Hello and welcome to the Pieris Pharmaceuticals, Inc. Year-End 2022 Conference Call and Webcast. [Operator Instructions]. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Tom Bures. Please go ahead, sir..

Thanks, Kevin. Good morning, everyone, and thank you for joining us for our year-end 2022 conference call and corporate update.

On the call today, we have Steve Yoder, our President and CEO, who will provide a corporate overview and outlook on our pipeline; Hitto Kaufmann, our Chief Scientific Officer; Shane Olwill, our Chief Development Officer; and Mary Fitzgerald, Vice President, Project Leader Elarekibep, who will be available for Q&A.

You can access the press release released this morning on the Investor Relations page of our website at www.pieris.com.

Before we begin, I'd like to caution that comments made during this conference call may contain forward-looking statements involving risks and uncertainties regarding the operations and future results of operations of Pieris, including statements related to the timing and progress of our clinical trials and preclinical programs, including the anticipated timing for the reporting of data, our partnerships and our financial position, and actual results or events may differ materially from those expressed or implied by such forward-looking statements.

Factors that might cause such differences are described in our filings with the SEC, including our annual, quarterly and current reports. The information being presented is only accurate as of today, and Pieris undertakes no obligation to update any statements to reflect future events or circumstances. I will now turn the call over to Steve..

Well, thank you, Tom. And thank you to everyone for joining us today for our year-end 2022 earnings call. Today, I will be providing an update on how we have continued to advance multiple clinical and preclinical programs that carry transformative potential, while also remaining committed to cost effective operations.

I also will provide progress updates on the company's top priority, obtaining data from the Elarekibep Phase 2a study in asthma. Elarekibep is an oral inhaled IL-4Rα antagonist, also referred to as PRS-060 or AZD1402, which is partnered with AstraZeneca.

Further, I will provide an update on the additional clinical and preclinical inhaled respiratory programs Pieris is advancing alongside Elarekibep as we seek to build a leading respiratory pipeline.

Respiratory diseases such as asthma, idiopathic pulmonary fibrosis in chronic obstructive pulmonary disease are areas of significant unmet need, and these are also indications that continue to be dramatically underserved by the biopharmaceutical industry.

If we are successful advancing inhaled biologics that directly target the relevant lung tissue, we expect to offer a fundamentally new approach to treating multiple high prevalence respiratory diseases, potentially transforming how patients with these diseases are treated.

Turning to our respiratory pipeline in more detail, I will begin with Elarekibep. We are working closely with our collaborator, AstraZeneca, or AZ, who is enrolling in the ongoing Phase 2a study for asthma as the study sponsor.

We believe Elarekibep could represent an expansive opportunity as an inhaled biologic for asthma that has the potential to address important shortcomings of currently approved drugs. The underlying biology targeted by Elarekibep is well characterized, and we believe that the development path for this program has also been meaningfully derisked.

Elarekibep targets IL-4Rα as mentioned, a target validated by dupilumab, which is an FDA approved inhibitor of IL-4Rα that has demonstrated FeNO reduction and clinical efficacy in uncontrolled moderate to severe asthma. The Elarekibep commercial opportunity is substantial when considering the current multibillion dollar asthma therapeutics market.

By directly targeting lung tissue through a convenient route of administration, Elarekibep has the ability to provide a superior product profile, offering a route of administration that many patients and health care providers would prefer.

If we are successful, we believe that Elarekibep could transform how asthma is managed, and the resulting commercial opportunity would be substantial. Further, we believe positive data from Elarekibep would validate our broader respiratory franchise.

In addition, there may be future opportunities to develop Elarekibep in indications beyond asthma, notably recently reported positive dupilumab Phase 3 data in COPD provide clear clinical evidence that an IL-4Rα antagonist can help COPD patients with Type 2 inflammation.

It is our view that an inhaled IL-4Rα intervention could be as relevant to treat COPD as it is for asthma. Now turning to the details of the current clinical study, the Elarekibep Phase 2a trial is well powered and intended to provide clear evidence of the clinical promise of Elarekibep in moderate to severe uncontrolled asthma.

