Shattuck Labs Inc (STTK) 2021 Q2 法說會逐字稿

Good afternoon, everyone, Welcome to Shattuck Labs' second-quarter financial results and business updates call. Today's call is being recorded. At this time, I would like to turn the call over to Conor Richardson, Senior Director of Finance and Investor Relations of Shattuck Labs.

Thank you, operator. Good afternoon, everyone, and welcome to the Shattuck Labs conference call to discuss our second-quarter financial results and business update. The press release for our financial results was issued after market close this afternoon and can be found on the Events and Presentations section of our website, shattucklabs.com.

During this afternoon's call, the Shattuck team will provide a business overview of the second quarter of 2021, including an update to our clinical development plans for SL-172154 and SL-279252.

A Q&A session will follow our prepared remarks. Joining me on the call today are Dr. Taylor Schreiber, our Chief Executive Officer, Dr. Lini Pandite, our Chief Medical Officer; Andrew Neill, our Chief Financial Officer, and Casi DeYoung, our Chief Business Officer.

Before we begin, I would like to remind you that today's webcast contains forward-looking statements within the meaning of Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements represent management's judgment as of today and may involve certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements.

For more information on these risks and uncertainties, please refer to our most recent annual report on Form 10-K for the year ended December 31, 2020, and our other filings with the SEC, which are available from the SEC's website or on our corporate website, shattucklabs.com. Any forward-looking statements represent our views as of today, August 11, 2021.

With that, I will now turn the call over to Taylor Schreiber, our Chief Executive Officer. Taylor.

Thank you, Connor. Good afternoon, everyone, and thank you for joining us. Today's earnings call is the first since our initial public offering in October of 2020 and I am exceptionally proud of the milestones our team has achieved since that time. Our clinical team has done an outstanding job of advancing the clinical development of both SL-172154 and SL-279252, our clinical stage Agonist Redirected Checkpoint, or ARC, compounds.

As a reminder, 172154 is a SIRPα-Fc-CD40 ligand bifunctional fusion protein currently in two different Phase 1 clinical trials, one for patients with advanced ovarian cancer and another for patients with squamous cell carcinoma of the head and neck or skin.

Our second clinical stage compound, 279252, a PD1-Fc-OX40 ligand bifunctional fusion protein, is being developed in collaboration with Takeda Pharmaceuticals and is in Phase 1 development for patients with advanced solid tumors.

Both of our ARC product candidates are first-in-class compounds that entered the clinic in less than four years since our founding due to the pioneering work of our scientific, manufacturing and regulatory teams. We are currently generating clinical data to validate the concept behind the ARC platform, and we are particularly excited to share this clinical progress with you in just a few months' time.

Specifically, we have submitted our clinical data from the monotherapy dose escalation portion of our Phase 1 clinical trials for 172154 and 279252 to the Society for Immunotherapy of Cancer, also known as SITC, for presentation at its annual meeting on November 10 through 14. Emerging data has guided us to amend and expand our clinical trials and today, we will provide some context for those expansions in addition to our general corporate update.

During 2021, we have made steady progress towards advancing the dose escalation cohorts for 172154 in patients with relapsed refractory ovarian cancer. We are pleased by the safety and tolerability profile observed thus far and are continuing to dose escalate into the higher dose level cohorts.

Given the totality of the data to date, we have begun to execute on our strategy to broaden clinical development into hematologic malignancies. Specifically, we will soon initiate a clinical trial for patients with acute myeloid leukemia, including a TP53 mutant acute myeloid leukemia cohort as well as for patients with higher-risk myelodysplastic syndrome. We see an opportunity for 172154 to potentially emerge as a best-in-class compound for these patient populations.

