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Edited Transcript of CATB earnings conference call or presentation 7-Nov-19 1:30pm GMT

Q3 2019 Catabasis Pharmaceuticals Inc Earnings Call

CAMBRIDGE Nov 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Catabasis Pharmaceuticals Inc earnings conference call or presentation Thursday, November 7, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrea L. Matthews

Catabasis Pharmaceuticals, Inc. - VP of Corporate Affairs

* Andrew A. Komjathy

Catabasis Pharmaceuticals, Inc. - Chief Commercial Officer

* Andrew J. Nichols

Catabasis Pharmaceuticals, Inc. - Chief Scientific Officer

* Jill C. Milne

Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director

* Joanne M. Donovan

Catabasis Pharmaceuticals, Inc. - Chief Medical Officer & Senior VP of Clinical Development

* Noah Clauser

Catabasis Pharmaceuticals, Inc. - VP of Finance & Controller

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Conference Call Participants

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* Joel Lawrence Beatty

Citigroup Inc, Research Division - VP & Analyst

* Yichuan Yan

Oppenheimer & Co. Inc., Research Division - Associate

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 Catabasis Pharmaceuticals, Inc. Earnings Conference Call. (Operator Instructions)

I would now like to hand the conference over to your speaker, Andrea Matthews, Vice President of Corporate Affairs. Thank you. Please go ahead, ma'am.

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Andrea L. Matthews, Catabasis Pharmaceuticals, Inc. - VP of Corporate Affairs [2]

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Thank you, Justin. Welcome to the Catabasis Pharmaceuticals conference call, where we will provide a corporate update and briefly review our third quarter 2019 financial results.

With me today are Jill Milne, Chief Executive Officer; Joanne Donovan, Chief Medical Officer; Andrew Komjathy, Chief Commercial Officer; Andrew Nichols, Chief Scientific Officer; and Noah Clauser, Vice President of Finance.

We issued a press release this morning summarizing our corporate update and our Q3 2019 financial results, which we will reference on today's call and is available on our website. I would like to note that during today's call, we will make statements related to our business based on current and future expectations that may be considered forward-looking statements under federal securities laws. Actual results may differ materially from those indicated by these statements as a result of a variety of risks and uncertainties, including those discussed in our most recent quarterly report on Form 10-Q, which we filed this morning with the SEC and is available on our website. Such statements represent our judgment as of today and Catabasis undertakes no obligation to publicly update any forward-looking statements except as required by law.

With that, let me pass the call over to Jill, who will provide our corporate update. Joanne will provide an update on our clinical trials with edasalonexent, and Andrew will speak to the potential commercial opportunity for edasalonexent in Duchenne. Andy will provide an overview of our collaboration with the Jain Foundation and Noah will wrap things up with a financial update. Jill?

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Jill C. Milne, Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director [3]

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Thank you, Andrea. Good morning, everyone, and thank you for joining us for today's call. I'm very happy to share the great clinical progress the company has made over the past 3 months. We believe that our drug candidate, edasalonexent will be a foundational therapy for all patients affected by Duchenne muscular dystrophy. For those on the call who are less familiar with the disease process and our program, I will give a quick overview.

At Catabasis, we are taking a different approach to treating Duchenne. Edasalonexent was designed to inhibit NF-kappa-B, a mechanism with the potential to benefit all patients and, therefore, is not limited to patients with specific mutations. It is important to remember that in Duchenne, the absence of the protein dystrophin is necessary but not sufficient to drive disease progression. Typically, young boys with Duchenne are not symptomatic in their first couple of years. However, without dystrophin, mechanical stress from everyday activities like running, chronically activates NF-kappa-B, which leads to progressive deterioration of skeletal muscle.

Importantly, the chronic activation of NF-kappa-B is also a critical component of cardiac disease and a factor in bone health in Duchenne.

