Molecular Partners AG (MOLN) Q4 2022 Earnings Report, Transcript and Summary

Good day and welcome to the Molecular Partners Publication of Full Year Results 2022 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Seth Lewis, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Betsy and welcome everyone to the Molecular Partners 2022 full year results conference call. My name is Seth Lewis, Senior Vice President of Investor Relations and I am joined today by Patrick Amstutz, CEO and Robert Hendriks, Senior Vice President of Finance. If you have not had a chance to see the press release issued yesterday evening highlighting these results, it can be found on our website, www.molecularpartners.com. Before we begin, I would like to remind you that this presentation contains certain specific forward-looking statements, beliefs and opinions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors, which may result in a substantial divergence between the actual results, financial situation, development or performance of Molecular Partners AG and investments and those explicitly or implicitly presumed in these statements. If you haven’t accessed this morning’s presentation, it can be found on our website, molecularpartners.com under the Investors tab, News and Events and Presentations tab. If you are listening to this on replay, this call is recorded on March 10, 2023. Please refer to our latest news and filings as results may differ in the future. With that, I will pass the call over to Patrick Amstutz. You may begin.

Thanks, Seth for the nice intro and making everybody aware how it goes. So we will start with a few slides. I will then hand over to Robert and we will – I will summarize with an outlook and then open for questions and I think that’s the real the reason for the call that we can get your questions. So we are welcome and an exciting call for us as we will have backward-looking and forward-looking into ‘23. Thanks also Seth for pointing out the disclaimer. I add that I am just off the plane, so a bit of jet lag. So any unclarity I would assert to that.

