Good morning and welcome to the Evelo Fourth Quarter and Full and 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call is being recorded at the Company's request.

At this time, I’d like to turn the call over to Stefan Riley of Evelo. Please proceed..

Thank you, operator. Good morning and welcome to Evelo's fourth quarter and year-end 2018 financial and operating results conference call. This morning, we issued a press release that outlines the topics that we plan to discuss today. This release is available at www.evelobio.com under the Investors tab.

Today on our call, Simba Gill, Evelo's CEO, together with key members of our leadership team, will review the Company's strategy, recent clinical highlights and our financial results.

Before we begin, I would like to remind everyone that statements made during this call that do not relate to matters of historical fact, including statements about our objectives and anticipated clinical milestones for 2019, the impact of any of our monoclonal microbials and the timing and result of any clinical studies should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the Reform Act. Actual results could differ materially from those indicated by forward-looking statements due to the impact of many factors.

Participants are directed to the risk factors set forth in Evelo's quarterly report on Form 10-Q for the quarter ended September 30, 2018 and the Company's other filings with the Securities and Exchange Commission. Any forward-looking statements made today speak only to Evelo's operations as of today.

Evelo disclaims any duty to provide updates to its forward-looking statements even if subsequent events cause the company's views to change. It is now my pleasure to pass the call over Simba..

Thanks, Stefan. Good morning, everybody, and Happy Valentine's Day. Today, I will review our vision and strategy, Duncan McHale, our Chief Medical Officer will review our clinical execution to-date and plans for the many clinical studies we're taking forward this year.

Mark Bodmer, our Chief Scientific Officer will review an important discovery that we have made, which underpins the mechanism of action over monoclonal microbials. Finally, Jonathan Poole, our Chief Financial Officer will review our financial before we turn the call over for question-and-answer.

Our vision is to develop monoclonal microbials as a broadly applicable new class of medicines.

Immune cells in the small intestine play a central role in governing our systemic immunology and our platform harnesses this to open up the potential for efficacious, orally delivered and convenient, safe and cost effective medicines, breaking multiple dogmas across science, medicine and business.

Our products have the potential to impact major chronic diseases and cancers at all stages of disease across global patient populations. We are advancing a broad clinical development pipeline, investigating multiple monoclonal microbials across different disease pathologies with multiple formulations.

We are also continuing to invest in our platform and pipeline with the aim of capturing the full breadth of our opportunity.

We have advanced our understanding of monoclonal microbials and the gut-body network through our internal research activities, as well as true collaborations with leaders in academia, including Harvard University, the Mayo Clinic and the University of Chicago. I would like to emphasize our clinical progress and execution against plan in 2018.

Our Series C financing and IPO place the Company on a strong financial footing, enabling us to invest in our platform and the advancement of several product candidates. We gained approval of multiple regulatory applications and initiated clinical trials in the U.S.

and Europe ending 2018 with three products in four clinical trials addressing nine different patient groups in oncology and inflammatory diseases. We have done this in less than [technical difficulty] Evelo was launched.

These achievements are a testament to the talent we have attracted in research, manufacturing, clinical development, regulatory affairs, legal, intellectual property, finance and corporate development. I want to acknowledge and thank our remarkable team at Evelo for making this happen.

I'd like to now introduce Duncan McHale, our Chief Medical Officer, to review the status, progress and anticipated readouts of our key clinical programs beginning with our inflammatory disease clinical trials..

Thanks, Simba. This has been an exceptionally busy period clinically as we've advanced three clinical candidates across multiple indications in parallel.

First, I'd like to talk about EDP1066, the first [technical difficulty] inflammatory monoclonal microbials candidates, which we're currently studying in a Phase 1b critical trial in atopic dermatitis and psoriasis. It's a placebo-controlled trial and test a range of doses of EDP1066 in 36 healthy volunteers and up to 84 patients.

The primary endpoint of the trial is the safety and tolerability of EDP1066. And we have included exploratory endpoints, which will give us insight into the potential clinical benefits of EDP1066 and its immunological effects.

Specifically, we're investigating how EDP1066 modulates clinically validated biomarkers of inflammation across Th1, Th2, and Th17 biology. We've completed dosing of the three healthy volunteer cohort in this trial.

And following review of the data by the trial’s safety review committee, we have proceeded as planned to the cohorts of expectations with atopic dermatitis and psoriasis. We have recently decided to add an additional cohort of 24 atopic dermatitis patients at the lower one-time’s dose.

The addition of this cohort means that we will have a full range of one-time and five times the estimated human equivalent dose for both atopic dermatitis and psoriasis patients based on our metrics scaling from the mouse models. We expect to announce initial clinical data from this trial in the second quarter of the year.

