Executives: Andrea Matthews - Vice President of Corporate Affairs Jill Milne - Co-Founder and Chief Executive Officer Joanne Donovan - Chief Medical Officer and Senior Vice President, Clinical Development Andrew Nichols - Chief Scientific Officer

Analysts: Joel Beatty - Citi Liana Moussatos - Wedbush Securities Hartaj Singh - Oppenheimer & Co. Inc.

Operator: Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Catabasis Pharmaceuticals Incorporated Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Andrea Matthews, Vice President Corporate Affairs. Ma'am, you may begin.

Andrea Matthews: Thank you, Heather. Welcome to today's Catabasis Pharmaceuticals' conference call, where we will provide a corporate update and review our second quarter 2018 financial results. With me today are Jill Milne, Chief Executive Officer; Joanne Donovan, Chief Medical Officer; and Andrew Nichols, Chief Scientific Officer. We issued a press release this morning, summarizing our corporate update and our Q2 2018 financial results, which we will reference on today's call. This press release 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 and other factors discussed in our most recent quarterly report on Form 10-Q, which we filed this morning with the SEC and is also 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 Milne, Chief Executive Officer, who will provide our corporate update. Joanne Donovan, our Chief Medical Officer will review our clinical programs for edasalonexent, and will be followed by Andy Nichols, our Chief Scientific Officer, who will provide a research update. Jill will then wrap things up with the financial update. Jill?

Jill Milne: Thank you, Andrea. Good morning, everyone, and thank you for joining us today for our second quarter 2018 financial results and an update on progress to date this year. In Q2 2018, we completed our goal of raising capital anticipated to fund our edasalonexent Phase 3 PolarisDMD trial through top-line data, and we'll be initiating the trial soon. This funding allows us to further our mission to establish Edasa as the new standard of care for all Duchenne patients regardless of mutation and to further explore the potential of edasalonexent to enhance the efficacy of available and developing exon skip in gene therapies when used in combination. The data from our MoveDMD trial demonstrated a profound slowing of disease progression over a year of edasalonexent treatment in boys with Duchenne, and provide compelling support for the success of our PolarisDMD trial and the potential of edasalonexent to become the new standard of care in DMD. The data support our product profile for edasalonexent that has significant market potential with approximately 15,000 patients in the United States and 19,000 in Europe. The PolarisDMD trial is designed to support registration of edasalonexent. Final preparations for the Phase 3 study are underway and enrollment will begin soon. Our PolarisDMD trial has many key elements in common with Phase 2 MoveDMD trial, including the patient population and functional endpoints. We have named our Phase 3 trial Polaris, because it is the brightest star in its constellation, and is also known at the North Star, which is our trial's primary endpoint, the North Star Ambulatory Assessment. In our MoveDMD trial, we saw clear divergence in the North Star Ambulatory Assessment score for boys receiving edasalonexent compared to the off-treatment control period. We expect to have top-line results from the PolarisDMD trial in the second quarter of 2020. In addition to the preservation of function we have observed in these boys, allowing them to continue to do the things most of us take for granted, like walking and climbing stairs, edasalonexent has demonstrated what we believe are positive effects on the heart in boys in the MoveDMD trial, critical to prolonging the lifespan of these boys and young men. These cardiac effects are supported by positive preclinical data with edasalonexent. We are currently investigating whether this effect, along with the other muscle preservation benefits we have seen with edasalonexent treatment could similarly benefit patients affected by other related diseases like Becker muscular dystrophy, where cardiomyopathy is the leading cause of mortality. Our preclinical research on combination therapies with exon skipping treatment suggests that edasalonexent may enhance dystrophin production where there are low levels of dystrophin present. And we believe that this enhancement of dystrophin production could similarly benefit Becker patients, who produce low levels of dystrophin. We are energized by the support we have received from physicians, advocacy groups, patients and their families as we prepare to initiate our Polaris trial, in our mission to provide a new standard of care for boys with DMD. Joanne will now share more details on the planned study as well as update you on our ongoing Phase 2 open-label extension. Joanne?

