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Operator: The host is recording this meeting. Line muted. Press pound pound one or hash hash one to speak. Kelsie Davenport: Good morning, and thank you for joining us as we discuss RGC Resources, Inc. 2026 second quarter results. I am Kelsie Davenport, director of finance of RGC Resources, Inc., and I am joined this morning by Paul W. Nester, president and CEO of RGC Resources, Inc.; Timothy J. Mulvaney, our VP, treasurer, and chief financial officer; and Tommy Oliver, senior vice president of regulatory and external affairs. To review a few administrative items, we have muted all lines and ask that all participants remain muted. The link to today's presentation is available on the Investor and Information page of our website at www.rgcresources.com. At the conclusion of the presentation and our remarks, we will take questions. Turning to slide one. This presentation contains forecasts and projections. Slide one has information about risks and uncertainties, including forward-looking statements that should be understood in the context of our public filings. Slide two contains our agenda. We will discuss operational and financial highlights for the second quarter and first six months of our 2026 fiscal year. We will then review our outlook for the rest of the 2026 fiscal year, with time allotted for questions at the end. I will now turn the presentation over to Tommy. Tommy Oliver: Well, thank you, Kelsie, and good morning, everyone. Turning now to operations on slide three. Main extensions and renewal activity for 2026 were steady. We installed 2.7 main miles, a similar total to the main miles installed in 2025. In addition, we connected 340 new services in 2026, which was close to the 359 connections from 2025, evidence that residential development continued across the region in the first half of the fiscal year. As shown on the right side of the slide, we renewed 1.5 miles of main and 190 services during the 2026 fiscal year. While the main miles renewed were down, in part due to weather, compared to the same period last year, the service renewals increased by almost 25%. Let us move to slide four, where we show our delivered gas volumes for the quarter. Despite an extreme cold spell in late January and early February, the quarter as a whole was warmer compared to the same quarter in the 2025 fiscal year. Total volumes were down 5% compared to 2025. Residential and commercial volumes were both down 5%, and heating degree days were down 2% compared to 2025. Let us move to slide five. The story of delivered gas volumes was a little different in the first six months of fiscal 2026. Despite the larger number of heating degree days, total volumes were down 3% compared to 2025, with the decline in industrial usage, primarily attributable to one customer, being the main reason. Unlike the quarter, heating degree days for the six months increased 3%, as the first six months of the fiscal year were colder than the prior year. Let us move to slide six, where we talk about CapEx. CapEx for 2026 compared to 2025. Total spending was 9.8 million dollars in the current year, down approximately 8% over the same period a year ago. Weather related to a winter storm in late January and early February affected our spending. We picked back up in March and will discuss plans for the remainder of the year later in the presentation. I am going to now turn it over to our CFO, Timothy J. Mulvaney, to review our financial results for the quarter. Tim? Timothy J. Mulvaney: Thank you, Tommy. Moving to slide seven, this shows both our second quarter and first half results for fiscal 2026. We had a robust quarter, with increased Roanoke Gas margins due to the rates that went into effect January 1 combined with higher earnings from our unconsolidated affiliate, MVP, and lower interest expense, which overcame higher expenses related to investment in our gas system and inflationary pressures that remain higher than the Fed’s 2% target. Net income of 8.7 million dollars, or $0.84 per diluted share, compared to net income in the same quarter a year ago of 7.4 million dollars, or $0.74 per diluted share, a 14% increase. The year-to-date results are also shown on slide eight. The strong Q2 results drove the six-month performance as well, as the first quarter did not have the benefit of the January rates. Net income was 13.6 million dollars in 2026, or $1.31 per diluted share, compared to $1.26 per diluted share in 2025, a 5.3% increase. A reminder about the seasonality of our industry: with recent ratemaking activity, much of our revenue is generated through volumetric factors, and accordingly, our performance in the back half of the year, when volumes are lower, inevitably results in fewer revenues and profits. Paul will discuss our outlook for the remainder of 2026 in a few moments. Moving forward to slide eight, our balance sheet remains strong. We do have a 15 million dollar note at Roanoke Gas that matures in August. It is included in our current maturities of long-term debt. We are deep in conversations with our lenders to refinance this note. We have long known that we would be unable to replicate the 2% rate that we have enjoyed. The discussions with lenders have been positive and should allow us to refinance this note at a rate consistent with our plans. We will have more to share on this in the near term. I will now pass the presentation to Paul W. Nester, our CEO. Paul? Paul W. Nester: Good morning, and thank you, Tim. We have a few topics that we would like to discuss concerning the second half of 2026. These are listed on slide nine. Before we get into the details of those, I do want to again thank our customers and employees for an outstanding winter performance. We discussed this a little bit on the first quarter call, when we were just coming out of winter storm Fern, but our system performed admirably during that period. Our employees performed admirably and safely, and so did our customers. Again, we had an outstanding winter heating season and are appreciative of our employees and customers. We are here to serve our customers. We did have a couple of challenges that arose in the second quarter. One of our top five customers by volume, and a long-time manufacturer in the Roanoke Valley—in fact, over 60 years—idled their operations in March. We really have great care and concern for the employees at that operation who lost their jobs in that process. Many had been there many years. As Tim said, it is a headwind in 2026. Again, they were a large gas customer. Tommy will talk about the ratemaking impacts of that event in just a few moments. Another challenge was described in our 10-Q, which we filed yesterday afternoon. We had some damage at our LNG peak shaving facility in the middle of the quarter. We have hired tank experts and other experts to help us assess the cause and makeup of this damage and to potentially design some solutions to remediate it. The outcome of that is that we do not expect to have use of our LNG peak shaving facility in the coming winter season. We have begun intense and thorough planning for that event and to provide service without the facility. As we disclosed in October, we are unable to estimate the costs associated with this event, and we are unable to estimate the investment required to possibly repair or, if needed, replace the tank. Tommy will also incorporate the ratemaking impacts of that into his comments. We will, of course, continue to update you in future communications and/or SEC filings as more facts about this become known. I am going to turn it over to Tommy to give us an update on our pending rate case. Tommy? Tommy Oliver: Thank you, Paul, and we are moving to slide 10 now. As we discussed in our most recent earnings call, Roanoke Gas filed an expedited rate case on December 2 seeking approximately 4.3 million dollars in incremental annual revenues, based on our current authorized return on equity of 9.9%. Interim rates became effective 01/01/2026, subject to refund. The SEC staff is in the process of their audit and is scheduled to file testimony in June. The hearing is scheduled for 07/15/2026, and we expect final resolution from the Commission by calendar year-end. For four months beginning in January, we were offsetting the new rates through credits on bills to return the tax credits to customers that were resolved with the IRS late in fiscal 2025 and had been included within our regulatory liabilities on the balance sheet. We concluded these refunds in April. As Paul mentioned just a few minutes ago, we had a large customer cease operations in the second quarter. We informed the SEC staff of this development, and we are optimistic that the SEC staff will incorporate the expected decline in usage over the coming year into their recommended revenue requirement when they file testimony in June. Regarding the damage that occurred to our LNG facility, we have alerted staff of this situation and have held discussions with staff regarding the establishment of a regulatory asset for these costs. So, Paul, I am going to turn it over to you. Thank you, Tommy. Paul W. Nester: I continue to be pleased with the work of Tommy and his team, and really our whole company, and our relationships with the State Corporation Commission, not only on the ratemaking side, but also in the safety aspect. So thank you for all that good work there. We are on slide 11. Our capital spending forecast remains at 22 million dollars for the fiscal year. We have rebalanced the mix of spending just slightly from what we presented at the end of the first quarter. Again, as more facts become known about our LNG facility, we will continue to be flexible to reposition certain investments as needed, or potentially add to this capital spending plan. On slide 12, with the strong second quarter that Tim reviewed, we have both narrowed and raised our 2026 earnings per share range. On the lower end, we are at $1.31, and on the higher end, we have moved it up to $1.37. I think Tim’s reminder about the seasonality is important. Obviously, the third and fourth quarters will not look like the first and second quarters from an earnings standpoint. We continue to see the same macroeconomic concerns that we have been talking about now for several quarters. Practical inflation remains above the 2% level that the Fed targets. We are constantly, throughout the organization, looking for ways to be more efficient and to save and manage expense. Interest rates—Tim talked about the refinancing of that note. Certainly, the global situation has caused the interest rate market to be volatile within a range, but still volatile. We are working with our debt partners almost on a daily basis to optimize that refinancing. The local economy, and we have said this as well for several years now, continues to be steady. The Google data center is moving forward. There have been a few other positive announcements recently across the Roanoke Valley. Our teams continue to work every day with economic development, contractors, and other folks that are facilitating this growth, and we do everything we can to support that. We will now open the call for questions. We would love to entertain any questions that you may have. Please dial 1 to unmute your line. Pound pound or hashtag hashtag 1 to unmute your line. We will wait just a few more moments in case anyone has a question. Hashtag hashtag 1 to unmute your line. Okay. Well, hearing no questions from the audience, this does conclude our remarks. Our team will be at the AGA Financial Forum in about ten days, and we hope to have the opportunity there to greet and visit with many of our investors and financing partners there. We wish the rest of you a safe and pleasant summer, and we look forward to speaking with you again in August to review our 2026 third quarter results. Thank you.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Crinetics Pharmaceuticals First Quarter 2026 Financial Results. [Operator Instructions] I will now hand the conference over to Gayathri Diwakar, Head of Investor Relations. Gayathri, please go ahead. Gayathri Diwakar: Thank you, operator. Good afternoon, everyone, and thank you for joining us to discuss the first quarter 2026 results. Today on the call, we have Dr. Scott Struthers, Founder and Chief Executive Officer; Isabel Kalofonos, Chief Commercial Officer; Dr. Alan Krasner, Chief Endocrinologist; and Tobin Schilke, Chief Financial Officer. Please note, there is a slide deck for today's presentation, which is in the Events and Presentations section of the Investors page on the Crinetics website. In addition, a press release was issued earlier today and is also available on the corporate website. Slide 2. As a reminder, we'll be making forward-looking statements, and I invite you to learn more about the risks and uncertainties associated with these statements as disclosed in our SEC filings. Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those stated or implied in such statements due to risks and uncertainties associated with the company's business. In particular, today, we will be reviewing launch progress to date, our commercialization plans, future performance and other data about the acromegaly market, which are all necessarily subject to a high degree of uncertainty and risk. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's news release, the company's other news releases and Crinetics' SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. In addition, this call will include certain non-GAAP financial measures. A presentation of the most directly comparable GAAP financial measures and reconciliations thereto are included in today's news release accessible from the Investor Relations section of our website. I would also like to specify that the content of this conference call contains time-sensitive information that's accurate only as of this live broadcast. Crinetics takes no obligation to review or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that, I'll hand the call over to Scott. R. Struthers: Thanks, Gayathri. Thank you for joining us on today's call. Moving on to Slide 4. This has been another strong quarter of executing our plan to make Crinetics the premier endocrine company. Crinetics is committed to translating the complexities of cutting-edge endocrinology into real value for patients. And with the launch of Palsonify, we are delivering on that commitment every day. We've made great strides in building the business by consistently adding patients every week to the pool that will be helped by Palsonify for many years to come. The consistent positive feedback we continue to receive from both patients and HCPs is especially gratifying. We have also meaningfully advanced our deep clinical stage pipeline with 4 major trials running and recruiting nicely. These represent blockbuster opportunities across several areas. And we continue to grow the pipeline with multiple compounds and IND-enabling activities with more to come from our ongoing discovery efforts. We have built a company that has proven it can discover, develop and deliver its own novel therapeutics, and we are well capitalized to continue to execute this growth strategy and drive value creation. I'm very proud of our team's strong execution across all dimensions of the company's first launch. This collective effort has translated into 232 additional patient enrollments and $10.3 million in net product revenue for the quarter. And we are making strong progress with access, including continually driving higher conversion from enrollment forms to patients starting Palsonify and growing reimbursement as coverage on formularies expand. We expect low discontinuation rates based on our clinical studies. Therefore, the number of patients on Palsonify should continue to compound. We continue to see momentum build on all fronts in the second quarter. While it's early days, we are confident in our growth trajectory. Palsonify sets a new standard of care for the treatment of acromegaly and is on track to become the most prescribed brand. Over the last few weeks, we've continued to advance Palsonify globally, including the European Commission approval of our MAA, the JNDA submission in Japan by our partners at SKK and our MAA submission in Brazil. These milestones underscore the strength of Palsonify's clinical data and the significant unmet need amongst patients around the world. As we expand internationally, we are taking a disciplined market-by-market approach, prioritizing geographies with clear regulatory and reimbursement pathways and pacing investment in line with an increasingly dynamic global pricing and access environment. All in all, it's clear that Palsonify is positioned to become the leading acromegaly treatment, and Crinetics has an exceptionally equipped team to bring it to the patients in need. With our early commercial success, continued clinical execution and a robust balance sheet to support the advancement of our innovative pipeline, Crinetics is well positioned to generate value for all stakeholders in both the near and long-term. I'll now turn the call over to Isabel to discuss the Palsonify launch in more detail. Isabel? Isabel Kalofonos: Thank you, Scott. Turning to Slide 6. The Palsonify launch continues to build on its strong momentum. I'm incredibly proud of our team. Their execution has led to a strong demand across all patient segments, expanding the breadth and depth of prescribing activity and solid reimbursement coverage. Palsonify establishing itself as a new standard of care in acromegaly, addressing a clear need for an effective, safe and convenient treatment to control the disease. Moving to Slide 7, starting with patients. As Scott mentioned, in the first quarter alone, we secured 232 new patient enrollment forms. This performance reflects strong execution in the field and demonstrates that we are expanding beyond early adopters and clinical trial transitions to reach the broader acromegaly population. As expected at this stage of launch, the majority of new enrollments continue to come from patients switching from existing therapies. We are seeing meaningful breadth and switching behavior with patients coming from all acromegaly therapies, including lanreotide, octreotide, cabergoline, oral nucleotide and combination regimens. We are very pleased to see that Palsonify is performing consistently across this diverse patient base with physicians and patients experiencing its benefits regardless of prior therapy. Importantly, both controlled and uncontrolled patients have switched to Palsonify, reinforcing its versatility across different clinical profiles. We are also encouraged by the expansion within treatment-naive patients. From the fourth quarter in 2025 to the first quarter in 2026, treatment-naive patients increased from 5% to 15% of total enrollments. We believe this is a positive signal of growing physician confidence and over time, we expect sustained growth in the share of naive patients. Providers are increasingly viewing Palsonify as a reliable solution across a broad range of patient profiles. As previously discussed, our strategy remains focused on driving adoption among both treatment-naive and switching patients, while expanding the overall market. Palsonify's differentiated profile, including rapid onset of action in as little as 2 to 4 weeks, sustained symptom and IGF-1 control and convenient once-daily oral dosing positions it well to address key limitations of existing therapies. We are already seeing early signs of this potential. Approximately 15% of first quarter prescriptions came from patients reinitiating therapy after discontinuing prior treatment, which is an encouraging indicator of Palsonify's ability to expand the treatment population over time. Our patient strategy continues to focus on empowering the patient voice and ensuring early and seamless access to treatment as described on Slide 8. This includes rapid initiation through our Quick Start program and comprehensive health support. We also support patients with a robust suite of services designed to meet patients' needs throughout their treatment journey, including education delivered by our endocrine nurse educators and engagement through our patient ambassador program. Our ambassador program connects with patients through multiple digital and social channels as well as live patient ambassador programs. The patient stories being shared reflect a diverse range of experiences on Palsonify, including individuals who were previously uncontrolled on existing therapies and who have achieved meaningful IGF-1 reduction along with clinically important symptom improvement. We believe this will motivate patients to more proactively manage their acromegaly and to initiate informed conversations with their physicians about Palsonify. Via CrinetiCARE , we are providing comprehensive support to help navigate insurance coverage and minimize friction in the prescribing process. Together, these efforts reinforce our commitment to supporting patients, amplifying their voices and helping them take a more active role in their care. Turning to Slide 9. I'm very pleased with our marketing and field execution. We continue to expand our prescriber base. As of March 31, there were 263 unique prescribers, up from over 125 at the end of 2023. This represents an important and expanding foundation for future growth. At large treatment centers, we are seeing top prescribers begin with a gradual number of patients with highly positive responses. In many cases, broader adoption is currently limited not by interest, but by appointment availability, which reinforces our confidence in underlying demand. Consistent with the prior quarters, enrollments remain evenly split between academic and community settings, reflecting broad relevance across practice types. Awareness of Palsonify continues to build, supported by targeted media reach, a strong presence at major congresses and a growing body of scientific publications. This includes a recently published indirect treatment comparison demonstrating Palsonify's value relative to other therapies as well as 2 oral sessions at the American Association of Clinical Endocrinology, including a late breaker that presented the first 6 real-world cases highlighting Palsonify's efficacy in both treatment-naive and uncontrolled patients. Our commercial execution continues to support educational programs and peer-to-peer engagement. Overall, we are very pleased with the positive experience prescribers have with Palsonify, which reinforces our confidence in continued adoption and growth. From an access standpoint, approximately 70% of patients on therapy at the end of first quarter were reimbursed a meaningful improvement from last quarter, and patients have continued to transition from quicker start to reimbursed product. Over time, we expect nearly all patients to have coverage for Palsonify, and we will continue to provide quicker start when needed to ensure initiation of therapy as soon as possible. We are also seeing most prior authorizations approved for 12 months and aligned with the label, reflecting payer confidence in both the clinical profile and durability of benefit. Turning to Slide 10. Payers appreciate Palsonify's unprecedented safety and efficacy, which continues to be reinforced with new research and publications. As I mentioned it, we recently published in the Journal of Clinical Endocrinology and Metabolism, a comparison of PATHFNDR-1 results against other approved acromegaly therapies. The analysis showed placebo-adjusted IGF-1 normalization of 79.7% with paltusotine, more than double what has been reported for both subcutaneous or oral ocreutide. This efficacy data, coupled with Palsonify's fast of action and symptom control are resonating strongly with payers. We continue to have highly productive discussions with top payers across the country, including regional and self-insured employer groups, supported by compelling clinical presentations that are resonating clearly. These conversations are translating into results. We are achieving formulary wins earlier than the typical decision time frame, reinforcing the strength of Palsonify's value proposition. Moving to Slide 11. Importantly, we have now achieved over 60% coverage and remain on track to exceed our 75% coverage goal by the end of third quarter of 2026. Our national account directors will continue to meet with payers in the next quarter to continue to accelerate coverage. We have delivered this progress with improved speed to therapy and continued operational efficiencies across prior authorization and appeals. Collectively, this reinforces that payers recognize the meaningful clinical benefit of Palsonify and the value of keeping people living with acromegaly in sustained biochemical and symptom control. Overall, our experienced commercial team is executing extremely well. The value proposition is clearly resonating with all stakeholders, and we are encouraged by the trajectory of the launch as we continue to expand access and improve outcomes for patients. I will now hand the call to Alan to discuss the pipeline. Alan Krasner: Thanks, Isabel. As we launch Palsonify, we continue to advance our deep homegrown pipeline. This pipeline continues in the Palsonify tradition of using novel and meticulously designed small molecules to interact with therapeutic endocrine receptors to improve the health and lives of our patients. Like Palsonify, we work to create truly new and needed treatments, which are easy to use for the patients and for their health care providers. As a clinical endocrinologist, I have long been frustrated by what I call no better option inertia, and the history of acromegaly care is a great example of this. For decades, we have been telling our acromegaly patients treated on depot injections that their blood tests look okay. Therefore, they are okay. Even if the patient wasn't feeling okay, there was very little we could do about it anyway. We knew that there were a lot of unsolved problems, not the least of which was unstable control of acromegaly symptoms even when blood test results suggested normal or close to normal IGF-1 levels. That's where Palsonify came in. It was long past time to break the inertia and create a better option, one that for the first time was approved with a rigorous demonstration of IGF-1 normalization and symptom control. And the patients don't have to wait a long time to achieve these goals. Palsonify for acromegaly is only the first candidate on this pipeline slide and the potential patient impact across our pipeline is enormous. Atumelnant is another great example of a Crinetics pipeline candidate. It has a novel mechanism of action that has already resulted in unprecedented biomarker and clinical responses in short-term Phase II studies. The Phase III COLMCAH adult and Phase II/III BALANCECAH pediatric studies are actively enrolling with a great deal of patient and investigator interest. We are also excited to begin enrollment into the Phase II/III equilibrium ADCS study in the near future. Additionally, we will report interim data from our Phase II CAH open-label extension later in the year. When I look at Slide 13, I see a lot of scientific creativity addressing long-standing inertia in clinic and plenty of opportunities for significantly better therapies to address many endocrine and endocrine oncologic disease states. We don't settle for the status quo at Crinetics. We don't do inertia. I'd like now to update you on our activities at major medical conferences. I recently returned from the American Association for Clinical Endocrinology meeting where Palsonify data were featured in 2 well-received oral presentations. As Isabel mentioned, one of these was the first description of real-world experience using Palsonify presented by a prescribing physician. There is no better way for practicing health care providers to learn about a new product than discussing with each other personal observations of how patients do with the