ACELYRIN - Q3 2023

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the ACELYRIN Q3 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Tyler Marciniak, Vice President of Investor Relations, Communications, and Corporate Operations. Please go ahead.

Tyler Marciniak (VP of Investor Relations and Corporate Affairs)

Thank you, operator. Good afternoon, everyone, and thank you for joining us. Before we begin, I'd like to remind the audience that this conference call will contain forward-looking statements, such as those related to progress of our clinical trials and anticipated data readouts, our future financial and operating results and investments, and our ability to commercialize our product candidates. These forward-looking statements involve risks and uncertainties that could cause our actual results and events to differ materially. We urge you to review the Risk Factors section of our Form 10-Q for the quarter ended June 30, 2023, filed with the SEC, and also available on our website at acelyrin.com, along with statements in today's press release and our slide presentation, which identify certain factors that could cause our actual results, performance, and events to differ materially.

Additionally, these statements are based on information available to us today, November 7, 2023, and we undertake no obligation to update them as circumstances may change. Joining us on today's call are Dr. Shao-Lee Lin, our founder and CEO, and Gil Labrucherie, our Chief Financial Officer. I will now turn the call over to Dr. Lin. Shao-Lee?

Shao-Lee Lin (CEO)

Thank you, Tyler. Good afternoon, everyone. Thank you for joining us for ACELYRIN's third quarter update call. As we approach the end of 2023, we feel fortunate for the progress we have made throughout the course of the year. We began in January with the transformative expansion of our portfolio through the acquisition of another private I&I company. In May, we were pleased to close a successful IPO in a challenging market environment. We are grateful to our investors for walking alongside with us in our journey as we remain focused on building a leading I&I company and continuing to advance programs across multiple autoimmune and inflammatory diseases, with the goal to deliver transformative medicines for patients.

Our strategy remains steadfast: to identify candidates we believe are diamonds in the rough, where, based on molecule characteristics, our collective experience and expertise, and the evolving scientific and medical understanding, we can establish a development plan that tests our hypotheses around clinical differentiation and the potential benefit for, for patients. We are advancing our portfolio of programs across multiple indications, including izokibep, a next-generation inhibitor of IL-17A, being studied in multiple trials with registrational potential within the rheumatology, dermatology, and ophthalmology settings. Lonigutamab, a subcutaneously delivered inhibitor of IGF-1R being developed for thyroid eye disease, and ACELYRIN-517, an earlier stage program we are evaluating for allergy-related mast cell-driven diseases such as chronic urticaria. In addition to our clinical progress, we continue to build our organizational capability and capacity to support our portfolio.

Most recently, we announced the appointment of Patricia Tierney as our Chief Technical Operations Officer, responsible for overseeing technical operations, CMC regulatory, corporate quality, and facilities. Patricia brings to ACELYRIN more than 25 years of biopharmaceutical experience across R&D, clinical, and commercial supply management, and expands our capacity for multi-asset, late-stage manufacturing at a pivotal time as we advance a robust portfolio with multiple large-scale clinical trials underway and prepare for potential regulatory filings and commercial launches. We also welcomed in September, Dr. Shep Mpofu, our Senior Vice President of Development, responsible for clinical development and translational sciences. Shep brings more than 20 years of industry experience, including a long tenure at Novartis, where he most recently served as Senior Vice President and Chief Medical Officer for Novartis Gene Therapies.

Prior to that, Shep was the global lead for secukinumab, where he advanced the product from early development through to multiple approvals across indications, including psoriatic arthritis or PsA, hidradenitis suppurativa or HS, uveitis, and axial spondyloarthritis or axSpA. His extensive experience will be key as we advance our pipeline across many of the same disease states. While Gil will review our financials in greater detail later on the call, I do want to underscore our strong financial position. With nearly $800 million on our balance sheet, we can execute on our strategy over the coming months and years and achieve numerous key milestones across the entire portfolio of programs and indications. Let's turn now to a review of our progress across the portfolio.

