Good afternoon, and welcome to the Spiro Therapeutics Second Quarter 2026 Earnings Conference Call. Please be advised that this call is being recorded and a replay will be available. You can find the information on the replay and further information related to today's announcement on the Spiro Therapeutics website at spirotx.com. At this time, I would like to turn the call over to Shai Biren, Head of Investor Relations. Mr. Biren, please go ahead.

Thank you, operator, and thank you all for participating in today's conference call. This afternoon, Sparrow Therapeutics released financial results and provided a business update for the second quarter of 2026. A press release is available on the investor page of the Sparrow Therapeutics website. Before we begin, I would like to remind you that some of the information presented on this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. These forward-looking statements are based on Sparrow's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties associated with our business and factors that could cause or contribute to such differences are described in SPARO's filings with the Securities and Exchange Commission, including in the Risk Factors section of the earnings report on Form 10-Q for the quarter ended June 30, 2026, filed today. Leading the call today are Esther Rajavelu, our President and Chief Executive Officer, and Dr. Deborah Zak, our Chief Medical Officer. There will be a Q&A session following the prepared remarks. I will now turn the call over to Esther to begin.

Thank you, Shai. Good afternoon, everyone, and thank you for joining us on our second quarter earnings and business update call. I will begin with key highlights from the quarter, outline our strategy and priorities going forward, and then review our financial results. In the last 90 days, we had four major milestones. The FDA approved UTEP-Z, the first and only oral carbapenem for the treatment of complicated urinary tract infections, including pyelonephritis, which we developed with our licensing partner, GSK. We in-licensed SP001 and repositioned the company's pipeline to focus on immune-mediated diseases. We closed $105 million non-dilutive, non-recourse financing. and we hired a chief medical officer. Let me start with the last one by welcoming Dr. Deborah Zak to the Sparrow team as our CMO. Deb is a board certified rheumatologist with a PhD in immunology and extensive drug development experience spanning research, clinical development and medical affairs. She brings more than 25 years of leadership in developing therapeutics for immune mediated diseases, most recently as CMO at Exogen and before that in clinical leadership roles at Amgen, Zencore, and Novartis. She officially joined Sparrow as CMO on August 3rd to lead our clinical development strategy as we advance SP001 into the clinic. Deb, welcome. We are so glad you're here and look forward to your comments on SP001 later during this call. Let me now turn to the quarter. On June 17, the FDA-approved eutepsi are tebupathic infections, including pyelonephritis, caused by certain susceptible pathogens in patients who have limited or no alternative oral treatments. It is the first and only oral carbapenem antibiotic approved in the United States. The approval was based on PIVOT-PO, the Phase III study we ran under our license agreement with GSK. The study was stopped early for efficacy in May 2025. GSK holds exclusive commercialization rights worldwide, excluding certain Asian territories where Meiji retains rights. GSK expects the Appendix to be available to U.S. Thurman, and Dr. J. Kahn. Following more than a decade of commitment and work by the Sparrow team to progress this asset through the clinic, Utebsi's approval provided the company an opportunity to pursue other growth prospects in immunological diseases with high unmet medical need. Which brings me to our announcements in July. On July 8, We announced an exclusive license agreement with InnoVent Biologics for SP001, also known as IBI355, for an estimated $1.1 billion in total contingent deal value. Separately, on July 8th, we also announced $105 million non-diluted, non-recourse royalty financing with affiliates of Healthcare Royalty, a business of KKR. Let me begin with our newly in-licensed asset, FP001. Our agreement with InnoVint provides us with exclusive worldwide rights excluding Greater China to develop and commercialize FP001 for all indications. InnoVint retains rights in Greater China. SP-001 is a third-generation, fully humanized, exosilent IgG1 monoclonal antibody targeting CD40 ligand. In the clinic, SP-001 completed two Phase I studies in healthy volunteers, including a single ascending dose and a multiple ascending dose study, as well as a Phase Ib multiple ascending dose study in primary Sjogren's disease. Data from the Sjogren's disease trial were presented in a poster at the ULAR Congress in June this year. We intend to advance SP001, an immunoglobulin G4-related disease, or IgG4RD, with a Phase II trial expected to begin in the second quarter of 2027. We will also evaluate additional development opportunities to potentially expand the SP001 value proposition. Dr. Zak will cover details on the drug, the CD40 ligand mechanism, and our development plan in IGG4-RD. Moving on to our financing, we closed $105 million non-dilutive, non-recourse royalty financing with healthcare royalty. The structure of the financing, which is also discussed in our 10Q filed today and our 8K filed on July 8th, is as follows. A special purpose subsidiary issued $105 million in senior secured notes. The notes carry a 10% annual interest rate and a nine-year maturity. Principal and interest are payable quarterly and are derived solely from the milestone and royalty payments After the notes are repaid, Sparrow retains 35% of additional GSK milestone and royalty proceeds. Let me take a moment to emphasize that the notes are non-recourse to Sparrow and our other assets are not exposed to UTEPsy launch or sales risk. This transaction further strengthened our balance sheet and provided non-dilutive capital as we embark on an immunology-focused strategy. By unlocking immediate value from a portion of future UTEPsy milestone and royalty streams, we are well positioned to execute on the clinical development for SP001. Following the transaction, we updated our cash runway guidance into the second half of 2029. Sparrow was founded with the strategy of in-licensing promising clinical stage assets and with an experienced and focused team advancing those programs through clinical development to commercialization. Following these transactions, we believe we continue to be well positioned to execute on our business strategy. I will now turn the call over to Deb to provide an overview of SP001 CD40 ligand as a target and our development plan for IgG4RD.