treatment. We have heard many powerful anecdotes from patients and these real-world results are very consistent with what we are hearing. Diligence study and follow-up does not stop just because a product is approved. The Annual Endocrine Society Meeting is coming up in June, and there will be several Crinetics data communications, 3 of which are oral presentations. One of these oral presentations will summarize results of up to 2 years of long-term safety and efficacy data from the Phase III PATHFNDER-OLE studies. Another oral presentation will detail final results from the Phase II TuCAN study results for eptumelimib in the treatment of adult congenital adrenal hyperplasia, or CAH. And the third, we will present new dosing data from the ongoing single-center study evaluating Aomelimet in patients with ACTH-dependent Cushing's syndrome. With the great potential across the Crinetics pipeline, I expect we will be presenting at these and other meetings for many years to come. With that, I will hand the call to Tobin for a financial update. Tobin Schilke: Thank you, Alan. Turning to Slide 16. Our financial results for the first quarter 2026 demonstrate a balance of disciplined execution and strategic investment as we advance the development of our pipeline and commercial launch of Palsonify. In the first quarter, we recognized $10.7 million in total revenue, consisting of $10.3 million in net product revenue from Palsonify and $0.4 million from our licensing agreement with our Japanese partner, SKK. Cost of product revenue in the first quarter was $0.2 million. Prior to Palsonify's approval last September, manufacturing costs were expensed through R&D as 0 cost inventory. If we were to include the cost of products sold that was previously expensed as 0 cost inventory, the cost of product revenue would have increased by less than $0.1 million. To date, we have only distributed 0 cost inventory and expect to continue to do so for the near term. Our research and development expenses for the first quarter were $100.1 million compared to $85.1 million in the fourth quarter. The increase compared to the fourth quarter is primarily due to the ramp-up of ongoing Phase III trials as well as the initiation of the Phase II/III pediatric study of adamelimab in CAH. Selling, general and administrative expenses were generally steady at $50.8 million for the first quarter compared to $53.7 million in the fourth quarter. The fluctuation compared to the fourth quarter reflects timing variability of commercial investment. We ended the quarter with $1.3 billion in cash, cash equivalents and investment. As of April 23, 2026, we had approximately 105.4 million shares of common stock outstanding. On a fully diluted basis, we had 123.5 million shares outstanding. This includes our outstanding options, unvested restricted stock units and shares expected to be purchased under our employee stock purchase plan. Moving to Slide 17. We are maintaining our guidance for GAAP and non-GAAP operating expenses in 2026. We expect GAAP operating expenses to be between $600 million and $650 million. We expect our non-GAAP operating expenses, which exclude cost of product revenue, stock-based compensation, depreciation and amortization to be between $480 million and $520 million. Based on our current operating plans and cash position, we project that our existing cash and investments will be sufficient to fund our operations into 2030. This provides us with significant runway to execute on the commercialization of Palsonify, pivotal readouts for ongoing clinical trials in carcinoid syndrome, adult CAH, pediatric CAH and Cushing's and continued advancement of our early pipeline, including proof of concept for 9682. I'll now turn the call back to Scott for some closing remarks. R. Struthers: Thank you, Tobin. Turning to Slide 19. Palsonify sets a new standard for the medical treatment of acromegaly. I'm very pleased with the progress we have made on the launch. We are optimistic that the trajectory ahead of us will make it the most prescribed treatment for these patients. As we approach the halfway point of 2026, Crinetics is in a unique position of strength with fully integrated capabilities, a deep pipeline and robust balance sheet. We are nicely advancing this innovative portfolio of clinical programs and the site activations and enrollment trends in all studies are positive. I look forward to sharing meaningful data from these programs as they mature. Beyond our late-stage trials, we are continually innovating on our early-stage programs and moving them forward towards the clinic as well as beginning new discovery efforts. We've also taken a new step for the company in establishing a collaboration with Dr. John Kopchick at Ohio University for the discovery of oral non-peptide growth hormone antagonist. Dr. Kopchick is a leading innovator in the field and discovered pegvisimod, the only commercially available growth hormone antagonist. We look forward to working with him to potentially create a new oral add-on therapy. As you've seen today, we are not just executing a launch. We're building a premier endocrinology company. With Palsonify setting a new standard of care in acromegaly and ongoing Phase III studies for carcinoid syndrome, atumelnant advancing toward 2 important indications, 9682 exploring the potential of an entirely new platform, a discovery engine that keeps replenishing what comes next and a uniquely experienced team to carry it forward, we are well on our way to transforming the lives of people living with serious endocrine diseases and creating lasting value for all stakeholders in the near and long term. Thank you for listening, and we look forward to your questions. Operator: [Operator Instructions] Our first question comes from the line of Joe Schwartz with Leerink Partners. Joseph Schwartz: I have one on atumelnant and one on 9682. First, we noticed that you've added a balanced CAH update for '26. What will that entail? Can you give us a sense of the quantum of data you'll report and what you hope to demonstrate there? And then second, where are you now in terms of enrolling the BRAVIS 2 study dosing cohorts? And when do you think we might get our first taste of data out of that program? Also, at what point do you make the investment decision to expand the range of tumors you might target? R. Struthers: Thanks for both questions, Joe. Let's see, taking them in order. How about -- let's talk about the BALANCE pediatric study. So, a reminder, this is a cohort-based study starting first in 12- to 18-year-olds looking at doses and confirming the translation of our expected doses in pediatrics from the adults. And there's 2 cohorts there that are mandated and then a possible third cohort. We're not changing our guidance. We hadn't said it wasn't coming this year. We're just reminding folks it may come this year. And especially if we don't need that third optional cohort, we will have data on the 12- to 18-year-olds as we begin going down the age groups. In terms of 9682, we are in the dose escalation phase, marching up the doses. We don't think it's prudent to give guidance as to when that may or may not come about. But the enrollment and enthusiasm in both that and all the CAH programs and the Cushing's program and the carcinoid syndrome program are very high. And so 9682 will make the decisions on the additional cohorts as we get to an effective or a tolerated dose. But we've already set out some key cohorts we're going to be expanding in the expansion phase. Operator: Your next question comes from Gavin Clark-Gartner from Evercore. Gavin Clark-Gartner: Great to see the progress. For Palsonify, I just wanted to confirm, for the cumulative enrollment that pie chart you showed the 15% of naive patients, that's cumulative since launch, right? What was the percent of naive patients that came in specifically in the first quarter? R. Struthers: Thanks, Gavin. Let me hand that over to Isabel, but we are pleased with the overall execution across all dimensions of this launch. And I've got a lot of questions over the years, where do you think the primary group is going to be? And I think the answer I've given is everybody. Our source of business is every single group. And in addition to those naive, the folks who are coming back to care represents an early victory on our planned Phase II of the launch when we start focusing more heavily on. But maybe, Isabel, you want to comment a little bit more about the naive population. Isabel Kalofonos: Just to clarify the 15% is specific to first quarter. And our market research showed that basically, the messages on PATHFNDR-2 are resonating really well with the community. We're helping shift long-standing perceptions. We are successfully reframing or as a true first-line option rather than a second-line alternative. The efficacy story is landing really well. And as Alan mentioned it, 3 of the 6 patients highlighted at the AAC poster were naive patients who have remarkable results. So, we see this group really expanding in the future, and we expect to be actually dominating in this group. R. Struthers: Yes. And just to add on to that, remember, this comes back to our overall strategy of laying the groundwork, getting people experience and then starting not just to focus on switching market, but growing the market and bringing people back to the care that they need, that they gave up on because of the problems associated with the current level of care like Alan was talking about. The inertia is not something that we want to do. We're not going to -- we need to move past that. Gavin Clark-Gartner: That's super helpful. Super quick follow-up. What's the scope of the CAH data that's coming at end of this year? R. Struthers: Well, I think you'll just have to wait and see for the abstracts, but it's a beautiful molecule, and we very much like it. Operator: Your next question comes from the line of Yasmeen Rahimi with Piper Sandler. Unknown Analyst: This is Liam on for Yasmeen Rahimi. Congrats on another outstanding quarter. Just looking forward at the Palsonify launch, could you provide some color on how you think 2Q will compare to 1Q? And how do you really see starting forms evolving over the next 4 quarters? Or I guess like what would be considered a steady-state starting form number? R. Struthers: I'll let Toby take that one. Tobin Schilke: Thanks, Liam. When you step back and zoom out, as Scott mentioned, we've accomplished a lot in the first quarter. You've seen the growth of the naive patients is the first question answered, the penetration into the discontinued patients and sort of just the depth and breadth from payer coverage and the increasing number of accounts that we penetrated over time. However, there's always puts and takes. So, for instance, we had the momentum in the fourth quarter of 2025, where we had some patients who had joined and became enrolled from the OLE and some kind of early adopters and a handful of hand raisers there. So that it's really tricky to kind of forecast where we're going to be. However, we like the momentum that we're building, and we're really confident in our trajectory. R. Struthers: And I think something that has been very nice to see is just how well the team across all the dimensions of the company, whether it's sales or medical affairs or even the back office stuff. It's all working very smoothly. The engine is coming, and we're building momentum. Operator: Your next question comes from the line of Max Skor with Morgan Stanley. Maxwell Skor: So, regarding Palsonify, with 70% reimbursed, what's the form to paid conversion rate? And how should we think about timing for the remaining 30%? R. Struthers: Well, first, let me complement the market access team. 70% at this early point in the launch is really superb for a molecule in the rare disease space like this. But do you want to comment a little bit more on some of the dynamics as well? Isabel Kalofonos: Yes. Thank you for the question. As Scott pointed out, we're very pleased that 70% of the total systems and the patients are getting reimbursed, and we are working through moving those quicker starts into reimbursed patients. That's moving at a good pace. I'm not going to mention the specific metric, but we're expecting all of them will eventually be converted to reimbursed drug. Operator: Your next question comes from the line of Jon Wolleben with Citizens. Jonathan Wolleben: Just one for me on Palsonify. When we think about the unique prescriber base, do you have a sense of how many acromegaly patients those prescribers have under their care? Just looking for some commentary about kind of the deepening of the prescribers as well as the broadening over time. R. Struthers: Yes. Thanks. And as we've said in the overall strategy the last couple of times, we're trying to get a broad set of experience so that we can then begin to expand the market and get people in and focus then on depth. And I think we're succeeding on both aspects of that. We're getting a broad set of prescribers at the top pituitary centers and out in the community, and those are starting to show depth in some of those prescribers and some are just new to the drug. Maybe you want to add a little bit to that. Isabel Kalofonos: We are very pleased with the results. I mentioned earlier in the call, 50% of the prescriptions are coming from community and 50% are coming from PTC. But the 50% from community are coming from 70% of our total prescriber base. That's really promising because it means we are expanding the market, building a broad base of prescribers that are having really positive experience and are starting to put the second, third and fourth patient on drug. Answering your question on how many patients those doctors represent today, approximately 1,400 patients. Operator: Our next question comes from the line of Jessica Fye with JPMorgan. Jessica Fye: Just curious, as you enroll the registrational atumelnant trials, do you anticipate being able to provide the Street with commentary on the ongoing safety profile, maybe based on like blinded safety data as it accrues? R. Struthers: Thanks, Jess, and welcome back. Yes, let me just say that every day, we're accruing patients every week. And the safety profile continues to be what we've always communicated it to be, which is very, very favorable. But maybe I should let Alan give a more physician-oriented answer to that. Alan Krasner: Yes, I mean, all trials, especially major Phase III, Phase II/III trials are carefully monitored for safety. Sometimes the efficacy results, of course, are blinded. But there are always medical monitors following both safety and efficacy as well as external data monitoring committees. In general, when the trial -- when these trials continue, that means the risk-benefit profile has been analyzed and it has been found to be safe to go forward. I don't know that we would come back to make public announcements, but you can be sure that this is -- when the trials continue, things are going along as expected. R. Struthers: And maybe just to be absolutely clear, with continued experience, we see continued good safety profile with nothing that has changed our mind or perspectives on that whatsoever. And as we add more patients, anything in the past that might have been concern to some, not so much us, continues to be diluted by more and more experience, both in the adult ongoing Phase III in the rapidly recruiting pediatric study where everybody is super sensitive to safety, of course, and in the ongoing OLE experience. So that experience base grows every day, and we continue to be pleased with the profile of atumelnant, both on a safety and efficacy point of view. Operator: Your next question comes from the line of Dennis Ding with Jefferies. Yuchen Ding: Congrats on a strong first quarter. I have one on Palsonify. So, it seems like each doctor so far is prescribing it to 1, maybe 2 patients. What's the feedback from them who have used it so far? And what's preventing them from prescribing Palsonify to more patients? Is it just confidence in getting these scripts approved? Or maybe penetration is just gated by the timing of patient visits? R. Struthers: Thanks, Dennis. Let me correct your premise. It is not true that they've only prescribed to 1 or 2 patients. It depends on how many patients they have and how often they're able to see them. But we have some who routinely are switching patients or adding to new patients. And just as we've said since the beginning, the major challenge is just getting that darn appointment. But we're hearing tons of positive feedback in an anecdotal sense that we're now starting to publish as evidence. We're getting good coverage, good reimbursement and everything is moving along just as we expect. So, nothing is getting in the way other than a little bit of time and a little bit of finding those darn appointments. Yuchen Ding: Got it. And if I can have a follow-up. For your preclinical oral TFHR antagonist, how do you think about this approach going after the receptor versus going after the autoantibodies? I mean one might say that completely hitting the receptor might get patients to go into a hypothyroid state that might require a Levo supplementation. So curious how you're thinking about that. R. Struthers: Yes. So just like our other programs, we're really going after the core target of the disease. And it's super specific to go after the receptor. And remember, there's this whole other branch that are going things downstream of the receptor like the anti-IGF antibodies. But at its core, what we've shown in a preclinical setting is a great degree of specificity, ability to achieve dose response. And if necessary, we could take add-back approaches like levothyroxine, which almost every endocrinologist is familiar with. Alan, maybe you want to elaborate on how we're thinking about developing this drug. Alan Krasner: Yes. No, I mean, I agree with Scott. It is the fundamental driver of the disease states in multiple organ systems is via -- it's mediated by the TSH receptor. So that's where we really want to target the therapy. The autoantibodies in Graves disease are very -- they come and go. The wax and wane with time. It's unpredictable as to when antibodies are even there versus how much antibody is there and what form of antibodies are there. These are polyclonal antibodies that are very heterogeneous. So even measuring them in a laboratory isn't necessarily predictive of clinical things. So, it's very hard to react to autoantibodies and chase them, especially in the disease state, which the natural history is for these things to kind of appear and disappear. I think targeting the TSH receptor is much more reliable and I hope will prove to be much more effective and long-term solution for patients. Operator: Your next question comes from the line of Kate Delloruso with LifeSci. Katherine Kaiser-Dellorusso: Congrats on all the progress this quarter. Just a quick one on Palsonify. I know it's early days, but I was wondering if you had any insights on real-world compliance or adherence thus far that might be captured your patient resources like the CrinetiCARE platform. R. Struthers: Yes. Thanks, Kate. Just a reminder, we've had great compliance and persistence throughout the clinical trials, open-label extensions, and that trend continues as we go into the real-world setting. But maybe you want to comment, Isabel? Isabel Kalofonos: We are very pleased with the positive experience that patients are having on Palsonify. You see a fast set of action in 2 to 4 weeks. You see symptom control and IGF-1 control. And that has led to the patients to continue on therapy. So, the patients that started in fourth quarter are on therapy today. We see a very positive trend on adherence and compliance. R. Struthers: And if I just extrapolate from these anecdotes we're hearing about how patients feel better. The converse of that is when you stop, you know what good is like and you are reminded what bad is like again. So, as we think about these enrollment forms each quarter and the natural history of acromegaly, it's important to remember that this is a lifelong disease, and we've developed a lifelong treatment. And so each quarter, we're adding hundreds of people who I think we can help not just through providing a good drug, but providing the whole ecosystem through CrinetiCARE and our other services to help them manage their health care, help them get to reimburse for their drug and help them stay on the care that they need. Operator: Your next question comes from the line of Alex Thompson with Stifel. Alexander Thompson: I guess when might you be in a position to give us some more clarity around time lines for the paltusotine carcinoid Phase III and the AML adult study? I guess asked another way, both of those trials have primary completion dates for 2027 on clinicaltrials.gov at this point. Is it possible we see data next year? Or are we going to have to wait until 2028? R. Struthers: Well, look, as I said earlier, Alex, it's not prudent to comment on time lines at an early stage of a trial like this. And you have to throw an estimate on clinicaltrials.gov. But we've done a whole bunch of different things as we've grown the company to help ensure that we can maximally recruit our studies. And these go from things like internalizing our U.S. clinical operations. So those are relationships at sites where we've had studies before and now it's with our own Crinetics staff who have low turnover and stay as a relationship for the duration of the study. And those people are also then, of course, the likely prescribers of the drug. And so, we've seen an acceleration in site activations. We've also put in various structures to help make sure that the sites are screening effectively. We've been very pleased in the CAH study that almost every site as soon as it's activated, starts screening immediately. And you don't always see that in these types of clinical trials, but it's great evidence about the enthusiasm of the investigator and the patient community. And similar in carcinoid syndrome, remember what a tough, tough disease this is and what really solid data we showed in the Phase II program. We recently had an investigators meeting there. And again, a ton of enthusiasm and a very positive response. So, we are working hard to make sure we can bring in these time lines at the fastest possible pace, and we've built the company to do that. So it's -- we had a discovery engine, I think most people recognize. The development engine, there's a lot of stuff behind the scenes that most people forget about, but it's complex and it's really running well. And now we've built the commercial engine and the commercial engine is coming, too. Operator: Your next question comes from the line of Tyler Van Buren with TD Cowen. Nicholas Lorusso: This is Nick on for Tyler. Congrats on the progress and on the quarter. Can you discuss what proportion of revenue came from new patients this quarter compared to patients rolling over from last quarter? And also, what was the overall growth of the patient enrollment forms month-over-month in Q1 and as you moved into Q2? R. Struthers: I'll let Toby take that. Tobin Schilke: Yes. I don't think we were going to comment on the revenue from new patients versus carryover patients. But when you step back, I think that as we look at this data and sort of the growth that we've had in enrollments, we're feeling very good about the trajectory of things. The team, like as Scott and Isabel mentioned, are building the relationships and they're doing it in a very steady fashion. And we're quite pleased with the progress and just the response to Palsonify in the field. Operator: Your next question comes from the line of Douglas Tsao with H.C. Wainwright & Co. Douglas Tsao: Congrats on the progress. I'm just curious if you could provide a little bit more on the 15% of patients who are returning to therapy. I'm just curious if you have a sense of were they in the system still and routinely seeing a clinician but chose not to be receiving sort of injectable therapy and were very quick to come on as soon as Palsonify was available? Or were these patients who somehow heard about the drug and then decided to sort of reenter sort of treatment? R. Struthers: Yes. Thanks, Doug. Again, let me give some credit to the team. They've been piloting some of the programs they're planning on deploying more widely to do exactly this and bringing these patients back to care. And so, some of it is from that and some of it is spontaneous. But maybe you want to comment a little bit, Isabel. Isabel Kalofonos: Well, we are really pleased because we are bringing back to patients that have given up on their treatment, even though they have a chronic disease where symptoms continue to advance. So, these patients that have discontinued therapy remain in the system. They were primarily discontinued due to the burden of the treatment and the fact that those treatments don't deliver, right? You continue to have symptoms at the end of the cycle, you have painful injections and after what you just give up. So, for us, it's great. None of them has discontinued for more than 2 years, some of them just a few months ago. And we have reengaged them. And that reengagement takes our media programs, our participation on the program and also some specific tools where we are working to identify them with the practice. So, these are very early outcomes in a group that has given up, but it's very encouraging for us because it means that we can expand the market. Douglas Tsao: That's really helpful. And just maybe on the switch patients, I'm curious, do they generally just come in -- I mean, how many visits to see the doctor do they need? Are they generally coming in, talking about the clinicians saying, yes, I would like to do this and they sort of get the ball rolling with the patient start form -- or do some patients need a couple of visits to sort of go through an education process? R. Struthers: Yes. So, there's a little bit of a mix. But before we hand this to Isabel, let me just tell you one anecdote I heard recently -- I had recently firsthand where I was talking to a couple of HCP friends of mine, and they were telling me about a couple of different patients that had come in and asked for Palsonify. And their initial reaction was, well, this is a -- you're on a second-line therapy. I'm not sure a first-line therapy will be what you need. And yet it worked anyway much to their surprise. And so, everybody was happy with that, and that story is propagating as well. But you want to comment, Isabel? Isabel Kalofonos: Yes. When it comes to the switching patients, I will first comment that we are very pleased that they are coming from all kinds of previous therapies, octreotide, lanreotide, combination therapy, cabvergolin, Mycapssa. So, we are taking share from pretty much all those switches. And the beauty of Palsonify is that it's performing really well across the board. So that shows the versatility of our drug and that confirms the efficacy and the benefit also having a once-daily therapy. When it comes to how long it takes to convince patients, it's like everything in life. Some patients are more ready to do that change because they are having the symptoms, because they feel uncontrolled because they hear about the convenience of our treatment, all of that makes them ready to switch. Other patients want to hear from other patients. That's why we have our Embassor program to hear stories. Other patients want to have a second opinion with the doctor. But that's what we are seeing across the board as patients have interest in learning more and many patients are joining our Embassor events. Douglas Tsao: That's really helpful. And Scott, can I just ask a quick follow-up in terms of your anecdote. I mean just given their reaction, I mean, does that suggest that even very well-educated clinicians with Palsonify don't necessarily have a full appreciation of the data and the strengthness of it because just given the PATHFNDR