As you heard from Simba, our strategy includes studying multiple formulations ahead of later stage trials and commercialization. Therefore, we're initiating an immuno-pharmacology study in healthy volunteers with EDP1066. We expect to dose the first subject in this study in the first half of this year and to complete it in the second half.

Now, consistent with our strategy to build a portfolio of multiple monoclonal microbials for the treatment of inflammatory diseases, we have advanced EDP1815 into placebo-controlled Phase 1b trial in atopic dermatitis and psoriasis.

The study has a similar design to the EDP1066 study, and we expect initial clinical data from this trial in the second half of the year. We aim to advance our inflammatory disease portfolio into further clinical trials in atopic dermatitis, psoriasis and additional indications in the second half of 2019.

And our potential additional indications include asthma, psoriatic arthritis, rheumatoid arthritis and inflammatory bowel disease. I'd like to discuss the progress we've made with EDP1503, our first antitumor monoclonal microbials. Now, one of the challenges in the immunological field is working out the mechanistic rationale for combination therapy.

Our preclinical research demonstrates that EDP1503 has pleiotropic effects modulating multiple antitumor immunological pathways. In the tumor micro environment, we see up regulated expression of MHC Class I and the chemoattraction CXCL9 and 10, and increased natural killer NK cells and proinflammatory metaphase [ph] cell activity.

These mechanisms all have relevance in treating patients who are either non-responsive or poorly responsive to current cancer immunotherapy. So, EDP1503 is in two open label Phase 2 clinical trials in a diversity of tumor types covering the broad range of immunoresponsiveness.

First study is a clinical collaboration with Merck, investigating the effect of EDP1503 and KEYTRUDA combination therapy in microsatellite stable colorectal carcinoma, triple-negative breast cancer and a basket of PD-1 relapsed tumor types. We commend dosing in this study in quarter four 2018.

Now, the second ongoing study is an investigator-sponsored study by the University of Chicago, also in collaboration with Merck. This study is looking at the effects of at EDP1503 and KEYTRUDA combination therapy in Metastatic Melanoma in both patients with checkpoint inhibitor naïve and those who have relapsed on checkpoint inhibitor therapy.

In both trials, patients will be dosed daily EDP1503 monotherapy for two weeks at the start of the trial, then they will receive daily EDP1503 in combination with checkpoint inhibitor therapy for the remainder of the study.

[indiscernible] because we'll be taking a baseline and at the end of the monotherapy period to look for effect of EDP1503 in monotherapy on the tumor immune environment. We expect clinical data from the first trial in the first half of 2020 and anticipate clinical data from the investigator-sponsored trial in the second half of 2020.

So, I’d now like to hand over to Mark, our Chief Scientific Officer to update you on the platform development..

Thank you, Duncan. We continue to discover marvelous new things about what immune cells in the small intestine can do and how monoclonal microbials have their effects. I'd like to tell you about some of them. The lining of the small intestine is the body's main window on our environment.

It contains the bulk of our immune cells and these cells sense the outside world and govern systemic immune activity according to what they sense. They are central regulators of the immune system.

This fills a fundamental gap in our understanding of how immunity and inflammation are coordinated and is the core scientific realization that has allowed us to create a new drug platform. I’ll describe some important insights into monoclonal microbials and how they work.

In a surprising discovery we found that many of our monoclonal microbials do not need to be viable for efficacy. They need to be intact, but growth and cell division are not required. This indicates the monoclonal microbial efficacy comes from the recognition of microbial structural motifs by immune cells in the small intestine.

It's also a formal demonstration that the effects are not dependent on engraftment or colonization. This extends the range of our discovery platform, opening up a new class of non-replicating monoclonal microbials quite distinct from anything else in the field.

We've defined an additional manufacturing steps to produce these impacts of non-replicating forms of monoclonal microbials and recently with our first non-replicating product candidate, EDP1867 into development for inflammatory diseases.

Coupled with this work on non-replicating microbes, we've been doing detail studies tracking the path of the immune signals generated by the action of our products in the small intestine. As a reminder, monoclonal microbials do not distribute outside the gut, but their effects do.

We mapped our direction from the immune cells in the small intestine to associated lymph nodes to the sites of therapeutic effect in plain issues or tumors throughout the body. A clear picture is emerging of the modulation of cellular, the cytokine pathways consistent with our understanding of validated disease targets.

The striking observation from this work is the coordinated effects on multiple pathways, reflecting a natural, complex process of restoring immune health. And we see the same picture with both live and non-replicating products.