So hopefully, I didn’t put…

You did not and I am back from the Cowen Conference, so also a good chance to then maybe follow-up in the Q&A a bit on investor sentiment, the questions we are getting and how sort of we present also in the field with other biotech. But let’s kind of first zoom out and kind of what is this all about? It’s the breakthroughs of tomorrow that link back to the company purpose, building value for patients where value today is not possible. And so we have invented the DARPin technology to bridge the gap between the small molecules and large molecules and we have validated the DARPin approach in over 2,500 patients with 7 clinical stage compounds. And I think it is important to stress that, that this is a proven technology and that all of these compounds one not yet, because it just went in, but 6 of those are really showing the exact activity in patients that they were designed for by our protein engineers and biologists. What is our strategy or how do we apply it? We have a very high bar on the unique DARPin solution. You can also call that differentiation. So every product we make should saw the problem that is not easily addressable with other technologies. The second is the true patient value that’s clear. I mean, we want to solve a meaningful problem and we want to see an early clinical readout. The early clinical readout goes to the return on the investment, because if we don’t see it, we can stop it. And that was one of the learnings as some of the earlier programs did not have that built in and let us then to also the ungood moment that we had to stop programs for strategic reasons as we could not further invest in them. That’s where the partner comes in we have and will partner and always to generate patient value for products that are not best in our hands but where we see the value and where a partner can help us bring it forward. It can be early partnerships, it can be biology partnerships, it can be technology partnerships where payload, let’s say, a radionuclide DARPin, we all classify that as partners and we are always open to partner to bring our breakthroughs forward. Now I am going to Slide #4. That gives you an overview of how we think or structure our approaches in the center of this picture, you see a DARPin and what I like to say the DARPin is a therapeutic modality. It’s not in itself a platform. It is larger than the platform. But we have built sub-platforms and there is different ways you can classify that the way we like to do it is, on the one hand, the multi-DARPin platform, where we have 533 or also Ensovibep, our COVID DARPin was part of that. Then we have the Radio DARPin therapy platform, that’s something I will also talk about. And the newest addition is the SWITCH or the either/or, our gating platform that we have built. And that’s sort of the basis for then the product and the candidates that we move forward. Let’s move to the candidate level and look back – look into 2022. I would like to start with, let’s say, the poster child of last and this year, and that is 533. It’s a novel tri-specific T-cell engager in AML. We have dosed the first patient, and we have a lot of preclinical data that supports the mode of action and we will also generate more of that. I will have a slide later on and also touch on it in the outlook. MPO317, that’s the local CD40 agonist, proud to say that we have the safety that supported dose escalation. We are now at the highest dose and have not found any dose-limiting toxicities, supporting the mode of action of local immune stimulation over systemic immune stimulation. Then a platform, so here, we have not yet defined the candidate while we have defined the first target for us, but it starts with a Novartis collaboration with two targets. And in the Radio DARPin Therapy Platform, that’s where it’s all about reducing kidney uptake as that is for many protein based approaches or even pepta-based approaches the dose-limiting organ, the problem zone. So if you can reduce the kidney uptake with a high tumor uptake, you are in business. Virology here is open-ended. A year ago, we were very heavily invested in virology with Ensovibep that actually had great data, right a year ago, went to EUA, but then we all know that from variance of SARS-CoV-2 virus came along and made the medical need much lower. So that program is quasi on hold. Hopefully, not ever to be used but would only be used if a new variant of higher virement would appear again. At the same time, it did open the path for discussions with Novartis and we have Letter of Intent to look into a Research Framework Agreement also to establish pandemic preparedness. Next slide, in a way, is a similar overview. So you see here the stages, the programs, this is the pipeline view. We will talk about 317, 533, the DARPin platform virology, I did touch on and the immune cell engagers, you can put equal to the SWITCH platforms as those are likely going to be SWITCH. So that’s an area of activity on SWITCH. We also have abicipar and so that we list them below the active pipeline. We see them as options – optionalities that can happen, but we are not building on them as the future basis of the company. Let’s take the time and just quickly talk through our key few programs that will be of interest in ‘23. I will start with 533 in AML. What is the problem in AML? And AML is one of the most deadly liquid cancers that there are liquid tumors they are. The problem in this disease is there are no clean targets like CD20 or CD19 on B-cell malignancies, but there are targets. And you see three of them here, CD33, 70 and 123. The problem of these targets is that they are also expressed on healthy cells. But our scientists found that they could with a lot of bioinformatics work in many databases, establish that mostly they are co-expressed, three of them or at least two of them. So what we built is a tri-specific T-cell engager with a long half-life and this will kill preferentially the dual and triple expressers, but not the healthy cells with mono expressing one of these targets. This Phase 1 is ongoing and we are extremely kind of pushing forward to get the results. We are guiding towards more the second half for safety, but also initial efficacy. Let me point out we do expect on this one that we will see single agent activity. We added the preclinical work to support further development. So that is maybe a bit cryptic, but you can think if the first Phase 1 looks good, you will want to go into different settings, different lines, also different combinations. So that line is hint into additional work we are doing also for combination settings pre-clinically. Moving to Slide 8, here I will speak about 317, this CD40 by FAP. CD40 is a new stimulating target. It activates the new system. It, in simple terms, could turn a cold tumor into a hot tumor. And when targeted systemically meaning with systemic antibodies, you get dose-limiting toxicities, so the highest dose you can reach is still below 1 milligram per kilogram. We have built a molecule that is FAP gated that goes to the tumor. It localizes its clusters locally activates. We are now in our highest dose far above the antibody doses even with smaller size. So the molar dose is like 30x higher at least than what you see with antibodies and we don’t see the toxicities. So, it seems that this texture really solves that problem. We have presented data showing localization initial data on activation. We will do more of that, complete the dose escalation and then depending on the data, obviously, enter partnering discussions. Here, I would also point out the indirect value inflection point as Roche has a similar molecule. I will also come to that in the outlook. And the data of the FAP x CD40 of Roche will obviously have an impact on this one. If that data looks good, obviously, there is a cross validation of the mode of action. Let’s go to Slide #9. Now I am a bit in the conceptual part. So here, you have a cartoon. You see three DARPins. You have a green DARPin that targets the tumor antigen. You have a blue DARPin that is an effector function. In this case, CD3 and we have a gray DARPin that has two binding sites. It was made from two DARPins, actually a yellow and the dark blue one and they were put together into this gray DARPin that is now called two in one. The blue part binds the CD3 DARPin and with a very low affinity, but a high local concentration of the linker. You can think of the blue DARPin and the blue part of the gray DARPin as on off, on off very fast, but mostly off in circulation. So if on healthy cells, you would even find the target – the green target nothing would happen as your CD3 is off. If you are now in the tumor, the green DARPin will accumulate this drug in the tumor. There is a yellow antigen. The gray DARPin with its yellow binding site will yellow antigen release the blue, because there cannot be simultaneous binding and with that set that activity free and recruit T-cells for local killing. For us, this is the first time we have seen or this has ever been described, such a mechanism. All others rely on protease cleavage like cytomics. They were a pioneer in this local activation field. This is entirely based on binding. And we are excited to move this forward with one or two programs and also in our pipeline. With that, I will switch to Radio DARPin Therapy. This is, let’s say, a link to radioligand therapy, but we want to expand the ligand space with the DARPin space. So ligands can maybe target a set of targets that are on tumors, but DARPins can expand that set dramatically. It started with a collaboration with Novartis as they were or are the leader in the field and with us recognize the potential of DARPins as delivery agents or vectors. We did a deal a bit more than a year ago with the €20 million upfront, CHF560 million in potential milestones and double-digit up to double-digit royalties. And this is for two targets. So, two targets are exclusive for Novartis. At the same time, there is many more targets out there and one of those is DLL3 and that’s what we have selected for our first in-house target and we are expanding to additional targets. The second one is being done and more are being evaluated. And as we don’t have the radioligands or the radionuclides at our disposal, so we are looking into partnerships to get access and partner with companies that have radioisotopes. Also, this will be one of the activities that you will see this year and we definitely want to sign one or two agreements with these companies. Let me show you some data. We wanted to make sure that our investors know of. Last time I presented that was the red part that was at JPMorgan and we did show that. And what you see here on the left hand side is the kidney and the bars should go down. Lower bars are better, because it shows how much of your drug is in the kidney. Lower is better. You see the solid – the red solid, that’s a parental DARPin. Then you have the striped red that is a different approach on top of cells, that’s now blue and it again reduces by 60%. So, we are working on a suite of ways to reduce kidney – and they are additive. At the same time, if you look at the tumor side, you see the tumor accumulation stays the same. So we have no impact on that. So what we are doing is we are moving the tumor to kidney ratio into a favorable direction. And now switching a bit gear going from science to corporate sustainability and corporate sustainability is maybe a large abstract for it. But it is something that we at Molecular Partners always live. So our company is almost 20 years in existence. And really with this purpose-drive and this understanding that we want to do good for patients, we want to do good for society, we want to do good for the world, ESG or corporate sustainability was always part of our culture and in our DNA. And now with the, I will call it, a bit more trends of ESG and reporting, we went back and we really were able to bring out what we always have in the company and it also is very much carried from our employees. So this is not just a tick-box exercise, but it really makes visible what is here. And you see there the different pillars that we are moving forward and some of them like human capital management, I mean, for us, people, talent, that’s our co-workers. It sounds a bit dry, but for us, it’s not, but those are the titles that one uses in the ESG exercise. But believe me, these titles are really full of life and full of passion for our co-workers. And the same is for access to medicines, for product safe, service and safety business ethics. These are really dear and core to our heart, and we fill them with life at Molecular Partners, and it is really that what also makes up our culture. So for us, this slide is not just a dry tick-box slide. It really shows what is dear to our heart where we also are willing to show what we’re doing and kind of be a role model for the industry. With that, I’ll pause, I will hand over to Robert, who will lead us through the numbers. I think he has set an exciting year that we had, and happy to hear him talk about the numbers.