We have also made significant progress in our clinical development efforts for 279252. We have completed enrollment through the 6 milligram per kilogram dose level, evaluated both weekly and biweekly dosing schedules, and gained enormous insights regarding the behavior of our compounds in patients with cancer. The available data suggests that there is a compelling scientific rationale for continued dose escalation beyond our originally contemplated top dose level of 6 milligrams per kilogram, which Lini will expand on in a few moments.

Turning to our corporate update, it is my pleasure to introduce Dr. Abhinav Shukla, who joined us this quarter as our Chief Technical Officer. Abhinav has held both technical and leadership roles at large pharmaceutical companies, contract manufacturing organizations, and small biotechnology companies. He brings a wealth of experience to our growing biologics manufacturing team.

Abhinav's experience across the full spectrum of biologics manufacturing is a critical advantage as we continue to build our internal capabilities. I am very pleased to welcome Abhinav to our executive team.

Today's call we will discuss select clinical data from our ARC platform, which we plan on unveiling in greater detail at SITC later this year, as well as insights into our clinical strategy. Lini will discuss our clinical development programs to date. Then Andrew will provide the financial update for the second quarter of 2021, and then I'll be back for some concluding comments. With that, I will now turn the call over to Lini Pandite, our Chief Medical Officer. Lini?

Thank you, Taylor, and good afternoon, everyone. First, I would like to discuss our lead clinical program, SL-172154, which is a SIRPα-Fc-CD40 ligand bifunctional fusion protein. As a reminder, SL-172154 contains the extracellular domain of the human SIRPα protein, which directly binds to and inhibits CD47.

In addition, SL-172154 also contains the extracellular domain of the human CD40 ligand protein that simultaneously and directly activate the CD40 receptor.

As most of you know, we are currently exploring SL-172154 in two ongoing Phase 1 clinical trials. Our first clinical study of SL-172154 is a multicenter, open-label dose escalation trial intended to assist the safety, tolerability, pharmacokinetics, antitumor activity and pharmacodynamic effects of intravenous administration of SL-172154 as monotherapy in patients with relapsed refractory ovarian cancer.

Enrollment in the monotherapy dose escalation cohorts has progressed smoothly. We are currently completing enrollment at the fourth dose level of 3 milligrams per kilogram, and we plan to proceed to the next dose level of 10 milligrams per kilogram thereafter.

Our second clinical trial of SL-172154 is an ongoing multicenter, open-label, dose-escalation clinical study intended to assess the safety, tolerability, pharmacokinetics, antitumor activity and pharmacodynamic effects of intra-tumoral administration of SL-172154 as monotherapy in patients with relapsed refractory squamous cell carcinoma of the head and neck or skin. We remain on track to present initial data from this study in the first half of 2022.

Overall, we are very pleased with the emerging profile of SL-172154. To date, no dose-limiting toxicities have been observed in either clinical trial, and we are encouraged by our ability to dose in the higher dose level cohort. Because SL-172154 contains both CD47 inhibitory and CD40 agonist domains, the safety data should be considered in the context with prior CD47 inhibitors and CD40 agonists.

On the CD47 side, consistent with our preclinical data, we have not observed any evidence of anemia or thrombocytopenia, which we believe is due to the selection of an effective silent Fc region for SL-172154. We believe this contributes to the safety profile and differentiates SL-172154 from other CD47 inhibitors with active Fc domains that have reported anemia or thrombocytopenia in clinical studies.

On the CD40 side, it is worth remembering that CD40 agonist antibodies have been in clinical testing for well over 20 years, but progress has been repeatedly hampered by a combination of toxicities at low doses and evidence of a bell-shaped dose-response curve.

In the case of SL-172154, clearing the 3 milligram per kilogram dose level would be a major milestone because previously studied CD40 agonist encountered dose-limiting toxicities, including a combination of cytokine release syndrome and liver dysfunction above doses of roughly 0.3 milligrams per kilogram, which is one-tenth the current dose level of SL-172154.