Thank you, Esther. I'm thrilled to join this bureau team as CMO, and I look forward to working together to bring this important candidate to patients. I will begin today with an overview of the asset, SP001, then I will share our preliminary development plans for IgG4RD subject to future discussions with the FDA. SP001 is a third generation fully humanized FC silent IgG1 monoclonal antibody targeting CD40 ligand. Let me explain why this target and this molecule are attractive opportunities for clinical development. CD40 ligand is an upstream immune activation signal. It sits at the interface of adaptive and innate immunity, orchestrating the interactions between T cell, B cell, and antigen-presenting cells. Blocking CD40 ligand interrupts a critical activation signal. Patients with immune-mediated diseases could experience meaningfully different therapeutic benefits by inhibiting CD40 ligand because we would be modulating the conversation between immune cells before they become pathogenic. The biology of this pathway has been well studied for over two decades, and therapeutic targeting has been clinically validated. T cells talk to B cells and macrophages using the same molecule, the CD40 ligand, which serves as a go signal. The antigen presenting cell, which is the immune system's alarm, gets the signal and acts to release more inflammatory cytokines. survive longer and continue to support the T cells. The B cell gets the signal and acts to proliferate, switch antibody class, and produce more antibodies, including IgG4. We believe this mechanism has the potential to modulate multiple components of the disease process simultaneously, which is why this target could be attractive across multiple autoimmune indications and not just one. We will advance SP001 first in IgG4-related disease, with a Phase II trial expected to begin in the second quarter of 2027. IgG4-related disease is a serious, chronic, fibroinflammatory disease that can affect nearly every organ system, including the pancreas, kidneys, salivary and tear glands, the aorta, lungs, even the lining of the brain. Patients are typically 50 to 70 years old. Over time, that inflammation causes scarring and fibrosis, and if left undertreated, it can progress to organ failure. A successful treatment should aim to reduce flares and treat the underlying course of disease. There are an estimated 20 to 40,000 diagnosed patients in the U.S., and we believe diagnosis rates should increase as a disease-specific diagnostic code was just implemented two and a half years ago in October of 2023. Treatment guidelines are being revised, which we believe will broaden the addressable market. IgG4RD is defined by B cells and the antibodies they make, but B cells don't act alone in this disease. The disease burden can also be attributed to T cells and macrophages, along with the B cells, all creating inflammatory and pro-fibrotic signals. Targeting CD40 ligand, which sits upstream of all of these, could theoretically turn down several sources of pathology at once, including antibody production, antigen presentation, and potentially fibrotic signals. Currently, diagnosed patients are monitored until the disease flares, and at that point, one of a few off-label options such as steroids with or without disease-modifying anti-aromatic drugs are used to control the flare for most patients. If the flare remains uncontrolled, then patients often progress to B-cell depleters such as off-label rituximab and the recently approved Aplizna. The result is that these patients continue on a cycle of remission and relapse as the depleted B-cells repopulate over time and there's no option at the present time for durable long-term disease control for these patients. The current development landscape for IgG4RD where all the other biologic agents either deplete or inhibit B cells only leaves room for an additional mechanism to enter development. We believe that CD40 ligand inhibition may offer a differentiated approach relative to therapies that target B cells alone by disrupting the pathologic interaction between T cells and the B cells that contribute to disease activity. We believe it is important to target the B-T cell co-stimulation process in IgG4RD because it can potentially help to stop the fibroinflammatory process from worsening while also controlling flares more consistently. Our planned phase two trial is aimed at establishing proof of concept in IgG4RD. We anticipate running an open-label trial with six-monthly dosing in two dosing arms, enrolling up to 15 patients in each arm. I will now turn the call back to Esther to review the quarterly financials.