results, I mean, I don't think anybody should be surprised that the drug would work or that it wouldn't be applicable to everybody with acromegaly. R. Struthers: Yes. No, it's not that it wouldn't be applicable to everybody. It's just that we're seeing kind of even more than we expected in the real-world setting than what we saw in the PATHFNDR studies. Because remember, we -- the PATHFNDR had 2 parts of the spectrum, 2 ends. The patients who are untreated at all in PATHFNDR-2 and the patients who are very well controlled on the injectable depots. But what was missing was all those patients in the middle who aren't that well controlled, who might be on combination therapy, and we only had a small amount of data on that from Phase II. And so, what we're learning in the real-world setting is that even if you're on a combination therapy, some patients are getting better on Palsonify. Even if you're on something like pasarreotide, which is a mixed receptor that people advance to after they fail on lanreotide and which has a variety of different problems associated with it, even those patients are getting switched and doing well. So I think we're all just a little bit surprised at how well this has done in the real-world setting, which is why it's so critical that we capture the real-world evidence and start to get that out there, not just through word of mouth, which is already happening, but through publications and formal presentations of evidence. Operator: Your next question comes from the line of Richard Law with Goldman Sachs. Jin Law: Congrats on the results and progress so far. Two questions for me. The first is we saw sales from other products from many other companies impacted by the severity of weather in Q1. Was there any seasonal effect that impeded Palsonify sales in moment form in Q1? And do you believe there's a pent-up demand as a result in Q2? And then I have a follow-up on eimelimab. R. Struthers: Look, we're very pleased with just the overall consistent launch and the way the team is performing, and I couldn't be happier. I think we've got enough time for the eimelimab question. Jin Law: Yes. I think just kind of following up to what you said earlier about safety monitoring, something like that. Can you discuss like what data sets that you can -- that you believe can help derisk the safety profile related to ahead of that Phase III CAH study? And then I think in the ongoing trials, you mentioned that you guys do monitor the safety or the data monitoring will monitor safety. Is there -- if there's a lower grade like liver tox signal, would that get reported to you? Like what level and what quantity of level of that signal gets communicated to you guys? R. Struthers: I'll let Alan answer the technical part of that. But in my view, there's not really anything to derisk anymore. We're at a normal Phase III, and it's moving forward in a very nice fashion. Alan, maybe you want to give people some comfort with the specificity of the rigor that goes into our overall safety monitoring, including the Phase III. Alan Krasner: Yes. So, all clinical trials, including Phase III clinical trials contain within it extensive safety monitoring, which generally includes regular visits with health care professionals for physical examinations as well as a battery of routine safety blood tests, EKGs and other important things, too, that are generally -- that are routine for clinical trials. All these safety data are very carefully monitored by well-trained professionals all the time. The all the safety data is available in real time to the medical monitors in particular. And this is followed very carefully. And as I said earlier, generally, when a trial is continuing, that means all the safety checks are as expected. And I feel very confident in our compounds and in our trials, including the ongoing trials. Yes. R. Struthers: And maybe to even put a finer point on it. You really think that IRBs around the world would let us start dosing 12-year-olds or soon even younger if they had any question about the safety or risk benefit of this drug. I don't think they would, especially as we get into kids. Operator: Our next question comes from the line of Catherine Novack with Jones. Catherine Novack: Just one on Palsonify in Europe. Can you give me your thoughts on potential pricing dynamics here and when you expect to see revenue from individual countries and which countries may be first? R. Struthers: Yes. Thank you. Look, we're focused on executing on the U.S. launch. And I'm really pleased that we've received the approval in the EU. We've submitted in Brazil. We've submitted in Japan. And all of this is building options for us around the world and I think showing the strength of the drug with the receptions we're getting from these global regulators. But like everybody else in pharma and biotech, we're monitoring rapidly how all the pricing and access situations are evolving. And we're navigating this uncertainty in a very disciplined market-by-market approach. We'll be prioritizing geographies with clear regulatory and reimbursement pathways. And also importantly, we're pacing the investment in these international activities, again, to preserve the option value without overcommitting too much capital. And just to be clear, we're not preparing for revenue from international operations this year, but we will be prepared for early launch in 2027. Operator: Your next question comes from the line of Brian Skorney with Baird. Brian Skorney: Congrats on the quarter. I also wanted to get some thoughts maybe on the ex-U.S. launch you mentioned sort of thinking about prioritizing where reimbursement may be favorable given sort of the IRA dynamics. But how do you think about where there might be higher value areas through either genetic clustering or just diagnostic clustering being a driver of demand? Like I think in Northern Ireland, there's a genetic cluster of the R304 mutation, maybe Brazil seems to have better diagnostic infrastructure than other areas. So, are there any areas that you kind of point to where the pool of identified patients may be particularly meaningful? R. Struthers: Yes. So, first, there's not really a genetic clustering to acromegaly, except as you say, in the Irish giants, which is one of a relatively small population where there is a genetic component to the acromegaly. So the distribution of incidents is pretty much global, but some health care systems are better at identifying patients and/or keeping them under care. But we need to balance that against also the reimbursement landscape and the regulatory certainty in those regions. So, all those things we're taking into account, but it's a little too early to comment in detail on the specificity of our international plans. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BioLife Solutions Q1 2026 Shareholder and Analyst Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the call over to Troy Wichterman, Chief Financial Officer of BioLife Solutions. Troy Wichterman: Thank you, operator. Good afternoon, everyone, and thank you for joining the BioLife Solutions 2026 First Quarter Earnings Conference Call. On the call with me today is Roderick de Greef, CEO and Chairman of the Board. We will cover business highlights and financial performance for the quarter and reiterate our 2026 financial guidance. Earlier today, we issued a press release announcing our financial results and operational highlights for the first quarter of 2026, which is available at biolifesolutions.com. As a reminder, during this call, we will make forward-looking statements. These statements are subject to risks and uncertainties that can be found in our SEC filings. These statements speak only as of the date given, and we undertake no obligation to update them. We will also speak to non-GAAP or adjusted results. Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in the press release we issued this afternoon. Now I'd like to turn the call over to Roderick de Greef, Chairman and CEO of BioLife. Roderick de Greef: Thanks, Troy. Good afternoon, everyone, and thank you for joining us for BioLife's First Quarter 2026 Conference Call. We're off to a solid start to 2026 with first quarter revenue growth of 25% and adjusted EBITDA up approximately 15% versus the prior year. Performance in the quarter was driven by continued strength across our broader product portfolio, led by our biopreservation media or BPM franchise. We entered 2026 with a simplified business and heightened focus on high-margin recurring revenue, and our results this quarter demonstrate the operating leverage in our model as a result. At the same time, we're seeing continued momentum across the CGT landscape, driven by expansion into larger indications, encouraging data readouts, strategic M&A and an improving funding environment, all of which we believe will support long-term growth across our end markets and underpins sustained value creation for BioLife shareholders. Turning to the quarter's results. Total revenue reached $27.5 million, increasing 25% year-over-year and adjusted EBITDA of $6.2 million or 22% of revenue, up roughly 15% from the prior year. BPM remained the primary driver of revenue growth with our other cell processing tools also contributing to overall growth. BPM represents over 85% of total revenue and continues to benefit from broad adoption across both commercial therapies and clinical pipelines where we maintain a dominant market share. Our top 20 BPM customers represented approximately 80% of BPM revenue and demand forecast from these accounts provide good visibility into our business. Channel mix remained consistent with over 60% of BPM revenue generated through direct sales with the balance through third-party distributors. Roughly half of BPM revenue was generated from customers with approved commercial therapies, and this remains a key driver of growth and durability in our model. We highlight these metrics because they reflect the ongoing shift in our business toward later-stage programs and commercial products, which are more stable, less sensitive to funding dynamics and growing faster than the broader CGT market. Several of the therapies we support are already at or tracking toward blockbuster status with annual revenues exceeding $1 billion. As these therapies scale and expand into new geographies and additional potentially larger indications, we believe BioLife is well positioned to benefit from higher patient volumes and the recurring nature of these revenue streams. Gross margin and adjusted EBITDA as a percent of revenue declined year-over-year due to the previously discussed bag yield dynamics. This remains a key operational priority, and we are making steady progress in close collaboration with our key customers to address it and are confident that this is temporary in nature. Stepping back, our market position continues to strengthen. At the end of the quarter, our BPM products were embedded in 17 approved therapies with visibility into an additional 9 unique approvals, expanded indications and geographic expansions over the next 12 months. Across the broader pipeline, we estimate our solutions are utilized in more than 250 commercially sponsored CGT clinical trials in the U.S., exceeding a 70% market share with an even higher share in later-stage Phase III programs. Independent third-party analysis of U.S. commercially sponsored trials where our biopreservation media is not used, no other commercial alternatives were identified, suggesting that these trials are relying on internal homebrew formulations. Given our leading share among late-stage programs, we expect this pipeline will convert into future commercial revenue as therapies advance through the approval process, reinforcing our position as a critical spectrum component of the cell therapy workflow. Building on this foundation, our team is focused on expanding BioLife's role within the CGT workflow beyond biopreservation media. Our CellSeal Vials and hPL product lines are already utilized in 4 approved therapies and over 35 clinical programs, and that number continues to grow. This expanding footprint is supporting our cross-selling efforts with existing BPM-only customers evaluating additional components of our portfolio. Given the size of these organizations and the rigor of their validation processes, adoption cycles tend to be longer, reflecting a higher bar for change while reinforcing the stickiness of these relationships. That said, we're seeing encouraging early traction and each additional BioLife product that's integrated into a therapy has the potential to increase our revenue per dose by 2 to 3x relative to BPM alone. While still early, this represents a meaningful opportunity to enhance both growth and the overall financial profile of the business. From a capital allocation standpoint, we remain focused on the highest return opportunities to support long-term growth, both organically and through disciplined strategic initiatives. Alongside our cross-selling efforts, we are regularly evaluating adjacent areas that build on our core scientific and commercial strengths. This includes selective acquisitions, minority investments and strategic partnerships that broaden our platform and increase our participation across the CGT ecosystem. This is enabled by our balance sheet, which gives us the flexibility to pursue attractive opportunities with discipline while maintaining a high bar for financial profile and strategic fit. Turning to our 2026 outlook. We are affirming the guidance we introduced on our last call. We expect revenue of $112.5 million to $115 million for the year, representing growth of 17% to 20%. As in prior years, our guidance reflects the visibility we have today based on demand forecast from our key customers. We also expect continued operating and adjusted EBITDA margin expansion and anticipate generating full year GAAP net income for the first time in many years. Before handing it over, I'll briefly highlight a few favorable developments we're seeing across the cell therapy landscape. Field is diversifying beyond traditional oncology applications with increasing activity in large autoimmune indications. We're also seeing encouraging data emerging in allogeneic cell therapies that have the potential to unlock multibillion-dollar market opportunities as well as renewed interest in established autologous approaches such as CAR-T and TILs, expanding the market from its base in liquid tumors into solid tumor indications. At the same time, we're seeing meaningful strategic activity, including the recent nearly $8 billion acquisition of Arcellx by Gilead as well as continued investment in next-generation manufacturing capacity and automation to support scale. As these therapies evolve and care settings shift, whether into outpatient and community settings or toward off-the-shelf approaches, this is expected to support sustained demand for robust, high-quality and trusted cell processing tools, biopreservation media and packaging solutions, areas where BioLife is well positioned. Taken together, these dynamics reinforce our confidence in the long-term trajectory of the field and the attractiveness of the CGT end market. BioLife has exposure across these areas and is uniquely positioned to benefit as these trends translate into durable demand. With that, I'll hand the call over to Troy to provide an overview of our first quarter financial results. Troy? Troy Wichterman: Thank you, Rod. We reported Q1 revenue of $27.5 million, representing an increase of 25% year-over-year. The year-over-year increase was primarily related to increased sales of our biopreservation media products, driven by strong demand from customers with commercially approved therapies as well as strong revenue growth from the balance of our product portfolio. GAAP gross margin for Q1 2026 was 64% compared with 67% in Q1 2025. Adjusted gross margin for the first quarter was 64% compared with 68% in the prior year. The decrease in adjusted gross margin percentage compared with the prior year can primarily be attributed to a product mix shift towards bags, which carry lower gross margins than bottles as well as a previously discussed impact from manufacturing yields. We view the yield impact as transitory and a key operational priority throughout 2026. And as it is resolved, we expect a corresponding expansion in gross margin. GAAP operating expenses for Q1 2026 were $17.5 million versus $15.3 million in Q1 2025. The increase compared to the prior year can be attributed to a $1.2 million increase in R&D, primarily related to our PanTHERA acquisition in April 2025 and the opening of our Center of Excellence. In addition, we had a $0.9 million expense increase in stock-based comp acceleration related to severance, partially offset by a reduction of $0.8 million in acquisition costs. Adjusted operating expenses for Q1 2026 totaled $16.8 million compared with $13.8 million in the prior year. GAAP operating income for Q1 2026 was $27,000 versus an operating loss of $0.5 million in the prior year. The improvement was primarily due to increased revenue compared to the prior year and lower acquisition costs, partially offset by higher stock comp related to severance. Our adjusted operating income for the first quarter of 2026 was $1 million compared with $1.2 million in Q1 2025. Our GAAP net income was $1.2 million or $0.02 per share in Q1 compared to $0.3 million or $0.01 per share in the prior year. The increase in net income was primarily due to increased revenues compared to the prior year. Adjusted EBITDA for the first quarter of 2026 was $6.2 million or 22% of revenue compared with $5.4 million or 24% of revenue in the prior year. The primary driver of the change as a percentage of revenue in the current quarter was due to the impact of bag yields on our gross margin percentage as discussed earlier. Turning to our balance sheet. Our cash and marketable securities balance reported as of March 31, 2026, was $111.5 million compared with $120.2 million as of December 31, 2025. Taking into consideration our adjusted EBITDA of $6.2 million in Q1, cash usage was primarily driven by tax obligations for share withholdings vested in Q1 of $5.6 million, debt principal payments of $2.5 million and unfavorable working capital of $6.9 million, which includes an increase in AR of $5.1 million, primarily related to timing. The entirety of our $2.5 million SVB debt balance is considered short term. Our final payment on the SVB debt balance is due in June 2026. We will pay a $1.2 million loan maturity balloon payment due at the time of maturity. Turning to our 2026 financial guidance. We are reiterating our 2026 guidance disclosed during our fourth quarter earnings call. Total revenue is expected to be $112.5 million to $115 million, reflecting overall growth of 17% to 20%. The increase is primarily due to expected demand from our BPM customers with commercially approved therapies as well as increased demand for our other tools. We expect GAAP and adjusted gross margin for the full year to be in the mid-60s. We expect gross margins to benefit from favorable pricing, partially offset by product mix and the previously discussed impact from bag yields. We expect to achieve full year positive GAAP net income and expansion of adjusted EBITDA margin in 2026 compared to 2025. Finally, in terms of our share count, as of April 30, we had 48.9 million shares issued and outstanding and 50.3 million shares on a fully diluted basis. Now I'll turn the call back to the operator to open up for questions. Operator: [Operator Instructions] And our first question comes from Matt Stanton from Jefferies. Matthew Stanton: Maybe on the topic of the bags, could you just clarify, are you saying that the bags have lower margins than bottles, all else equal and that there's also the scrap issue tied to the bag, so kind of two issues on the bag in terms of mix? And then I would love to just get an update on the scrap side of the bag. I think before you talked about kind of a 90-day notice period. Maybe just help us in terms of getting that back to normal as we think about kind of the 22% adjusted EBITDA margins in 1Q and the walk up the rest of the year to kind of get to that year-over-year expansion that you reiterated again today. Roderick de Greef: Yes, Matt, let me take the second part of your question, and I'll have Troy deal with the first part. So with respect to where we are with our customers in order to solve this problem, we have been working with them over the last 60 days to provide them with several different alternatives to the existing bags, which are causing the problems. So we are at a point now where that customer notification will be going out shortly. There's a 90-day period for them to select effectively which option they'd like to utilize. And then we have to burn through the remaining bag inventory that we have. So we're on track for the same sort of timing as we had laid out in the last phone call we had. And we would expect to be able to see some flow-through of enhanced margin either Q4 or Q1 of '27, depending on how quickly we burn through the existing bag inventory. I'll let Troy answer the rest. Troy Wichterman: Yes. And Matt, on your question on bags versus bottles on gross margin. So as a percentage of revenue, bags do have a lower gross margin than bottles by quite a bit at this point in time because of that yield issue we've been talking about. Matthew Stanton: Okay. And then so once the yield issue is rectified, are the margins closer to the same as previous is that right? Troy Wichterman: Closer, correct. Matthew Stanton: Okay. Okay. And then maybe, Rod, you talked about a little bit just outside of biopreservation media, you talked a little bit about cross-selling there. I would love just some more color on the new product front. Obviously, you have the Cryo case. I think you've talked about maybe some other things coming out of the pipeline. You have PanTHERA here, would love kind of an update on that. Just anything as we think about the back half of '26 and '27 on the new product front and other things coming out besides biopreservation media. Roderick de Greef: Sure. You bet. With respect to the PanTHERA product, we're still on track for a Q4 launch of that. We've identified what the value proposition will be in addition to identifying the final molecule that we'll be going with. So that looks good. With respect to cross-selling the other products, that is a longer-term effort. It continues to move forward with respect to increased number of validations, et cetera. And I think that at the end of the day, when I look at the revenue growth, albeit from a smaller base, those other tools are growing at a faster rate actually than the biopreservation media is. So we're pleased with the momentum. Obviously, we'd like things to go faster, but there's a certain amount of inertia with respect to the validation process within these large companies. Operator: The next question comes from Brendan Smith from TD Cowen. Brendan Smith: Congrats on the quarter. Maybe just a quick one from us on a bit more sector level. I guess as you kind of look at state of biotech funding and kind of the broader strength you're seeing, are you potentially expecting any inflection orders over the coming months? I guess, just given that we're now kind of approaching almost 6 months of pretty solid funding recovery there. I guess, really, how big of a driver is that for BioLife realistically? And is this something that could jump up in Q3 or Q4? Or just kind of your view on the funnel looking like a more gradual ramp? Just kind of trying to understand cadence for guidance. Roderick de Greef: Yes. Thanks, Brendan. I think that as we've talked in the past, the biotech funding does not really impact us. To the extent that it does, it impacts us at very early-stage customers. There's a few exceptions to that. But in general, it affects earlier-stage customers that buy a very small amount of product through distributors from us, right? So the overall impact is not that meaningful. The bulk of the revenue, certainly the revenue growth is coming from well-capitalized firms. And when I look at the Phase III customers that we have that should be gaining approval over the next sort of 12 to 24 months, those are, by and large, also well capitalized. On top of that, though, to the extent there is an impact, I read the other day where overall biotech financings for '25 were about $11.1 billion. So it seems to me that, that issue has stabilized and now should not be a headwind at any level for us going forward. Operator: The next question comes from Paul Knight from KeyBanc. Paul Knight: Rod, we were at the BioLife booth at INTERPHEX, the CryoCase won one of the Best In Show awards. How is that going commercially? Roderick de Greef: Yes. We were pleased to receive the award for sure, Paul. I think it's good recognition that it truly was sort of a unique product that we put out. So again, we have well over 3 dozen validations going on, and I think that there's definite interest. But again, whenever you're dealing with something that changes in the manufacturing process, particularly of a final drug product, but even in late stage, it's a decision by committee, right? A lot of people are involved, and it takes a lot of time. But we're seeing some bright spots and are looking forward to being able to see some traction certainly towards the second half of the year, hopefully, with the type of announcement of a customer that people would recognize. Paul Knight: And then the other question, Rod, you mentioned earlier, autologous has kind of been the core of the market. But where are we with allogeneic cell therapy based on what customers are telling you? Roderick de Greef: Yes. I think we're still a couple of years out, but Allogene has published some decent data. I think they did a raise. So from a financial perspective, they're in a much more solid position. And I think there, although the overall BPM volumes per patient might be a little bit lower, the opportunity to address much larger patient populations is, in our estimation, going to far outweigh the reduced amount of volume per patient. But again, I think it's a good 2-plus years away from really having a revenue impact on BioLife. Paul Knight: And then lastly, you mentioned GAAP net income. Is that like targeting 4Q, Rod, or Troy? Roderick de Greef: No, it's for the full year per quarter, Paul. Operator: The next question comes from Mac Etoch from Stephens. Steven Etoch: Maybe following up on Paul's question. I think the share of homebrew has been pretty stable over the last couple of years, particularly in late-stage trials. As you think about cell and gene therapy expanding into these larger indications and the FDA focusing on more standardized platforms, do you see an opportunity to kind of capture more of that share moving forward? Roderick de Greef: Yes, I think so. As we're taking a cut of this data, Matt, on every 6-month basis. We go back and review the results of all the clinical trial work that has been done and refresh it. And the numbers are actually going up in our favor. So I think that at the end of the day, it's going to be very few folks who use a homebrew with a commercial product. As we've mentioned, we're in 900-plus trials worldwide, but the ones that really matter are the 250-plus that we're in that are commercially sponsored that are looking to achieve a commercial therapy. And I think that it's going to be increasingly difficult to justify whether it's from a cost perspective, a manufacturing process perspective, a logistics perspective, the FDA to use something other than the gold standard. Operator: The next question comes from Matt Hewitt from Craig-Hallum. Tollef Kohrman: This is Tollef Kohrman on for Matt Hewitt. Is there anything specific you want to call out on that increase in R&D expense? Roderick de Greef: Yes. I think it is directly related to bringing on the Center of Excellence, which provides us with the ability to do some serious scientific work. We have 4 or 5 scientists working at the center, all PhDs. We've never had that before in terms of a team of scientists that can actually do the R part in addition to the D part of R&D. So we're pretty pleased with that. So there's a cost associated with that as well as the cost of increasing the accelerating projects that we have internally, including the RCC, which will ultimately be the answer to the bag issue that we have. So that's a rigid container designed to carry our product from our factory to our customers in a rigid container that can be used in a closed system. So that's a product that we're definitely making an investment in as well as the consumable line associated with the CT-5. So that's where the money is going. It's really internal product development. Operator: The next question comes from Thomas Flaten from Lake Street Capital Markets. Thomas Flaten: Rod, you mentioned in your prepared comments that commercial BPM customers were about half the revenue. And I think on the last call, you said you could get that maybe up to 55%. Any update on that outlook? Or do you think 55% is still realistic? Or do you think you can push it beyond that? Roderick de Greef: I think in the near term, that's about the right number. The rate of growth of that group of customers versus, say, distribution or noncommercial is so significantly different that it's going to be a higher number in the outer years. But in this year, I think a target of 55% is pretty much where we're going to settle out. Operator: And our next question comes from Yi Chen from H.C. Wainwright. Katherine Degen: This is Katie on for Yi. Thinking about some of the deals you announced on prior calls with Pluristyx and Qkine with those two coming together and that announcement on May 1, does that integration kind of give you any meaningful wins for biopreservation media demand? Are you kind of expecting any pull-through from that deal? How are you kind of thinking about that? Roderick de Greef: are you speaking about the Qkine deal? Katherine Degen: Yes. Roderick de Greef: Yes. I think where the pull-through with our products comes into play is combining our CellSeal product line as a primary container for Qkine cytokine line. That's where we're going to see some incremental revenue from our products. The other way we'll generate revenue is obviously through the sale of their cytokines to our customer base. Katherine Degen: Yes. I guess my question is, are you expecting any synergy now that Pluristyx and Qkine have an agreement together? Roderick de Greef: You mean the Pluristyx and Qkine agreement? Katherine Degen: Yes, right. Roderick de Greef: No, no. I think -- yes, that's specific to Qkine providing some products that have -- that are relevant to their Organoid kit. So that really is outside of anything to do with BioLife per se. Katherine Degen: Okay. So you don't think they'll pull through any customer base from that? Roderick de Greef: Not that will directly impact our revenue in any way, no. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Rod de Greef for any closing remarks. Roderick de Greef: Thank you, Jason. In closing, 2026 is off to a strong start with solid top line growth. We remain focused on operational execution, including supporting our core BPM customers, expanding adoption across our broader portfolio and managing operations efficiently across our organization. We believe our position as a leading supplier of bioproduction products, together with exposure across the attractive and growing CGT end market leaves us well positioned for durable growth and long-term value creation. Thank you for your time today, and I look forward to seeing some of you at upcoming investor conferences. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, and welcome, everyone, joining today's Arcturus Therapeutics First Quarter 2026 Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to Neda Safaradev, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead. Neda Safarzadeh: Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics quarterly financial update and pipeline progress call. Today's call will be led by Joe Payne, our President and CEO; Dr. Alan Cohen, our Chief Medical Officer; and Dennis Mulroy, our Chief Financial Officer. Dr. Patrick Beculolo, our CSO and COO, will join them for the Q&A session. Before we begin, I would like to remind everyone that the statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statements. Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our most recent Form 10-K and in subsequent filings with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made. Arcturus specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe. Joseph Payne: Thank you, Neda. It's good to be with you again, everybody. The first quarter of 2026 was a period of solid execution for Arcturus as we continue to advance our rare disease pipeline and strengthen our leadership team. I'm very pleased to report that our CF program is now in new uncharted territory. Our 12-week Phase II study began enrollment in Q1. We are already well beyond one month of dosing. Continuous dosing beyond a month has never been successfully tolerated in the history of inhaled mRNA therapeutics, but this is a big deal. And why is that? Because Class I CF is a serious disease with serious unmet medical need, and we believe that the nested pulmonary congestion observed in Class I CF disease requires consistent chronic dosing that is reasonably well tolerated to be successful. There are specific reasons why Arcturus has been able to achieve tolerable dosing beyond one month. Firstly, our inhaled LUNAR particle technology includes key delivery lipids that are chemically different from all other technologies competing in this space. Secondly, our messenger RNA manufacturing process to remove undesired impurities is unique, proprietary and trade secreted. ARCT-032, this is our inhaled mRNA CF therapeutic candidate, continues to showcase these differences in its growing safety and tolerability profile. The CF community is aware of our safety and tolerability profile, which has contributed to the reason why we were able to initiate enrollment of our 12-week open-label Phase II study earlier than originally anticipated. This study is enrolling Class I CF participants and monitors lung function measures, including percent predicted FEV1 and lung clearance index or LCI. We believe there is increasing recognition across the field of both the significant unmet medical need in Class I CF and the importance of achieving a well-tolerated repeat dose therapeutic approach to enable durable clinical benefit. Our program is designed with these principles in mind, and we are encouraged by the opportunity to generate meaningful clinical data in a patient population that continues to have no effective treatment options. We look forward to collecting this clinical data, including lung function measures during and throughout this open-label Phase II study. Arcturus remains committed to advancing our inhaled mRNA therapy for people living with CF Class I mutations who continue to face significant unmet medical needs. Now moving on to our flagship liver program, ARCT-810. This is our mRNA therapeutic candidate to treat ornithine transcarbamylase or OTC deficiency. We met with the FDA to discuss the pediatric clinical development strategy for ARCT-810. Following this Type C meeting, we're pleased to receive clear regulatory direction on a path toward a pivotal pediatric study. In line with that direction, we are collecting additional exploratory data and look forward to further alignment with the FDA at the end of Phase II meeting planned for the second half of 2026. Beyond our clinical rare disease programs, our partner, Meiji in Japan is actively manufacturing KOSTAIVE. This is our self-amplifying mRNA COVID vaccine for the upcoming 2026, 2027 season using a 2-dose vial presentation. All commercial guidance for KOSTAIVE in Japan will be provided by Meiji. We also expanded our executive leadership team with the appointments of Dennis Mulroy as Chief Financial Officer; and Dr. Alan Cohen as Chief Medical Officer. I'm pleased that they are both on the call with us today, and we will get to hear from them shortly. Both bring extensive and relevant experience that will play important roles as we continue executing across clinical, regulatory and corporate priorities. Many of you will have the opportunity to meet with these gentlemen, and I encourage you to do so. Overall, we believe Arcturus is well positioned to advance our pipeline toward meaningful clinical and regulatory milestones for patients and for our shareholders. With that, I'll now turn the time over to our Chief Medical Officer, Dr. Cohen. Alan Cohen: Thank you, Joe, and good afternoon, everyone. From a clinical development perspective, the first quarter reflected meaningful progress across our key programs. Starting with cystic fibrosis. ARCT-032 is currently enrolling people with CF with Class I mutations in a larger and longer open-label Phase II study over a 12-week period. The study is designed to monitor safety, tolerability and assess evidence of early clinical benefit, including 2 pulmonary functional measures, including changes in percent predicted FEV1 and lung clearance index. We've intentionally designed this study to generate a more comprehensive understanding of safety and tolerability, along with early signs of clinical efficacy, which are critical to advancing inhaled messenger RNA therapies in the lung. We are also evaluating 2 validated quality of life outcome measures, along with changes in high-resolution CT imaging to support a comprehensive assessment of potential clinical effects. Taken together, these endpoints are intended to provide a robust data package to inform both the therapeutic potential and the feasibility of repeat dosing. Our goal is to establish not only early evidence of activity, but also the feasibility of repeated dosing, which is fundamental to unlocking durable benefit in this patient population. Turning to OTC deficiency. Our ARCT-810 program continues to broaden its development strategy to address the unmet medical needs of newborns and young children affected by the most severe forms of the disease. Following our recent Type C meeting, the FDA provided clear direction toward a pivotal pediatric development path. We are actively collecting additional exploratory data to help establish the optimal dose and therapeutic effect as we prepare for the end of Phase II meeting planned later this year. Across both programs, our focus remains on generating high-quality clinical and regulatory data to support thoughtful decision-making and efficient advancement through development. We believe this disciplined approach is particularly important in emerging modalities where careful characterization of safety, tolerability, delivery and clinical effect is essential to long-term success. I'm excited to be part of the Arcturus team, look forward to working closely with our investigators, regulatory partners and internal team members as we continue moving these important programs forward. With that, I'll now pass the call to Dennis. Dennis M. Mulroy: Thanks, Alan, and good afternoon, everybody. Our press release issued earlier today includes financial statements for the first quarter ending March 31, 2026, and provides a summary and analysis of our year-over-year performance. Please also reference our most recent Form 10-Q for more details on our financial performance. Cash, cash equivalents and restricted cash totaled $213.4 million on March 31, 2026, and $232.8 million on December 31, 2025. Year-over-year quarterly revenue decreased by $27.3 million. The decline was driven by reductions in revenue from our CSL collaboration as Arcturus refocuses on our rare disease clinical programs. Quarterly research and development expenses decreased year-over-year by $13.4 million, which was driven primarily by lower manufacturing costs related to LUNAR-COVID and BARDA as well as reduced clinical trial costs associated with the LUNAR-COVID program. Additional decreases were attributable to lower payroll and benefit costs associated with lower stock-based compensation expense and a reduction in headcount. Overall reductions were partially offset by higher manufacturing costs related to LUNAR-OTC. General and administrative expenses decreased year-over-year by $1.8 million due to reduced share-based compensation expense as well as payroll and benefits associated with reductions in headcount. Through continued execution and strategic refocusing on our existing rare disease clinical programs and therapeutic platform in the first quarter of 2026, Arcturus has maintained a cash runway extending beyond the second quarter of 2028. The company remains in a strong financial position and has cash runway needed to achieve multiple near-term value-creating milestones in both therapeutic programs. With that, I'll now pass the call back to Joe. Joseph Payne: Thanks, Dennis. Arcturus continues to make steady progress across our rare disease mRNA therapeutic programs while strengthening the foundation of the company. With enrollment now underway in our 12-week open-label Phase II study of ARCT-032 in cystic fibrosis and clear regulatory direction from the FDA on the pediatric development strategy for ARCT-810 in OTC deficiency, we remain focused on advancing toward important clinical and regulatory milestones throughout 2026. Supported by a strong balance sheet and an expanded experienced leadership team, we believe Arcturus is well positioned to execute on our priorities. So with that, let's turn the call over to the operator for questions. Operator: [Operator Instructions] And we'll take our first question from Seamus Fernandez with Guggenheim. Boran Wang: This is Evan Wang on for Seamus. Two for me, one on OTC deficiencies and one on cystic fibrosis. Just on -- first on OTC deficiency. Can you share specific FDA feedback on the glutamine and ureagenesis assay specifically? Curious also the discussion between infants and adults since I don't know if I saw you mentioned a path forward in the adult setting. And second, on cystic fibrosis, just curious, anything you can share in terms of patient enrollment and progress there? And what's the potential for a potential interim there? Joseph Payne: Thanks, Evan. I can turn the time over to Alan to address some of the FDA feedback questions pertaining to infants and adults and the biomarker question to him. And then I can -- we'll go to that point. I can address the CF question. Alan Cohen: Right. Thanks, Joe. So we've successfully, as you mentioned, completed the first 2 Type C meetings with the FDA. And it's clear that we have greater clarity now as to what we need moving forward. And as you mentioned, the utility of the biomarkers, most notably ammonia and glutamine in particular, have been historically highlighted and were identified as areas of greater focus and attention for us moving forward. So greater clarity on which biomarkers to use. Ureagenesis is still -- is a biomarker in development, and we're continuing to advance that. But it's -- our dependence upon it, I think, will depend on the additional data that we're currently in the process of generating. Joseph Payne: And then with respect to your CF questions and the cadence of enrollment, I think the cadence of enrollment is being determined in the upcoming weeks. We just started the study in the first quarter, but we'll be able to give a more accurate enrollment completion timing later this year. We do remind people that we enrolled approximately 13 subjects in 2025 over sequential 3 cohorts: first, second and third cohort. And that was limited to the United States. We are expanding enrollment not just in the U.S., but also outside the U.S. or abroad. Operator: Our next question comes from Lili Nsongo with Leerink Partners. Lili Nsongo: Maybe just a quick question regarding the OTC program. So could you tell us what is the type of exploratory data that the FDA is looking for and also whether it would require for you to initiate studies in the pediatric population? Joseph Payne: Go ahead, Alan. Alan Cohen: Sure. So great question, and thank you for asking. The first Type C meeting that we had, as you alluded to, focused exclusively on what will it take for us to be able to take the adult data that we're still in the process of generating in our current open Phase II study into pediatrics. The results of that meeting suggested that we have a clear path forward. We're continuing to collect additional enrollment data for the 0.3 and the 0.5 dosing groups. Our plan is to then have an end of Phase II meeting with the FDA. The intent there is to do the sort of the usual necessary tasks, which is to reaffirm and continue to show safety and tolerability. And of course, if you're going to go into young children and newborns, the goal would be to also show enough evidence of clinical efficacy to justify going into such a young vulnerable population. We have greater clarity now as a result of that meeting. We're in the process of completing that data set, and we should have sufficient data later this year to take that total data set, bring it forward to the FDA and continue our conversations and hopefully get into a pediatric study sometime in the months and years ahead. Operator: We will move next with Yanan Zhu with Wells Fargo. Unknown Analyst: This is Kwan on for Yanan. So our question is around cystic fibrosis. Since there is no placebo control for the 12-week study, can you talk about the variability of FEV1 and LCI? And how should we prepare to interpret the data without a placebo control? Joseph Payne: Yes, that's correct. There's no placebo arm in the present study. And maybe Alan can comment on the REACH study and placebo strategy going forward. With respect to variability of FEV, that's well understood. We are collecting 2 lung function parameters, FEV and LCI. And maybe Alan can comment on the value of doing that. Alan Cohen: Sure. Great question and an important question. As you know, the requirements for percent predicted FEV1 and spirometry is active performance characteristics and reproducibility with the person performing the test. The good news about cystic fibrosis patients is that they've been accustomed, unfortunately, to doing spirometry since they're in school. And since most of the adults that we're enrolling are well into their 20s and beyond, they have decades of experience performing spirometry almost daily. We have set in this Cohort 4 study parameters from screening and baseline to allow for a small variation from the 2 measures, but not an excessive amount so that there is enough consistency between screening and baseline that we feel confident that an individual is producing reproducible, reliable tests throughout the course of the study. That was something we didn't have in place before. I think it's necessary. I believe that it's going to mitigate any concerns that we may have moving forward. Now in terms of LCI, the challenge with LCI in adults is that there just simply has not been a very large natural history database of people with cystic fibrosis. The good news -- the good news is that the Cystic Fibrosis Foundation, recognizing the sensitivity of that tool, in particular for measuring changes in small airways, which is likely to be the place where early demonstration of clinical efficacy is most likely to be observed. They are currently completing a large prospective open-label study in exactly the same population that we're targeting for our Cohort 4 and subsequent studies. And that data should be shared later this year going into 2027 by the CF Foundation at the upcoming NACFC meeting. So we're looking forward to seeing that data starting to be presented, and they have assured all sponsors, including us that we will have access to that data moving forward. So we'll have a normative data set, which we hope to use as we bring forward the data we'll be generating on our study drug in the months and years ahead as well. Joseph Payne: The only thing I would add is that I just want to remind everyone on the call that the FDA has not defined a threshold of success for FEV or LCI, at least for our program. In the modulator space, they have. But for a new modality like inhaled mRNA for Class I CF, there's no minimum threshold that we must observe. Anything positive would be viewed seriously. And like what Alan mentioned, the REACH study will be very likely to be very helpful as well. Anyway thanks for the question. Operator: We will move next with Myles Minter with William Blair. Jake Batchelder: This is Jake on for Myles. One of your competitors recently discontinued its inhaled CFTR mRNA trial. We were just wondering if you've seen any of the manifestations that were described there and led to the discontinuation, and whether you've had any discussions with the CF Foundation or regulators regarding patient enrollment of this new cohort now that that trial has been discontinued. Joseph Payne: Yes. The short answer is no. There's significant differences between the technology that we use to deliver the RNA molecule then versus our competitors, and we touched that on in the script earlier on today's call. But I would like to also highlight that we have utilized no steroids as a co-treatment before, during or after the dosing period. And that's a point of differentiation, and there's reasons for that, that are safety and tolerability related. And also, we've been approved by regulators to -- for unsupervised dosing at home, and that's not been the case for some of the other companies in this field. And those are -- that's another point of differentiation. And the reason behind that, again, is all because we're using a different technology. It's a different chemistry, and it also includes a different manufacturing process to purify the mRNA molecule, which could be a contributor to remove the impurities that cause those undesired immunogenicities and immune responses. But anything else to add, Alan? Alan Cohen: No, I think Joe covered the majority of it. The only thing I would add is that it's worth pointing out that at the completion of our Cohort 3 study, which went up from 5 to 10 to 15 milligrams daily for 28 days, that we were given the ability to move forward with a longer study, allowing for either 10 or 15 milligrams daily in Cohort 4. So our safety monitoring committee saw nothing clinically worrisome and have allowed us to not only go up to 15 milligrams if we choose to daily, but we also have the freedom and ability to take those patients out to 12 weeks, which we are currently embarking on right now, initiating at a 10-milligram dose once daily. Operator: We will move next with Mayank Mamtani with B. Riley Securities. Mayank Mamtani: And good to hear 032 study is progressing ahead of plan. Did I hear that you've had certain patients move past the one-month exposure window? And just curious if like the Vertex study, there are any go/no-go decisions intra-study on duration of treatment because both studies were kind of comparable on time lines and how further along they were their mechanisms built in your study that informs continuation based primarily on tolerability reasons, but also obviously, efficacy reasons also. And then I have a follow-up. Joseph Payne: Yes, it's a good question. With respect to the first, we have initiated the 12-week study in the first quarter. So that means that we are well beyond a month of dosing already in the study. We are continuing to enroll at a pace that's going to be understood in the next -- in the coming weeks. But yes, we're well beyond that one-month study. With respect to intermediate go/no-go opportunities and decisions that are built into the protocol, I'll have Alan comment on that. Alan Cohen: Yes. I mean the good news about an open-label clinical trial is that we're going to be able to, in an active way, monitor patient progress and look for safety signals as well as early signs of efficacy. It's our impression that by the -- before the end of this calendar year, we should have enrolled and have sufficient enough data in hand that we will be able to speak a little bit more clearly to the future longevity of the program as well as the direction of the program moving forward. Mayank Mamtani: Understood. And then on the REACH data that you're looking to learn at NACFC, I was just curious on the LCI, what according to you sort of good looks like and what correlations that you're curious about? [Indiscernible] Joseph Payne: Yes, there's several reasons why we've included lung clearance index into this new protocol for the fourth cohort. The first, of course, is to add an additional measure of lung function that is respected, understood and can be a potential endpoint for us in the study. With respect to the correlation of LCI to other parameters, maybe you can comment on that. Alan Cohen: Yes. I mean the interesting thing about LCI is that I mentioned earlier and one of the questions that we got earlier was talking about the variability of the performance characteristics of spirometry. The nice thing about lung clearance index and why it was used almost exclusively in young children who can't perform spirometry is that it's a passive maneuver. It doesn't require active involvement of the patient itself to perform it. So it's actually very reproducible and highly reliable. So all you really have to do is form a seal around the mouthpiece and then the equipment does the rest. So right now, the only outstanding information we have is what the CF Foundation is generating right now with the REACH study, which is what's the normal rate of decline of lung clearance index within the population that we're studying. So we have a comparative group. So really, right now, it's not only a more sensitive measure. And by the way, it's also, as you may know, been an approvable endpoint for some of the modulators, in particular, in Europe and rest of world. So we know it's reliable. We know it's reproducible. It has really not been used in adults just simply because it wasn't perceived as necessary. But I think increasingly, it's being appreciated for the sensitive way with which it measures a more distinct, more peripheral, more acutely portion of the airway that may prove to be much more useful for purposes of a study like this in these patients moving forward. Joseph Payne: And LCI also has a correlation between mucus plug reduction and in so much that that's the encouraging data we saw in our second cohort that we've shared. We'd like to see that correlate with a lung function measure and lung clearance index has a nice correlation to these reductions of mucus plugs in other studies. Mayank Mamtani: Got it. And lastly, any insight on your plans for combining with a modulator or maybe nonresponder population? Is there anything you could do in the ongoing protocol? Joseph Payne: Did you understand the question? Alan Cohen: Yes, I think I did. And if I didn't, please correct me. I guess the question as I understood it was, obviously, the highest unmet medical need population are those with null mutations and those who are unable to tolerate or are unable to get access to modulators. That's obviously the patient population that we're focused on now. Is our therapeutic potentially beneficial to a broader population of patients who may be on modulators? Yes, the answer is yes. And that would obviously be the next place we'd want to go. But obviously, we're going to need to generate sufficient data to make that justifiable, and we look forward to hopefully getting that data in the years ahead. Operator: We will move next with Adam Walsh with ROTH Capital Partners. Adam Walsh: On the adult Type C meeting timing, when would we expect to hear about that outcome? Joseph Payne: Sure. We've shared previously that both of these Type C meetings would be completed in the first half of this year, and we're well on track for that. So the second would be sometime this quarter. That's