Joanne Donovan: Thank you, Jill, and good morning, everyone. As Jill told you, final preparations are underway and enrollment will begin soon for our Phase 3 PolarisDMD trial with edasalonexent in Duchenne. PolarisDMD is a multi-centered global study. We expect about three dozen clinical trial sites across the United States, Australia, Canada, Europe and Israel, with enrollment to start first at sites in the U.S. As Jill mentioned, we made great progress in all the activities to initiate the trial. We have edasalonexent drug available. We have finalized the protocol and we submitted it to institutional review boards and we actually have IRB approval for several sites in the U.S. We will be sharing updates soon as the first sites open for enrollment. PolarisDMD is a randomized double-blind placebo-controlled trial and is expected to enroll approximately 125 boys. As we did in our MoveDMD trial, our Phase 3 PolarisDMD trial will enroll boys aged 4 to 7, up to their 8th birthday. This age range was chosen, because as we and others have shown, boys who were not on steroids are declining in their functional abilities. And we believe that early intervention with edasalonexent will provide the largest potential benefit. The study will include boys regardless of mutation type, who have not taken steroids for the past six months. The randomization will be 2 to 1, such that for every 2 boys that receive 100 milligrams per kilogram per day of edasalonexent, 1 boy will receive placebo. Boys on a stable dose of EXONDYS 51, who are otherwise eligible, can enroll in the trial. The primary efficacy endpoint will be change in the North Star Ambulatory Assessment score after 12 months of treatment with edasalonexent compared to placebo. Key secondary endpoints will include the age-appropriate timed function tests time to stand, 4-stair climb and 10-meter walk/run. Assessments of growth, cardiac and bone health will also be included as important differentiators of edasalonexent from the current standard of care. We're very confident in the trial design as edasalonexent showed improvement compared to the off-treatment control period across all these functional measures in our recent MoveDMD Phase 2 trial and open-label extension. The MoveDMD open-label extension with edasalonexent is ongoing, and we have a number of boys and their families that have been associated with the trial for more than two years. There was a particularly rewarding milestone, when a boy participating in our MoveDMD trial recently turned 10-years-old. The boys in the MoveDMD trial are doing well and we hear wonderful feedback from their parents at advocacy conferences and meetings. [ph] We are making plans to transition these boys to a longer term open-label extension, where they will continue to receive edasalonexent. We're continuing to assess the boys' progress and plan to present additional edasalonexent open-label results at upcoming scientific conferences later this year and in 2019. Thank you to the boys, their families and the clinical trial sites in the MoveDMD trial. We truly appreciate their partnership and support of our shared mission. I also want to express appreciation for those that are considering participation in our Phase 3 PolarisDMD trial. We've received many inquiries from interested families and eager clinical sites, and we are happy to help connect people as well as answer any questions about the trial. We're thrilled to see the enthusiasm from the Duchenne advocacy community, as we advance our edasalonexent program to the final stage of clinical development, and get one step closer to an approval and making edasalonexent available to all of those that are affected by Duchenne. Our goal for edasalonexent is to treat a broad patient population across all mutation types and throughout the lifetime of those affected by Duchenne. I will now pass the call over to Andy Nichols, our CSO, who will share a research update. Andy?

Andrew Nichols: Thank you, Joanne, and good morning, everyone. Earlier this summer, I presented new edasalonexent clinical biomarker data demonstrating NF-kB target engagement in our MoveDMD trial in boys affected by Duchenne at the New Directions in Biology and Disease of Skeletal Muscle Conference. NF-kB is a fundamental driver of disease progression in Duchenne and other neuromuscular diseases. In the MoveDMD trial, during an off-treatment control period, when boys were not receiving edasalonexent, multiple transcripts of NF-kB regulated genes increased, consistent with systemic activation of NF-kB in DMD. Gene expression analysis was performed following 12 and 24 weeks of 100 milligrams per kilogram of edasalonexent treatment. And these same transcripts of NF-kB-regulated genes significantly decreased by two-fold, showing decreased NF-kB signaling in boys receiving edasalonexent. These objective and non-effort based biomarker results parallel the preserved muscle function results in the MoveDMD trial and add to the comprehensive edasalonexent clinical dataset. It's the remarkable consistency and totality of the data that give us great confidence in edasalonexent's potential. We've demonstrated NF-kB target engagement with edasalonexent in boys affected by Duchenne as well as in adult subjects and in preclinical mouse and dog models of Duchenne. In boys that are affected by Duchenne that take edasalonexent as monotherapy, we expect edasalonexent to have a positive effect on muscle health by reducing inflammation, reducing muscle degeneration and increasing muscle regeneration. Dystrophin protein is essentially absent in those affected by Duchenne. In Duchenne patients that make some dystrophin, for example, due to treatment with an exon skipping therapy, inhibiting NF-kB with edasalonexent could increase the amount of dystrophin produced. NF-kB mediates the induction of factors that block dystrophin production. It has been shown by others that inhibition of NF-kB directly enhances dystrophin production. And we have shown pre-clinically that edasalonexent can increase dystrophin production in the presence of small amounts of dystrophin that can be produced by exon skipping. The excellent safety profile observed with edasalonexent enables dosing in young boys and in combination with other therapies, such as those taking EXONDYS 51. We have patients in our Phase 2 open-label extension using this combination therapy and would allow participants to use this combination in our Phase 3 study. Likewise, in Becker muscular dystrophy, a disease where low-levels of dystrophin are produced, edasalonexent could potentially increase dystrophin levels. Edasalonexent's potential heart benefits are also important in Becker's, as cardiomyopathy is the leading cause of death in these patients. We are evaluating potential benefits of edasalonexent in Becker muscular dystrophy and investigating potential approaches to clinical trials. Our vision for edasalonexent is to treat a broad population across all mutation types and throughout the lifetime of those affected by Duchenne, either as a monotherapy or also in combination with dystrophin targeted therapies with synergistic effects. I'll now turn the call back over to Jill.