As a recap, izokibep is a small protein therapeutic designed to inhibit IL-17A with high potency through tight binding affinity that has the potential for robust tissue penetration due to its small molecular size, which is about one-tenth the size of a monoclonal antibody and has an albumin binding domain that extends half-life. The high potency and small size of izokibep can lead to clinically meaningfully differentiated responses for patients across multiple indications where this mechanism of action has been validated, and that this can be achieved with a safety profile consistent with that of the IL-17A class, as has been demonstrated by the currently marketed monoclonal antibodies, secukinumab and ixekizumab. IL-17A as a target has not demonstrated dose-limiting toxicity over 10 years of post-marketing and millions of patient years of safety experience.

This will be important as we discuss what appears to be an evolving understanding around targeting the IL-17 axis more broadly than selectively targeting IL-17A. Let me begin with psoriatic arthritis, which is our most advanced program and represents the largest potential indication for izokibep. Psoriatic arthritis is a chronic inflammatory disease with multiple clinical manifestations, including arthritis, psoriasis, spondylitis, dactylitis, and importantly, enthesitis, which is an inflammation of the strong, dense, poorly vascular tissues that anchor our ligaments and tendons to bone. Enthesitis impacts the majority of moderate to severe psoriatic arthritis patients and has been historically very difficult to treat. It is a marker of disease severity and a source of residual pain and physical dysfunction, which impacts quality of life for patients.

There are approximately 1.6 million PsA patients in the U.S., and the 2022 PsA treatment market was valued at $8.8 billion globally and is estimated to grow to nearly $18 billion by 2030. Historically, PsA treatments have been more effective in the joints and skin, but not the harder-to-treat manifestations of the disease, such as enthesitis. Rapid, deeper, and more durable resolution of disease across clinical measures is the key to improving overall quality of life, which is ultimately our goal for patients. We have already shared results from a phase 2 placebo-controlled trial of izokibep in PsA, which demonstrated differentiated dose-ordered responses as early as 1 month into treatment and increasing over time. This included an ACR50 response of 50% at week 12 or 44% placebo-adjusted.

Resolution of enthesitis, as measured by the Leeds Enthesitis Index, was 82% at week 8 at our 80 milligram every other week dose. Week 12 was not a protocol-specified time point for this measure. LEI resolution is the standard approach to reporting improvements for enthesitis. To enable comparison with recently reported emphasitis data for one of the IL-17A/F inhibitors, we also analyzed subjects with LEI of 2+ at baseline, with an improvement of 2+ points at our week 8 versus the other agent's data at week 12. This analysis showed 100% response at week 8 in patients receiving 80 milligrams of izokibep versus 0% in placebo. These results are relative to 71% reported at 120 milligrams for the IL-17A/F agent at 12 weeks, without disclosure of a placebo as a reference for that agent.

At EULAR in June 2022, we presented primary endpoint 16-week data showing that izokibep demonstrated clinically meaningful benefits across disease manifestations, including 52% ACR50 response, 85% PASI75 response, and 88% resolution of enthesitis, which to our knowledge is a level of resolution not previously reported for any other agent. These clinical benefits subsequently drove significant improvements in quality of life across all domains, and importantly, this included statistically significant improvements in pain, functional capacity, and sleep disturbance, as measured by the Psoriatic Arthritis Impact of Disease Questionnaire or PsAID. The PsAID is a validated psoriatic arthritis-specific patient-reported outcome measure.

Furthermore, earlier this year, we were delighted to report initial long-term efficacy from the same phase two trial that showed that with longer duration of treatment, patients experienced durable and deepening resolution of disease across clinical manifestations of PsA, leading to further improvements in quality of life as measured by the PsAID. Additional data demonstrating that increased duration of therapy continues to enhance resolution of disease will be presented in both poster and oral podium sessions taking place next Monday during the upcoming American College of Rheumatology's Convergence in San Diego. At 46 weeks, of participants receiving izokibep 80 milligrams every other week, 79% achieved ACR50 response, up from 52% at week 16. Even higher orders of clinical response in measures approximating resolution of disease were observed, with 52% achieving ACR70, 71% achieving PASI 100, and 89% achieving enthesitis resolution.

Notably, patients who switched from placebo to 80 milligrams every other week at week 16 responded quickly, with more than 60% of patients in both the switch group as well as the original 80 milligram every other week group, achieving minimal disease activity by week 46. Importantly, this efficacy was delivered with a safety profile consistent with previous izokibep experience and that of the IL-17A class as a whole, with no evidence of dose-limiting toxicity... modeling from the phase II PsA data predicted the potential to increase response over time, as has been demonstrated with the 46-week data. The modeling further predicts the potential for increased efficacy with higher doses over the 80 milligrams every other week utilized in the phase II trial.