To date, we have observed none of these adverse events, yet we have observed unique evidence of CD40 engagement and pharmacodynamic activity. We plan to share further details at the SITC conference later this year. We are very excited and encouraged by the emerging profile of SL-172154 and believe that we have entered an immunologically active therapeutic window not seen with prior CD40 agonists.

The emerging profile of SL-172154 has prompted us to initiate our plans to bridge an immunologically active dose from the Phase 1a clinical trial in ovarian cancer to the Phase 1a/1b clinical trial in hematologic malignancies. And today, we are excited to announce that we plan to expand into clinical studies in both acute myeloid leukemia and high-risk myelodysplastic syndrome.

In AML, we plan to study SL-172154 in combination with azacitidine and venetoclax. In TP53 mutant AML as well as in high-risk MDS, we plan to study SL-172154 in combination azacitidine. We expect to file an IND for this trial in the fourth quarter of this year and initiate a Phase 1A/B trial thereafter.

Specific details on the trial design will be forthcoming. As a Class, CD47 inhibitors have demonstrated clinical activity in both AML and higher-risk MDS. We see an opportunity for SL-172154 to differentiate from other compounds in the field due to combined effects of CD47 blockade and CD40 co-stimulation.

Now I would like to turn our attention to SL-279252, our PD1-Fc-OX40 ligand bifunctional fusion protein. As most of you know, we are currently enrolling in a Phase 1, multicenter, open-label trial to evaluate SL-279252 administered intravenously as monotherapy in patients with advanced solid tumors and lymphoma.

To date, we have enrolled a heavily pre-treated, predominantly PD-1/PD-L1 experienced patient population across the initially planned dose escalation cohorts beginning from our first dose level of 10 to the minus 4 milligrams per kilogram through 6 milligrams per kilogram and evaluated two dosing schedules. We have not observed any dose-limiting toxicities through the highest dose levels.

We have observed dose-dependent OX40 receptor engagement of OX40 expressing T-cells and a primary pharmacodynamic effect showing rapid egress of these target cells from the circulation which has not previously been reported for prior OX40 agonist antibodies.

Because the emerging data indicates that additional dose levels could enable a more complete assessment of PK/PD and antitumor activity, we plan to continue to dose escalate through two additional dose levels of 12 milligrams per kilogram and 24 milligrams per kilogram. At this time, however, it remains unclear whether OX40 activation may increase response rates beyond what is expected of PD-L1 inhibition in PD-1 experienced patients.

Because very few patients enrolled to date were known to have PD-L1 positive tumors, we plan to now select for patients with known PD-L1 positive tumors, and will be looking for clinical response rates that indicate a feasible development path in PD-1 experienced populations. Thus, we look forward to the additional data from the higher dose cohorts.

Overall, we are pleased with the progress that we have made to date on both of our clinical-stage ARC product candidates, and look forward to the future growth in our clinical development efforts.

We believe that the pharmacodynamic profiles observed with both SL-172154 and SL-279252 demonstrate activation of CD40 and OX40, respectively, in a manner not seen with prior CD40 and OX40 agonist antibodies. This is consistent with our underlying hypothesis from which the ARC platform is derived. With that, I will now turn the call over to Andrew Neill, our Chief Financial Officer. Andrew?

Thank you, Lini, and good afternoon, everyone. As Conor mentioned, the full financial results for the second quarter of 2021 are available in our earnings press release and our forthcoming 10-Q. Today I would like to focus on a few key points from our disclosures.

We are fortunate to be well positioned financially. As of June 30, 2021, we have cash and cash equivalents and short-term investments of approximately $304.8 million. Revenue for the second quarter ended June 30, 2021, was negative $4.2 million compared to $3.2 million for the second quarter ended June 30, 2020. All revenue to date is generated solely from our collaboration agreement with Takeda.

The negative revenue for the second quarter of 2021 was driven by increased expected costs required to complete our performance obligations in the collaboration agreement as a result of the modifications to our clinical development plan for SL-279252. The negative revenue does not affect our cash position. In the second quarter of 2021, our research and development expenses were $14.9 million compared to $7.8 million for the second quarter of 2020.