the near term. It's on the near-term horizon, very soon. Adam Walsh: Wonderful. And then how is the team segmenting pediatric versus adolescent versus adult for OTC? And what is the realistic enrolled patient number for the pediatric pivotal given the targeted severity? Alan Cohen: Sure. Great questions. I'll take this one. This is Alan. The population that we believe has the highest unmet need are those who tend to be under the age of 6, so preschool age up to early school age. By the time, unfortunately, most of these kids with OTC deficiency who manifested in the birth period, by the time they get to school age, they're either unfortunately having a liver transplant or if they're unable to be stable enough for that, they die. So the segmentation for the pediatric population would almost exclusively be focused on that exact population, children in the first weeks and months of life up through probably age 6. Adam Walsh: Excellent. And then one more, if I may, just on 032 in CF. How is the team approaching interim versus full disclosure given the open-label design? I know this was touched upon on the last call, and you may not be advanced enough to comment on it. But will you be anticipating any disclosure on interim given the open-label study? Joseph Payne: Yes. The language we've used on this call today, Adam, is that you're right, it's an open-label study. It's already started. And we're expressing confidence on today's call that later this year, we should have sufficient enrollment and data to inform our next steps. So I think we're going to be in a really good place to understand where we are with this program later this year. Operator: We will move next with Whitney Ijem with Canaccord. Angela Qian: This is Angela Qian on for Whitney. Can you remind us what preclinical data you have of LUNAR-CF to penetrate the mucus? And any data around like endosomal escape or production of functional protein? And then can you also remind us what cells are you reaching within the lung? Joseph Payne: Sure, sure. So we have Pad here with us. He can comment on the fair data, et cetera. Padmanabh Chivukula: Yes. Well, first of all, we worked for many years with the CF Foundation to develop our preclinical package. And we've done quite a bit of work on looking at LNP stability in sputum. And then we've also done a lot of work preclinically in mouse roles and ferrets as well as nonhuman primates. And what we see is in the CF mouse model, for example, that we can get to various bronchial epithelial cells. We have a pretty broad distribution and some of this data was recently published with some of our collaborators. And I think that's available, and we can provide that to you. Joseph Payne: Did we address your question? Angela Qian: Great. Yes. If you could send that, that would be great. And then maybe a follow-up is on dosing. Currently, are you doing anything to address kind of the distribution of drug into the lower lobes? Like is there a way you can try to impact the distribution of drugs? Joseph Payne: Right now, our anticipation is we won't have to modify the position of the patient or anything like that to access different lobes or parts of the lung. So that's not our anticipation. But... Padmanabh Chivukula: I can also -- this is Pat again. We can also -- when we did our initial preclinical evaluation of the nebulizer that we were going to use, we've optimized the particle size of the nebulizer so that it does get distributed throughout the lung. Alan Cohen: Yes. And this is Alan. Just to add one more piece to that. I think your question is probably coming from the high-resolution CT data that we shared and generated in our last cohort, which showed a preponderance of effect mostly in the lower segments of the thoracic cage and within the lower segments of the lung. We know that ventilation perfusion and ventilation in general differs with aerosols in particular, in the lower and upper segments of the lung. One of the things that we're hoping to achieve if we're going now from a 4-week dosing strategy to 12-week strategy is a much more thorough application of our therapy throughout the lung, and we hope to see that manifest as the study goes beyond the 4-week period. So we think this is more so a byproduct of time and not necessarily dose. Operator: We will move next with Yigal Nochomovitz with Citigroup. Joohwan Kim: This is Joohwan Kim on for Yigal. Maybe 2 quick ones from us. Just to confirm, firstly, do you need to enroll more patients at the 0.3 or 0.4, 0.5 mg per kg dose for the exploratory data that needs to be generated? Or is that just from longer follow-up? Joseph Payne: The short answer is we just need to complete the scheduled study as dictated and communicated at the Type C meeting. So there's nothing too extraordinary. We just need to complete that data set and also analyze it and then present it in a way that they requested. It was just a reanalysis of the data that they wanted to appreciate. And we said that we'd provide that to them at the OP2 meeting. Joohwan Kim: Got you. And also on CF, I believe that you noted that you're planning on conducting the HRCT scans in the 12-week study. Can you provide additional detail on how frequently that assessment as well as LCI and FEV1 measurements might be conducted? And are you seeking to enroll a certain number of patients ex-U.S. Joseph Payne: Yes. With respect to high-res CT scan, it's before and after. We typically do not propose to take several of these high-res CT scans during a study. It's typically before and after. With respect to the other lung function measurements and the cadence of that throughout the 12-week study, maybe, Alan, you can comment on that, what you're comfortable sharing. Alan Cohen: Yes. We haven't really shared that kind of level of granularity. But I think it's appropriate to just consider that every time a patient comes back to a clinic to get evaluated and to get another scheduled amount of drug, that's a perfect time, particularly at a CF center to repeat testing in a controlled setting. We are not using home monitoring nor home spirometry or lung clearance index equipment in the household or in the home. So we want consistent measures being performed in an appropriate skilled center so that we can have reliable data. So we're collecting that data at every time point that the patient is coming back. So it's at a regular cadence over the course of 12 weeks. Joohwan Kim: Got it. And are you looking to enroll a certain number of patients ex-U.S.? Joseph Payne: Yes, for 20 subjects, up to 20 subjects is what we're -- is what's presently in the protocol. For CF -- for CF? Or were you asking about OTC? Joohwan Kim: No, I just want -- amongst those 20 patients, is there a specific number that you're looking to get ex-U.S. versus U.S.? Joseph Payne: Go ahead and comment on that. Alan Cohen: Yes. No, another great question. We added ex-U.S. sites in large part because there are jurisdictions in the world that happen to have higher preponderances of people with no mutations. And we're trying to take advantage of the fact that there are high unmet medical needs in parts of the world where the level of care, the nature of care and the clinical course of the disease is commensurate and consistent with what we observed here in the U.S., Canada and other parts of the world. So we haven't -- we haven't set a high or low bar in terms of the number of patients to be enrolled in the United States and outside of the United States. It's our anticipation that it's going to be perhaps an equal mix, but it really shouldn't matter at this point. Operator: We will move next with Thomas Shrader with BTIG. Unknown Analyst: This is Jenny on for Tom Schrader. I had a couple of questions on the OTC program. For OTC, you're now pursuing late onset adult and severe pediatric populations, which is a meaningful broadening. But could you help us understand how you're thinking about resource and capital allocation between these 2 tracks? Is there a scenario where the adult program generates registrational data first and helps derisk the pediatric program? Or do you view these as truly independent developmental paths that need to run in parallel? And as you think about your end of Phase II meeting in the second half of the year, could you walk us through your best case versus base case outcome and what that looks like from that interaction? Joseph Payne: Okay. A lot there, but I think Alan got it. But with respect to pediatric and adult regulatory paths, we can comment on that and then expectations for the EOP2 meeting go ahead. The path for what percentage of the budget is allocated or energies and resources to the pediatric path versus the adult path? Is there more prioritization to the pediatrics? Alan Cohen: Well, yes. So okay, understood. So rather than getting into granularity on the budgetary likelihood of expenditure, right now our pediatric program is predicated on the successful completion, sufficient end of Phase II data and a general agreement that we've generated sufficient safety, tolerability and clinical efficacy data to be able to then go into children. Our expectation and hope is that the pediatric opportunity and unmet medical need is the greatest and the one that we feel we need to be spending our greatest attention to once we're given the opportunity to do so. Our adult program is almost completed. So right now, we're just finishing up enrollment on a small number of patients to complete the GRID that Joe was just referring to a moment ago. It's 5 doses. And then once we complete 5 doses and have time to analyze the totality of that data and prepare for our end of Phase II meeting, our hope is that we're given the green light to move forward with a pediatric program, and that would be in large part of our focus moving forward. Operator: [Operator Instructions] We will move next with Yale Jen with Laidlaw & Company. Yale Jen: In terms of the pediatric OTC programs, you mentioned that most of those patients need transplantation as the treatment. I just wonder whether you're thinking the drug currently you're developing was mainly for a stop gap for those patients before they can ultimately get transplantation or this is potentially disease modifying the patients can be treated for a long time without the need for transplantation. Joseph Payne: Well, first to comment is that the OTC deficiency is definitely a pediatric-centric disease. That's usually when it's diagnosed. And there is a significant unmet need to prevent the undesired liver transplantation that occurs in these young children. So engaging them prior to the severity getting to that point is the timing we're talking about. But is there any other comments? Alan Cohen: Yes. No, I think your question is actually a really good one. Our hope and expectation would be that we're not only forestalling the need for a liver transplant, but we should hopefully be able to keep these children from requiring lung -- not lung liver transplants lifelong if we intervene and do so in as pronounced a way as we hope and expect to do as early as possible in the course of their disease. Operator: Thank you. And at this time, there are no further questions in queue. I will now turn the call back to Joe Payne for closing comments. Joseph Payne: Just thanks, everyone, for participating on the call. We appreciate everyone's time. Please don't hesitate to reach out to our team for any remaining questions. We will always get back to you as soon as we can. Thanks again. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Good day, and welcome to QuinStreet's Fiscal Third Quarter 2026 Financial Results Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Vice President of Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may begin. Robert Amparo: Thank you, operator, and thank you, everyone, for joining us as we report QuinStreet's Fiscal Third Quarter 2026 Financial Results. Joining me on the call today are Chief Executive Officer, Doug Valenti; and Chief Financial Officer, Greg Wong. Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements and are not guarantees of future performance. Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 8-K filing made today and our most recent 10-Q filing. Forward-looking statements are based on assumptions as of today, and the company undertakes no obligation to update these statements. Today, we will be discussing both GAAP and non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release, which is available on our Investor Relations website at investor.quinstreet.com. With that, I will turn the call over to Doug Valenti. Please go ahead, sir. Douglas Valenti: Thank you, Rob. Welcome, everyone. Fiscal Q2 was another quarter of strong performance and progress. We grew revenue 28% year-over-year to a new company record, and we grew adjusted EBITDA 53% year-over-year, also to a new company record. Our core business is strong, and we continue to make good progress on initiatives that we expect to continue to deliver impressive revenue growth and margin expansion in fiscal Q4 and beyond. Those initiatives include dozens of active projects applying AI across our business system to our proprietary data, tech stack, integrations and workflows and to our media campaigns and interactions with consumers. AI is strengthening our already formidable competitive advantages and is driving even better results for clients, media partners and QuinStreet. As a technology-driven company with hundreds of engineers and technical product employees, we are a fast and effective developer and adopter of leading-edge AI technologies and tools. And of course, we have a proven history with AI. We have been developing and applying AI algorithms since 2008. Getting back to fiscal Q3, let me review some of last quarter's accomplishments in more detail. We set a company record for quarterly revenue, $346 million, up 28% year-over-year. We also set a company record for quarterly adjusted EBITDA, $29.6 million, up 53% year-over-year with expanding margins. We continue to be in a strong financial position with a strong balance sheet and strong cash flows. We ended the quarter with over $100 million in cash and with net debt of around $50 million, including all bank debt and seller notes. Our net debt is well less than 0.5x our annualized adjusted EBITDA, even after accounting for the full cost of the $190 million acquisition of HomeBuddy. And we expect to deliver well over $100 million more free cash flow over the next 12 months. So fiscal Q3 was an exceptionally strong quarter, and we are in an exceptionally strong market and financial position. Looking at the current June quarter or our fiscal Q4, we expect growth to accelerate even more and margins to expand even further, and we expect to set new records for quarterly revenue and adjusted EBITDA in Q4. Our early view of next fiscal year, which begins on July 1, is that we expect to again grow revenue and adjusted EBITDA at strong double-digit rates year-over-year. Looking at our major client verticals. We delivered record auto insurance revenue in fiscal Q3 due to strong carrier demand and high levels of consumer shopping activity. Carriers continue to report good results. We are confident that our full market opportunity in auto insurance is still in its early innings, and we are successfully expanding our media, client and product footprints in that important client vertical. We also delivered record quarterly revenue in home services in Q3, with revenue run rates now approaching $0.5 billion annually. The work to integrate HomeBuddy and to capture synergies is going well as we continue to successfully expand our media, client and product footprints for growth in the enormous home services market opportunity. As I indicated earlier, our success continues to be driven by our industry-leading technologies and business systems, including, at their core, our AI optimization algorithms. And we are expanding the application of AI to dozens of other areas of the business, to our massive store of proprietary data generated from billions of dollars of media spend, to our millions of permutations of campaign and marketplace variables, to our proprietary integrations with clients and media, to our thousands of proprietary workflows and to our interactions with millions of in-market consumers every month. Those efforts are already delivering big improvements in performance and productivity, and we see much, much more. Let me give you a few examples of where we are successfully applying AI to our broader business system. First example. We are applying AI to integrate new and updated carrier rates faster and at greater scale into QRP, our insurance rating platform, increasing productivity there by an estimated 50%. Another example. We are using AI to generate more and better ads for creative, improving productivity in that core essential function by an estimated 400% and resulting in faster campaign launches. A third example. Our frontline employees are using AI-enabled natural language analytics to access even more of our deep trove of proprietary data and to drive deeper analytic insights and improvements in client, media and margin results with less need for analyst support or long cycle times. And one final example here. We are, of course, applying AI to dramatically improve software coding productivity across the business and tech stack. We are also seeing exciting growth in revenue from AI media and as AI grows in media. Some examples of that. First, as AI overviews have expanded rapidly over the past year to now trigger on an estimated 50% plus of Google searches, revenue from our proprietary campaigns on Google has grown by over 100% over the same period. A second example. We are an early participant in OpenAI's advertising platform, where we are already live in both insurance and home services. And one last AI media example. We are improving consumer conversions for our media campaigns and for clients due to the use of conversational AI in our web flows, chatbots and inbound calls and in SMS and e-mail communications with end market consumers. Overall, we are and have been and expect to continue to be an AI winner. Turning to our outlook. We expect revenue in fiscal Q4 to be between $350 million and $370 million, up sequentially to yet another new quarterly record and implying at least 34% growth year-over-year. We expect adjusted EBITDA to be between $37 million and $43 million, also up sequentially to yet another new quarterly record, reflecting continued margin expansion and implying at least 67% growth year-over-year. With that, I'll turn the call over to Greg. Gregory Wong: Thank you, Doug. Hello, and thanks to everyone for joining us today. Fiscal Q3 was another successful quarter, as Doug noted. It was the third consecutive quarter of record revenue for QuinStreet and also a record for adjusted EBITDA. This strong performance was driven by continued momentum and execution across our verticals. For the March quarter, total revenue was $346.1 million, up 28% year-over-year. Adjusted EBITDA was $29.6 million, up 53% year-over-year, and adjusted net income was $17.8 million or $0.31 per share. Looking at our revenue by client vertical. Our financial services client vertical represented 67% of Q3 revenue and grew 16% year-over-year to $231.8 million. Auto insurance momentum continued, delivering a record quarter and growing 27% year-over-year. Our home services client vertical represented 33% of Q3 revenue and grew 63% year-over-year to $114.3 million. Turning to the balance sheet. We ended the quarter with $102 million in cash and equivalents and net debt of $54 million. Overall, QuinStreet remains in a strong financial position, and we expect to generate strong cash flows in the coming quarters and years. We continue to have a rigorously disciplined approach to capital allocation, and we'll continue to prioritize: one, investing in new products and initiatives for future growth and margin expansion; two, accretive acquisitions; and three, share repurchases at attractive levels. We will continue to be measured in our approach and remain focused on maximizing shareholder value. Moving to our outlook. We expect revenue in fiscal Q4 to be between $350 million and $370 million, representing at least 34% growth year-over-year. We expect adjusted EBITDA to be between $37 million and $43 million, reflecting continued margin expansion and representing at least 67% growth year-over-year. With that, I'll turn it over to the operator for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Jason Kreyer from Craig-Hallum. Jason Kreyer: Doug, can you talk more about the AI actions that you've taken in the quarter? You'd highlighted some relationships with Google and OpenAI. And perhaps you can elaborate on your role there and what you expect over the long term with these partnerships. Operator: I think Jason got disconnected. Our next question comes from the line... Douglas Valenti: I'm sorry, operator. This is Doug. Let me get back in. I apologize, Jason, but yes, thank you for the question. We're applying AI across the business system, as I indicated, including in media. And one of the places in media that we are active is now in OpenAI's advertising platform. They are early, but we were -- we believe we were in the first few hundred folks to actually be engaged with them and to be active on the platform. And as I said, we're active in both insurance and in home services, running advertising campaigns there to both generate revenue, of course, and we have generated our first revenues there, but also to continue to help them pilot that platform and evolve it into a much bigger part of their business and a much bigger part of everybody -- of our business as well. So super excited. As we've indicated before, we believe the LLMs are going to be a new entry point for consumers just like AI overviews on Google have been a new component, a new entry point for consumers. And we believe that it's a new great opportunity for us to plug in and do what we do, which is to help those consumers get matched to the best service providers and generate maximum media yield and revenue for all parties, including the platform companies, whether they be Google or OpenAI or others. So that's what that's about. But again, a lot of AI opportunities and a lot of AI activity going on. Jason Kreyer: We look forward to hearing more about how that evolves. Just as a follow-up, I want to ask about the HomeBuddy performance in the first quarter. And I'm curious how you felt the HomeBuddy and Modernize assets interacted over the course of the quarter and kind of how that integration is modified as we go forward? Douglas Valenti: Yes. It's going extremely well, going certainly as we had predicted and, in some ways, better. We integrated very quickly and, in the quarter, actually generated revenue from the integrations in terms of, for example, taking media from the Modernize side, sending it over to HomeBuddy to be converted into their auction basics, which will be product for their clients and vice versa, getting revenue back. So we're -- it's going well. It's going as expected, and we continue to be very excited about the expansion of our footprint, both in product and media with HomeBuddy. So in terms of changes, I think we're a little bit ahead of schedule in terms of integrating the organizations. We are a little bit ahead of schedule in terms of doing what we -- in terms of having a -- kind of a one-platform approach to the media. And so I'd say that, again, every bit as well as we hoped and, in some places, better. Operator: Our next question is from Luke Horton from Northland Securities. Lucas John Horton: Congrats on the quarter. Just wanted to touch on the auto insurance side. It looks like spending remains strong. Could you provide a little color on size of carriers and any trends you're seeing with the major carriers versus smaller guys? Douglas Valenti: Sure, Luke. We are continuing to see strength across the auto insurance client base. One of the trends that we are seeing is continued broadening. The broader base of clients grew significantly faster than the largest client, which also grew very rapidly. So there's no issues there, just a continued increased activity and broadening of demand across the client base and across the major carriers, top 10 to 15, however you want to think about them. So I'd say if there was a trend, it was just continued strength generally and continued broadening, which we've indicated previously. Lucas John Horton: Okay. Awesome. That's great to hear. And then on the kind of early fiscal year '27 color you provided with the strong double-digit revenue and EBITDA growth. I guess, could you expand on what the kind of 2 or 3 biggest drivers underpinning that outlook would be? Or what would be the biggest risk to achieving that? Douglas Valenti: Sure. Right now, we've seen preliminary numbers for next year from pretty much all of the businesses. And we've got double-digit revenue growth across the board -- strong double-digit revenue growth across the board. And in most cases, margins growing faster than revenue. And the one place where I think that's not yet indicated, it's flat margin cash revenue, but really strong growth. So some investment going on there. So no issues with that. So again, as you would expect, home services, of course, will be particularly strong early because of the acquisition in the first couple of quarters, we expect it to be strong in the back half as well after we lap the comp on the HomeBuddy acquisition. Insurance, we see strong demand from clients and continued strong development of new media capacity, which has been a good driver of our growth and margin expansion in auto insurance over the past couple of quarters. And then we're seeing, in the credit-driven verticals, good legs of growth there as well, whether it be in credit cards where we're getting strong indications from the issuers or banking where we're seeing strong demand from the clients there, and we have strong media capabilities there. And in the -- in AmOne Financial, the personal loans and debt solutions company, we've been focused on quality of revenue there. So we have not been growing that business over the last year or so, but we've been pretty significantly expanding margins. We've had some decline. We've indicated before, some decline in revenue, but pretty flat margin dollars as we've improved the quality of the revenue, and we expect to be able to resume pretty aggressive growth next fiscal year at those higher margins. So right now, it's pretty much across the board strength as we go through the detailed planning for each of the client verticals. Operator: Our next question is from Elle Niebuhr from Lake Street Capital Markets. Elle Niebuhr: So on the home services front, given the heavier implied Q4 weighting, what are you seeing in contractor demand, lead pricing, media availability? Any of that, that gives you the confidence that the seasonal ramp is playing out as expected? Douglas Valenti: We're seeing pretty much all those things, Elle. I mean the client demand continues to be extraordinarily strong. The -- and that's been consistent for a while. We have significantly greater demand than we have capacity to fill it, which is always what you want in our business, given the way we serve clients. We are making great progress on the media side with our proprietary campaigns, with the shared media between HomeBuddy and Modernize, which are the 2 brands we have in home services. And that's an area of real opportunity as both clients -- both of us take media that we don't match as well or don't have as good a coverage for, and take advantage of the new coverage, either Homebuddy for Modernize or Modernize for Homebuddy. We're seeing good growth in new product areas, continued growth in new product areas. Consumers are -- and homeowning consumers, who are the customers there, are quite strong still. The consumers has been exceptionally resilient, given the uncertainties and inflation