Thank you, Deb. Let me now review Sparrow's financial results for the second quarter ended June 30, 2026. As of June 30th, the company had cash and cash equivalents of $50.8 million. This balance does not reflect the net proceeds from the royalty financing we completed in July 2026. We expect that our cash and cash equivalents at June 30th, together with the proceeds of the royalty financing, will be sufficient to fund the $35 million non-refundable upfront payment to InnoVent. and our operating expenses and capital expenditures into the second half of 2029. There was no revenue for the second quarter of 2026 compared with total revenue of 14.2 million for the second quarter of 2025. The change compared with the prior year period was primarily due to the collaboration revenue from Pfizer and GSK being fully realized in prior periods and all funding having been received under the government awards. Research and development expenses for the second quarter of 2026 were $3.4 million compared to $10.7 million for the same period in 2025. The decrease in R&D expenses year over year was primarily due to reduced clinical activity following the early completion of the Phase III trial for UTEP-Z in the first half of 2025, together with lower personnel-related costs. G&A expenses for the second quarter of 2026 were $6.5 million compared to $5.9 million for the same period in 2025. The increase was primarily due to increases in business development, legal, and consulting expenses. The company reported a net loss of $9.6 million for the second quarter of 2026 compared with a net loss of $1.7 million for the second quarter of 2025. Diluted net loss per share was $0.16 and $0.03 for the second quarters of 2026 and 2025 respectively. For further details on our financials, please refer to our 10-Q filed with the SEC today. For that, I will turn it back to the operators for Q&A.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question today is from Ram Selvaraju with HC Wainwright. Please go ahead.

Thanks so much for taking my questions and congratulations on all of the recent progress. Progress made on many fronts, I might add. I was wondering if I could ask Deb to perhaps elaborate on the following three aspects as it pertains to the Envisioned Clinical Program. How are you thinking about specifically assessing the magnitude and significance of clinical benefit? And in particular, how does this dovetail with the way in which you envision the product ultimately being positioned as and when it might get to market in IgG4-Rd? Is this, for example, with respect to flare suppression, Symptom Control, Achievement of Long-Term Remission, and or Reduction in Use of Steroidal Therapy or DMARDs or something else or some combination of all of these factors. And then I was hoping you could also elaborate on the structural features of this molecule and why that might point to its potentially being best in class in the CD40 ligand category. Thank you.