From an efficacy perspective, the study will compare patients administered ICS/LABA background therapy, plus 3 milligrams of DPI, or dry powder inhaled, formulated Elarekibep versus patients administered this ICS/LABA background therapy plus placebo.

The study's primary efficacy endpoint will evaluate FEV1 improvement at four weeks relative to placebo. The top line results will also include an overview of the 1 milligram, 3 milligram and 10 milligram DPI dose cohorts in the safety portion of this study.

Based on our recent discussions with AstraZeneca, topline Phase 2a study results from this study are now expected to be reported by the middle of 2024.

AstraZeneca continues as the operational lead, and this change from prior guidance is based on their most recent assessment of the study, as well as updated projections based on AstraZeneca's actions taken to deliver this study.

As a baseline, we are pleased that AstraZeneca has received regulatory approval in all jurisdictions for a previously announced protocol amendment. As a reminder, this amendment was prepared to improve recruitment, while maintaining study rigor.

The protocol changes include expanding FEV1 inclusion from 60% to 80% to 50% to 85%, permitting high dose inhaled corticosteroids and long acting beta agonist, the ICS/LABA combinations as background therapy where previously this was limited to moderate dose ICS/LABA.

In addition, there was simplification of the schedule of assessments and other modifications intended to reduce unnecessary patient and site burdens.

Moreover, AZ has communicated to us that Elarekibep is a high priority program, and that their organization is significantly increasing operational resources on the study to drive patient recruitment, including the addition of several new countries and sites, bringing the total number of clinical sites in this study to over 100.

While it remains too early to fully appreciate the impact of the study changes, leading indicators such as clinical site engagement and patient screening data are encouraging.

With Elarekibep being strongly supported by AstraZeneca's organizational commitment and with the increased resources provided, we are eagerly looking forward to obtaining study results. This important data set, alongside the delivery of a development plan and budget from AstraZeneca, will trigger our opt-in decision into co-development.

Being in a position to opt in if data are positive is a top priority for our company. And you will hear in a few moments from Tom how we are prudently managing our finances with Elarekibep as our highest priority.

Before this, however, I want to spend some time discussing two other highly differentiated inhaled respiratory programs that we are advancing, PRS-220 and PRS-400, both of which are fully proprietary.

Given the data we have generated so far with Elarekibep, we have increased conviction in the validity and differentiation of our inhaled therapeutic protein approach.

PRS-220 is an inhaled Anticalin protein with best-in-class potential that targets connective tissue growth factor or CTGF for the treatment of idiopathic pulmonary fibrosis and other forms of fibrotic lung disease.

Preclinically, PRS-220 has demonstrated superior on-target potency compared to pamrevlumab, which is an intravenously infused CTGF antagonist in late stage clinical development.

Critically, we believe that an inhaled route of administration provides for superior lungs exposure and may lead to a superior clinical outcome compared to a systemically administered approach in this pathway.

Based on these potential benefits, the convenience of at-home delivery via inhalation, as well as the ability to combine PRS-220 with current standard of care for IPF, we believe PRS-220 could have best-in-class potential for this serious disease.

We continue to administer PRS-220 according to plan to subjects in a Phase 1, single ascending dose and multi-ascending dose study that is evaluating the safety, tolerability and pharmacokinetics in healthy volunteers. We expect to report study results in the second half of this year.

As a reminder, this work is partially funded by a grant from the Bavarian Ministry of Economic Affairs, the Regional Development and Energy. Lastly, I want to provide an update on PRS-400, which is an inhaled anti-Jagged-1 antagonists being developed for the treatment of muco-obstructive lung disease.

Our enthusiasm for this program is based on the large market opportunity represented by mucus driven respiratory diseases, and is supported by preclinical data showing that PRS-400 can regulate mucus production in the lungs.