As my final comment, we believe that these gut body phenomenon will turn out to be broadly general for many aspects of physiological control. This is the basis of our continuing discovery work, not only on the extensive range of opportunities to address clinical needs and inflammation and oncology, but also in an exciting range of therapeutic areas.

I'll now turn the call over to Jonathan..

Thanks, Mark. In today's press release, we reported cash, cash equivalents and investments of $147.9 million at the end of Q4 2018 as compared to $164.3 million at the end of Q3 and $38.2 million at the end of 2017. We expect that these funds will be sufficient for our operating and capital expenditure needs into the second half 2020.

And as Simba mentioned, our current operating plan includes the completion of our ongoing clinical trials for EDP1066, EDP1815 and EDP1503 and the potential initiation of clinical trials in two additional indications in our inflammatory disease therapeutic area.

R&D expenses for the fourth quarter increased $5.2 million to $11.3 million from the same period 2017, reflecting our expanding portfolio of clinical trials and continued investments in our platform and preclinical pipeline.

Cost drivers for the full year were similar with total 2018 R&D expenses of $39.9 million, compared to $20 million for the same period in 2017. G&A expenses for the fourth quarter of 2018 were $4.7 million, compared to $2 million for the same period in 2017 and for the full year G&A expenses were $18.2 million compared to $17.6 million in 2017.

These increases for the quarter and the year were due primarily to increased personnel costs, professional and consulting fees, and facility expenses, supporting Evelo’s growing organization and public company infrastructure required during our IPO in May 2018.

And finally, net loss was $15.4 million for the fourth quarter compared to a net loss of $9.9 million for the same period in 2017. And for the full-year 2018, the net loss was $60.9 million compared to $34.1 million in 2017. With that, let me hand the call back to Simba to wrap up.

Thanks Jonathan. We have built a strong foundation for Evelo and believe that we are now well-placed to validate the potential of monoclonal microbials as a broadly applicable new modality of medicines with the potential to treat all stages of disease for large patient populations around the world.

As a final comment, building great companies is always about leadership, people and culture, and we remain focused on attracting and inspiring special people in a special culture that allows for continuous innovation, invention and creation. With that, thank you very much for your attention. And we are very happy to take any questions you may have.

Operator?.

Thank you. [Operator Instructions] First question comes from the line of Chris Shibutani of Cowen. Your line is open..

Hi, guys. This is CJ [ph] for Chris Shibutani this morning. Congratulations on all the progress since the last quarter, and thanks for taking the question. I'm curious to learn a little bit more about the thoughts behind the immuno-pharmacology clinical study that we started in healthy volunteers for 1066.

What is that you're hoping to learn there that will better enable additional trials in the inflammatory indications in particular for the second half?.

CJ, this is Simba. Thanks for your kind comments. I’m going to let Duncan answer that question..

Thanks for the comments. So, yes, the immuno-pharmacology experimental study, it allows us to test a variety of sort of dosing levels and formulations.

And these studies should provide a rapid readout, and the results would help accelerate future developments for 1066 and on the monoclonal microbials, so -- so to say, formulations maybe around new patient populations that we would need to include in the future developments such as pediatrics and may include way to optimize delivery..

And would there be new types of biomarker data, things like that that would provide new information for indications?.

At this point, we're not committing to communicate the data that we would get from these studies, they are really for internal decision-making in terms of the program. .

Sure. Okay. Thanks. You guys have also been very confident about the data you haven't seen so far it seems.

Can you give us a little more color what we should expect? What types of data for the upcoming readouts for 1066 and 1815 in terms of types of data we’ll see to specific biomarkers, number of patients, will it be all healthy volunteers, will patient data be included?.

So, firstly, let me emphasize that we’re very much enrolling on plan and we've completed with EDP1066 through the highest dose cohort in healthy volunteers. So, based on the data review by the trial’s safety review committee, we proceeded as planned into cohorts of patients with both atopic dermatitis and psoriasis on the EDP1066 trial.

We expect to report initial clinical data on both EDP1066 and EDP1815 in line with our guidance, which is second quarter of this year for EDP1066 and the second half of this year for EDP1815.

The primary endpoints of the study are -- of the studies are safety and tolerability of each of the EDP1815 and 1066 in healthy volunteers, as well as in patients with mild or moderate psoriasis or atopic dermatitis.

We will be looking at exploratory biomarker endpoints, which will include the effects of the potential therapies on multiple validated clinical measures of disease. And we're not giving specific guidance on what those measures are. But we'll be looking at an integrated set of biomarkers, pharmacodynamic markers and beyond..

And our next question comes from the line of Matthew Harrison of Morgan Stanley. Your line is open..

Thanks for taking the question. This is Vikram on for Matthew. So, our question is around being able to compare the data we're going to get this coming year, especially in atopic dermatitis. There's been a lot of data from antibodies, from small molecules over the last couple of years.