Great. Thank you, Patrick. Currently on Slide 13, just to discuss some of the basics here. The numbers that we will present will be stated in million Swiss francs. Of course, the rest of the details will be in the press release as well as in the appendix of the presentation and the presentation is clearly also available on our website to finish Stage 1. My name is Robert Hendriks, I’m the VP of Finance here. And I’d like to take you through Slide 14 on the financials. When we are looking at these financials for the past year, I’d like to focus your attention to three numbers in particular. The first one would be the revenue number, almost CHF190 million in ‘22. And I will, on the next slide, provide more detail, but it’s clear that this was largely driven by the funds that we received early ‘22 from Novartis. The second number I’d like to draw your attention to would be our operating expenses. The guidance that we provided during last year consistently was in the 70% to 75% range, and the CHF73 million ended up right in the middle of that guidance. And these costs have been stable over recent years. Combined, these two numbers clearly lead to the positive results that we achieved in ‘22. The third number I’d like to draw your attention to would be the cash balance of almost CHF250 million. This is the cash on the bank account, including the short-term deposits that we have with banks. So we are with close to CHF250 million. We think that this will carry us into ‘26. And this puts us in a privileged position in the industry. So these three numbers, the revenue, the expense and the cash are important to note as they tell the financial story of MP in ‘22 and fully reflect the healthy financial state of the company. Moving to Slide 15. If we then look in more detail to the revenue numbers, it becomes clear with a remarkable year ‘22 was, with a revenue close to CHF190 million. You can see that in the recent years, the revenue mostly related, if not all related to the Amgen collaboration, and in ‘22, we see the impact of the Novartis collaborations. If I break down CHF190 million, CHF173 million of revenue relates to Novartis, and this can be broken down in a few buckets. The biggest bucket would be CHF163 million that were triggered by the exercise of Novartis on the license agreement, and this happened in the first week of January. A further CHF10 million of revenue then comes from the December 22 collaboration on as discussed earlier. Here, we can break that down to CHF2 million of FTE recharge and CHF8 million of the recognition of the upfront payments that we received following this agreement. The balance of the upfront on the collaboration will be recognized into revenue in ‘23 and ‘24. Then following the notice from Amgen on MP0310, we were able to recognize in full the remaining contract liability or deferred revenue of CHF10 million that we still have on the books. This number is actually in line, as you can see with the most recent years when it comes to Amgen revenue. Then finally, and that’s the yellow bit on top. We were able to recognize CHF7 million into revenue from the amount that we received from the Swiss government, the as per the reservation agreement that we concluded with them in 2020. That agreement transitioned to Novartis upon the exercise the option exercise, so we were able to recognize the mute This revenue, together with the operating expenses, clearly resulted in a positive net result of CHF118 million in ‘22 and a cash balance of just shy of CHF250 million. This then leads me to Slide 16 on the guidance on operating expenses for ‘23. In line with the past, we will not guide on revenue. For the year ‘23, we guided total operating expense of CHF70 million to CHF80 million, of which around CHF9 million will be non-cash. And as always, this guidance is subject to the progress and changes of our pipeline. So in summary, I think with almost CHF250 million in cash and no debt we are in a privileged position. We are funded into ‘26, and this is without clearly taking into account any possible money coming in from collaborations and future partnerships. I think that these numbers show the healthy financial base of us entering into ‘23 that will allow us to continue to invest and to bring drugs to patients in need. Thank you for your attention. With this, I’d like to hand back to Patrick, who will tell you more about the R&D and scientific outlook for this year.