Furthermore, given the desire to avoid disrupting mucus homeostasis throughout the body, especially in the intestines, we believe an inhaled intervention is the most appropriate route of administration to address muco-obstructive lung disease.

PRS-400 is designed to block the Jagged-1 Notch signaling locally in the lung via oral inhalation with the objective of reversing goblet cells metaplasia, hyperplasia and mucus plugging, as well as increasing the number of ciliated cells.

Unlike many other interventions that aim to reduce mucus burden, PRS-400's mode of action is independent of stimulus, which we believe offers applicability across a broader patient population. Our team has made excellent progress optimizing further characterizing PRS-400 program lead candidates.

We anticipate presenting additional preclinical data throughout 2023, and we are also working towards a development candidate nomination later this year.

Turning now briefly to our immunooncology pipeline, we remain committed to delivering on our partnered obligations, and I want to highlight that with the benefit of our existing collaborators, our immunooncology pipeline is being advanced in a cost efficient manner.

We also believe that multiple opportunities exist to generate value from this portfolio based on promising preclinical and clinical data. And we continue to work to achieve this objective.

For example, in our collaboration agreement with Servier, we continue enrollment in the dose escalation portion of the Phase ½ study of PRS-344 or S095012, which is a 4-1BB/PD-L1 Mabcalin bispecific for the treatment of solid tumors.

Next, within our Seagen collaboration, we earned a $5 million milestone payment when they initiated a Phase 1 study for SGN-BB228, also known as PR-346, which is a first-in-class CD228/4-1BB bispecific antibody-Anticalin compound designed to provide a potent co-stimulatory bridge between tumor specific T cells and CD228 expressing tumor cells.

Beyond this program, Pieris is committed to delivering on to other programs with Seagen. We believe we receive full reimbursement for internal and external spending on these programs.

Finally, I want to mention that Boston Pharmaceuticals continues to advance PRS-342 or BOS-342, which is a 4-1BB/GPC3 bispecific Mabcalin compound towards the clinic, with Phase 1 expected to begin in the coming months. We are eligible to receive a more nominal milestone payment upon the first-in-human dosing on this program.

And we believe that clinical entry of this program, which will be the fourth clinical stage 4-1BB from our IO franchise offers additional long term upside. This concludes my prepared remarks and I will now hand the call back to Tom..

Thank you, Steve. Cash and cash equivalents and investments totaled $59.2 million for the quarter ended December 31, 2022, and this does not include the $5 million Seagen milestone payments, which was received in February 2023.

The year-end cash balance is compared to a cash and cash equivalents balance of $117.8 million for the year ended December 31, 2021, but the overall decrease during the course of 2022 being a result of the need to fund operations. The company believes operations are sufficiently funded for more than the next 12 months.

Research and development expenses were $53 million for the year ended December 31, 2022 compared to $66.7 million for the year ended December 31, 2021.

This decrease is due to the lower overall program costs for both Elarekibep and Cinrebafusp alfa as well as due to lower manufacturing costs across other late stage respiratory and immunooncology programs, lower license fees and lower consultant costs.

These lower costs were partially offset by higher clinical costs for PRS-220 and PRS-344 or S095012. Higher preclinical spending was also incurred on PRS-400 and there was an increase in personnel and travel costs.

Next, general and administrative costs were $16.4 million for the year ended December 31, 2022 compared to $16.6 million for the year ended December 31, 2021.

The period-over-period decrease was driven primarily by lower personnel facilities and audit and tax costs, partially offset by higher business development, travel and amortization of deferred costs related to revenue recognition. Moving on to other income.

For the year ended December 31, 2022, $8.2 million of grant income was recorded with respect to PRS-220 compared to $3.7 million for the year ended December 31, 2021.

The increase is due to high overall costs incurred on PRS-220 as the program progressed into Phase 1 clinical study, along with a full year of grant funding eligibility in 2022 compared to 2021, the year in which the grant was awarded.

The company's net loss was $33.7 million or a $0.45 loss per share for the year ended December 31, 2022 compared to a net loss of $45.7 million or a $0.71 loss per share for the year ended December 31, 2021.

