinical meaningful impact and value to our patients with HS who deserve the best treatments that we can provide them. Thank you.

Thank you for Professor Kimball for your reflections on the dataset. Now I know that you had other appointments to attend to. So once again, thank you very much. With that, let me hand over for the last bit to our CEO Jorge da Silva, again.

So, great to have Professor Kimball as one of the key researchers in the field and in our trial. Hopefully, that was informative for those listening to this webcast. Before we go to Q&A, I want to get to a few clear points around what happens next. As you can imagine, I've been reading some of the reports that have been coming out since yesterday night, and I seem to hear that there's a clarity of -- a lack of clarity of path, and I have to confess that I could not disagree more. I think it's unclear what exactly the path will be, what are the adjustments that we will need to make, if any, but the path is very, very clear. We believe, and I think you've heard some of that color that the HS package that we have with sonelokimab has good chances of being approvable based on all the data and this -- again, this correlation of data and what it means around a single data point for a single element that changes in one trial. And therefore, we will be seeking to confirm that registration path with the appropriate regulators. Now you'll be asking, okay, but what does this mean? What are you going to discuss? What do you think the outcomes may be? I think it's very unlikely that this is seen as a failed study and as a failed program. That's what the company believes at this point, having consulted with several folks internally and externally. We could imagine paths in which VELA-1 becomes the leading registrational trial and VELA-2 together with MIRA, which as I mentioned already today, is part of this whole game, if you allow me this expression, will then support VELA-1 as registrational. It could be that it's VELA-1 and VELA-2 as originally predicted. We just obviously have to understand and describe that significance around that primary endpoint. It could also be that the FDA requires us to do a little bit more work. All of these are possible outcomes. We believe that we have a very strong set of arguments here. And again, you heard other people in this call saying that today. So we're feeling confident. But the path is very clear. We are preparing those books. We are looking to engage with the regulators in short order. There should be no lack of clarity around what happens next. And hopefully, within the next quarter, we'll be able to come back with a good plan. What I think is also true, and I want to make this, and I want to underline this point is that this company continues to believe that SLK has a differentiated profile in HS, matching others in efficacy and obviously showing an impact on pain and quality of life and safety and convenience that we believe will really drive the acceptance of this medication with patients and physicians that, as you heard, sorely needed. And obviously, we had an issue with one trial and endpoint in HS. But that doesn't mean that the drug cannot perform extremely well or better than others in other indications that we're also running, PPP, axSpA, PsA, et cetera, right? So I think it's also important to remember that this is one trial, and we have excellent data also in other indications. We believe that it's very important, as you heard also from Professor Kimball, that this data is discussed and out there. So we will wait no further and make sure that the data is presented in a scientific conference as soon as possible. And that means we will be in Nashville at the end of October to present the valid data as soon as possible so that you can all continue to see all data in all transparency and for the Street and investors to have an opportunity to engage directly with KOLs and those that will participate in the approval process and in the prescription to create your own perspective around what this data really means. So with that, we'll move us to Q&A. Maybe Matthias, you can check the many questions that are out there, and you can direct a bit traffic. I think we'll take 5, 10 minutes for this.

Absolutely. And we did receive quite a few questions. So let me try to group them a little bit. There's a few questions here that continue talking about the placebo. One of them here specifically asked, have you identified any particular reason of why the placebo response is so high? Maybe Kristian, you want to address this one?

Yes. Short answer, no. You've heard from Professor Alexa Kimball, it's not the first time that the HS community has observed such a phenomenon. And although many have tried, I think there's no clarity what really drives this phenomenon yet. Very clearly, the quality, the operational execution, the validity of our trial is flawless. We have looked into every corner. There's no site, no country issue sites that have participated in mirror or not. There's no smoking done, if you allow me to use these words. Of course, we have started to do the analysis. Are these patients somehow different? Do they have a different baseline characteristics? Is there anything different with regard to the phenotype, the smoking status. So far, we have not identified any difference between those placebo responders and others. But it's clearly an issue that we will continue to investigate and discuss with regulatory authorities.