In the second quarter of 2021, our general and administrative expenses were $5.4 million compared to $1.7 million for the second quarter of 2020. Our net loss for the second quarter of 2021 was $23.6 million or a loss of $0.56 per basic and diluted share compared to a net loss of $6.2 million for the second quarter of 2020 or $0.81 per basic and diluted share.

Now turning to our financial guidance for 2021 and beyond. Our financial guidance remains unchanged from the guidance given in connection with our initial public offering in October 2020. Importantly, expansion of SL-172154 into clinical trials in patients with AML and higher-risk MDS does not change our current cash runway guidance, because the operating expenses associated with these trials were included in our internal forecasts.

Based on our current and planned operations, our expected cash runway remains through year end 2024. And with that, I will now turn the call back over to Taylor. Taylor?

Thank you, Andrew. Over the past year, Shattuck has made tremendous progress, and we are learning how to best apply the ARC platform for the benefit of patients with advanced cancers with the learnings from our first two clinical trials. SL-172154 and SL-279252 have been very well tolerated in humans to date, which bodes well for the ARC platform as a whole.

In addition, we have observed an escalating linear relationship between the dose of ARC administered and the corresponding pharmacodynamic responses to 172154 and 279252. We believe these observations validate one of the central hypotheses to the ARC platform that hexameric compounds like ARCs will engage TNF receptors in a fundamentally different manner than monoclonal IgG antibodies.

Our progress with 279252 has been exciting, and we believe that the data collected from additional dose escalation cohorts will allow us to fully characterize the pharmacokinetic profile and to identify the dose at which the pharmacodynamic effects of OX40 stimulation reach maximum levels. We began this study in a PD-L1 unselected and highly heterogeneous patient population in order to proceed quickly through dose escalation.

Now that we are within an immunologically active dose range, it is now appropriate to enrich for patients with PD-L1 positive tumors. It is not yet clear, however, whether OX40 stimulation will increase response rates beyond what is expected of a PD-1 inhibitor in a PD-1 or PD-L1 antibody experienced patient population. And the path forward for 279252 will depend upon observing monotherapy activity in PD-1 or PD-L1 antibody refractory patients at these higher dose levels.

An enormous opportunity remains to address the unmet need in PD-1 and PD-L1 experienced patients, and we are excited to further characterize 279252 at higher dose levels in a PD-L1 selected patient population. We are also highly encouraged by the early data from the dose escalation portion of our clinical trial with 172154 in ovarian cancer and look forward to filing our IND for our Phase 1A/1B clinical trial in AML and high-risk MDS in the fourth quarter of this year.

Several patients have cleared the dose-limiting toxicity window at a dose of 3 milligrams per kilogram, which is a dose tenfold higher than the maximum tolerated dose for prior CD40 agonist antibody therapies. This is also a dose range at which other CD47 inhibitors began to achieve high levels of receptor occupancy on CD47, suggesting that 172154 may bridge the perceived gap in effectively dosing a CD40 agonist to the level required for a CD47 inhibitor.

We believe that expansion into hematologic malignancies with 172154 will further demonstrate 172154's best-in-class potential as a CD47 inhibitor. The emerging clinical data from 172154 and 279252 suggest that the ARC platform has unlocked the TNF superfamily of costimulatory receptors in a manner that has evaded IgG antibody-based modalities for over 20 years.

The data suggests that CD40 is a very powerful stimulator of the innate immune system, whereas the effects of OX40 stimulation are more subtle. That said, a complete exploration of CD40 and OX40 biology has not been possible with IgG antibodies because escalation to higher dose levels was limited by a combination of toxicity and diminishing signs of immune activation.

We believe the opportunity to compare and contrast the biologic consequences of CD40 versus OX40 activation in just a few months' time will challenge some of the dogma that has surrounded these targets for decades.