There's been a lot of interest about -- in how we're going to be able to compare the data we're going to get in AD from 1066 and 1815 this year to those previous data sets.

So, how would you think about framing that comparison? And, are there any trial design details that you could share that will help people make the comparison?.

Yes. Let me make a high level point around your question, directly, Vikram. So, very importantly, one of the strategic drivers behind what we're doing is to advance monoclonal microbials for the treatment of all stages of inflammatory disease.

Studies are very much focused on the moderate disease populations, and that's distinct to the bulk of antibody work in which most antibodies are primarily used, as you know, between severe disease populations. So, the moderate patient populations represent a very significant unmet medical needs.

Those patients typically don't take antibodies for a variety of reasons, due to the limitations of antibodies. So, I just wanted to clarify that.

Specifically, the other point is that the main aims of the study, as I commented on briefly just now, safety and tolerability in healthy volunteers and patients, and the then essentially a signal finding study.

So, that's the key thing we're looking for is a signal, which would potentially validate the central thesis of the Company, i.e., the systemic immune system can be modulated by engaging immune cells in the small intestine with already delivered monoclonal microbials.

So, that's really what we're looking at as opposed to looking at comparative data in historical clinical studies..

[Operator Instructions] Our next question comes from the line of Matthew Luchini of BMO Capital. Your line is open.

So, first, just to be clear, following up on one of the prior questions, the data that comes out in the second quarter, will include both healthy volunteers and patients with active disease? And then, secondly, I wanted to just share a little bit more about the addition of the one-times dose cohort in those added for atopic dermatitis, a little bit more about why and what you saw, and should we expect your follow as the same path in 1815 study? And then, the final question would just be for 1867, given that you're thinking about also moving that into inflammatory disease.

Could you talk about how you think that product might be positioned relative to your existing inflammatory products? Thank you..

Thanks, Matt. So, yes, -- yes to your first question, in terms of will we provide readout in the second quarter in both patients as well as healthy volunteers. So, that's a very clear, yes. Let me take the 1867 question next and then I'll hand over to Duncan, he can talk about the expansion with the additional cohort in the EDP1066.

So, as Mark said, the discovery of Evelo in which we have now shown that some monoclonal microbials retained activity even when the unknown replicating is profound. What that opens up is an expansion of our existing strategy, which is, take forward multiple antiinflammatory products for the treatment of multiple different diseases.

And the data that we’ll generate in the clinic will drive which products we take forward in which different indications. So, at this stage, what we can tell you is EDP1867 drives, profound inflammatory effects is working in a different way to the other microbes. And we'll go into the clinic and see what the clinical biomarker data represents.

And that will drive how we advance it as we go forward. So, just to illustrate that in a little bit more detail, the breadth of inflammatory diseases, as you know, Matt covers everything from psoriasis to psoriatic arthritis, atopic dermatitis, food allergies, asthma, RA, ankylosing spondylitis, other ulcerative colitis, Crohn's, colitis, and beyond.

So, there's a huge breadth of different inflammatory indications we could go after, each of which are driven by differential cytokine pathways et cetera, so IL-4, IL-5, IL-13, et cetera. So, that's always been our strategy to take forward multiple different inflammatories, given the breadth of biology and the breadth of disease.

And now with 1867, we have another potentially very exciting product? So, that's how we look at 1867.

Duncan, do you want to talk about the expansion to the additional cohort for 1066 and what we're already doing, what we have now initiated with 1066 with -- 1815 actually, Matt just indicated that? So, yes, we’re already looking in both atopic dermatitis and psoriasis on the current plan at 1x and 5x dose on 1815.

But, Duncan give more color on 1066..

Yes. And so just to be clear, the addition of the cohort, nothing to do with anything -- this has been in the trial.

What we have done is, as Simba said, this is originally a signal searching study -- is a signal searching study and we were looking at the higher dose to get that signal, but we had a low dose in psoriasis because that enables the safety to get to the higher dose in both atopic dermatitis and psoriasis.

By adding in the lower dose in atopic dermatitis, that balances that up and actually gives us a more sensitive study to detect a signal in both atopic dermatitis and psoriasis. So, it improves the overall sensitivity to detect the signal.

And as Simba said, actually we've incorporated that upfront into the 1815 design, because we think it's a better design, it’s a more sensitive design. So, it's purely just optimizing our ability to see a signal there..

Thank you. And this does conclude the Q&A session. I'd like to turn the call back over to Simba Gill for the closing remarks..

So, I’d just like to thank everybody for their time and attention. Thank you very much..

Thank you for joining us today. You may now disconnect..