To that end, the ongoing phase IIb/III trial in PsA is evaluating both 160 milligrams weekly and every other week to continue to maximize potential responses for patients. Aside from the higher dosing, the design of this trial is consistent with that of the phase II, with a few notable exceptions. Firstly, this is a truly global study with 352 patients across 71 sites, including 40 in the U.S. and 30 internationally, to enable the potential for registration across geographies. In addition, there is an increased percentage of enthesitis at baseline and an increased percentage of TNF failures, meaning individuals who have had an inadequate response, intolerance, or contraindication. These aspects all have the potential to impact the specific point estimates relative to phase II, but are important in understanding the potential benefits of izokibep for PsA patients.

Both are important given the contribution of enthesitis to severity of disease, including continued pain and disability, and also the increasing number of patients who have not simply been exposed to TNF inhibitors, but have demonstrated an inadequate clinical response. This phase IIb/III trial in PsA completed enrollment in the second quarter of 2023. Over 75% of patients have completed through the primary endpoint at week 16, and the discontinuation rate is 5.9%. Top-line data continues to be expected in the first quarter of 2024. Now we'll turn our attention to hidradenitis suppurativa, which continues to be an area of rapid evolution. Just last week, only the second treatment for HS and the first new option for patients in almost a decade was approved by the FDA.

We have the great fortune at ACELYRIN of having members of our team who held important roles in the context of each of these approved therapies, and for all of us, it's always gratifying to see new treatment options for patients. At the same time, while the IL-17A safety profile is well-established, we have also seen, especially recently, our understanding of the safety profile of targeting subunits beyond IL-17A continues to evolve and may become a more important consideration. Targeting both A and F leads to dose-responsive increase in fungal infections. This was seen in data from both agents targeting inhibition of IL-17A and F.

After 24 weeks of treatment, one demonstrated an approximate doubling of fungal infection risk from 12 weeks, which increased to about 20% in the planned dose and almost 30% in their higher dose, with the beginnings of reports of recurrence of these fungal infections in areas beyond just skin. Additionally, the risk of suicidal ideation and behavior was noted in a recent label of an IL-17A and IL-17F inhibitor. This has been noted previously in the label of an anti-IL-17 receptor inhibitor, which blocks all the subunits of IL-17, including IL-17F. Cumulative data from these two agents over the registrational programs raises the question of relationship between inhibiting IL-17 more broadly than IL-17A, specifically the potential association with the inhibition of IL-17F.

This recent label also noted the requirement for routine laboratory monitoring for liver toxicity, which has not previously been noted for the IL-17A inhibitors. So the landscape is actively evolving in terms of balancing efficacy and safety hurdles for new treatments for HS patients. We believe in izokibep potential in HS, with roughly 25% of patients achieving ISRs 100 responses within 12 weeks, which means they rapidly achieve resolution of all abscesses and nodules without new draining fistulas. This is a level of responders achieved in half the time reported by others, and without the safety or tolerability considerations of targeting IL-17F in addition to IL-17A. As we previously shared, both our phase IIb/III and our ongoing phase III trial are moving forward, and discussions with the FDA will help inform next steps to advance our registrational program.

We expect to have an update by end of this year or early next year. In addition to PsA and HS, we continue to explore the potential for izokibep to make a meaningful difference for patients with both axSpA and uveitis. Enthesitis is a central feature of axSpA, and we believe the rates of enthesitis resolution demonstrated in the phase II PsA trial suggest the potential for clinically meaningful differentiated benefits for patients with this disease. We will use the optimal dose from the PsA program to inform a planned future phase III program in axSpA. We also continue to enroll our phase IIb/III clinical trial of izokibep as a treatment for uveitis. Previously reported data for another IL-17A inhibitor delivered intravenously has validated the inhibition of IL-17A as a potential therapeutic for uveitis.