Thanks, Robert. Really a lot of numbers, impressive numbers, and I can only echo the health of the company, which is not a given in the current setting where not all biotechs can build on such a strong balance sheet. But before we open for questions, let me just quickly walk through the outlook. What can you expect from us in ‘23, what to look into? I’m now going to Slide #18. I do start a game with 533 and that is the key driver where we are focusing heavily on the execution that we are able to present you with safety and efficacy results in the second half of this year. Again, additional preclinical work, especially for combinations, but also understanding the drug where to develop it further is ongoing and will be presented over the year. 317, that’s the completion of the escalation and safety trial first half of this year and initiating partnering discussions on the back of that and stressing again the indirect catalyst by the Roche FAP CD40, that’s Roche 6189. If you want to look it up, that would have a direct read through to 317 in good, but also obviously in negative data [indiscernible] working therapy platform. So we will definitely advance the platform, working on that kidney to tumor or tumor to kidney ratio. It is about selecting targets and candidates. So that’s an activity ongoing and which of these kidney reduction approaches we build and put in that candidate. And last but not least, very importantly, the collaboration with radioligand companies that we can secure access. It is a cross talk, the better our results, the better our arguments with these companies are. The aim is one to two of collaborations in that space. On the further opportunities, we have SWITCH DARPin. So immune cell engagers, where we are aiming to move a program forward for ourselves, but there is also partnering optionality there as these are platforms. And we have a rich pipeline, and we could add more in some partnerships on the SWITCH platforms and also update you on the virology projects, that’s kept a bit open because there is in-house activity and partner activity with Novartis. Let’s see where that goes, essentially an update over the year. With that, I would like to echo what Robert said, we’re well funded into ‘26. Nothing we take for granted, but we really take that as a mandate to work hard to push forward and generate the value for patients and the shareholders as we invest that smartly in our pipeline. With that, happy to end the call it, formal presentation part and open for questions. Happy to take those as they come.