Jill Milne: Thank you, Joanne and Andy. Turning to our financials, our second quarter 2018 press release and 10-Q provide the detail, so will give a brief summary. We ended the quarter in a strong financial position with $49.9 million of cash and cash equivalents as of June 30, 2018. We raised $42 million in an underwritten public offering in June of 2018. Based on our current operating plan, we believe we have sufficient cash to fund operations into the second quarter of 2020. In the second quarter of 2018, our net cash used in operating activities was $5.6 million. Our R&D expense was $4.2 million in Q2 2018 compared to $4.5 million in Q2 2017, a decrease of $0.3 million. Our G&A expense remained constant at $2.4 million in the second quarter of 2018 and the second quarter of 2017. Our operating loss was $6.6 million in Q2 2018, a decrease of $0.3 million versus Q2 2017. Our net loss was $6.5 million or $0.20 per share in Q2, a decrease by $0.5 million compared to our net loss in Q2 2017. For the second quarter, we had weighted average common shares outstanding of $32.7 million. Additional financial information is available in our 10-Q, which we filed with the SEC earlier today. We are working to change the trajectory of Duchenne and to enable boys and young men to preserve critical functions for longer periods of time, and most importantly improve their quality of life. As we prepare to initiate our Phase 3 study, we continue to explore the full potential of edasalonexent. Our excitement about edasalonexent's potential is matched by treating physicians and families impacted by Duchenne, and we appreciate their continued support and encouragement. The Phase 3 PolarisDMD registration trial that we have designed for edasalonexent is well informed based on our experience in the MoveDMD trial as well as feedback from physicians, advocacy groups, families and FDA. I continue to be inspired by our phenomenal team at Catabasis and their dedication to our mission to make this new medicine available as quickly as possible to the many boys and men affected by Duchenne. With that, I will ask the operator to open up the calls for your questions. Heather, can you please repeat the instructions and poll for questions? Thank you.

Operator: Thank you. [Operator Instructions] Your first question comes from Joel Beatty with Citi. Your line is open.

Joel Beatty: Hi, good morning, and thanks for taking the questions. First question is about the competitive landscape with steroids. When the Phase 2 program was enrolling there were no approved steroids for DMD in the U.S. Yeah, and with the Phase 3 program, there is now an approved steroid with Emflaza. How do you anticipate that affecting enrollment in the Phase 3 program? And then, also is there any need now to do some type of comparative work, exploring the efficacy and safety of Emflaza head to head versus a steroid?

Jill Milne: Yeah, thanks, Joel, for the question. This is Jill. I'll start. So even during our enrollment of our MoveDMD Phase 2 trial Emflaza was available to patients in the U.S. through a different mechanism. And so, we don't anticipate that having an effect on enrollment. And in fact, the enthusiasm that we've seen so far at - with regard to our Phase 3 supports that. So we don't see Emflaza as impacting the enrollment. And I think I missed your second part of the question. Was it…?

Joel Beatty: Would any clinical study work need to be done comparing edasalonexent with Emflaza head to head, either for regulatory purposes or for commercial purposes?

Jill Milne: We do not believe for regulatory purposes in the U.S. that would be required. However, we do think from a commercial perspective on that some point in the development of edasalonexent, it would be beneficial to show a comparison of Edasa to Emflaza or another glucocorticoid, hopefully, with the goal of demonstrating a superior efficacy and a far superior safety profile.