While izokibep is the lead program in our portfolio, we have two other programs, lonigutamab and ACELYRIN-517, which we are developing in thyroid eye disease and mast cell disease. Thyroid eye disease is a vision-threatening, progressive, chronic autoimmune disease, and similar to HS, the TED landscape is evolving rapidly. Our team has deep experience in this indication, with many involved in developing the only currently approved treatment. Recent clinical data demonstrating the effectiveness of inhibiting IGF-1R in chronic TED supports our approach to developing lonigutamab, not just for acute disease, but also more treatments for chronic inflammatory autoimmune diseases. This includes targeting greater depth and durability of response with longer-term dosing and the goal of achieving resolution of disease.

Recent updates from the FDA to the warnings and precautions of the currently approved therapy also highlight hearing impairment as a serious, potentially permanent side effect of treatment. We have hypothesized this hearing impairment may be directly related to the inhibition of the normal function of IGF-1, given its role in regenerating cells of the inner ear subsequent to routine auditory insults. The unique characteristics of lonigutamab may allow us to optimize efficacy by maintaining minimum drug levels needed to achieve improved depth and durability of response, limit safety liability, including hearing impairment, potentially associated with high maximum drug concentrations, and maximize patient convenience through subcutaneous delivery. The phase one/two trial of lonigutamab, delivered subcutaneously in 10 patients, is ongoing. We anticipate initial proof of concept data, including proptosis response and clinical activity score, by end of first quarter 2024.

ACELYRIN-517 is a fully human, highly potent IgG1 monoclonal antibody directed against c-KIT, with the potential to address mast cell-driven diseases. We are conducting a phase 1/2 proof of concept trial of ACELYRIN-517 and expect top-line results in the second half of 2024. With that overview of the portfolio, let me now turn the call over to Gil for a review of our financials. Gil?

Gil Labrucherie (CFO)

Thank you, Shao-Lee, for that overview of our portfolio, and good afternoon, everyone. As Shao-Lee mentioned, we are fortunate to be operating from a strong financial position as we not only advance our portfolio of clinical stage programs, but also build our organizational capability and identify potential additional diamonds in the rough to add to our pipeline. At September 30, 2023, cash and cash equivalents and short-term marketable securities totaled $788.4 million, which we expect to fund operations through key value-driving milestones across all three programs. Research and development expenses were $74.6 million for the third quarter, as compared to $12.5 million for the same period in 2022.

Comparing 2023 to 2022, the company has undergone significant growth, including expansion of the izokibep program across multiple indications and the addition of two programs in 2023, both of which are now in clinical stage development. General and administrative expenses were $19.9 million for the third quarter, as compared to $2.9 million for the same period in 2022. The quarter ended September 30, 2023, includes stock-based compensation expense of $11.7 million. These increases in expenses were primarily a result of expanding our organizational capability to support the development of our broad portfolio of immunology product candidates. Finally, our net loss for the third quarter of 2023 totaled $83.9 million, or $0.87 per share, compared to $14.4 million, or $8.17 per share, for the third quarter of 2022.

The total net loss for the current quarter includes stock-based compensation expense of $15.3 million. As you can see, we continue to carefully allocate capital across our robust clinical portfolio, and we're delighted to have a strong financial position from which to continue our important work for patients. And now I will turn the call back to Shao-Lee. Shao-Lee?

Shao-Lee Lin (CEO)

Thanks, Gil. As you've heard, we continue to make steady progress in our efforts to build a leading immunology company. We feel fortunate to have an experienced team, a robust pipeline, and a strong financial position, providing runway for multiple key milestones across all three clinical programs. We remain committed to our long-term vision to accelerate the development and commercialization of transformative medicines, to address unmet medical needs, and to deliver sustainable value to our shareholders, partners, and most importantly, to the patients we serve. In the ever-evolving landscape of our industry, we understand the importance of adaptability and resilience. We are committed to making data-driven, disciplined decisions, as well as being responsible stewards of our human and financial resources in navigating challenges and embracing opportunities. Once again, I thank you for your trust and support. We look forward to your continued partnership as we journey ahead together.

Operator, we are now ready to open the call to questions.

Operator (participant)

Thank you. We will now conduct a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster.... Our first question comes from Yasmin Rahimi from Piper Sandler. Please go ahead.