[Operator Instructions] The first question today comes from Joe Walton with Credit Suisse. Please go ahead.

Thank you. I have a few questions, but your line did seem to cut out a bit. So I do apologize if I ask you to repeat some stuff that you’ve already said, which wasn’t available certainly to us. But firstly, can I ask just how many people just took some idea on the recruitment? And any update on the size of your studies for MP0533 and 317? You last said that you would be looking at something like a 25 to 45 patients start and that those patients would start to be recruited in the back end of 2022 for 533. So just some updates there. On the Novartis radioligand collaboration, have you – what you have done for Novartis cut out for me. So have you delivered any targets to them or are you still trying to sort out this issue of the kidney accumulation before you can go much further? And could you also just expand a little bit more on the sort of partners that you want? Are you absolutely confident you can sort out the targets and the linkers yourself? It’s just you need help with the actual radio activity, and you can do everything else yourself. And we’re very mindful that it’s taking Novartis a huge amount of time to actually sort out [indiscernible] etcetera. The manufacturing is so incredibly complicated. Just wondering how you’re looking at that? And my final question on the funding side of things, I absolutely appreciate that if you keep at your current level of spending, you’re funded through to ‘26. But given the progress that you’re making and the extra people that you’ve taken on board, presumably, you would be looking to accelerate this level of spend over the next couple of years against, which you would need to get some partnership income? Those are my questions. Thank you.

Jo, very good questions, and let me kind of go through. And I think your last – the first one was sort of linked. So maybe I’ll actually take that one last, which is like FTE guidance – spending guidance, I’ll take that last, but I will start with the 533 trial. As you said, we guided 25 to 45 patients that is absolutely correct. There is a slide on dose escalation. I think the one thing to point out there is that we have to start with low doses as we do not have reactivity. So we’re in a naval setting. So we have a few patients low doses then spend to higher doses and can recruit more patients. So that’s kind of the one end. We definitely want to – and pending also obviously the progress we can include more. It is definitely something we want to do, especially then at the higher dose levels to include more patients. At this point in time, for this year, just given the time we will have initial safety data of a good handful. I think it’s 10 plus or so patients. I mean, we are recruiting now. And so – and then we will also see initial efficacy results as this cannot drag on for a month, the activity has to show itself in the first weeks when you apply the drug. The caveat we want to give here and just to be also clear is there has been success in AML where some drugs have shown early results, but it didn’t last very long. So even if we see an early response for the real value that we are aiming for and because we’re targeting also the leukemic stem cells, we want to see activity by on just 1 or 2 months. It’s really the 3 and plus months we want to see. There is biomarkers to sort of predict that, but the data is the data. So there will be more safety and initial activity data that we showed this year and then more to come on the durability of the response. As we cannot foresee at what dose level we see activity, it’s difficult to guide on timing, but the second half of the year for initial results is good. And the Novartis…

Yes. I’m just going – this is Seth. thanks, please. Maybe to the Novartis collaboration as well, I was just going to point out one thing in the way that we were – the question was, so Jo, for your benefit, the deal when we did the two targets with NIBR, these are two targets that they had asked us to build which, we said at the time not things that we were actively prosecuting at that time. So we’re very interested and happy to do so. But the comment and the consideration around the kidney accumulation issue, that’s a systemic problem for all protein therapeutics and one that we’re now showing that we can potentially and it looks very encouraging around, but that was not – and is not a rate-limiting step for us in our relationship with Novartis. So they aren’t waiting for us to do anything on that. They will profit from it because we want the profit as a partner, and we want them to succeed, but I don’t – I just want to be sure that there was a confusion in the question that there were somehow this kidney toxicity accumulation consideration with somehow rate-limiting to our work with Novartis or anything else. It’s a systemic thing that we look like we believe in our – at this moment with our scientists that we’re going to be able to overcome and we’re very hopeful for it. Go ahead, Patrick, sorry.