With respect to my remarks that we believe operations are sufficiently funded for more than the next 12 months, I wanted to make a few additional comments. First, we believe in the immense commercial potential of our respiratory programs, and that inhaled biologics can yield transformative therapies not possible by other modalities.

We remain committed to our mission and are evaluating opportunities to support the long term development of therapeutic candidates, such as PRS-220 and PRS-400.

However, we cannot ignore the more constrained environment in which we are operating, and we continue to reduce our cost profile as evidenced by the significantly reduced cash burn of approximately $22 million in the second half of 2022 compared to more than $40 million in the first half, while having meaningfully advanced our two proprietary respiratory programs, PRS-220 and PRS-400.

Although our operating plans for the current year include the benefit of cost saving actions we have already taken, we are prepared to gate future investments on PRS-220 and PRS-400, including certain Phase 2 readiness activities for PRS-220 and IND-enabling activities for PRS-400 in the interest of achieving our top priority, namely, obtaining data from the Elarekibep Phase 2a study in asthma.

Based on the current timelines for AZ to deliver this study, we are confident we will be able to achieve our cash reach objectives on the basis of our current balance sheet, making cost saving decisions as needed and being supported by anticipated modest milestones from existing collaborations. With that, I'll now turn the call back over to Steve..

Thank you, Tom. And thank you all for joining us on the call today. We would now like to open the call for any questions..

[Operator Instructions]. Our first question today is coming from Roger Song from Jefferies..

Just a couple from us. The first one for 060, knowing the timeline projection is mostly driven by AstraZeneca, but just do you know any kind of – I think, Steve, you mentioned on cost and leading indicators, the enrollment is accelerating after the protocol amendment and opening new sites.

Can you just give us a little bit more color around this acceleration of the enrollment and how confident maybe you and AstraZeneca about the new timeline for the topline data in 2024?.

Look, PRS-060 has been challenging to enroll, as we mentioned. However, we're very encouraged by the composite of efforts that AZ has been doing and has now really increased resource commitments as we communicated, hopefully, clearly today.

There has been a composite of meaningful protocol amendments that squarely address a significant portion of previously observed screen failures. And those have been fully approved in all the jurisdictions we mentioned.

There has been meaningful additional site engagement, which has translated into some of the increase in, for example, screening, which we can come back to.

And very importantly, there has been this clear increase in operational commitments to increase both geographies by more than 50% of the current number of geographies that are listed on ct dot gov. And a significant increase of sites to over more than 100.

So when we combine the more ease in enrollment, the increased site engagement, and the significant volume of increased sites, we believe that that is all trending in the direction that we needed to go.

And I think there's, without question – nope, there is no question that AZ doesn't believe this is a very high priority and they are treating it as a very high priority. I think what is also very helpful is as we've been working through COVID and we've working through post-COVID, we are operating under a new normal for enrolling asthma studies.

And we, with every passing month, every passing quarter, are getting more real time visibility on the throughput of patients through sites on studies, such as PRS-060.

And so, we will continue to rely on real-time intelligence from the global CRO that's administering the study for AZ to be as accurately informed as possible on those recruitment rates. And that is something that we have factored into our go-forward projections for delivering the study by the middle of 2024.

There is, I think, some important nuances or aspects of the study we can remind on in terms of the path to getting patients ultimately randomized.

And I'll maybe hand it over to Mary Fitzgerald, who can go through the actual sequence of events and why the screenings we believe are a reliable leading indicator to ultimately increasing the enrollment and delivering the study on plan.

So, Mary, do you want to take that one?.

Thank you, Steve. Yes, Roger, one of the things that happened is that screening takes some time to translate into actual randomization. So we have a two-week screening period followed by a four-week run-in period. So, there are six weeks then between the initial screening and when patients can be randomized.