Yasmeen Rahimi (Managing Director and Senior Research Analyst)

Good afternoon, team, and thank you so much for all your really thoughtful remarks for us. Team, as we're awaiting that PsA data in early next year, could you maybe comment on sort of how soon post the second safety DB, phase three, would you be in a position to get ready and file for approval in PsA? And whether the data would be sufficient on the heels of both of the results, if you could just provide color in that regard. And then two, if you could just maybe comment on how you're tracking, you know, or have been tracking or are tracking currently, like suicide ideation, liver enzyme abnormalities, to the extent you can across all studies. And I'll jump back into the queue, and thank you again.

Shao-Lee Lin (CEO)

Thank you, Yas. This is Shao-Lee. So with regards to PSA, we anticipate that registration will require both the ongoing phase 2/3, that we hope to be part of that package, as well as a confirmatory study, which is standard for these indications. We haven't yet provided guidance, specifically the time post, you know, sort of post this study readout relative to when we think that will be. But obviously we'll, you know, sort of move forward expeditiously, as expeditiously as possible. With regards to the signals that you've noted, you know, really, since the brodalumab experience with this group, these have been endpoints that have been followed across the IL-17 class, and we're following the standard approaches there as well.

Yasmeen Rahimi (Managing Director and Senior Research Analyst)

Okay, thank you. I'll jump back into the queue. Thanks.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Tyler Van Buren, from TD Cowen. Please go ahead.

Speaker 8

Hi, this is Beth on for Tyler. Thank you guys for taking our questions. We have 2 for you. So first, looking forward to the top line PSA phase 2/3 readout in Q1, how are you thinking about the bar for success, given the bimekizumab phase 3 data and other recent competitor readouts? And then 2, for the lonigutamab MAD healthy patient readout in Q1, how many patients worth of data might we see across the 3-4 dose cohorts? And how de-risking do you expect the early proptosis data to be as we think about efficacy in later stage trials? Thank you.

Shao-Lee Lin (CEO)

Super. Thanks for that, Beth. So your first question was about the upcoming PsA 2/3 readout in first quarter of 2024 and the bar for success. You know, the way we think about this is that the phase 2 study that we've already completed, that went up to 80 milligrams, and we're going to share the long-term data, even additional measures of resolution of disease at the upcoming ACR meeting. We feel like that study already demonstrated the potential for differentiation within the kind of, especially the top dose, 80 milligrams every other week. We've seen top-range results with regards to joints and skin at the week 16 primary endpoint and really outsized enthesitis results, as we've recapped today, within that time frame, and that just haven't been seen before with other agents.

And we've shared that at the 46-week time frame, we see, you know, sort of even continued deepening of those responses, again, as we've shared today with ACR 50s, or sorry, ACR 70s up at above 50%, PASI 100 scores up over 70%, and enthesitis still in the kind of 80%-90% range. So we're very, very pleased with those results. We think that they fundamentally de-risk the 2/3 that's coming up. We conducted that 2/3, really, because our modeling from that phase 2 suggested to us that we could get some additional efficacy out of additional pushing the exposure a bit more, within the context of this disease state.

That's the reason for the additional dose ranging, the 2/P portion, if you will, of the 2/P 3 that's upcoming. As a for instance, we know from our earlier psoriasis experience that moving from 80 every other week to 160 every other week in psoriasis did give us a bit of a bump with regards to efficacy. At a minimum, we hope to recapitulate that, but already we feel like we have a differentiated offering. Then your second question was about lonigutamab and how much data we would have moving forward and how de-risking that is, you know, sort of overall.

I think what you can anticipate is that, from an initial proof of concept perspective, you know, we'll have a number of patients that are very similar to what's been demonstrated previously for the Viridian and Immunovaccine, sort of, or, compounds. On the order of, you know, 6 or so patients in those experiences have been sufficient to really demonstrate the potential for a signal across both proptosis as well as clinical activity score. So we'll have those measures within the context of 10 patients to evaluate. We may have more patients than that, but, you know, as we move forward, we'll have a better bead on that.

you know, because of the strong signal in terms of efficacy that we see with this axis, we anticipate it's not going to take much more than that to see a signal for these agents, again, as has been demonstrated already.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Vikram Purohit from Morgan Stanley. Please go ahead.