No, absolutely. I echo what you say. Jo, when we signed the agreement with Novartis, there was no [indiscernible] cell whatsoever, no orthogonal approaches. So this is all on top. I think it is fair to say that we are delivering or have delivered initial DARPins to Novartis. So there is absolutely no setback there. That’s going as planned. But the time lines for – from binders to candidates to clinical trials, that’s the question you have to ask Novartis. So we can only guide on our own pipeline, and we hold through that we want to see the first radio DARPin Therapy in the clinic next year in ‘24. That’s an aim we have. You asked a very good question about what – for what do we need a partner? And you made it also, I think, very clear that I mean – there is more to just linked DARPin to a [indiscernible] and put a radioisotope on and you have your product. I think what I just described, so the chemistry that is actually quite simple. So we have done that several times. That is not the difficult part. The difficult part is the logistics in the clinic, is the quality of manufacturing, is the global distribution. And that’s where we want to also then work with the leader in the field or the leaders in the field, maybe one because that race is ongoing or race. That establishment of this drug class as a drug class that can be really patients. We see the problems. We see the problem Novartis has. So we don’t want to do that alone. We don’t – we need partners who can do it, and we will likely do collaborations, maybe more of the shape of a 50-50 that we co-own the product with such a company that actually has radioisotopes and is building the delivery and the logistics around it. So, get you understand how we see that. So, not alone, but real partnership and while the chemical or the technical part that we have or are mastering well, we don’t see any limitation so far, not at all. At the same time, the complexity of the value generation chain, yes, and that’s where we want to team up. And that’s why you should see, hopefully, the collaboration agreements this year. Then I think the funding let’s go back to that an acceleration, I think it’s true. So, what we have at the cash reach is built on, let’s call it, scenario – on a conservative scenario of a rather steady cash burn. And if a program is stopped obviously then the cash burn will be longer, which is in a way not good, if things go really well, if 533 looks great, then we want to accelerate, you are right. Then also our cash burn would have to change. At that point in time, but also our stock price should change, so there is different optionalities there or partnerships. So, to do a partnership or whatever on good data is a totally different game than now. So for us, it’s really bringing the good programs forward, collecting the data and then see what is the best way to bring it forward alone or in partnerships. 533 is the base that we want to do it alone and if that is possible, that is plan A. I hope that answers part of your funding question. We have not grown massively last year. We did not give the exact FTE numbers. We also don’t plan to grow massively this year. So, we see this rather steady, a bit up and down. We just need the resources that – to progress the pipeline. I think we are at this point in time more on a steady state than a growth trajectory, also given the market and the state of the company – stage of the company where the programs are. I hope we could answer your questions, Joe.

Yes. Thank you. You have given us your FTEs, You increased your staff by 7% on Page 14, but thank you very much.

Yes. But what that’s going to be next year, if it is – I mean, 7% is more or less almost equal. It depends really how things develop, yes.

Thank you.

The next question comes from Georgi Yordanov with TD Cowen. Please go ahead.

Hey guys. Thank you so much for taking our questions and congratulations on the progress. So, maybe on the topic of durability for 533, maybe can you, I guess talk about when can we expect some initial insight into that? And then maybe also, what have you seen from your preclinical data in that respect in terms of – are you seeing certain like mechanisms of resistance that evolve over time? How should we be thinking what does the data suggest? And then on the radioligand therapy, maybe can you just talk about how you made the decision to select the tumor-specific antigen here? We have seen other companies go after targets like mono [ph]. So, maybe can you just talk about how do you decide to – why did you decide to take a slightly different approach? And what do you think is differentiated by the DARPin platform that that could allow you to have differentiation on that market?