Thanks, Kristian. I see another couple of questions here, specifically asking about the path to approval, the path to VELA. May I call out 2 questions here. One of them very general. Can you elaborate more on the path to approval? What makes you so confident that the VELA studies are approvable? And yes, one other question from an analyst here is asking specifically regarding is there any precedent from other studies that were in similar situations that support our level of confidence. Jorge?

Absolutely. I don't think I need to elaborate much more on the path and why we're confident that the studies are approvable. I think, again, you heard an external person clearly stating this drug is in the high efficacy range and has all these things going forward. So I think the concordance of all of this, the quality of what we have done, I think, gives us all that confidence. On the path to approval, obviously, I haven't specifically said it, but I can obviously state it that, of course, we are looking for an interaction with the regulator to get clarity as soon as possible. Ideally, we would get that in the next month or so. Obviously, these things sometimes take a little bit of time. It might be closer to Christmas, but anything within the 1- to 3-month range, I think we're there. So hopefully, that brings a little bit more clarity, but I think we've said it before. Now very, very interesting question on the examples, case examples from before. There are several, but I will call one because I think it's the most helpful here. I would like to remind everybody in this webcast that one of the drugs approved for HS, Secukinumab for its approved dose actually did not meet statistical significance in one of its Phase III HS trials in the SUNSHINE trial. So here, you have a clear example of the drug that, if you will, has performed even worse in the sense that it just didn't meet significance in any of the analysis and obviously, still seen as an overall package as an important package and obviously something that has been extremely helpful for patients in the market and obviously has performed very well for the company that markets that product. So I think quite a bit of confidence, case examples in our own indication. So I think we're feeling very confident here. Obviously, a lot of work to do. Very, very clear that it didn't create the result that the Street was expecting. We understand all of that. But we are here to develop sonelokimab for the long run.

Perfect. And I do see a few questions here asking aside from the path to approval, how confident are you that you can compete against existing therapies, mainly called out bimekizumab. Also some questions here for Professor Kimball, but I think she addressed them already in the call, but maybe the company's view, our view on ability to compete in the market.

Again, Matthias, I hope the people watching the webcast don't get bored, but I will go back to the statements from Professor Kimball. You heard it. Sonelokimab is a drug that operates on the high efficacy range with a lot of great things going for it. I invite all investors, the Street, anybody that is watching this webcast to do their homework in terms of where other competitors, and I'm not going to name any specific competitor, but how those competitors have fared along all the lesion scores, but also all the pain scores, all the quality of life scores, the safety, the convenience. And I think we truly believe that the data is strong enough for us to compete. By the way, as of now, we don't necessarily see a very large impact in terms of time in the VELA process. So if you're thinking, well, you could compete, but you're going to come 20 years later. Obviously, we don't believe that to be the case. So I think the data is very strong. And I want to underline one more thing, Matthias, if you allow me, which is we're talking about HS. We're talking about HS. We also have to talk about PPP. We also have to talk about PsA. We also have to talk about axSpA. We also have to talk about indications. It's not like all of a sudden, the drug doesn't work, which obviously, as you see from the data is far from the truth. So I think a lot to go for. Obviously, a setback, a disappointment in terms of what was expected by the Street, but I insist not a case for us to stop believing in not at all. Any time for more questions? One more?

I see a couple of questions here that probably I'm best suited to answer because they ask about the capital and the cash position of the company, also specifically calling out our debt facility with Hercules. So maybe providing a quick response on this one. So based on the VELA results, we're not planning to draw the next tranche from the Hercules facility. But importantly, we are by no means with our back against the wall. The last reported cash that you've seen in our 10-Q was $425 million. And as we've seen in the past and as you will continue seeing in the future, we operate very efficiently with a comparably very low cash burn compared to other companies at our stage. So we believe we are by no means with the back against the wall. Now let me be clear, the situation certainly presents some challenges to the company. We have lived through similar challenges in the past. And this management team and certainly myself as CFO, will make sure that we continue to be very prudent with our capital allocation. I think with this, we have covered all big things here. Once again, I would say thank you very much for joining us here today to hear our presentation of the VELA week 16 data. We hope it was helpful to also have Professor Kimball share her view and her reflection on the data results with you. Once again, thank you from my side.

Thank you.

Thank you. Have a great day.