Before we turn to Q&A, I would like to close by thanking all of our clinical investigators, their teams and institutions, and, most importantly, the patients and their families who have participated in our clinical trials and have helped make this progress possible.

From all of the employees at Shattuck, we look forward to the second half of this year and the milestones it will bring. We appreciate your continued interest in Shattuck and look forward to keeping you appraised of our progress throughout the year. With that, operator, I would like to open the call for questions.

(Operator Instructions) Marc Frahm, Cowen.

Hi, thank you for taking my call. This is Ernie Rodriguez for Marc and congratulations on your progress. We just have a question on a follow-up on your commentary regarding the receptor occupancy for the CD47 (inaudible) on 154. Have you discussed what level of receptor occupancy you have achieved and if this level is above what others have seen or experienced anemia on [Shattuck]?

Sure. Hi Ernie, and thank you for the questions. This is Taylor. We will be disclosing the specific receptor occupancy levels at SITC. However, I can put the dose levels into a little bit more context with what has been reported with some of the other CD47 targeted agents. And with an antibody like magrolimab, for example, that antibody began to see early receptor occupancy on CD47 expressing red blood cells and then saw saturation of CD47 expressing leukocytes, but that didn't occur until they reached dose levels of roughly 20 milligrams per kilogram.

In contrast, some of the SIRPα-Fc fusion proteins have been shown to achieve full occupancy -- and with different Fc fusion proteins, full occupancy can mean different things -- at levels of between 1 and 3 milligrams per kilogram.

Our impression of the reason why some of the SIRPα fusion proteins have not reported 100% occupancy on CD47 positive leukocytes is not that you cannot achieve 100% occupancy on leukocytes. It's that some of the lower affinity or lower avidity SIRPα-Fc fusion proteins have a faster off rate and fall off CD47 on leukocytes faster than either high avidity or high affinity SIRPα fusion proteins. So hopefully, that provides a bit of context.

That's very helpful. Thank you.

Jonathan Miller, Evercore ISI.

Hi, guys. Thanks for taking my question. And I'm really looking forward to seeing some of the significant clinical data at SITC. But while we look forward to that, I mean it seems escalation on 154 so far has been very supportive on safety, I should say (inaudible) programs, but no responses yet.

So now as we're entering the immunologic reactive dose range, what are the key biochemical signals we're going to get (inaudible) that will get us comfortable with activity given we're just entering that active dose range?

And then secondly, as we turn to heme indications, I see that you are planning to pursue combo trials. Obviously we're starting mono there. Competitors have all moved robustly to combo trials for further development. Do you have any expectations of a meaningful monotherapy activity rate or development in that direction?

Sure. Thank you, John. I'll take the first part of the question and then ask Lini to take the second. So in turn, and she can elaborate on my response to the first as well. What you should expect to see at SITC with both programs is all of the patient characteristics and safety data to date at the various dose levels, the pharmacokinetic profile of the compound across the dose ranges, and then the pharmacodynamic effects that will include receptor occupancy.

As Lini mentioned, for the OX40 engaging compound 279252 margination of OX40 positive lymphocytes at various dose levels. And then for both compounds, immunophenotypic data and serum cytokine analysis, as well as antitumor activity. And I will ask Lini to take the second half of your question there regarding AML and MDS.

Thank you for the question. With the AML/MDS, the monotherapy portion of this is a very short monotherapy. That's our plan to go into the combination very quickly. So we are bringing in an immunologically active dose, we are bridging that dose from the Phase 1 ovarian study. And our plan is to go quickly into the combinations that I mentioned with azacitidine, venetoclax and azacitidine monotherapy -- with azacitidine and azacytidine/venetoclax.

Okay, sure. So I take it that there's no expectation of seeing substantial monotherapy activity there or developing in that direction. On -- particularly on --.