and gas prices. I can't really say that about the low-end consumer where we -- but AmOne has solutions to help those consumers. But as far as the homeowning consumer, which are the folks that are the customers for our contractors in home services, those folks are quite healthy and quite active. So there's not really a dimension of weakness we're seeing in home services. If you look at the components that we worry about most, which, of course, media, capacity, client demand, pricing or consumer activity, consumer demand for projects. So continued strength and advantages of having HomeBuddy now to multiply that strength. Operator: Our next question comes from the line of Patrick Sholl from Barrington Research. Patrick Sholl: Maybe just a follow-up on the AI side. Can you maybe talk about like carrier adoption on that? Is that sort of -- I guess, just how carriers are spending within, I guess, maybe either in agentic format or through kind of the ChatGPT or other tools like that? Douglas Valenti: Sure, Patrick. They -- if it works for them and it comes to our platform, they're buying it. In terms of buying direct there, not yet in terms of buying, say, directly off those platforms. From what we understand and have been told, OpenAI and others are focusing primarily on marketplace providers like us initially because of the consumer choice and the content. I do expect that, over time, as their platforms and their ad platforms develop further that, of course, carriers will spend direct and there will be opportunities for them to do that. But again, as I indicated, we're early and one of the early folks working with them and one of the early folks they want to work with to help them develop their ad revenue platform and to be in a position to be able to scale that and continue to evolve it to be a big part of the channel. And I think it will be a big part of the channel. We're excited about it, as I said, as another way for consumers to come into digital. and to shop and pursue products and service providers in our verticals. So early, not a lot of direct activity from what we've seen and what we've heard, but good active planning and activities and indications that OpenAI is going to be a big player here, and we're going to be a big part of that, just like we have been with Google since the early days of the company. We launched our first campaign with Google, gosh, as soon as they -- we had SEO with them in the early days and as soon as they went into an ad-based platform, again, we were one of the first ones in that as well. So we expect this to be a pretty similar kind of opportunity and curve. Patrick Sholl: Okay. And maybe just a quick clarification on your outlook for 2027 on the solid double-digit growth. Should we be, I guess, understanding that to be excluding acquisitions as well? Or is that on a current operations basis? Douglas Valenti: We are -- we don't have any new acquisitions in that assumption. So yes, we would expect that, that would be on the current base business. Patrick Sholl: Yes, sorry, I misspoke. I meant like would that be pro forma for acquisitions or just... Douglas Valenti: No acquisitions in that. No acquisitions in that plan. Patrick Sholl: Okay. All right. And then lastly, just on the other financial services verticals. I think you kind of touched on this a little bit, but those don't seem -- are those like being impacted at all from the rate environment or the macro, I guess? I think like some appliance manufacturers have cautioned on the consumer spending side. And I'm just kind of curious on how that might be flowing through on from consumer demand. Douglas Valenti: Sure. No, we're seeing a mixed bag, mostly good for us. The AmOne Financial business is really positioned to help consumers on the lower end of the spectrum access capital in the form of personal loan or deal with debt problems in the form of debt settlement or credit repair. And so, unfortunately, in some ways, there's still a lot of consumer demand and appears to be growing consumer demand there. Credit cards, we only really serve prime and super prime consumers. We're not in the lower income spectrum of cards or credit development cards or anything like that. So those consumers continue to be very robust, and we have not seen issues there. On the deposit side, similarly, folks have money to put into savings accounts, high-yield savings accounts or CDs or other platforms, annuities and other. They tend to be consumers that are in the middle to upper income spectrum. So continues to be strength there. We've seen some -- I guess if there was something to look out for, I'd say that there's probably a little bit less activity by source of funds clients than there would be if the interest rate path were clearer. I wouldn't say that's something that's fundamentally going to change our outlook or is a big risk to the business going forward. But I'd say that that's something that -- it's probably not as robust as it would be if everybody knew that rates were either going up or down. And you can imagine why, right? They don't want to commit to a CD rate until they know where rates are going and they have to decide what their interest margin is going to be when they develop those products and when they recruit consumers for those products. But generally speaking, what you've heard from everybody, pretty stable, strong consumers, generally, particularly middle and upper income. The consumers at the lower end of the income spectrum are getting squeezed because of inflation, because of gas prices, which disproportionately hurt them and because of relatively low wage growth. But relative to -- as you position that against our business, that's a pretty good profile for the products that we serve. Operator: [Operator Instructions] Our next question is from Naved Khan from B. Riley Securities. Ethan Widell: This is Ethan Widell calling in for Naved Khan. To start off with, can you maybe add a little bit of color on just what you're seeing on the macro side for auto? I imagine that elevated oil prices pressing on discretionary budgets might cause less driving, more -- it's better for carriers, maybe more shopping for rates, but just wondering kind of what you're seeing along those lines. Douglas Valenti: I think both of those things. What we're seeing at our level is continued real strong demand and carriers wanting us to do more and figure out how to get more. But I think, at a macro level, I think you hit on it there. The carrier loss ratios are very healthy. They -- the indications we've gotten from them and from the industry is that they feel like they're rate adequate. And I think that the effect of higher gas prices is likely to be less driving, which means less -- the rate of incidents will be lower, which is going to be good for them because, as you said -- because there's likely to be fewer incidents and fewer claims. And the other thing that is absolutely a factor in auto insurance is that consumers shop more when they're under financial pressure for auto insurance because they want to see if they can save money because they have to have it, but they want to make sure they're not paying more than they have to pay for it. So shopping activity tends to be at pretty high levels. And we have seen good strong shopping activity, certainly through the peak shopping season, which is always in the kind of February-March time frame. But generally speaking, we're seeing a good strong consumer activity. Ethan Widell: Got it. And then kind of longer term, how do you view or maybe anticipate, like, your mix shift over time as you take into account kind of various growth rates in your verticals, but also layering in HomeBuddy to that? And how do you consider that in terms of maybe long-term margin possibility? Douglas Valenti: Yes, it's a great question. I think the theme that we'll probably see over the next few periods, and I'd say that's probably certainly quarters and maybe years, is that a little bit more normalization of the mix. And what I mean by that was the spike in auto insurance really caused auto insurance to be super heavy in our mix there for a period of time. And one of the reasons our margins -- and we said before, auto insurance, at its scale and with its structure, tends to come in at a little bit lower media margin percentage than our average. And so that shifted our margins down some. But as the greater growth in auto insurance has normalized after that -- the rapid expansion of 1.5 years, 2 years ago, and the other businesses continue to grow strongly, you're seeing the mix shift back to -- gradually shift back to a more normalized level where the auto insurance won't be as dominant, which means that there will be a natural lifting of our media margin profile, which will be -- should be a natural upward tug on EBITDA margins. And I've said before that there are kind of 3 things that are going to -- that are causing us to expand margins, have caused it over the last few quarters and are likely to continue to do it, including as we forecast next quarter. One is that mix shift. After kind of getting a heavy mix of auto insurance, that mix is going to more normalize and that will be a natural upward move in our media margin profile, which translates fairly directly to EBITDA margin since our fixed cost base is semi-fixed. The second is going to be continued success in expanding our auto insurance margins, which have been -- are up 4 to 5 points this year over the beginning of the year, largely due to a lot of specific projects to do that as well as the development of proprietary media that we said we were going to develop, and we spent a lot of money and invested in developing and have very successfully developed. We're going to continue to do that. And that's been very, very beneficial to us and to our margins in auto insurance. And the third is just natural operating leverage. I mean, as we grow at these rates on the revenue and therefore, margin dollar lines, but of course, don't grow at these rates on the semi-fixed cost lines below the margin -- the media margin lines, then you have a natural expansion of margin, top line leverage or operating leverage, depending on how you want to talk about it. So those 3 factors, I think, are going to continue to play a role, certainly next quarter and probably for a considerable time going forward. Operator: There are no questions at this time. Thank you, everyone, for taking the time to join QuinStreet's earnings call. Replay information is available on the earnings press release issued this afternoon. This concludes today's call. Thank you.
Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the El Pollo Loco First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded today, May 7, 2026. And now I would like to turn the conference over to Ira Fils, the company's Chief Financial Officer. Please go ahead. Ira Fils: Thank you, operator, and good afternoon, everyone. By now, everyone should have access to our first quarter 2026 earnings release, which can be found at www.elpolloloco.com in the Investor Relations section. Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements, including statements related to our new products and growth opportunities, strategic and operational initiatives, expectations regarding sales and margins, potential changes to our product platforms, capital expenditure plans, the ability of our franchisees to drive growth, expectations regarding commodity and wage inflation, remodel plans and our 2026 guidance, among others. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we currently expect. For a more detailed discussion of the risks that could impact our future operating results and financial condition, we refer you to our recent SEC filings, including our Form 10-K for the year ended December 31, 2025, as well as our Form 10-Q for the first quarter of 2026, which we expect to file tomorrow and encourage you to review at your earliest convenience. During today's call, we will discuss non-GAAP measures, which we use for financial and operational decision-making as a means to evaluate period-to-period comparisons and which we believe can be useful to investors in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP and reconciliations to comparable GAAP measures are available in our earnings release, which is available in the Investor Relations section of our website. With respect to the adjusted EBITDA outlook we will be providing on today's call, please note that we have not provided a reconciliation to the most directly comparable forward-looking GAAP financial measure because without unreasonable efforts, we are unable to predict with reasonable certainty the amount of or timing of non-GAAP adjustments that are used to calculate income from operations and company-operated restaurant revenue on a forward-looking basis. Now, I would like to turn it over to our CEO, Liz Williams. Elizabeth Williams: Thank you, Ira and good afternoon, everyone. We are proud of our first quarter results, including system-wide same-store sales growth of 5.8% and restaurant-level margin expansion of 320 basis points year-over-year. As we enter the third year of our brand transformation, El Pollo Loco is building momentum on the strong foundation we've built over the past 2 years. What's particularly encouraging is that this performance reflects strength across multiple fronts. Our innovation pipeline, highlighted by the success of our Baja Double Tostadas, continues to resonate with guests. But equally important is the operational progress we are seeing across every key metric from customer service and accuracy to speed of service. We are also seeing balanced daypart performance with lunch traffic returning, dinner continuing to grow and evening into late night gaining traction. These results demonstrate that our strategy is working. Our momentum is sustainable and we are well-positioned to deliver on our priorities for 2026. As we look at the remainder of the year, our main goal remains clear: to drive sustainable traffic growth across our system while maintaining the margin discipline and unit economic improvements that we've accomplished over the past 2 years and to thoughtfully grow El Pollo Loco across the country. We recognize that the operating environment for the remainder of the year presents challenges, particularly related to consumer spending pressures from elevated energy and gas prices. While we are monitoring these dynamics closely, we remain focused on what we can control, delivering exceptional value, great customer service and delicious new menu items that resonate with our guests. As we look to continue this momentum throughout 2026 and beyond, I would like to walk you through our progress and future plans across our strategic pillars. Let's start with the Brand that Wins pillar, which continues to be critical in driving our business. Our culinary innovations during the first quarter delivered exactly what we intended, driving traffic with quality and value proposition that defines El Pollo Loco. We kicked off the year with new Double Pollo Salads in 3 craveable flavors: Street Corn, Mexican Caesar and Bacon Ranch. This lineup added growth to the salad category and delivered value to our customers through a premium salad at an affordable price compared to other fast casual salads. We continued the momentum with the introduction of our Baja Double Tostadas in mid-February, which feature double portion of fire-grilled chicken or seasoned shrimp, both drizzled with a tangy lime crema sauce. The Baja Tostada lineup exceeded expectations, delivering a record-breaking 8.3% sales mix for our brand with our tostada and salad category peaking at over 20% of our total sales mix. Our guests love the Baja Tostadas so much that we have made a strategic decision to keep the chicken Baja Tostada on the menu in the summer, providing us with some strong check-building opportunities. Shifting to more affordable options, we launched our Loco Tenders in late April. These all-white meat, boldly seasoned tenders represent our take on America's favorite finger food with a distinctive El Pollo Loco twist through the seasoning and our 3 signature dipping sauces: Baja Lime, House Ranch and Pollo Loco Sauce. We expect tenders to be an important traffic driver, particularly with new consumers who may not yet be familiar with our quality chicken. To build excitement and generate buzz, we strategically seeded our Loco Tenders into several cultural moments before the Loco Tenders launch. In early April, we brought tenders to the Revolve Festival at Coachella, giving celebrities, VIPs and influencers a sneak peek into our newest innovation. We also hosted a tender reveal party for media and influencers, offering a firsthand look at our tenders and a chance to meet our executive chefs. Social momentum continued with user-generated content and we generated over 2 billion impressions across social channels leading up to the launch day. We're only 2 weeks into the launch and the tenders are already meeting our expectations. We believe that the combination of bold flavors and bold activations is a winning equation for us. And you can expect to see additional infusion of buzz-building moments into our product launches as we move forward. As we look at the balance of 2026, we remain confident in our innovation pipeline. From testing loaded quesadillas to grilled chicken sandwiches to cheesy enchilada bowls and our newest beverage offering, our pipeline is the most robust we have delivered in years. Beyond menu innovation, our marketing efforts continued to amplify the El Pollo Loco brand through our Let's Get Loco campaign. Our first quarter results have demonstrated that our social media and activation strategy is a powerful driver of brand engagement and cultural relevance. And we will continue to leverage these channels to amplify our menu innovation and to reinforce our fire-grilled chicken differentiation to create the kind of memorable brand moments that turn customers into true fans. From our Leg and Thigh Day promotion in January to our Loco Moments during the March basketball tournament to our recent festival merch drop, we have shown the power that social presence can have in expanding our audience and brand relevance. In short, the combination of thoughtful innovation, targeted marketing and our growing social platforms positions us well to continue driving sustainable traffic growth throughout 2026 while maintaining the margin discipline we've established. Moving to hospitality mindset. I'm pleased with the continued progress we've made in the first quarter to improve guest experience and overall customer satisfaction. Our team's relentless focus on executing the fundamentals is paying dividends and our service consistency is improving. Our overall satisfaction scores continue to outpace the QSR industry as measured by SMG with meaningful sequential improvement across every key metric from accuracy to quality to friendliness, cleanliness and speed. What's particularly encouraging is that we're not just maintaining the gains we achieved in 2025, we're building momentum that positions us well for continued progress. We are using data to identify our biggest daypart opportunities to drive even greater guest satisfaction and operational throughput. We have deployed new tools and standards to drive speed of service while also focusing on order accuracy. These 2 metrics work hand-in-hand as we believe improving speed and accuracy represents a significant step in enhancing customer satisfaction and overall performance. As we continue to address this opportunity, we have many initiatives underway to assist our team members. From redesigning how orders are displayed on the kitchen display screens to reconfiguring our point-of-sale keys to streamlining the ordering process, all of these reduce potential errors at the point of entry. Our goal is to make it easier and faster for team members to deliver customer orders accurately and efficiently. In addition to these initiatives, we are also reinforcing our commitment to speed and accuracy through enhanced training protocols, such as triple checking every order. We're also testing enhanced product labels and testing consumer-facing order confirmation boards. As we work to make speed and accuracy an even more disciplined part of our culture, our teams continue to take tremendous pride in getting orders right every single time. We are confident that the investments we're making in both tools, systems and training will create meaningful improvements to guest experience over time. Before we move on, I would like to take a moment and recognize our team members and franchise partners who are raising the bar and elevating our service. Their dedication to operational excellence is what will drive our success and I am grateful for their commitment to delivering an outstanding experience for every guest. Also aiding our operations and customer satisfaction is the continued shift of our business to digital platforms as this part of our business continues to gain momentum. For the first quarter, our total digital business, including kiosks, represented approximately 28% of sales in our corporate restaurants. More importantly, we saw a year-over-year improvement in sales and transactions from our loyalty members, which we believe were a direct result of our more aggressive approach to our app-based promotions and targeted value through our Loco Rewards program as well as the recent enhancements made to the app that improve ordering and give more benefits to our highest frequency members. Our strategy for loyalty is focused on 3 key areas: providing everyday value, delivering personalized offers and creating exclusive experiences for our members. We deliver on everyday value through our all-member perks, including our Loco Friday Drops, our member boosts and our national food holiday deals. We launched our Loco Friday Drops in 2025 as a tribute to our 50th year. And given its performance, we've decided to keep our Loco Friday Drop perks alive for the remainder of 2026. Each Friday, we drop an offer that ranges from new innovations to fan favorites. These are typically available only for 1 day. This sense of urgency creates FOMO, or fear of missing out, for our members to drive incremental frequency. To level up our value even more, we introduced boosts recently, which are seasonal, limited-time offers based on membership tiers. The higher the tier, the better the boost. And lastly, we leverage relevant national food holidays to deliver value. Case in point, our National Burrito Day activation at the beginning of April delivered our single highest loyalty sales day in our company's history. The results speak to both the strength of our menu and the growing engagement with our Loco Rewards program. We achieved a 30% increase in redemptions over last year and generated loyalty sales that significantly exceeded both our prior-year performance and our internal goals. Our participation rate reached 21%, up from 19% last year and we saw a healthy 7% increase in average check compared to last year. Again, these proof points demonstrate that our loyalty platform is not just driving transactions, but also creating meaningful engagement with our most valuable guests. During the quarter, we also implemented improved program segmentation, giving our members personalized messaging and offers based upon purchase history as well as launching our member exclusive experiences, which is a platform of exciting perks, including early access to new menu items and access to curated experiences, including tickets to concerts and sporting events. For example, in March, we launched the Coca-Cola x El Pollo Loco Soccer Challenge, a sweepstakes that exemplifies our evolved approach to loyalty. Through our partnership with Coca-Cola, an official partner of Major League Soccer, we gave Loco Rewards members the chance to win a VIP trip to the MLS All-Star Game in Charlotte this July, along with other offers from El Pollo Loco. In totality, our approach to loyalty has returned healthy increases in member frequency, up 13% for the trailing 12-period and member spend is up over 17% year-over-year. Turning to our Winning Unit Economics pillar. I'm pleased to report that we are now solidly within our 18% to 20% long-term restaurant-level margin target that we set out 2 years ago, including achieving a 19.2% restaurant-level margin in the first quarter. But more importantly, we've built a sustainable margin structure that improves both team member productivity and our guest experience through disciplined cost management, strategic menu pricing and investments in technology. As we look ahead, our focus starts to shift from driving significant year-over-year margin expansion to maintaining our healthy margin range while we invest strategically in other initiatives I've alluded to earlier. We expect restaurant-level margins to remain within the 18% to 20% range as we balance our commitment to operational excellence with continued investments in menu innovation, guest experience and unit expansion. This disciplined approach ensures we can deliver sustainable, profitable growth while maintaining the quality and value proposition that differentiates El Pollo Loco. For our last pillar, Driving Unit Growth, we remain on track to open 18 to 20 new restaurants this year system-wide. Our pipeline is building momentum with existing franchise partners and new partners while also leveraging our company capital. As a reminder, the vast majority of our openings this year are expected to be outside of California as we continue nationwide expansion. And roughly 75% will benefit from the lower cost of having been a second-generation site. On the restaurant refresh front, we continue to see strong returns from our remodel program. As we continue to focus on new unit development and ensure flawless execution across all growth initiatives, we will continue to balance our remodel pace in 2026 to ensure we do not disrupt our operations. In summary, our performance to date and the progress we've made across our strategic pillars gives us confidence that El Pollo Loco is on the right path. As we look ahead, we believe the investments we've made in innovation, operations and technology, coupled with the momentum in our development pipeline, have positioned us well to deliver on our commitments for 2026 and beyond. With that, let me turn the call over to Ira for a more detailed discussion of our first quarter financial results. Ira Fils: Thank you, Liz and good afternoon, everyone. For the first quarter ended April 1, 2026, total revenue was $126.2 million, compared to $119.2 million in the first quarter of 2025. Company-operated restaurant revenue increased 7.6% to $105.9 million from $98.4 million in the same period last year. The $7.5 million increase in company-operated restaurant sales was driven by 5.4% growth in company-operated comparable restaurant sales, as well as sales from 2 company restaurants opened since the first quarter of 2025. The growth in comparable restaurant sales included a 5.7% increase in average check size, partially offset by a 0.3% decrease in transactions. During the first quarter, our effective price increase versus 2025 was 4.6%. Franchise revenue decreased 8.8% to $12 million during the first quarter, driven by $1.9 million of franchise IT pass-through revenue in the prior year quarter related to the new point-of-sale franchise rollout completed in 2025. This decrease was partially offset by a 6.1% increase in comparable restaurant sales and revenue associated with 9 franchise-operated restaurant openings subsequent to the first quarter of 2025. The 6.1% increase in comparable franchise store sales consisted of a 4.9% increase in average check size and a 1.1% increase in transactions. For the first quarter, system-wide same-store sales were up 5.8% as system-wide traffic turned positive to up 0.6%. We are very pleased to report that the sales momentum we experienced in Q1 has continued into the second