Joel Beatty: Got it. And then, one other question related to the gene therapy programs in development. It looks like they may be entering pivotal studies shortly. If they're approved, how do you see that affecting the market landscape for edasalonexent?

Jill Milne: Yeah, that's a great question. There is certainly is a lot of excitement about the potential of gene therapy in Duchenne. We absolutely see an important role for edasalonexent in the treatment landscape for Duchenne, even in the presence of gene therapies on the market. And the reason I say that is for a couple of reasons. One, we believe the gene therapies as they are transferring microdystrophin, which is not the full length dystrophin gene, hopefully, if they work as we all hope, will convert Duchene patients to a Becker phenotype, where there'll still be a need for additional effects on improving muscle function. Second, we believe the effects we've seen on the heart with edasalonexent could be an important piece to the edasalonexent treatment paradigm. In that, we believe that if we could have a benefit on the heart, and ultimately, that's what these boys die from, that could be an important differentiator of the edasalonexent compared to the gene therapies, where we don't know yet if they will have a benefit on the heart.

Joel Beatty: Makes sense, thank you.

Operator: Thank you. Your next question comes from Liana Moussatos with Wedbush Securities. Your line is open.

Liana Moussatos: Thank you for taking my question and congratulations on your progress. So what did we learn from MoveDMD since Polaris is going to have a placebo arm for 12 months? What are you thinking about discontinuation rates, probably low, but what are you thinking? And then, after you start the Phase 3, are you going to do anything with other program? And you mentioned more data at scientific conferences from the open-label extension, what kind of data?

Jill Milne: Great. Thanks, Liana. Let's see, I'll make sure I hit all of these. Yes, so from the PolarisDMD, so it will be a placebo controlled trial. We don't anticipate any significant discontinuation rate. What - and the reason for that, we've built a couple of things into the trial to try to address that. The trial is 2 to 1 randomization for every two boys receiving edasalonexent, one will receive placebo. In addition, all boys after the treatment period will be eligible to enter into an open-label extension, so that's our intension with the trial, so all boys will be eligible to receive the drug at some point during the trial. For - you asked about other programs post starting the Phase 3, so you hit it right on the head, our absolute focus right now is launching this Phase 3 trial and being very much focused on edasalonexent and making sure that we are moving that program as efficiently as we can forward. We are, as Andy outlined in his section, it beginning to explore the potential of edasalonexent in related muscular dystrophies such as Becker muscular dystrophy, where we see from a mechanistic point of view as well as the data that we generated to date, great potential there. So that might be something in the future, once we get our Phase 3 launched that we would consider as expanding our pipeline. In terms of conferences coming up, we do intend to present additional data at upcoming conferences. And the typical conferences that we have presented in years previous, the type of data that we will be presenting - the type of clinical data will be from the MoveDMD trial, we certainly have more safety data from these boys, now that has been - some of the boys have been in the trial, associated with the trial for more than two years. So you can expect to see more data from that.

Liana Moussatos: Thank you.

Operator: Thank you. Your next question comes from Hartaj Singh with Oppenheimer. Your line is open.

Hartaj Singh: Hi, thanks for taking my question. I just have one broad question, a couple of specific questions off that, Jill and Joanne. The broad question is, I mean, there is a lot of development in DMD, we've seen a little - a few blow-ups from time to time, but we are really seeing some good therapies, exon skipping, Edasa gene therapy. The FDA is kind of going ahead and publishing guidelines on DMD development on gene therapy developments, et cetera, et cetera. We've got some gene therapy companies wanting to kind of try to get accelerated approval. You've accrued a lot of data with MoveDMD. What are the sort of pushes and pulls that could get you into kind of a meeting with the FDA to try to potentially discuss accelerated approval? And then what would be a sort of any kind of timelines around that? And I just got a couple of specific questions after that. Thank you.

Jill Milne: Okay. Yeah, so well, we're certainly very excited about the data we generated in the MoveDMD trial and in particular, the statistically significant improvements in the MRI T2 at 12, 24, 36 and 48 weeks of treatment with edasalonexent. While we can't speak specifics about our regulatory strategy or meetings - upcoming meetings with regulators, we are certainly pursuing all available options to us. We're expediting the edasalonexent program.

Hartaj Singh: Great, Jill. And so, just specifically, I mean in the DMD guidelines published in February, I guess, do you feel that the specific steps that regulators are looking for and possibly they'll come up in discussion for an accelerated approval filing that the MoveDMD trial could - the data could potentially address some or majority of those?