By inhibiting NF-kappa-B, we believe edasalonexent can benefit all Duchenne patients regardless of mutation, both as monotherapy as well as in combination with dystrophin-targeted therapies. Based on our clinical data and the mechanism of action inhibiting NF-kappa-B, edasalonexent has the potential to benefit skeletal muscle, including the diaphragm, cardiac function and also bone health.

In September, we announced that enrollment was completed for our Phase III PolarisDMD trial for boys affected by Duchenne. I want to point out that target enrollment was exceeded, which I believe is the result of provider and Duchenne family excitement about edasalonexent. Joanne will talk more about this shortly.

Now that enrollment is completed, we have refined our time line, and we expect to have top line results from this pivotal study in the fourth quarter of 2020. The clinical data, along with our ongoing efforts in CMC and nonclinical activities are intended to support an application for commercial registration of edasalonexent in 2021.

As we have seen in the past several months, the regulatory and development landscape for Duchenne continues to evolve. We feel confident in the mechanism of action of edasalonexent, the data we have generated to date and the design of our Phase III trial to ultimately support global regulatory filings for full approval.

Our placebo-controlled Phase III trial uses the North Star Ambulatory Assessment as the primary endpoint. The North Star is a functional endpoint appropriate for a pivotal trial per FDA guidance. Changes in the North Star reflect clinically meaningful changes in activities of daily life.

As I've previously mentioned, while we progress our clinical activities, we are also laying a strong foundation for the next stage of the company. We have strengthened our team with the addition of Andrew Komjathy as our Chief Commercial Officer, as we prepare for the commercialization of edasalonexent, subject to regulatory approval. He will share his initial impressions of the commercial opportunity for edasalonexent for the treatment of Duchenne.

Edasalonexent has the potential to provide benefit in other forms of muscular dystrophy, where activated NF-kappa-B plays a key role in disease progression. We recently entered into a preclinical collaboration with the Jain Foundation to study edasalonexent in dysferlinopathy, which includes both limb-girdle muscular dystrophy type 2B and Miyoshi myopathy.

We expect these preclinical results from this collaboration in the first half of 2020. Andy will provide more details on this work.

Now I'll let our CMO Joanne provide an update on our clinical trials. Joanne?

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Joanne M. Donovan, Catabasis Pharmaceuticals, Inc. - Chief Medical Officer & Senior VP of Clinical Development [4]

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Thank you, Jill, and good morning, everyone. I am thrilled that we have completed enrollment in our Phase III PolarisDMD trial of edasalonexent in boys affected by Duchenne. Our enrollment target was 125 boys aged 4 to 7, and we enrolled 131 boys within a year due to strong interest from physicians and Duchenne families as well as support from patient advocacy organization. Thank you to everyone who's making this Phase III trial possible, including all of the site staff and participating families.

We opened 40 clinical trial sites across 8 countries for our Phase III trial, and we are very pleased that patients were enrolled in all 8 countries and at nearly all of the clinical trial sites. The majority of the sites are located in the United States and correspondingly close to 2/3 of the boys are enrolled in the U.S. Europe and Israel enrolled 1/4 of the boys in our Phase III trial and 8% enrolled in Canada, with 4% in Australia. We're in the process of analyzing the baseline information from the patients in the Phase III trial and look forward to sharing more information in the coming months.

As you likely recall, the Phase III PolarisDMD trial is a randomized, double-blind, placebo-controlled trial with 2:1 randomization. The primary efficacy endpoint is the change in the North Star Ambulatory Assessment score after 12 months of treatment with edasa compared to placebo. North Star was chosen as the primary endpoint with support from regulatory authorities. Key secondary endpoints include the timed function tests, 10-meter walk/run, time to stand and 4-stair climb. And additional assessments include growth, cardiac and bone measures as well as patient-reported outcomes.