quarter. System-wide comparable store sales for the second quarter to date through April 29, 2026, increased 4.8%, consisting of a 3.9% increase in company-operated restaurants and a 5.3% increase in franchise restaurants. Looking ahead, we believe same-store sales for the second quarter will be in the 3% to 4% range. Turning to expenses. Food and paper costs as a percentage of company restaurant sales decreased 30 basis points year-over-year to 24.9% due to higher menu pricing and cost management initiatives, partially offset by approximately 70 basis points of commodity inflation and higher discounts. We expect commodity inflation to be in the 1.5% to 2.5% range for the full year 2026. Labor and related expenses as a percentage of company restaurant sales decreased about 260 basis points year-over-year to 30.1% as we continued to benefit from improvements in operating efficiencies, along with lower health insurance and workers' compensation costs. In addition, labor as a percentage of sales benefited from leverage on the 5.4% company-owned comparable store sales increase. Wage inflation during the first quarter was a manageable 0.4% for all our company-owned locations. For the full year 2026, we expect wage inflation of between 1.5% and 2.5%. Occupancy and other operating expenses as a percentage of company restaurant sales decreased 30 basis points year-over-year to 25.8%, primarily due to leverage on the same-store sales increase was able to offset increases from higher delivery fees, higher utilities, higher occupancy costs and higher liability insurance costs. Our restaurant contribution margin for the first quarter improved to 19.2% compared to 16% in the year-ago period. As we continue our path of margin improvement, we expect our restaurant level margin for the full year 2026 to be between 18.25% and 18.75%, an increase of 25 basis points from our prior guidance. In addition, we expect our margins in the second quarter of 2026 to be between 19% and 19.5%. General and administrative expenses increased to $12.8 million compared to $11.3 million in the prior year. The increase was primarily due to $0.6 million received from a legal settlement in the prior year, as well as increased legal fees, outside services, software maintenance and other general administrative expenses. These increases were partially offset by lower shareholder activism-related expenses. As a percentage of sales, G&A increased 10.1% or 60 basis points. To enable our continued growth in 2026 and beyond, we continue to strategically invest in resources to drive new store development, operations excellence and technology. During the first quarter, we recorded a provision for income taxes of $3.3 million for an effective tax rate of 29%. This compares to a provision for income taxes of $2.3 million and an effective tax rate of 29.7% in the prior year period. We reported GAAP net income of $8.2 million or $0.27 per diluted share in the first quarter, compared to GAAP net income of $5.5 million or $0.19 per diluted share in the prior year period. Adjusted EBITDA for the first quarter of 2026 was $18.2 million compared to $13.9 million in the first quarter of 2025. Adjusted net income for the first quarter was $8.3 million or $0.28 per diluted share compared to adjusted net income of $5.5 million or $0.19 per diluted share in the first quarter of last year. Please refer to our earnings release for a reconciliation of non-GAAP measures. In regard to our remodeling efforts, during the first quarter, we completed 6 franchised restaurant remodels and 7 company remodels. In terms of liquidity, as of April 1, 2026, we had $44 million of debt outstanding and $3.9 million in cash and cash equivalents. Subsequent to the end of the first quarter, we borrowed a net additional $2 million on our revolver, resulting in our debt outstanding of $46 million as of May 7, 2026. With that, we would like to provide you with the following updated guidance for 2026. We are increasing our system-wide comparable store growth guidance to now be between 2% and 4% for the full year. We are increasing our adjusted EBITDA guidance to be between $67.5 million to $69.5 million. We are maintaining the following guidance: the opening of at least 3 to 4 company-operated restaurants and 15 to 16 franchise-operated restaurants; capital spending between $37 million and $40 million; G&A expenses between $52 million to $54 million, excluding onetime charges and including approximately $6.5 million in stock compensation expense; and an estimated effective income tax rate of approximately 29% to 29.5% before discrete items. Finally, given our step-up in capital spending this year, we anticipate depreciation and amortization will also marginally step up to be between $18.5 million and $19 million for the full year. This concludes our prepared remarks. We'd like to thank you again for joining us on the call today and we are happy to answer any questions you may have. Operator, please open the line for questions. Operator: [Operator Instructions] We take the first question from the line of Jeremy Hamblin from Craig-Hallum. Jeremy Hamblin: Congratulations on the really strong results. So I wanted to dig in a little bit. Menu innovation clearly has been a key driver for you. You had the Loco Tenders launch just towards the end of April. And wanted to just get a sense for how customers were responding to that. And in terms of pricing, the price point is a little bit higher than some peers, like Raising Cane's, for example. But certainly, the reviews that we've seen have been very positive on product taste and the sauces in particular, the Baja Lime and the Loco Sauce. So just a little more color you might be able to share on that launch. Elizabeth Williams: Yes. Thanks for the question. Yes. So innovation, as you heard, really proud of everything we're doing with culinary innovation and the response we're getting from our consumers. In this environment, people want to try new things and there's so much love for our brand. So when we can do that, we're seeing a lot of success. As you mentioned, Loco Tenders launched in April. We put a lot of social and just traditional marketing, all kinds of marketing behind making it a really prominent and successful launch. And as a result, we're driving a nice amount of trial. And you're right, the sauces really are part of the story. There's 3 sauces. Personally, I love the Pollo Loco Sauce. But they're all really great. Also, our tenders have a unique spin on them in that they have kind of a kick, a little bit of a spice. You can get them as an original without that. But that really is what's differentiating us from -- there's such a big -- a large amount of tenders out there. So we feel like we're differentiated there. In terms of pricing, we did a lot of work to make sure we were competitively priced. So I'm curious which Raising Cane's you're going to. But in terms of just looking out across the competitive landscape, we are seeing that we're in the middle of the pack. And we're also seeing nice add-on. So sometimes you wonder if it's just going to be a meal onto itself or if you'll see consumers add them on to -- onto a bigger order and we're seeing that as well, which is exciting for us. So all in all, I'm proud of -- it's only a few weeks in there, but proud of what we've accomplished. Jeremy Hamblin: Fair enough. Fair enough. I'm in the East Coast market, as you know. So maybe a little bit -- usually not lower price, but maybe than Southern California market. So -- and then, Ira, I wanted to ask about menu pricing. So I think you said 4.6% in Q1. Can you give us a sense for how that might play out the remainder of the year? Ira Fils: Yes, sure. Thanks for the question, Jeremy. So we will see a step down in the pricing that we're carrying as we think about the balance of the year. It'll step down to about 3%, 3.5% in Q2 and then just a little above 3% as we go into Q3 and Q4. And implicit in that is we do have another menu -- a small menu price increase scheduled for midyear of about 1.5%. Jeremy Hamblin: Perfect. And then last one for me. So a big year with the acceleration here in unit growth. And in terms of a lot of those stores, as you said, the majority are going to be outside of some of your core markets and outside of California. But I wanted to get a sense for -- you already have some of those markets where you're building out great franchise partners. Can you give us a sense for the performance of those new stores versus kind of your new unit algo and what you might be expecting? Elizabeth Williams: Yes. So I'll start and then I can have Ira wrap it up there. Proud of what we're seeing with new restaurant development. Really a wide variety of all positive results, but some extreme high sales volumes, particularly when it's the first store in a state, a lot of pent-up demand. But then you're seeing many other openings that are opening at average, a few below our system average, but with the full confidence that over time, they will grow to system average. So seeing just across the board there. Ira Fils: Yes. I completely agree. We're excited about what we're seeing. We are seeing a range. But I think really in totality, what we are seeing are volumes that give us confidence that they make sense for us to continue to deploy capital. It makes sense for franchisees to deploy capital and we expect to continue to grow in these markets. Operator: We take the next question from the line of Todd Brooks from The Benchmark Company. Todd Brooks: Congrats on the eye-opener of a good quarter. So well done. A few quick questions here. One, you talked about tenders and you talked about it meeting expectations. But what I'd love to drill down in, what is the expectation at the launch? Was there a mix target you were hoping to hit? Or any color you could give us around the performance from a quantified standpoint? Elizabeth Williams: When we look at mix targets, we've got a range in terms of what we see when we devote a promo panel and we put a lot of marketing effort behind a new product. And we'd say that this product is right in line with what we traditionally see. Because we're just in the first couple of weeks, that's building. And so as an example, media just turned on in the last week. And so that we'll continue to see it build. So not really releasing exact numbers at this point, but proud of how they're doing. And a couple more weeks, we'll get a lot more information on the mix between how much is being eaten as an entree versus being added on to an existing meal. Todd Brooks: Okay. Great. I was wondering and -- I mean, it sounds like with the April commentary, the question may be redundant, but things obviously changed a bit for the consumer come March, April. And with your concentration in California, obviously, gas prices are even more of a headline issue there. If you look at progression across the quarter and into April, did you see a downshift at all from the consumer? Or did you guys power through it with the momentum you have in the business? Elizabeth Williams: No, the consumer has remained steady. We're pleased with that. And we think that's a function of we're continuing to perform. We're continuing to improve with the operations and the value. And our consumer is remaining steady. In terms of the progression as we went through the quarter and Ira, you might comment on this. Ira Fils: Yes. We -- as you can -- we announced our quarter-to-date -- quarter on the last call and we were in the low 2% range, 2.4% and obviously, putting up a 5.8% for the quarter. We had a big step-up in March, which was driven -- honestly, we had some weather benefits, which helped us. But we did feel the strength in the consumer as well and the business. And I think as you move into April and we see the 4.8% that we put up in April, speaks to how we feel a little -- a lot of momentum in the business and we really have not seen that impact from the consumer of what you're talking about in regards to the increased inflationary pressures as well as driven by gas prices. Todd Brooks: Okay. Perfect. And then one more from me. Liz, as you're thinking about franchising as a growth engine, I'm not going to ask the pipeline question. For once this quarter I'm going to ask a different question. How aggressive are you being as far as exploring territories that you're looking for partners? And what are you willing to do as far as proving out Loco East Coast or even working your way a little bit more aggressively towards the East Coast to start to put that patina of Loco truly being a national brand versus a super-regional brand? Elizabeth Williams: So simply put, very aggressive. And I just actually had the Board in this week and we had a robust conversation around what's the right combination of company and franchise development. Company will continue to develop. But the good news is there's a lot of franchise partners that also want to develop alongside us. Some are in our system today and then some are those that we're getting to know or we haven't met yet. So with the addition of a new recruiter on our franchise development side, she's having some great conversations with franchise partners in new markets, some very far away from California. And I think there's going to be good demand to be able to grow in those markets without even having to go deploy company capital in some of those further afield markets. But then there's plenty of places where company is operating. So take Dallas, for example, where we just opened our first company restaurant in Dallas at the beginning of the year. And we did that alongside -- we have a franchise partner in that market. So we're developing there. The franchise partner is developing in Texas. So that's an example of moving several states away and putting company capital to work in a way that we're all going to grow that Texas market. So long story short, it's a combination of both. And the magic will really be in unlocking even more franchise partners across the country. Operator: We take the next question from the line of Matthew Curtis from D.A. Davidson. Matthew Curtis: I got a question on throughput. It seems like you're driving improvement in speed of service, order accuracy. Liz, I heard your comments about part of this being reconfiguring display screens, et cetera, to help with that. But I'm just wondering what you have planned going forward to continue driving the improvement there. And how much actual improvement on speed of service have you seen so far, either in store or via the drive-thru? Elizabeth Williams: Thanks for the question. I'm very pleased with the improvements we're making operationally. Before we even got to speed, we all aligned that the first thing we needed to do was make sure we were improving our performance with things like accuracy and service and standards because I think we all can agree and we've seen a lot of data, if you're fast, but the order is wrong and you get home and you don't have what you want, that's a terrible experience and you would have preferred to have waited that extra -- make it up a couple of seconds for your order to be right. And so the primary focus the last couple of months has been on the standards, the service and really the accuracy. And so that's where we've made the most meaningful improvements when you look both at the SMG data, when you look at just more broadly talking to consumers. So that's where we're really proud. Speed, on the other hand, in different pockets of the organization, especially where we're testing different things, we're seeing some improvements in speed. I think that's still an area where we have opportunity. And over the next couple of months, all of those items I mentioned on the call, these operational enhancements are exactly what is going to underpin us improving speed. So the simple things like making it easier to make our food because the team member can read the description on the kitchen display system in just a faster format, that's going to help, as one example. So lots of progress we're proud of, but still, I think, a lot of upside as we continue to focus on it. Matthew Curtis: Okay. Great to hear. Then I guess another question, a different question on the traffic improvements you've seen relative to the fourth quarter. I was wondering if you could talk about how broad-based this improvement has been demographically and if any particular groups in terms of age, income, or other factors are really leading the improvement. And I ask because I think on the last call, you mentioned early data suggesting improved momentum with younger consumers in particular. Elizabeth Williams: Yes. So we're seeing the improvement broadly across all, which is nice to see. So whether it's incomes or ages, seeing improvements across the board. That younger set is a little bit higher in terms of the growth, which is a great indicator, we think and also just signals that the work we're doing on some of these new menu items that are just more relevant for that crowd, along with how we're communicating with our brand voice is resonating. So we're excited about that. It's also nice. I've seen data that shows we're seeing frequency increase with our existing consumers. So the consumers that are heavier users, they're coming more frequently, which is also great. And then also with new consumers, we see when we put new innovation out there, as you would expect, it brings in new consumers. So it's kind of -- it's across the board that we're seeing the improvements. Operator: Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn the call back over to Liz Williams for her closing comments. Elizabeth Williams: Thanks again, everyone, for your interest in El Pollo Loco today. We look forward to talking to you again next quarter. Have a wonderful evening. Operator: Thank you. Ladies and gentlemen, the conference of El Pollo Loco has now concluded. Thank you for your participation. You may now disconnect your line.
Operator: Hello and thank you for standing by. Welcome to the Nektar Therapeutics First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to Vivian Wu from Nektar Investor Relations to kick things off. Please go ahead. Vivian Wu: Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. On today's call, you will hear from Howard Robin, our President and Chief Executive Officer; Dr. Jonathan Zalevsky, our Chief Research and Development Officer; and Sandra Gardiner, our Chief Financial Officer. Dr. Mary Tagliaferri, our Chief Medical Officer, will also be available during the Q&A. Before I begin, I would like to remind you that we will be making forward-looking statements regarding our business, including statements related to the therapy potential and development plans for rezpegaldesleukin, the timing and expectations for clinical data presentations, regulatory interactions and other statements regarding the future of our business. Because forward-looking statements relate to the future, they are subject to uncertainties and risks that are difficult to predict and many of which are outside of our control. For a discussion of these risks and uncertainties, please refer to our filings with the SEC, including our most recent Form 10-K and subsequent filings. We undertake no obligation to update these forward-looking statements except as required by law. A live webcast and replay of this call will be available on the Investor Relations section of our website at nektar.com. With that, I will turn the call over to Howard. Howard W. Robin: Thank you, Vivian, and good afternoon, everyone. We are exceptionally proud of the progress we've made at the company. The data we've reported over the last year from our Phase IIb studies in atopic dermatitis and alopecia areata demonstrate that REZPEG could produce clinically meaningful outcomes in 2 distinct autoimmune and inflammatory disease settings. And importantly, the data sets reported in February and April of this year highlight the potential for REZPEG to offer further improvement for patients over time. In February of this year, we reported the long-term monthly and quarterly dosing results from the 36-week maintenance portion of REZOLVE-AD in patients with atopic dermatitis. These data showed a significant durability and further deepening of efficacy and established a highly differentiated profile for REZPEG as a novel regulatory T cell mechanism. Supported by these results, we're moving quickly to initiate the ZENITH-AD Phase III program in patients with moderate to severe atopic dermatitis by July of this year. We have completed our meetings with regulatory authorities on the Phase III program and JZ will discuss the elements of the program later in the call. We expect to have the first data from the Phase III program in mid-2028 and this will support our goal of submitting a BLA in 2029. There remains a need for novel mechanisms in atopic dermatitis beyond those currently available in the treatment landscape. In the U.S., there are over 15 million people with moderate to severe atopic dermatitis and fewer than 10% are receiving biologic treatments for this chronic skin disorder with many patients not responding well to the existing agents. Roughly half of patients on existing approved agents, which includes Dupixent and other IL-13 based mechanisms, failed to respond or lose treatment effect over time. This leaves a significant opportunity for REZPEG to enter the treatment paradigm in a lead position as a novel immune modulating mechanism that could offer in both naive and experienced patients a differentiated efficacy and safety profile and monthly or quarterly long-term maintenance dosing. Turning to alopecia areata. In April, we announced positive 52-week top line results from the blinded treatment extension period in the Phase II REZOLVE-AA study. These data also demonstrated a deepening of efficacy and clinically meaningful improvement across numerous SALT measurements with twice monthly dosing of REZPEG. We believe REZPEG can now be advanced as a compelling first-in-class biologic candidate that can change the treatment paradigm for patients with this condition. Nearly 6.7 million people in the U.S. have alopecia areata and the vast majority are untreated. More than half of dermatologists have been reluctant to prescribe the only approved systemic therapies, JAK inhibitors, because of box warnings and ongoing clinical monitoring challenges. We know there remains an unmet need for an efficacious and safe biologic with a better safety, efficacy and dosing profile. Based on our KOL enthusiasm and market research, we believe there's a strong opportunity for REZPEG to capture frontline share in this indication. We plan to initiate the Phase III program in alopecia areata in the first part of 2027 to add a second potential indication to Nektar's BLA submission for REZPEG. The global markets for atopic dermatitis and alopecia areata combined are expected to reach close to $40 billion over the next 5 years. And we believe that this market has the potential to grow even further with the adoption of novel mechanisms like REZPEG. We've seen this with the introduction of new mechanisms in the psoriasis market over time where the number of patients served grew tenfold over the span of 15 years and now supports 7 blockbuster products. That growth was not only driven by drugs competing for the same patients. Each new mechanism brought in new adopting treatment physicians who were not yet prescribing systemic therapies. We believe atopic dermatitis and alopecia areata could be at a similar inflection point today and as a truly novel MOA, we believe REZPEG can transform the treatment paradigm in both these indications. And importantly, we believe that Treg biology and REZPEG has potential application beyond atopic dermatitis and alopecia areata. Nektar is now in a very strong financial position to support the advancement of REZPEG. Since year-end, we've raised approximately $783 million in net proceeds through 2 financings. We ended the first quarter of 2026 with $731 million in cash and this does not include our April financing, which adds another $350 million to our balance sheet bringing total cash and investments today to over $1 billion. With this financial strength, we could advance into Phase III in both indications with a cash runway that brings us into the third quarter of 2028, well past anticipated data readouts. I'll now turn the call over to JZ to go over our clinical programs in more detail. JZ? Jonathan Zalevsky: Thank you, Howard. Good afternoon, everyone. As Howard said, over the past year, our clinical data generated from the REZOLVE-AD and REZOLVE-AA studies have confirmed that our approach with REZPEG to stimulate regulatory T cells translates into a differentiated clinical profile; compelling efficacy, a favorable safety profile, extended dosing frequency and responses that deepen over time. Unlike therapies that block a single inflammatory pathway downstream, REZPEG acts upstream restoring the fundamental immune balance that is disrupted in autoimmune and inflammatory diseases. Last June, we reported the 16-week induction period in the REZOLVE-AD study, in which REZPEG demonstrated a rapid onset of efficacy on key metrics of EASI-75 and itch. REZPEG also achieved statistical significance on the primary endpoint of mean percent change in EASI score and for the high dose, met statistical significance on all key secondary endpoints at week 16. In the 24-week crossover data of patients originally assigned to placebo and crossover to treatment with high dose REZPEG Q2 week, we saw further deepening of response with no sign of plateau. These data bolstered our decision to advance a 24-week induction period into Phase III. In the 36-week maintenance phase where patients continued on to less frequent monthly and quarterly dosing of REZPEG, we continued to see durability of the induction responses and observed increased responses for EASI-75, 90, vIGA and itch over time. This also included up to a fivefold increase in EASI-100 rates, which represents complete skin clearance, a level of response rarely achieved for patients. A key differentiating finding from our REZOLVE-AD study was the improvement in patient-reported comorbid asthma. Approximately 25% of patients with moderate to severe atopic dermatitis also have asthma and most approved therapies do not address this comorbidity. REZPEG produced statistically significant improvements in the asthma control questionnaire or ACQ-5 scores at week 16 versus placebo, including in patients with uncontrolled asthma at baseline. Outside of Dupixent, no other approved agent or late-stage candidate has demonstrated this. We are including ACQ-5 as a secondary endpoint in the Phase III program with the goal of potentially including this in the label. In Q1 of 2027, we expect to report 52-week off-treatment data from REZOLVE-AD. These data will allow us to assess the remittent potential of REZPEG beyond 52 weeks and we are looking forward to those data. We have completed the end of Phase II meeting with the FDA and the scientific advice process with the EMA and we will initiate the first trial in the global Phase III program by July of this year. Our planned registrational program called ZENITH-AD is expected to include 3 trials in total, 2 global monotherapy studies with 510 biologic-naive patients 12 years and older in each study along with a separate study in 510 treatment-experienced patients 12 years and older. For the 2 pivotal biologic naive studies, patients will be randomized 2:1 to receive 24 micrograms per kilogram every 2 weeks or placebo during a 24-week induction phase to be followed by a 28-week maintenance period and evaluating monthly and quarterly dosing regimens through week 52. The overall design is intended to be consistent with prior registrational studies supporting approval of biologics in atopic dermatitis. The first 2 studies in biologic naive patients will begin first starting in July of this year and the third study in biologic experience will initiate a few months after that. Our market research supports usage of REZPEG as a first-line and second-line biologic therapy and we have designed the program to capture this in the potential label. In addition to these 3 pivotal Phase III studies, the program will also contain other studies to support registration. These will also include a 200-patient open-label adolescent study and a long-term extension study. Additionally, we plan to launch REZPEG with an auto-injector and the BLA submission will also include a PK bridging study to support this. The agency is not requiring a vaccine study that has been done in some prior Phase III programs in this indication. The Phase III studies are designed to support both U.S. and EU registration with an IGA-related primary endpoint for U.S. registration and an EASI-75 coprimary endpoint to support European approval. A series of multiplicity protected endpoints for itch and other important patient reported outcome measures such as sleep, quality of life and asthma control are designed into the studies as well. We expect a similar country distribution as Phase II with the addition of other selected countries in Asia to reflect the global footprint. As Howard stated, we expect the first data readout from the Phase III program in the middle of 2028. Moving now to alopecia areata. We recently reported the 52-week top line results from the blinded 16-week treatment extension of our Phase IIb REZOLVE-AA study. As a reminder, our Phase IIb REZOLVE-AA trial enrolled 92 adult patients with severe to very severe alopecia areata. Patients received subcutaneous REZPEG in 24 micrograms per kilogram every 2 weeks, 18 micrograms per kilogram every 2 weeks or placebo. The primary and key secondary endpoints were assessed at the end of the 36-week induction period, which we reported last December. These data demonstrated a proof of concept in alopecia areata and showed that REZPEG met the target product profile of standard of care low-dose JAK inhibitor. The extension phase was specifically designed to evaluate whether continued treatment with REZPEG beyond week 36 could drive additional patients to achieve a SALT Score 20 response. SALT Score 20 represents a patient achieving 80% or more scalp hair coverage, which is the established registrational endpoint in alopecia areata. This was an important question in order to determine if our Phase III program in alopecia areata should have a 36-week or 52-week primary endpoint treatment period. The data in April showed that continued treatment with REZPEG drove meaningful new responses in patients who had not yet reached SALT Score 20 at 36 weeks. 