If you don't mind, Jon, I'll just make one quick comment on that point. And our guidance around monotherapy antitumor activity for 172154 is based upon two things. It's based upon what is known clinically about the expected monotherapy activity of the CD40 agonist as well as what is known clinically about the expected activity of an Fc silent CD47 inhibitor.

And our interpretation of the 20 plus years' experience we have of CD40 agonist antibodies in human clinical studies is that, while some agents have shown sporadic monotherapy activity in tumors like melanoma, renal cell carcinoma and lymphoma, there is no consistent pattern of monotherapy activity, at least with the CD40 agonist antibodies. And because of that, we don't feel that it's appropriate to frame efficacy expectations around any CD40 agonist agent.

On the CD47 side, the only agents that have shown monotherapy activity are those that have residual function in the Fc domain, CD47 inhibitory agents which lack that function do not have monotherapy activity and they also don't have tox. And so what that tells you with the CD47 inhibitors as a class is that the Fc domain and the characteristics of the Fc domain are in and of themselves sufficient to drive toxicity.

However, what you notice about all CD47 inhibitors, regardless of whether the Fc domain is active or inactive, is that they are all pursuing registrational pathways in combination either with certain chemotherapies or ADCP-competent tumor-targeted antibodies.

And so you can then extend the conclusion a bit from there and say that while the Fc domain is sufficient for tox and sporadic monotherapy activity, it is insufficient to drive registration. And so with this agent, we are again framing expectations based upon 172154 being a CD47 inhibitor with an inactive Fc domain.

Got it, great. Thank you. I think that's very responsible. Maybe turning to 252, Can you speak a little bit to the clinical relevance of OX40 stimulation pushing T cells into the periphery out of the blood? Are there other signs of T-Cell activation that go along with that? Granted, it's tough to disambiguate what's going on given the lack of PD-L1 [activity] in many of these patients, but I'm trying to focus specifically on OX40 access PD and what that can tell us about successful immunostimulation.

Yes. Thanks for the question, Jon. So OX40 is an antigen dependent CD4 specific T cell co-stimulator. And so you expect the pharmacodynamic, at least the direct pharmacodynamic effects of OX40 stimulation to be centered on that T-cell population, and more specifically to a subset of CD4 positive OX40 positive T-cells that are actively encountering, in this case, tumor antigens.

And in that subset of cells, you may expect those cells to rapidly carry 279252 from the peripheral blood into tissues. And if that includes tumor tissues, then that could provide a means of actively transporting 279252 out of the blood and into peripheral tissues, including tumors. And if those cells are being activated, then you would expect to see some signs of that.

That could come in the form of changes to the immunophenotypic profile of those cells and patterns of activation markers, or it could come in other forms. But it's hard to say for sure, because the human experience with OX40 antibodies contains very, very little in the way of convincing pharmacodynamic activity to date.

And so I think we are in somewhat uncharted territory here for OX40 agonists and, therefore, we want to be sure that we fully explore the dose levels here and identify a dose level at which OX40 biology, at least as far as we can measure it, has been maximized.

Great. Makes sense. Thank you very much.

Gil Blum, Needham.

Hello and congrats on all the progress. It looks like both programs seem to be very safe. But as you dose escalate, do you expect at some point to start seeing some level of immune mediated tox, the sort of low-grade rash, low grade CRS that are seen sometimes with immuno-oncology agents?

Sure. Thanks for the question. I'll ask Lini to take this one.

Yes, as we dose escalate, given that we do have an agonist and this molecule as well, we would expect to see some degree of tox. But we are very encouraged that we are able to dose escalate through the lower doses, especially in the CD40 target with CD40 antibodies. Dose-limiting toxicity has precluded dose escalation beyond 0.3 milligrams per kilogram.