Speaker 7

Hi, everyone. This is Gospel on for Vikram. We have two questions regarding PSA and HS. So for PSA, I was wondering what the competitor data readout has—no, data tells you, if anything, about the importance of molecule size for the treatment of PSA? And then in regards to HS, I was wondering, have you been able to further analyze the results to better understand the placebo response and discontinuation rate observed? If so, do you currently see any read across to the ongoing PSA readout? And are there measures that have been put in place for that study to prevent similar issues from arising? Thank you.

Shao-Lee Lin (CEO)

Thank you for that, Gospel. You know, maybe I'll start backwards a little bit to tie it back in, which is, and I appreciate the question. Obviously, given our HS readout that we shared in September, we've been extraordinarily hypervigilant with regards to putting in any measures such that we understand in real time, continue to understand and ensure that we are understanding in real time any discontinuations as well as putting into place anything that could help from a placebo response perspective. We don't anticipate any read-through to our PSA, and we think that our, you know, sort of blinded continued analysis haven't suggested to us any issues in that regard. We have continued further deep dives with regards to the HS dataset.

As I shared in our prepared remarks, we anticipate having more information with regards to that program by end of year, early next year, to share when we have sort of relevantly compiled both our conversations with the health authorities as well as the deep dives that continue to be ongoing. So bottom line is, HS continues to move forward with regards to the TP-3 study that read out as primary, as well as the ongoing phase 3, as planned, as we had previously discussed. We don't anticipate a read-through to PsA. And from the PsA perspective, you know, we do think that there is importance still with regards to the molecule size and the potential for differentiation.

We think our phase 2 results, especially in enthesitis, point to that. Exactly where the threshold was for, you know, the size cutoff that could enable us to get into that dense, strong sort of polyvascular tissue relative to other molecules wasn't entirely clear. You know, I will say that the data more recently suggests that not only is the threshold between our 18 kilodaltons and the 150 or so for the marketed monoclonals, but perhaps is even between the 18 and the 40 kilodaltons of the recently sort of released axSpA data, given the difference in enthesitis.

I've shared with you today, in our prepared remarks, our best attempt at an apples to apples comparison, given the data that was presented, not with regards to LEI resolution, which we've shared previously, but with regards to LEI 2+ at baseline, improving more than 2+ points over the course of the study. And recall that was for us at week 8, an earlier time point, because we didn't collect it through 12, 100% response for that degree of change or improvement, versus a placebo of 0%, relative to 71% without the placebo reported.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Emily Bodnar from HC Wainwright. Please go ahead.

Emily Bodnar (VP and Senior Healthcare Analyst)

Hi, thanks for taking the questions. Kind of along the lines of some of the other questions on PSA, I was wondering if you can maybe discuss what endpoints or metrics that physicians are most looking to see improved upon or where they kind of see the largest unmet need, where you think you can differentiate. I know you've talked about enthesitis already, but are there any other places where you kind of see those kinds of differentiating? And then maybe just on expenses, if you can touch on, it looks like in Q3, the expenses kind of doubled from the second quarter. So is that kind of a base level for you going forward, or any guidance you can give on expenses for the remainder of the year or next year? Thank you.

Shao-Lee Lin (CEO)

Yeah. Thanks for that, Emily. Maybe I'll start with PsA sort of disease state manifestations, et cetera, and I'll let Gil handle the second question. So, you know, with regards to where we think the field is going and what's important for patients, and therefore for our investigators and KOLs as well, is that we really need to do better with regards to our treatment offerings for these patients. We've traditionally been talking about an ACR50 response in the 50% sort of range....

And, you know, what that means is that, you know, half the people will get 50% better with regards to their joint disease, which is, you know, a pretty low bar still, if you think about how much unmet need, how much better we should be able to do. So things like ACR70s are as close to remission as we've been able to have within the ACR scoring system. PASI 100 are, you know, sort of all clear skin. Enthesitis resolution means that I don't have any more enthesitis that I can measure, which is terrific. And so it's really the totality of all of the manifestations of this disease that therefore, as you can imagine, impact most the overall quality of life of a given patient.