Thanks Georgi. Both great questions. Happy to answer. So, let’s stay on the durability of 533, and it is actually the key design feature of this drug. And the problem of durability is also of other drugs clonal escape, because you are not killing all clones, that means you might reduce the tumor mass. But if 10% of your tumor cells are not killed, there you have your population that just goes back in two months afterwards, you are at the same starting point that you were. And so this mono targeting is actually exactly leading to this short-lived responses. We are trying to go broader with our tri-specific approach and include – and there is a bit of debate, we call it the leukemic stem cells or the precursor cells, because if you really get to them, if you really can kill those cells upstream that are causing the problem, you have at least the belief and the hope to have a much longer durability of your response because, a, you don’t have clonal escape because we are targeting three targets. And b, you are sort of drying up what’s it called the stream or you have to source so that you really could kill those cells that are responsible for the relapse. And that is what we designed the molecule for. That’s where we have a lot of preclinical data that was presented at ASH, and that’s what we want to show in the clinics. Now, as I have said, the holy grade is obviously to follow the patients and see the non-relapsing patients that follow the time they don’t relapse. What you can also do is you can do bone marrow aspirates and check for MRD positivity or negativity so minimal residual disease. And if you are MRD negative, meaning there is no disease that is a good, call it, biomarker for your durability of response. So, that is something we are looking into as early as we can when we see a complete response. So, to have a complete response, MRD negative, that’s the first thing we are hoping for. And then obviously, looking that translates into durable responses. And all on the design of the drug, so this is not by chance, if this happens, this is because we designed it to happen. On the DLL3 and I am also glad about that question, now going to Radio DARPin therapy. Most of our competitors are working with ligands. That’s why it’s called radioligand therapy. And take PSMA that target or other targets you were hinting to, these are targets that have groups where ligands combined really well. That’s one reason these companies that have radioligand therapy are all going against the same targets. With the DARPins, we are rather agnostic is it’s on the surface and it’s a protein that we can bind it. So, we are hoping to expand the target space beyond what is, I would say, ligandable or addressable with ligands, so going to the broader space. And we have chosen DLL3 because of other also – because it’s – because certainly it’s high medical need, especially in small-cell lung cancer, but also in some prostate, and it is – the tumors are highly metastasized, so that one of the reasons. At the same time, we have a rather big initiative to identify new targets for DARPins. And as I have said, they are sort of a gating system that it should be something where that is more DARPin unique, I mean maybe not ideal for ligand. And it should be as clean as possible and in indications that have high need and have maybe a high level of metastases. And then in indications where radiotherapy is used, so it’s sort of a Venn diagram we are building. And that is ongoing, definitely also something we can update over the year how our thinking of differentiation between radio DARPin and radioligand is coming along, but both great questions and both hinting to the differentiation activities that we are building into our pipeline.

Thank you so much.

The next question comes from Daina Graybosch with SVB Securities. Please go ahead.

Hi. One question for me, in other T-cell engagers, there is often a pretty steep dose response curve. So, if you follow receptor occupancy, you see it jump up. And I wonder if you are targeting three different targets, how are you thinking about pharmacodynamic markers and when you will know that you should be in an active dose for where we should start to see clinical activity?

Yes. No, that’s – it’s start on, and it is something we are following. As you say, we have to try specific with the lower affinity, so it’s not quite as easy as it’s not one target. What we are doing is obviously – and that’s the good thing in AML, we can take patient samples as you go. So, it’s much easier than a solid tumor biopsy. And we are looking at target engagement. We are looking at T-cell activation. We are looking exactly at the questions you have. But your point you make, so how steep that sort of response curve will be, we will have to find out. We did not up for the most potent molecule because potency was seen with other T-cell engagers, but with the side effects were just too strong. So, the idea, hopefully is that we actually can find that window of engagement and killing without the side effects. And we will update definitely with all the data we have, and we are measuring exactly what you were hinting at. So, how – and its receptors occupancy, if you want, or how many DARPins per cell and how active are the T-cells. Thanks Daina.

The next question comes from Yi Chen with H.C. Wainwright. Please go ahead.

Hey, Vikas Tyagi [ph] on behalf of Yi. Just a couple of quick questions on 533, any plans on – and please, I beg your pardon if you have already addressed this, but any plans on expanding the clinical sites to the U.S.? And then the other one on abicipar in AMD and DME, where does it stand as it relates to commercial activities? Thank you.