So there is always a lag behind an increase in screening and the randomization. So we expect, based on the approval of the new protocol with the amendments that will enhance screening, will take a little bit of time to come into place, but based on this six-week period before patients are randomized..

I think we have a better understanding of the improvement here. So maybe just another question related to 060.

Also, the cash runway, given the timeline kind of we're working towards your cash for the topline, understanding you're gating your other earlier pipeline to prioritize the 060, but just to remind us, so what will be the next step for 060 after topline, what will happen there and how is that building to your operational plan?.

Roger, I'll just say at a high level a couple of remarks and turn it over to Tom. So, we are considering that the current cash reach will allow us to get through the data, the 060 Elarekibep, that top line data, and that is absolutely a priority.

It's probably one and something we are extremely committed to getting through on the basis of our balance sheet, and as we mentioned, modest anticipated milestones from our existing collaborations. Mechanics of co-development are pretty clear.

And we also believe it's going to be a watershed moment for that program, leading to clinical validation and we will be prepared to manage financing a co-development opt-in at that time.

Tom can talk again about the specific mechanics of what triggers our co-development opt-in and what we will have at the time, both internally and externally, to communicate publicly at the time we would communicate our opt-in decision..

At the time of the top line data readout, AstraZeneca would also need to give us a development plan, a going forward development plan that they would prepare in asthma, the indication of asthma for this program to get to BLA filing. With those two pieces of information, we have to make our codevelopment opt-in decision.

The opt-in, we can at two levels, one at 25% with a cost share with a cost cap, and the other is a 50% without a cost cap. In either one of those scenarios, the benefit compared to not opting in, for example, is that we get an increased share of economics for the lifetime of the program as opposed to a defined period, if we don't opt in.

So, enhanced economics on the back end.

And when we think about the opt in overall, again, I think one of the pieces that we think is very manageable for us, again, regardless of our profile, is at the time of the readout, assuming the data is good, the opt-in at 25% at a minimum is something that we will achieve or have an offset of future development milestones on this program that cover about 50% of the overall opt-in cost that we would have with AstraZeneca.

So that becomes a very attractive option for us on this program.

And if again we think about the, again, like the multibillion dollar opportunity in asthma and the market it brings, not even to mention the potential for COPD or other respiratory indications, again, we see the pathway that dupilumab has forged and this again creates a great opportunity for us.

And so, we very much value the co-development opt-in decision that we have..

Next question is coming from Jonathan Miller from Evercore ISI..

Just to follow on Roger's question there. Am I understanding right that the current cash mouths, you no longer anticipate – the current cash runway, you no longer anticipate to be sufficient to fund that 25% opt-in on its own and you would have to finance that when the time comes.

And then just related to that, when you say you're prepared to gate for the development for 220 and 400 in the interest of 060 advancement, can you give us some color on the timelines, how those timelines might change as we wait and when you would know whether or not you can move forward with those development programs in advance of the 060 readout?.

On the first question, just to be clear that, yes, we are not factoring in our runway, the ability to opt-in on the back of positive clinical efficacy data for PRS-060 or Elarekibep, but we've never factored that in. So, again, we believe that data set will be a watershed moment for the program.

And given the timeline for that data set to be delivered and all of the other optionality within our pipeline and our history of transacting with third parties to create significant shareholder value, we remain very optimistic and confident that we will be able to manage through that at the appropriate time.

The second question was around gating expenses. Well, I will say at a high level, and I'll turn it over to Tom, that we believe we still have time to manage those critical path activities to look at multiple options that we're working on across our pipeline.

And as you can imagine, PRS-400, more early stage, is a lower cost investment relative to PRS-220. However, PRS-220 is going to continue to benefit heavily from the Bavarian grant through the Phase 1 study, and we are absolutely committed to completing the Phase 1 study, which is on plan.

There will be some Phase 2 readiness activities that we will need to consider later in the year, second half of the year. And that's probably all we can say about that.

But, again, we have time to work through a lot of different options, including what we think could be a very informative readout from FibroGen's pamrevlumab, which has been communicated by FibroGen as something that we be disclosed by the middle of this year. So, I guess another important piece.