Our open-label extension trial, GalaxyDMD embodies our ongoing commitment to the Duchenne community. 13 boys enrolled in the GalaxyDMD trial, 11 from the completed MoveDMD trial and 2 of their eligible siblings. We were urged by families with sons in the MoveDMD trial to also provide edasalonexent for their other sons affected by Duchenne and are glad that we're able to enroll eligible brothers of MoveDMD patients.

Our primary objective with GalaxyDMD is to collect long-term safety data. And we're also monitoring assessments of muscle function as well as bone health. When boys complete the 12 months placebo-controlled Phase III PolarisDMD trial, they as well as their eligible siblings will have the option to participate in the GalaxyDMD extension trial and receive open-label edasalonexent.

Dr. Richard Finkel, Chief of the Division of Neurology in the Department of Pediatrics at Nemours Children's Health System and a principal investigator for the MoveDMD and PolarisDMD trial, gave 2 presentations of the clinical findings from the MoveDMD trial last month: The first was at the 24th International Congress of the World Muscle Society in Copenhagen; and the second was at the Child Neurology Society, 48th Annual Meeting in Charlotte.

As we reported previously, in the MoveDMD trial and the open-label extension, edasalonexent preserved muscle function and substantially slowed disease progression compared to rates of change in the off-treatment control period. It significantly improved biomarkers of muscle health and inflammation and was well tolerated without any safety signal.

In more than 60 years of cumulative patient exposure in the completed trial, the majority of adverse events were mild in nature and the most common treatment-related adverse event was diarrhea, generally mild and transient. There were no serious adverse events observed on treatment and no adverse trends in chemistry, hematology or measures of adrenal function, which are suppressed with steroids and steroid analogs. Edasalonexent is not a steroid and has not shown the known side effects of steroids.

At this point, some boys have received edasalonexent for more than 3.5 years. The boys are now an average of 9.5, with some as old as 11 years old. We see this overall profile of efficacy and tolerability to date as being very supportive of the potential for edasalonexent to be a foundational therapy for the treatment of Duchenne.

I'm now pleased to introduce our new team member, Andrew Komjathy, who recently joined as our Chief Commercial Officer. Andrew?

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Andrew A. Komjathy, Catabasis Pharmaceuticals, Inc. - Chief Commercial Officer [5]

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Thank you, Joanne. I'm excited to be a part of the Catabasis team at such a pivotal time with our Phase III PolarisDMD trial fully enrolled and preparations underway to bring edasalonexent to market, subject to regulatory approval.

I'm very glad to have the opportunity to bring my rare disease commercial experience to Catabasis and to the Duchenne community. I'd like to share today my initial thoughts on the Duchenne muscular dystrophy market and the commercial opportunity for edasalonexent. Although Duchenne is a rare disease, it's been very well-characterized and patient segments are clearly defined. The disease is typically diagnosed when boys fail to meet developmental milestones, usually by the age of 5.

Treating patients in the early ambulatory phase, those aged 4 to 7 years, has the greatest opportunity for long-term benefit on skeletal and cardiac muscle disease progression. However, edasalonexent has the potential to provide clinical benefit broadly to all Duchenne patients from the time of diagnosis onward and is not limited to patients with specific mutations. Duchenne is an X-linked disease with a devastating diagnosis due to the lack of a cure and its relentless progression. It is estimated that about 15,000 boys and men are living with Duchenne in the U.S. today and approximately 19,000 in Europe.

In the U.S., the majority of patients are treated at a small number of centers. In an effort to better understand the substantial unmet need in Duchenne, we conducted primary blinded market research with U.S. Duchenne physician experts, payers and members of the Duchenne community. There was support for edasalonexent across all of these key stakeholders. The most encouraging signal was that 80% of the physicians indicated a strong interest in using edasalonexent based on the efficacy and safety profile available at the time of the research.