Yes. 533 and U.S. So, the initiation of the trial plan or the first part is planned for Europe at this point in time. So, we are first in Switzerland, then the Holland [ph] side. And I think it’s also Lithuania that we are planning to start up sites. With success, with good response rates, with complete responses, we would immediately want to go to the U.S. to include U.S. sites. Those plans are being built. We do plan for success on that program, for sure. And so that will be the next step after we have clinical data. Then abicipar, where does the program stand, let me quickly remind you so abicipar went to through two Phase 3 trials. It has stellar efficacy data activity data with three or every three months injection being as – then as a monthly Lucentis regime, so non-inferiority reached. It had and they got a complete response letter on inflammation that was 15%. At the time, we had thought it was the impurity. So, we put a lot of activities on further purifying and we brought the 15% to below 10%, but then we hit a ceiling we could not explain. As we gave the program back and more recently, we have found the likely culprit of those 10%-ish, below 10% inflammation, which is the silicon oil that is used to lubricate the syringe that together with the DARPin, so it’s sort of an induced indirect impurity that causes DARPin aggregation. We see sub-physical particles that form or can form and then can lead to inflammation. The solution is rather simple to go for non-siliconized syringes, then you could move the program forward. There is some discussions ongoing with a potential path forward for this program. We would not fund that ourselves. So, this has to happen outside of Molecular Partners. So, we put that as an optionality out there. While the efficacy is good, we also have to state that other programs have caught up on durability that is now is also out there now, taking market with high-dose idea. So, the question is really more how would one run trials and what is the investment to make a big part competitive in the landscape. Let maybe that what is the trial to show information is gone. Just to give you an update, that – those discussions are out there. It’s not what we are kind of doing a day job, that 533 in the pipeline. But if there is optionality, we are open to discuss that with potential partners or investors.

Thank you.

Thank you.

[Operator Instructions] The next question comes from Sebastian Vanderzeil with BOK [ph]. Please go ahead.

Hi. It’s William dropping in for Sebastian today. Thanks for taking my questions. So, I just have a couple, first on 317. So, you have mentioned you expect to complete the patient recruitment in the dose escalation part of the Phase 1 study in the first half of this year. So, can we expect to see additional results from the study in the second half of this year? And then another question, what is your thinking around suitable partners for this program? Thanks.

Yes. No, thanks. So yes, I mean recruitment, I said we are at the top dose. So, we are definitely closing in on that, and it depends a bit sort of how long patients are on trials and so that’s going on. Also to what are we looking for, and one thing we wanted to guide is we are not expecting to [Technical Difficulty] a good panel of biomarkers showing activation of the immune system locally. ABC is going up, T-cells moving in for those markers and cytokine patterns and mRNA patterns in the cells. So, we are doing a lot of, call it, biomarker analysis in the tumors. That’s what – and also the periphery active. So, that data set should then be used to sort of conclude that the mode of action is safe, it does, and it moved forward in combination with drugs that would that initial incubation. What companies come as a partners, likely those that are in immuno-oncology and have a franchise to build or defend. And that’s why I was stressing the Roche study. So Roche, obviously, has Atezo. If that Atezo combination and they are doing the PD-L1 combo with their FAP CD40, if that looks stellar, my guess is companies with a PD-1 or PD-L1 would like, obviously not to be pushed out by Roche, but to have a chance against. So, likely partners would include those that have that franchise and that investment ongoing. There is other combination partners like more chemotherapy, radiation therapy that also boost that can be looked into. But my guess is these are immuno-oncology companies that are interested in CD40 FAP.

Okay. Thanks.

Thanks.

[Operator Instructions] As there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Patrick Amstutz for any closing remarks.

Thanks and thanks for all the great questions. I think the questions also allowed us to highlight how we are thinking about our pipeline, how we are differentiating over other approaches, and that is our highest mantra differentiation and to gain high patient value and early clinical readouts. And this will be a year of execution to get exactly to those inflection points. We are excited to have them on the horizon and are looking forward to working with all of you to realize that patient value. So, thanks to my team here. Thanks to Seth, who I visited this week and also thanks to everyone on the line and all of our investors supporting us. Take care. Stay well. Talk soon.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.