Jill Milne: Yeah, I think, the way we look at this in - certainly the FDA issued their final guidance in Duchenne in February of this year. And in that guidance, they mentioned two possible surrogate endpoints that could potentially support accelerated approval. One is dystrophin levels, the other is MRI. You asked about what the process of such an effort would be and you could imagine there would have to be a two-step process here, where the FDA would have to decide that they would accept MRI as a surrogate endpoint to support accelerated approval. And then, the next step would be if a sponsor had data that with MRI in a trial would go in front of the FDA, once the FDA made that decision.

Hartaj Singh: Yeah. Now, that makes sense. I am sure these decisions are not simple for regulators. The other question I have is just on trial recruitment. I know, you've got the sites going, you've got - Joanne mentioned more than 3 dozen sites. What are some of the things that could potentially speed recruitment? I assume your evaluation period is pretty much set. So if there is anything that could get the trial readout to occur more quickly than the second quarter of 2020, one big variable I assume would be recruitment. Are there any things that you could do or any sense that you get that your recruitment could maybe go faster than expected or how are you designing your protocol?

Jill Milne: Yeah, so certainly you can imagine that our top priority right now is recruitment and thinking about last patient in, because our goal is to get edasalonexent to patients as quickly as we can. And so, we see recruitment now as the hurdle in front of us. Although, I've got to say, the interest that we've gotten so far as we've been preparing to initiate this trial has been great. And so, we're very encouraged by that. We are opening a large number of sites, approximately 3 dozen sites to support that recruitment. And we will be getting out there, talking with patient advocacy groups, speaking at meetings, webinars, roundtables, to make sure people have a clear understanding of the trial and to help support that enrollment.

Hartaj Singh: Great.

Joanne Donovan: Yeah. Hartaj, this is Joanne. I was also going to add to that. We've also spent a lot of time talking through the protocol with advocacy groups and hearing what makes a difference in terms of supporting patients in the study. It is because of the safety that we've observed so far, patients are going to be coming in every three months. It's going to significantly reduce the burden on patients. And hopefully, that is something that we know that patients - that parents take into account in designing on clinical trial and it will help them make their decision as well as things like providing travel support and all of the things to help them work in the trial, because we know it is a burden. So we are excited about getting started. We'll be doing a lot of outreach as we already have as Jill mentioned and we are seeing a lot of inbound interest.

Hartaj Singh: Great, Joanne. Yeah, I mean, the safety point is important. Our [channel text] [ph] indicate that steroids have just really horrible off target issues and safety issues. I imagine that people would want something with a risk benefit profile like Edasa. Last question on OpEx, just you had a lower burn this quarter than what we had expected and less than I believe the first quarter, Jill. Is that something we should model going forward or do you think that it will start picking back up a little bit as Polaris gets going. And, again, thank you.

Jill Milne: Thanks, Hartaj. Yes, so yes, you noted that. I don't think you should model that. We anticipate really flat going forward, roughly flat going forward, and that's because, as you know, we prioritized the edasalonexent program in the restructuring that we did in April. And so, with the Phase 3 now ramping up, we anticipate it to be similar.

Hartaj Singh: Great. Thank you, all.

Jill Milne: Okay, thanks, Hartaj.

Operator: Thank you. And you have a follow question from the line of Liana Moussatos with Wedbush Securities. Your line is open.

Liana Moussatos: Hi, along the lines of recruitment, of the 3 dozen sites, how many were also from MoveDMD and were there any sites in MoveDMD that you didn't include in these 3 dozen for Polaris?

Joanne Donovan: Hi, Liana. This is Joanne. So we have 5 sites - we had 5 sites in MoveDMD. And we're moving forward with them as well.

Liana Moussatos: Okay. All of them are in Polaris?

Joanne Donovan: We are moving forward with them all, yes.

Liana Moussatos: Okay. Thank you.

Jill Milne: Thanks, Liana.

Operator: Thank you. And I am showing no further questions at this time. I'd like to turn the call back over to Jill Milne for closing remarks.

Jill Milne: Thank you, Heather. We are thrilled to be preparing for the initiation of our Phase 3 PolarisDMD trial and believe that this trial will establish edasalonexent as a foundational oral therapy for all boys and men affected by Duchenne. Thank you all for joining our call today and for your continued support of Catabasis. We look forward to speaking with you again soon and keeping you updated as our Phase 3 trial sites begin to open for enrollment and on our progress overall. Have a good day. Andrea?

Andrea Matthews: 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.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you all may disconnect. Everyone, have a wonderful day.