Payers interviewed agreed that edasalonexent's potential clinical benefit would justify coverage for Duchenne patients. Not surprisingly, patient advocates, parents and caregivers were extremely enthusiastic about the prospect of edasalonexent in the Duchenne treatment armamentarium. They view the efficacy data to date as compelling, given the priority preserved muscle function. This group really wants a safe and tolerable therapies that are applicable for all Duchenne patients. The potential profile of enabling age-appropriate development and participation in activities with peers resonated very strongly with parents of boys affected by Duchenne.

These market research results are very consistent with what we have seen in action in the clinic. I believe that we were able to fully enroll our Phase III trial so quickly because of the compelling profile of edasalonexent, which led many families to select our Phase III trial rather than enroll in another clinical trial or start steroid treatment.

The Duchenne community is eager to embrace edasalonexent, should it be approved by regulators, and we look forward to working with the entire community as we prepare for the potential commercialization of edasalonexent.

Now Andy Nichols will discuss our new research collaboration in -- and additional possible indication for edasalonexent. Andy?

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Andrew J. Nichols, Catabasis Pharmaceuticals, Inc. - Chief Scientific Officer [6]

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Inhibiting NF-kappa-B with edasalonexent has the potential to slow the disease progression and preserve muscle function and other forms of muscular dystrophy beyond Duchenne. We recently announced a preclinical collaboration with the Jain Foundation to study edasalonexent in dysferlinopathy. Dysferlinopathy includes both limb-girdle muscular dystrophy type 2b and Miyoshi myopathy and is thought to be the second most common form of limb-girdle muscular dystrophy. Dysferlinopathy is a serious rare disease that causes progressive muscle weakness, for which there are currently no approved treatment options. Steroids are not helpful for these patients, and a clinical study has shown that steroids had a detrimental effect in patients.

The Jain Foundation is a nonprofit foundation, whose mission is to cure muscular dystrophies caused by dysferlin protein deficiency. The Jain Foundation has established a global patient registry of genetically confirmed dysferlinopathy patients, and they are also leading an effort to collect disease natural history data focused on potential clinical endpoints that could ultimately support regulatory approval.

These patients experience a progressive and debilitating decline in muscle function that significantly impacts their lives. Their muscles lack dysferlin and NF-kappa-B is chronically activated. Edasalonexent inhibits NF-kappa-B and has the potential to slow disease progression in dysferlin deficient populations.

Under this collaboration, together with the Jain Foundation, we are conducting a preclinical study to evaluate edasalonexent as a therapeutic intervention for dysferlinopathy by measuring disease progression in dysferlin-deficient mice treated with edasalonexent.

We look forward to learning more about the potential of edasalonexent in dysferlinopathy, about the natural history of the disorder and potential clinical endpoints.

Noah Clauser, our Vice President of Finance, will share a financial update before we open up for questions. Noah?

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Noah Clauser, Catabasis Pharmaceuticals, Inc. - VP of Finance & Controller [7]

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Thanks, Andy. Turning to our financials. Our third quarter 2019 press release and 10-Q provide the details, so I will just highlight some key items here.

As of September 30, 2019, we had $40.6 million of cash, cash equivalents and short-term investments. Based on our current operating plan, we expect that we have sufficient capital to fund operations beyond the announcement of the top line results from the Phase III PolarisDMD trial and through 2020.

In the third quarter of 2019, our net cash used in operating activities was $6.5 million.

Our R&D expense was $4.7 million in Q3 2019 compared to $3.9 million in Q3 2018. Our G&A expense was $2 million in the third quarter of 2019 compared to $2.1 million in the third quarter of 2018.

Our operating loss was $6.7 million in Q3 2019 compared to $6 million in Q3 2018. Our net loss was $6.5 million or $0.56 per share in Q3.

I will now turn the call over to Justin to open for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question is going to come from Joel Beatty from Citi.

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Joel Lawrence Beatty, Citigroup Inc, Research Division - VP & Analyst [2]

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So with enrollment complete for the Phase III Polaris study, could you talk a little bit about the patient retention that you're seeing through that? And how the completion rate might be looking? And then also enrollment into the extension study?