Thank you so much for this question. Let me start with your second question first, the structural features of this particular molecule. There are several other molecules which are in the CD40 ligand type arena. Two of those are fusion proteins. , whereas the other three are quite similar to the SP001. We think that the particular features of SP001 that we have seen in preclinical and other suggest that it might have some additional or a bit of better and others, but the PK of the antibody itself and the fact that it's very specific are key features making a monoclonal antibody molecule very, very attractive for use in this area. When you talk about the Phase 2 trial, magnitude and clinical benefit for IgG4 relates to how we think about this impacting the upstream nature rather than just affecting the B cells, also going towards inhibiting that crosstalk between T cells, innate immunity, and the B cells. In the trial itself, in the phase two trial itself, we will be looking for symptom control and also for control over the period of time, as well as reduction in steroids and DMARC use. The way that the phase three trials are done are quite opposite. So flare suppression, we're looking to establish rather than that were that were inhibiting recurrent flares, although we will see that in six months. But what we're really looking for is that the molecule controls the symptoms and has a good safety profile and that we can take away the other steroids that are detrimental to patients often in this age in this age group and with these disease and concomitant features. Phase three would be where we would look at the flare suppression because there you do the opposite. You control the disease and then put your agent on and see that the flares do not resume. Does that answer your question or are there further features?

Yeah, no, that's very, very helpful. And I understand that, you know, there's a lot that cannot be definitively answered at this specific point. I also wanted to touch upon two other aspects. One of these pertains to the way in which a drug like this might be deployed in IgG4RD given the current armamentarium. In other words, would you anticipate that it could be seamlessly inserted into the existing toolbox, so to speak? and potentially deployed alongside or as an adjunct to therapy with B-cell depleters, as a replacement for B-cell depleters, and perhaps most importantly, how it might play alongside a drug like Euplizna. And then just maybe Esther, you and Esther could comment on this aspect. If we look at the commercial opportunity, how has the commercial experience with Euplizna to whatever extent you have information on market uptake and so on since the label was extended into IGG4RD, inform how you are thinking about the magnitude of the commercial opportunity here.

Thanks, John. Maybe I'll take the first stab at at least the last part of your question, which is on the commercial opportunity. here with IGZ4, and then Deb can cover some of the other position and questions that you asked. So, you know, we can comment on euplasna uptake, but what I will share is that this disease is fairly early in its life cycle. It was only defined just about, you know, a couple decades ago, and the patient communities are just coming together, and even rheumatologists who treat this disease are still, you know, getting their arms around understanding and the patient profiles as well as the treatment regimens that are available both as approved agents as well as off-label use of some of the other therapies that Deb walked you through in the prior question. We do expect to see diagnosis rates improving in this disease, increasing especially was established just a couple of years ago. And as we've seen with other rare diseases, when the patient communities come together and there are approved therapies that are available and prescribers' awareness increases, you do see a much higher uptake and increasing diagnosis rates. So that's our expectation. over the next several years for this market commercially. Let me turn it over to Deb to answer your other question.

Yes, you wanted to know how this would fit with other things that are in use. The ones that are currently in use are B-cell ablators and steroids, both of which work well but have potential downsides for this age group, especially with comorbidities present. The other piece that's a little bit different is that what currently happens is that patients are treated when they flare, they're brought down under control, they go off medication, and then it's a waiting game until the disease comes back. So I can see where a molecule such as this, by continuing control of the disease, you smooth out that that treatment regimen so that the patient continues to be under control, thereby not adding to the damage that may already be there and progressing to further damage. It could certainly be used after one of the other agents in order to control following that because the disease is pretty relentless in coming back, even if once controlled. We tend not to cure things in rheumatology but we do try to control them very well.

Thank you very much.

Again, if you have a question, please press star then one. Please stand by as we poll for questions. Showing no further questions, this concludes our question and answer session. I would like to turn the conference back to Esther Rajavelu for any closing remarks.

Thanks, Operator. To close, Barrow has entered an exciting new chapter as an immunology company. We move forward with a focus on immune-mediated diseases anchored by our lead asset, SP001, and a strengthened balance sheet. These provide us with cash runway into the second half of 2029. We look forward to keeping you updated on our progress in the quarters ahead. Thank you all again for joining us today and for your continued interest in Sparrow. This concludes our call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.