So it's important not just to hit the joints and the skin, although, of course, one wants to hit them as hard as one can, really be able to talk about remission or resolution, ACR70s, and, you know, the majority of people achieving ACR70s, the vast majority of people achieving PASI 100. And now we feel like within the subset, the vast majority of people, achieving resolution, of their enthesitis, which is, again, a marker of severity of disease, of residual pain and dysfunction for these patients, that obviously adds up to the quality of life. And one of the measures, of, you know, sort of this overarching, resolution of disease is also minimal disease activity.

And as we've shared, you know, both our switch from placebo to active in the phase 2 study, as well as the 80 milligrams from the get-go, those subjects are achieving about 60% minimal disease activity in the upcoming data set that will be presented. So we're excited about this. We think that the 2B3 gives us the potential to impact this even further. And we already know that the opportunity exists based on our existing data, to do that from a skin improvement perspective. Gil?

Gil Labrucherie (CFO)

Great. And to the financial question, Emily, I... You know, as I said in my prepared remarks, we ended the quarter with over $788 million in cash on the balance sheet. So obviously, we're in a very strong financial position, we have sufficient funding to go through catalysts across our pipeline. At this stage, we're not giving specific line item guidance, but I can tell you that we're thinking very carefully about how we allocate capital, stage appropriate. We're scaling the investments as we scale the trials and go through. So we are obviously in 2024 planning, and we're looking very closely at that and being prudent with our capital, but we're really pleased with where we are at this point.

Emily Bodnar (VP and Senior Healthcare Analyst)

Got it. Okay, thank you.

Operator (participant)

As a reminder, if you would like to ask a question, please press star one one and wait for your name to be announced. One moment for our next question. Our next question comes from Akash Tewari from Jefferies. Please go ahead.

Akash Tewari (Managing Director)

Hey, thanks so much for taking my question. So I remember as of September, you had mentioned the blinded dropout rate for your upcoming psoriatic arthritis trial was around 5%. Any color on what that's tracking to as we get into November? And what level of dropouts do you claim with for this trial with your current powering assumptions? And then, I guess maybe on HS, can you go over precisely what your HS protocol deemed to be drug-related or not? For example, in the circumstance by which a participant had an injection site reaction and also stopped treatment, how would you determine whether that was a drug-related discontinuation or otherwise? Thanks so much.

Shao-Lee Lin (CEO)

Thanks, Akash. So with regards to your first question about the PsA study that's about to read out and drop and discontinuation rates. So, as I shared in our prepared remarks, we are at over 75% of patients within the context of that trial, having completed through the primary endpoint, and our discontinuation rate currently is 6.9%. So we feel... Oh, apologies, 5.9%. And, you know, and it just speaks to my mindset with regards to my next comment, which is really that anything below 10% is the usual threshold that we think about for clinical trials in general. And if it bounces around within the context of that number, but is below 10%, we really aren't concerned.

So we're feeling very good about where we are with that study at this juncture, and as I said earlier to Emily's comments, really don't feel like there's any read-through that. And we wouldn't have expected that, but we don't think we're seeing that. Separately, with regards to HS and scoring of HiSCR and whether or not those are adverse events, we take that as reported to us, HiSCR and whether or not they were dropouts due to HiSCR. When we talk about our dropouts as discontinuations, we were responders without adverse events. We actually went back through and didn't just take at face value whether or not it was reported to us as whether it was a loss to follow-up or with consent, et cetera.

We went back through the entire electronic data set, and evaluated for whether or not there was a pattern, including looking for ISRS that weren't necessarily reported as an AE, and that pattern also does not exist, which I think is probably your underlying question.

Akash Tewari (Managing Director)

Awesome. Thanks so much.

Operator (participant)

Thank you. I am showing no further questions. I will now turn the conference over to Tyler Marciniak for closing remarks.

Tyler Marciniak (VP of Investor Relations and Corporate Affairs)

Thank you all for joining today's opportunity for us to share with you our third quarter financial results and corporate updates. As Shelley and Gil mentioned, thank you for your trust and support as we continue to build ACELYRIN into a leading I&I company. We look forward to engaging with you regularly and transparently. But in that vein, I would like to highlight once again our upcoming PSA data presentations at ACR and the several investment conferences we are attending in the coming weeks. We hope to see you in person soon and would encourage you to view the Fireside Chat and other resources we regularly post to our website. And of course, please feel free to contact our investor relations team at any time if we can be of service to you. With that, we'll conclude our call for today. Thank you very much.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.