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Jill C. Milne, Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director [3]

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Sure, Joel. Thanks for the question. I'm going to hand it to Joanne to address that.

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Joanne M. Donovan, Catabasis Pharmaceuticals, Inc. - Chief Medical Officer & Senior VP of Clinical Development [4]

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So we enrolled the study over a period of less than a year. So we actually don't have kids yet enrolled in the extension study. But overall, retention has been excellent, and we're very pleased with how the study is going.

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Joel Lawrence Beatty, Citigroup Inc, Research Division - VP & Analyst [5]

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Great. And then I guess, can you talk a little bit more about maybe the results that you expect between -- from the agreement with Jain Foundation between now and the results of the Phase III study?

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Jill C. Milne, Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director [6]

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Yes. Sure, Joel. That's a good question. We're very excited about our work with the Jain Foundation, and I'll let Andy answer that.

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Andrew J. Nichols, Catabasis Pharmaceuticals, Inc. - Chief Scientific Officer [7]

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Yes. So we are studying the effects of edasalonexent in dysferlin deficient mice, and we will primarily be using magnetic resonance techniques, including MRI and MRS to measure muscle volume, fat accumulation and other changes in the muscles in these mice, particularly in the girdle region around the hips. So these mice actually just demonstrate a phenotype quite similar to that seen in limb-girdle muscular dystrophy patients.

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Operator [8]

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And our next question comes from Hartaj Singh from Oppenheimer & Company.

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Yichuan Yan, Oppenheimer & Co. Inc., Research Division - Associate [9]

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This is Jackie on for Hartaj today. Just wondering, when we would be able to see some baseline characteristics from PolarisDMD patients? And then I've got a couple of quick follow-ups.

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Jill C. Milne, Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director [10]

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Sure. So Jackie, we expect to report the baseline characteristics from the PolarisDMD trial sometime in the coming months.

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Yichuan Yan, Oppenheimer & Co. Inc., Research Division - Associate [11]

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Got it. Got it. And what are some gating factors we should be thinking to -- going from a successful Polaris readout to NDA filing?

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Jill C. Milne, Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director [12]

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You said gating factors between our Polaris readout and -- yes, so we expect the PolarisDMD trial to read out in the fourth quarter of 2020 and expect to be with positive data from that trial. We expect to file an NDA in 2021.

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Yichuan Yan, Oppenheimer & Co. Inc., Research Division - Associate [13]

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Okay. And last question. Can you maybe update us on what the current [CT] experience in MoveDMD is? And what the age range of experience for the drug? Is that at this point like the oldest treated boy to date?

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Jill C. Milne, Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director [14]

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Sure. So I'll let Joanne address that. But we have boys from the MoveDMD trial, who've now been on drug for several years. So Joanne?

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Joanne M. Donovan, Catabasis Pharmaceuticals, Inc. - Chief Medical Officer & Senior VP of Clinical Development [15]

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Yes. So the age range in the trials ranges from literally their fourth birthday up till age 11 in the studies now. So we'll continue to follow the boys in terms of their -- in terms of safety, and we think it's an important -- another important component of collecting data, so that we'll have an integrated package for registration filings.

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Operator [16]

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And I would now like to turn the call back over to Jill Milne, Chief Executive Officer.

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Jill C. Milne, Catabasis Pharmaceuticals, Inc. - Co-Founder, CEO, President, Principal Financial Officer & Director [17]

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Thank you, Justin. Thank you all for joining our call this morning, and thank you for your continued support of Catabasis. We will keep you updated as we execute on our edasalonexent program and share areas of progress. We look forward to speaking with you again soon. Andrea?

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Andrea L. Matthews, Catabasis Pharmaceuticals, Inc. - VP of Corporate Affairs [18]

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That concludes today's call. A webcast replay will be available for 90 days via the Investor Relations page on our website at www.catabasis.com. Thank you.

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Operator [19]

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Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.