We've been able to dose escalate to -- as we are currently at 3 milligrams per kilogram. And so, it gives us an opportunity to dose escalate to the point that we have receptor occupancy on both CD40 as well as CD47, and be able to saturate those receptors. So I think we're encouraged by this dose escalation that we're able to do. But as you said, certainly -- I mean, we certainly monitor our patients with a view to the fact that there could be toxicity at higher doses.

And on 252, just to clarify that I understood this correctly, so we're discussing enrichment for patients who are PD-1 positive and PD-1 refractory following PD-1 based therapy. Is that correct?

Yes, that's correct. That's correct. So the reason for that -- in our dose escalation up to now, we did not really select for patients who are PD-L1 positive. We started at a very low dose and we wanted to get through the dose escalation as efficiently as possible to a point that we had an immunologically active dose range. And currently we are at that dose range. So moving forward, our plan is to select patients with no PD-L1 positivity.

And the reason for that is that one end of our molecule binds PD-L1. And so it would make sense to actually select for that. Now we certainly acknowledge that these are patients who have failed PD-L1/PD-1 therapies and have other mechanisms of resistance that may preclude them from responding to an agent such as this.

Okay. That makes a lot of sense. Maybe a last one on the [chip digit] program, which we haven't discussed much of today. Following the results in the space, Arcus and others, has there been any additional disclosures regarding whether we're going with an Fc active or Fc inactive here?

There has not been any disclosure yet but we will be providing additional guidance around the next ARC program to enter the clinic later this year.

Okay. Excellent. And we'll definitely look forward for your results at SITC. And thank you for taking our questions.

Thanks for the questions.

Zhiqiang Shu, Berenberg.

Good Afternoon. Thanks for taking my question. So of your first 154 program, the current dose is 3 milligram per kilogram. The next one is 10, it seems to be a big jump. I guess what gives you the level of comfort you can dose escalate to more than two, three times of that to your current dose? I'm curious your thoughts there.

Hi Zhi, thanks for the question. I 'll ask Lini to take that one as well.

Zhi, we often dose escalate in these oncology studies in half log increments. So that at 3 to 10 is a reasonable increase, that's a half log increase. And so, depending on what we see at 10, then we'll determine whether we need to go higher or not. But right now, that's actually a very reasonable increase.

Got it. And then in terms of next step when you select a recommended Phase 2 dose and move into the combination phase of your study, I guess what are gating factors here we're looking for when you select the dose and when you want to combine with the rituximab (inaudible) in the trial?

Sure. So in general, what we're looking for in identifying a recommended Phase 2 dose is to find a dose which is well tolerated, where we see saturation of both targets of the ARC compounds. So in the case of 172154, that will mean saturation of both CD47 and CD40.

And where we see that there has been a continued escalation in the on-target pharmacodynamic effects that we expect to see downstream of that engagement, and wherein those pharmacodynamic effects have escalated up to a point and then reached a plateau.

Presumably after -- not every patient will reach maximum pharmacodynamic activation of CD40 or OX40 at the exact same dose. And so identification of a maximum plateau may improve the probability that we select a dose which maximizes the biology for all patients we might treat. Of course, then observation of anti-tumor activity is important.

And then -- we should have mentioned this earlier, but also in narrowing the dose and schedule we'll be looking as well at the PK profile and ensuring that not only do we achieve full occupancy of the targets, but that there is sufficient free drug in the system to maintain full occupancy through the dosing interval. So collectively, those are the vectors that we're triangulating to pick up a dose going into subsequent studies.

Great. Thanks, Taylor.

Sure. Thanks for the question.

Thank you. That's all the time we have for today's Q&A session of the call. At this time, I'd like to turn the call back over to Taylor Schreiber, Chief Executive Officer of Shattuck Labs, for closing remarks.

Thank you, operator, and thank you all for joining the Shattuck Labs second-quarter financial results and business updates conference call. We appreciate your continued interest in Shattuck, and we look forward to updating you on our milestones throughout the remainder of this year. Thanks very much.