STIFEL 2026 HEALTHCARE CONFERENCE - ALAUNOS THERAPEUTICS INC

Explicit Guidance:

• Financial Runway: Raised $350 million (upsized from $200M target) provides operational runway extending into 2029.
• Clinical Milestones: Phase 1B proof-of-concept data for lead program (199) and anti-PDGF-B antibody (360) expected next year (following entry into clinic); full proof-of-concept data anticipated in the 2028 timeframe.
• Competitor Data Timing: GSK's BMP9/10 sparing drug (35 Pharma) Phase 2 data in PAH and HFpEF expected next year; GSK HFpEF data expected 2028; Regeneron's Phase 2 PDGFB data expected 2029.
• Merck Commercial Outlook: Sotatercept (Winrevair) generated $2 billion in revenue two years post-launch; projected peak revenue of $8–10 billion for PAH alone; potential for $20–30 billion market opportunity across broader cardiopulmonary indications.

Business-Segment Outlook:

• Lead Program (199): Positioned as a "first-in-class" or "fast-follower" in Pulmonary Arterial Hypertension (PAH), targeting superior dosing convenience (potential flat dosing, sub-Q auto-injector, weekly or weight-band profiles) versus Merck's Q3-week dosing. Aiming to improve upon Sotatercept's dosing limitations which led to the exclusion of the higher dose (0.7 mcg/kg) due to hemoglobin changes.
• HFpEF Expansion: Planning to advance into Heart Failure with Preserved Ejection Fraction (HFpEF) as a fast follower to Merck's Phase 3 program, leveraging a potentially larger patient pool (10x PAH) and optimizing dosing beyond Merck's selected lower dose.
• Group 3 Indications (ILD/COPD/IPF): Aiming to be first-in-class in Interstitial Lung Disease (ILD), Idiopathic Pulmonary Fibrosis (IPF), and COPD, capitalizing on anecdotal success where Sotatercept has been used off-label. Management notes these indications have "blockbuster potential" similar to recent launches by $20–30B biotechs.
• Next-Gen Platforms (247 & 258): Advancing programs designed to spare BMP9/10 signaling (unlike Sotatercept) to allow higher dosing of ActRII inhibition without hemoglobin-related side effects. Conditional on positive Phase 2 readouts from GSK's competing asset; otherwise, 199 remains the primary commercial focus.
• Combination Therapy: Advancing an anti-PDGF-B antibody (360) next year, designed for co-formulation with 199 to create a potential "best-in-class" or "first-in-class" combination approach in PAH, targeting orthogonal mechanisms to improve efficacy beyond monotherapy.

Market and Competitive Outlook:

• PAH Market: Valeris positioned to challenge Sotatercept's dominance by addressing dosing frequency and convenience ("flat dosing," auto-injector) which current specialists note is suboptimal.
• Pricing Dynamics: Expects Sotatercept to maintain flat pricing between doses and retain orphan status in HFpEF due to Merck's focus on labeling criteria and high efficacy (hazard ratio <0.2). Valeris anticipates a strong market entry, potentially capturing both incident and existing patients, though switching rates may be influenced by patient comfort with established therapies.
• Market Entry Strategy: Relies on a concentrated prescriber base of specialists rather than primary care, enabling rapid share gain if clinical data is compelling.
• Structural Advantage: Uniquely positioned as the only entity planning combination therapies and next-gen dosing regimens for the ActRII signaling pathway, whereas Merck is locked into its initial dosing strategy and face long timelines (9+ years) to pivot to Group 3 diseases.

Macro / Industry Outlook:

• Regulatory Pathway: Management cites "very nice regulatory precedent" for moving quickly from Phase 1 proof-of-concept to registrational Phase 3 studies in PAH, utilizing endpoints like BNP, 6-minute walk distance, and pulmonary vascular resistance.
• Clinical Trends: Anticipates continued external data generation from Sotatercept across Group 2/3 diseases (ILD, IPF), which will validate the mechanism and inform Valeris' own studies.
• Biotech Landscape: Observes a trend of successful late-stage biotech launches in pulmonary indications (e.g., United Therapeutics, Roivant) suggesting high investor appetite and commercial success for novel mechanisms in this space.

Strategic Initiatives:

• Product Launch & Optimization: Aggressive clinical strategy to optimize dosing, delivery, and administration of 199 to improve upon Sotatercept's limitations (specifically hemoglobin elevation risks and dosing frequency).
• Pipeline Expansion: Moving aggressively into HFpEF and Group 3 lung diseases (ILD, IPF, COPD) to diversify indications beyond the smaller PAH market.
• Management Transition: CEO (Speaker) will serve temporarily with a goal to hire a permanent CEO within the first year, while maintaining board support via Paragon Therapeutics.
• M&A/Asset Development: Built "call options" into the company structure to pivot to next-gen mechanisms (247/258) if competitor data (GSK/Kiros) validates BMP9/10 sparing strategies; otherwise, full focus on 199 and combinations.

Risks and Headwinds to Outlook:

• Competitor Outcomes: The strategic path for next-gen assets (247/258) is contingent on GSK's upcoming data; if GSK's data is negative, Valeris proceeds with 199. Conversely, if GSK succeeds, Valeris must move quickly to match.
• Safety/Efficacy Trade-offs: Potential for hemoglobin elevation (on-target but clinically sensitive) and the risk that BMP9/10 sparing may not yield the predicted efficacy benefits, or that the "spare" mechanism is actually a "feature" of Sotatercept.
• Switching Dynamics: Risk of low patient switching to 199 if Sotatercept is highly effective and dosing is deemed acceptable by patients, leading to a "stickiness" of existing therapy.
• Regulatory/Development Risk: While regulatory pathways are clear, Phase 1/2 studies must confirm dose-dependent biomarkers (serum FSH, hemoglobin changes) to justify progression to registrational trials.

Management Tone on the Future:

• Confidence Level: Highly confident ("very nice," "incredibly well," "blockbuster potential," "unheard of hazard ratio"), viewing the current market landscape as a "moment in time" to capture first-in-class status in Group 3 diseases.
• Strategic Posture: Aggressive ("move aggressively," "fast follower," "first in class"), positioning the company to capitalize on gaps in Merck's strategy (dosing optimization, combination therapies, expansion into larger indications).
• Differentiation: Emphasizes the inability of large pharma (Merck) to pivot quickly due to regulatory inertia and the time cost of re-filing, framing Valeris' agility as a decisive competitive advantage.
• Hedges: Maintains conditional strategies for next-gen assets dependent on competitor data readouts, avoiding premature pivots until GSK's data is available.