Nonetheless, we do believe PRS-220 has already demonstrated best-in-class potential based on the preclinical data we've seen and also based on the fundamental biology where we believe you absolutely should interrogate this locally to have a meaningful clinical benefit..

Maybe I'll just add one thing in terms of the overall spending. I'd say this doesn't change for those two programs, the path that we're on today. It just is going to impact that going forward, later this year, as Steve mentioned, right, and how quickly we're able to continue to move those programs along.

For example, we know a Phase 2 study for PRS-220 is something we would have to independently work to fund. So, certainly, some Phase 2 readiness type activities and starting that would make sense, again, in terms of gating that type of spending in order to make sure that we have sufficient runway to achieve the readout for Elarekibep.

And it's the same thing with PRS-400. There's a lot of costs that come into play once you get to a development candidate nomination that you're going to have to incur for CMC and tox work to bring that to an IND state. So those are the types of costs that those programs continue.

It's just those larger expenditures, some of those cannot be incurred or committed to in the near term..

On the oncology side of the business, obviously, most of this is off your balance sheet and it's being done through existing collaboration agreements, which is great.

I guess I'd love to get a sense for your expectation on milestone, funding potential there, is your cash crunch in any way going to impact the potential for those programs to develop with the collaborators?.

Steve here. I would I would answer that by saying we continue to increase the ratio of investments on respiratory to IO, as you probably imagine. And our current IO investments are very measured. Going forward, we're predicting that that's probably going to be about 10% of, for example, cash on hand.

So that's something that's very manageable, given, as you said, we have most of this development expenditure for IO off of our balance sheet. For 344, escalation is ongoing and we would expect to disclose those data publicly before changing the spend ratio that I mentioned.

And we believe that, given all of the data we've generated and the commitment of the several partners that have now [indiscernible] bispecifics in the clinic based on the same format and 4-1BB biology that there will be opportunities to get a net positive outcome for Pieris.

But we believe we're going to just have to let some of those things play out. .

Next question is coming from Matt Phipps from William Blair. .

This is Rob Andrew on for Matt Phipps. One of the issues that was raised last year was screen failures. And it's kind of been touched on a little bit here. But you've made efforts to kind of widen the funnel to avoid some of those failures.

So I guess, can you just confirm that you are now seeing less screening failures following the implementation of those protocol changes? Steve, I think you mentioned 100 sites now? Looks from clinicaltrials.gov, like there's about 60 up and running with about 40 listed as active.

Can you just give us a sense of how up to date that is and what the timelines are for getting to that 100 site number?.

Your first question was on the screen failures and how much the amendments have impacted that. And then the second question was on how current is the list on ct dot gov? I think Mary closely working with AZ can talk specifically about those.

We've already mentioned the impact that the amendments have, were meant to address about 50% of the screen failures, and that the T2 endotype will also continue to be a basis or has been a basis for screen failures, but we do not want to compromise on that point.

Again, remember, the composite of eosinophil and FeNO cutoffs, I think, really put us in the bullseye of the right patient population. So that's something we really want to try to maintain, and we are.

And we do believe with the significant increase in volume of additional sites and geographies that we're able to address that and manage that going forward.

Mary, please feel free to talk a bit about the nature of those amendments and how it's addressed a critical amount of the screening failures and then also the trajectory at a high level of the onboarding of the additional sites to get over 100 sites we mentioned..

Yes, of course.

In terms of the screening failures, some of the things that have been implemented, I think you're aware of them that the widening of the FEV1, for example, the allowing high dose inhaled corticosteroids, allowing separate devices to be used for the ICS and LABA combinations, all of these significantly contribute to improving the screen failure rate.

So for that to go down. But as Steve says, we can't reduce screen failure rate to zero. And everyone would anticipate that you will still see screen failures due to ensuring that we have a T2 endotype in the study. And of course, that's the appropriate endotype for the FEV1 improvement that we're looking for. So I think we've done what we can here.

And obviously, we're in constant dialogue with the sites to try and make sure that we accommodate things that are difficult for the site. So we have simplified, if you like, the assessments being done at each visit. So all of these contribute to making the study easier for patients and for sites.

So, all of these things we think will contribute to more patients coming into the study. And you alluded to the 60 sites being currently listed on clinicaltrials.gov, which is accurate. AZ have a transparency policy whereby they put meaningful changes on clinicaltrials.gov on a regular basis.

So I wouldn't expect the numbers there to be out of tilt with what's actually happening.

But when you make the decision to include new countries and new sites, of course, there's a lag between the time it takes between agreeing that you're going to do that, but missing the protocols and new protocol to those countries to be approved and those countries being approved and then the site being activated and screening starting.

So we wouldn't expect to see a significant increase there until later in the year when countries have approved the protocol on the sites that are involved in the study. So we would expect to see that happening towards the mid half of the year. So, Q2, Q3. So that's just, unfortunately, how long it takes to get countries involved and then sites active.

I hope that answers your question..

Just one other question, The dupilumab success in COPD was mentioned in the call.

Could you just kind of remind us of the mechanics of what a decision to pursue an additional indication would be kind of as it relates to the original deal and opt-ins or additional indications treated separately when it comes to those kinds of decisions if there were a decision to pursue any additional indications such as COPD..

As I mentioned, we are enthusiastic about the dupilumab data as in past other so-called T2 interventions, say, on IL-5 receptor have not produced such robust results. So, we do believe that this continues to validate IL-4Rα as the quintessential intervention point for T2 asthma, in particular stratifying as we continue to stratify patients.

And as it relates to the codevelopment opt-in, we do believe there are multiple features of the codevelopment opt-in that actually facilitate Pieris being able to participate in significant upside on additional indications that makes sense for oral/inhaled administration, including COPD.

Tom can talk about some of those mechanics, but some of the components that would allow us to participate should we choose to opt-in, even if the time of the opt-in, it's not clear exactly when additional indications may be pursued. So with that, I'll turn it over to Tom for some more of those details..

As it relates to an indication like COPD, for example, the development plan that AstraZeneca could give us, I think that is something where we'll have to talk with them about whether they would go right after COPD right now. So, lots of discussions to still yet happen.

But it would be clear, or it is very clear that the development opt-in decision is for the indication of asthma, so that's the primary indication. However, any opt-in decisions that we take, whether it be, again, say, do nothing, the 25% or the 50%, the resulting economics apply for all future indications.

So, if we're opting in, for example, at a 50% level and we're going to get a gross margin share, that will apply to all indications because there's no way to split whether it's going to be asthma or COPD or other indications in the future.

So the economic upside for AZ's decision to expand to other indications is going to be very clear in terms of what the economic benefit would be. From a cost perspective, overall, the development plans in terms of what they give us initially, that sort of comprises the biggest piece of our sort of known commitment.

There are mechanisms in the contract by which these additional costs are obligations to us where that development pattern would come into play. And we know we're going to have those obligations. But some of it could be part of, again, like an ongoing budget or some of it could be deferred until later in terms of the overall contract timeline.

So it's a little bit more nuanced in terms of how the cost obligation comes in. But I guess I would say that's helpful in terms of – we know we get the economics and then it's just a little bit more how we pay for that..

I would just sum up to say we would welcome additional investment in other indications as a codevelopment partner alongside AstraZeneca. We would not meet any such ambitions with fear or trepidation.

It would be manageable investments based on mechanics of the contract in our view, which would allow significant growth for the program, which allows significant economic upside for Pieris. .

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Steve for any further or closing comments..

Okay. Well, thank you, Kevin. And I want to thank everyone again today for your attention and for your continued support of the company. We are truly excited by the promise in particular of our inhaled biologics pipeline and the opportunity to improve outcomes for patients with respiratory disease. We look forward to updating you on our progress.

Have a great day..

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today..