29% and 31% of the 31 patients in the 18 and 24 microgram per kilogram dose arms who entered the blinded treatment extension, respectively, achieved new SALT Score 20 responses between weeks 36 and 52 with no new responses in placebo. Across other SALT measurements we looked at, increasing proportions of patients achieved clinically meaningful hair growth thresholds. And importantly, REZPEG achieved the target product profile with 52 weeks of twice monthly dosing. Of note, nearly all of the patients or 94% who entered the blinded 16-week extension period completed treatment to week 52. And this demonstrates that when patients understand the promise of REZPEG to grow hair, they will continue on twice monthly treatment. As Howard stated, our plan is to hold an end of Phase II meeting with the FDA this quarter with the EMA scientific advice coming later this year to align on the global registrational path forward in alopecia areata. Our ongoing Phase IIb REZOLVE-AA study also has a 24-week off-treatment observation period for all patients. This data is expected in Q4 2026. These data will give us an opportunity to understand what dosing regimens of REZPEG to use beyond 52 weeks in alopecia areata patients and whether we include a less frequent dosing regimen in the registrational program. We believe the 52-week data for REZPEG is well positioned to address several key unmet needs. First, the long-term safety profile is differentiated, including the suitability for chronic use without the safety and monitoring limitations associated with the JAK inhibitor class. Second, the twice monthly dosing profile enables better potential compliance. And third, the opportunity for more durable and deepening efficacy over time. Beyond our 2 lead indications, we are pursuing the broader potential of the Treg mechanism. In type 1 diabetes, the ongoing Phase II study of REZPEG is being sponsored and funded by TrialNet, evaluating REZPEG in patients with new onset Stage 3 type 1 diabetes. TrialNet, as a reminder, is the same consortium that ran the foundational studies for Teplizumab, the only approved therapy in this setting, and they bring expertise and a deep commitment to finding better options for patients with this diagnosis. In the study, patients are randomized 2:1 to REZPEG or placebo and receive treatment every 2 weeks for 6 months across 3 sequential age cohorts starting with adults 18 to 45 and stepping down to patients as young as 12 and then 8 years of age. The primary endpoint is the change in C-peptide levels after a mixed meal tolerance test at 12 months of treatment. We expect initial data from the study in 2027. Given the challenges with administration and safety of Teplizumab, REZPEG could be well positioned for new onset type 1 diabetes. We are also planning to initiate a proof-of-concept study in at least one new indication in the second half of 2026 with initial data expected in 2027. We are analyzing the disease settings where a T regulatory mechanism has demonstrated clinical activity and this will help inform our decision on which indication to prioritize with the goal of achieving an additional data catalyst for REZPEG in 2027. And turning to our earlier pipeline programs, NKTR-0165 and NKTR-0166. NKTR-0165 is our TNFR2 agonist antibody, a molecule with very high specificity for signaling through TNFR2 on Tregs to enhance their ability to regulate the immune system. We believe this mechanism has potential across a range of indications, including MS, ulcerative colitis and vitiligo. In Q1, we announced an academic research collaboration with Dr. Stephen Hauser at UCSF to explore the role of TNFR2 agonism in neurodegeneration, neuroprotection and cell repair with a focus on patient-derived B-cell models of MS. We look forward to working with Dr. Hauser to inform the future development of this program. We expect to present preclinical data from NKTR-0165 at a scientific conference in the second half of this year. Building on the learnings from NKTR-0165, we have designed NKTR-0166, a bispecific molecule that combines a TNFR2 agonist epitope with an antagonist epitope previously validated in rheumatology. This dual mechanism gives NKTR-0166 the potential to modify disease pathogenesis across multiple autoimmune settings and we are planning IND submissions for at least one of these programs in 2027. With that, I'll turn it over to Sandy to review our financial results for Q1 2026. Sandra Gardiner: Thank you, JZ, and good afternoon, everyone. On today's call, I'll review our quarterly financials for the first quarter of 2026 and provide updated cash guidance. We ended the first quarter of 2026 with $731.6 million in cash and investments with no debt on our balance sheet. In the first quarter, we completed an underwritten public offering in sales under our existing ATM facility resulting in approximately $525 million in net cash proceeds. This does not include an additional $351 million in net proceeds from our April financing. As Howard mentioned earlier, our current cash balance exceeds $1 billion and we expect to end 2026 with approximately $800 million to $825 million in cash and investments. Now turning to the income statement. Our first quarter 2026 noncash royalty revenue totaled $10.9 million. Full year revenue for 2026 is still expected to total $40 million to $45 million. Our R&D expenses were $35.7 million for the first quarter of 2026 and we still anticipate full year R&D expense to range between $200 million and $250 million, including approximately $5 million to $10 million of noncash depreciation and stock-based compensation expense. As we discussed on our March call, we are still completing the planning and budgeting activities for the REZPEG Phase III program. We do, however, expect R&D expense to increase on a quarterly basis in 2026 as these Phase III clinical studies are initiated. Our G&A expenses were $13.4 million for the first quarter. We continue to expect G&A expenses for the full year of 2026 to be between $60 million and $65 million, including approximately $5 million of noncash depreciation and stock-based compensation expense. Noncash interest expense for the first quarter was $7.9 million and is expected to remain at a similar level for the remaining 3 quarters totaling approximately $30 million to $35 million in 2026. Our net loss for the first quarter was $44.9 million or $1.82 basic and diluted net loss per share. And as I stated earlier, we now expect to end 2026 with between $800 million and $825 million in cash and investments. I'll now turn it over to the operator for Q&A. Operator: [Operator Instructions] And our first question will come from Yasmeen Rahimi from Piper Sandler. Dominic Lorenzi: This is Dominic on for Yasmeen Rahimi. Congrats on a great quarter and appreciate all the updates. So we're excited for you to be kicking off the Phase III AD program soon. Could you just remind us of what are some of the rate-limiting steps left for those -- I guess you have the 2 trials that are starting here shortly? And then could you walk us through some nuggets of detail? I know you said there will be some sites similar to the Phase IIb. So what would the site overlap I guess look like for that? Do you have any nuggets of detail on the CRO selection? Anything like that would be very helpful. Mary Tagliaferri: Dominic, this is Mary. Thank you for your question. We too are very excited to move forward with the Phase III study. We right now are activating sites and we have the final protocol written. In terms of sites, remember in the REZOLVE-AD Phase II, we enrolled 17% of the patients from the United States and 28% from North America and we had 67% of the patients came from Europe and 5% from Australia. In the Phase III program, we're going to have a larger footprint particularly in the APAC region or the Asian Pacific region. We in general expect to enroll roughly 15% to 25% of patients from North America with a similar proportion of patients specifically from the United States as in our Phase IIb trial and then approximately 40% to 55% of patients will come from Europe and roughly 20% to 30% from APAC. We will have a number of clinical sites that participated in our Phase IIb program participating in the Phase III as well. We had roughly 130 sites that were activated for the Phase IIb trial and we'll have roughly 150 sites activated for each one of the Phase III studies. Thanks for your question. Operator: Our next question comes from Julian Harrison from BTIG. Julian Harrison: Congratulations on all the progress. On your Phase III plan in atopic dermatitis, I'm wondering if you could talk more about the decision to have a separate biologic experience study versus maybe mixing both naive and experienced patients across 2 larger studies? Mary Tagliaferri: Yes. Thank you, Julian, for that question. Obviously the cytokine blocking agents that came before us enrolled patients that were biologic naive. And we do feel it is important to be able to compare the results of the REZPEG study on the EASI-75, the IGA and other secondary endpoints directly to those cytokine blocking agents and for that reason, we do want to have just a naive patient population. In terms of the experienced patients, we do believe that we'll have similar efficacy in that population and that's certainly what has been seen in the lebrikizumab trial that evaluated patients who had previously been treated with Dupixent. The EASI-75 and the IGA score was similar to what we've seen with lebrikizumab in the naive patient population. However, we have not yet studied the biologic experience in the JAK inhibitor experienced patients yet. Likewise, there may be different clinical sites that has a larger patient population with the biologic experienced patients and it will be easier for us to find the footprint and enroll those and activate those sites for the experienced study. So we think operationally, there are advantages to do it. And likewise again having the ability to compare directly to Dupixent and lebrikizumab and trilkizumab that just enrolled the naive patients, we believe will be an advantage. So thanks for the question. Operator: Our next question will come from Jay Olson from Oppenheimer. Jay Olson: I'll add my congrats on all the progress, including getting ZENITH-AD up and running in the near term. We had a question on alopecia areata. Can you please provide some updates on your thinking around the Phase III study design for REZPEG in AA and especially in terms of the enrollment criteria in terms of age of patients and baseline SALT Score and then whether or not you think a single Phase III study is sufficient? Mary Tagliaferri: Jay, thank you for your question. We are having our end of Phase II meeting with the FDA this quarter. So we will have more information following the regulatory meeting that we're having. That being said, the Phase III study design will be 52 weeks. We will evaluate REZPEG 24 micrograms per kilogram versus placebo. We think a study roughly the size of 600 patients and 1 single study should be accepted by the FDA. The reason we believe this is that Pfizer did run 1 Phase III study for Litfulo, their JAK inhibitor, and the FDA did accept 1 single Phase III study. So we have asked the FDA to confirm this precedent would also be applied to our program. In terms of age, patients would be 12 years and older. And in terms of baseline SALT Score, we will enroll patients with severe and very severe alopecia areata, which is a SALT Score of 50 or above. Many people have asked us could we develop REZPEG for patients with moderate alopecia areata and we do think the answer to that question is yes. However, that would come after we have an approval for the severe and very severe population. And of course JAK inhibitors are not appropriate for that patient population given the black box warnings that Howard referred to and the difficulty in managing patients on JAK inhibitors. However, we think there's a huge opportunity for REZPEG in that patient population as well. Operator: Our next question comes from Cha Cha Yang from Jefferies. Cha Cha Yang: This is Cha Cha on for Roger Song. So I have a question about your earlier pipeline program, especially in T1D. Can you just tell us more about the collaboration with TrialNet and what that looks like and particularly what rights that Nektar has about data into future development rights? And then my second question related to that is can you tell us more about the baseline characteristics for the T1D study and how they might compare to the PROTECT study? Jonathan Zalevsky: Sure. So in that collaboration with TrialNet, which is part of the NIH and the NIDDK, TrialNet and the TrialNet consortium besides funding is also executing the study. So we work together on the design of the study protocol. It leverages all of their expertise, including the really large data set that they have on the change in C-peptide levels in patients that are newly diagnosed, really this patient population. We also work closely with the lead investigators. And even on our call when we announced the start of the collaboration, the 2 lead PIs joined that call with us to present the study and the concept behind REZPEG in this indication. So we'll be working with them, but they're responsible for really driving the execution of the study. The patient population is very, very typical in these studies. So there are patients that are within 100 days of their first diagnosis of type 1 diabetes. So these are patients that have really just had their first clinical episode of disease and they're enrolled into the study within 100 days. So a very typical patient population for these kind of new onset Stage III type 1 studies. And in terms of the rights, Nektar maintains the rights to REZPEG and the future development in type 1 diabetes that would come subsequent to this if this study is possible. Operator: Our next question comes from Samantha Semenkow from Citi. Samantha Semenkow: I just have 1 on the upcoming off-treatment data sets that we're expecting for both atopic derm and alopecia areata. How should we be thinking about what good data would look like in these readouts? Is there a bar for easy maintenance for example or a SALT Score maintenance that you would like to see from each of these or some other metrics that you're tracking closely? Mary Tagliaferri: Sam, so I think I'll start with alopecia areata first. We continue to dose those 27 patients for an additional 16 weeks and we just shared those data. And as you saw, there were 8 new SALT Score -- 8 new patients that reached a SALT Score less than or equal to 20. The big question that we have is what type of maintenance dosing will be best suited for these patients that have achieved a SALT Score less than 20 or have 80% of their hair regrowth. We figured that out in our atopic dermatitis program, the ideal maintenance dosing after a 16- or 24-week induction period should be 1 month and 3 months. In terms of alopecia areata, after 52 weeks of treatment, we don't yet know what the maintenance dosing should be. And so for that off-treatment data that we're going to have at the end of this year, it's going to be highly informative to us to understand how we should continue to dose patients in the alopecia areata program after 52 weeks of treatment given 24 micrograms per kilogram every 2 weeks. In terms of the data from the REZOLVE-AD study, you're absolutely right. We'll continue to follow the durability of those patients' responses in those patients who achieved an EASI-75 and EASI-90 and IGA 0 and 1 and we'll continue to look at the durability of those responses. As we saw with Q monthly dosing and Q 3 months dosing, we had exceptional durability and we also saw deepening of responses. Now with the off-treatment, we'll be able to determine are patients able to maintain those EASI-100 responses, the 30% of patients that achieved that and the IGA 0 and 1 responses. And remember, we had roughly 60% of patients who had an EASI-75 or vIGA at the time of rerandomization achieving an IGA of 0 and 1. So we'll be very eager to see the durability of maintaining the EASI-75, the EASI -100 and vIGA-01. I think this will be highly informative again to understand the dosing frequency for these patients after they're treated with 52 weeks of treatment. So you're absolutely right. The standard endpoints that we use for clinical trials will also be the endpoints that we'll look at in the off-treatment time frame. Thanks for the question. Operator: Our next question comes from Marc Frahm from TD Cowen. Marc Frahm: Congrats on all the progress getting the trials designed. Maybe just on that bio-experienced patient study in atopic dermatitis. Can you just walk through kind of how you're defining bio-experience there? Will patients be required to have overtly failed therapy or could they have discontinued for any other reason? Just how long do they have to have been off therapy, things like that? And will that include JAK experienced patients or just focused on the IL-413 pathway? Mary Tagliaferri: Thanks, Marc, for the question. So all the candidates have to require systemic therapy. So they have to have a history of atopic dermatitis for at least 12 months and they had to have had an inadequate response to topical medications. And then in addition to that, these patients have to have then had either a biologic or a JAK inhibitor. So we will be enrolling patients that have also been on JAK inhibitors. In terms of washouts for biologic, patients will have to have been off treatment for 12 weeks or 5 half-lives, whichever is longer. And then for JAK inhibitors, there will be a washout of 4 weeks. The eligibility criteria for moderate to severe atopic dermatitis is very similar for both studies, of course patients have to have an EASI score of 16 or higher, a body surface area of 10% or more and have an entry of an IGA of 3 or 4. Marc Frahm: Okay. That's very helpful. Do you think you need to be successful in all 3 trials to get approved or is 2 out of 3 enough for approval do you think? Mary Tagliaferri: Yes. I think that this is a great regulatory question. And as we unblind the data and have conversations with our regulatory advisers, I do believe that showing efficacy in 2 well-controlled randomized trials would be sufficient for regulatory approval. But we again will have to have those conversations with the FDA at the time of our BLA submission. Operator: Our next question comes from Mayank Mamtani from B. Riley. Mayank Mamtani: Congrats on the progress. Just on the prior comment on the AD off-therapy durability data. Just curious how do you expect an endpoint like EASI-100 to sort of evolve over time there? And then on the earlier stage pipeline, the 0165 specific program, JZ, just was curious how you're thinking of developing that maybe relative to 0165? And maybe just remind us what are the key milestones to watch out for those 2 programs? Jonathan Zalevsky: I can start with the last question first, Mayank. So for 0166, so as we mentioned, that it's a bispecific, right? That contains a TNFR2 agonist on 1 arm and then a validated target for rheumatology indications on the other arm. So our indications are definitely in the rheumatology setting. And then we have the opportunity to have basically multiple mechanisms, right, that we bring forward on the cell as well as adding a TNFR2 second component for a potential differentiating novel approach to treating rheumatology diseases. In terms of the main milestones that we have across that program is we have IND-enabling studies around 0165 and then the 0166 program is a little bit further behind, but it's also undergoing those same IND-enabling studies as well. And I'll turn it over to you, Mary, for the other question. Mary Tagliaferri: Yes. So as you know, we did publish data from our Phase Ib in Nature Communications and this was published in 2024. And what we did show is that patients were dosed with the highest dose of REZPEG 24 micrograms per kilogram and then those patients after 12 weeks of treatment were off therapy for a total of 9 months. And we did see that these patients were able to maintain their EASI-75 and there was remarkable durability and you can see that in the publication. So if we replicate the data from the early Phase I, we would see durability for potentially 9 to 12 months off therapy. Again I think the goal here is to find a treatment regimen that's highly differentiating from the current available therapies. And as you know with Dupixent, patients have to take an injection every 2 weeks indefinitely. And so we really believe if we can get to a dosing regimen of REZPEG that's monthly or every quarterly just like SKYRIZI 4 times a year, this will be a huge advantage for patients and quite a transformation in this field. Hopefully, the data will also show durability off treatment. And therefore, if patients go for longer than 3 months without dosing especially if they get to an EASI-100 complete clearance of disease and have this level of durability, this will be a huge advantage for patients. I think we're all eager to see the data and to see the length of time that patients can maintain their IGA 0 or the EASI-75, EASI-90 and EASI-100. So we really look forward to having those data in the first quarter of next year. Thank you for the question. Operator: Our next question comes from Arthur He from H.C. Wainwright. Yu He: Congrats on the progress. So I had 2 quick questions on alopecia areata program. So first, could you remind us how you picked the 24-week treatment period at the first place, why not longer? And also for the Phase III study, are you guys contemplating to include JAK inhibitor experienced or refractory patients in the Phase III study for alopecia areata? Mary Tagliaferri: So we chose the 24-week off-treatment period because you may know with JAK inhibitors, patients start to lose hair relatively quickly and so we felt like that was a sufficient amount of time to potentially see a differentiation between JAK inhibitors and REZPEG. And in terms of the Phase III, we are going to go with patients who are JAK inhibitor naive. However, there are multiple other ways to evaluate REZPEG in a patient population that is JAK inhibitor experienced. We do believe that in this particular indication, REZPEG could be a first-line therapy. And for those of you who were able to listen to our presentation for the 52-week data in alopecia areata, all of our KOLs said that the vast majority of patients and in fact Jonathan Silverberg said 90% of his patients would use REZPEG in the first-line setting. So we do and we are positioning REZPEG in the first-line setting for alopecia areata. And we do believe the drug will be effective as well in patients who have already experienced a JAK inhibitor and we'll find another pathway to explore REZPEG and evaluate REZPEG in that patient population as well. So thanks for the question, Arthur. Operator: Our next question comes from Andy Hsieh from William Blair. Tsan-Yu Hsieh: Just follow up on Jay's question previously. Mary, you mentioned about having to basically conduct a Phase III trial in alopecia and getting a label before conducting a trial in a moderate population. So I'm curious, one, do you have to go back to a Phase II or you can start a Phase III after that? And then the other one is really about understanding FDA's pushback. Is it -- are they not comfortable with the safety database especially now you have hundreds of patients in safety database? So just I'm curious about why there's such a regulatory pushback in a moderate population. Mary Tagliaferri: So we do have to speak to the agency about the moderate population. But after speaking with our steering committee members, the placebo effect for alopecia areata for patients who have severe and very severe disease is very low. For SALT 20, it's single digits between 2% and 5%. So running a clinical trial where the placebo effect for your primary efficacy endpoint is low and testing the same population as in our Phase IIb AA study gives us a high probability of technical success for our registrational program. Now that being said, in the moderate patient population per our KOLs and our steering committee, the placebo effect could be higher in the population of patients that have, say, a SALT Score that's actually less than 50 so in the 30 to 50 range. So we believe that the best path forward is to go with the clear regulatory precedent where there is a clear endpoint for the patient population that's with a SALT 50 or above. And we will have a conversation with the FDA about the moderate patient population. We have not gotten feedback yet through our end of Phase II or regarding the moderate population. So we have not received any pushback. We just haven't had the conversation yet, Andy. Operator: And our next question comes from Jessica Fye from JPMorgan. Unknown Analyst: This is for Joseph for Jess. It seems like you have much of the plan in place for the Phase III in alopecia. So I just wondering if you can -- what are the points that you can hammer you want to hammer out with FDA at the end of Phase II meeting? Mary Tagliaferri: Yes. Of course a lot has come up about can you run 1 Phase III clinical trial versus 2 and again there's precedent for 1 Phase III clinical trial for this indication. As we mentioned, Pfizer was able to have their JAK inhibitor approved with 1 Phase III. So I would say that's probably the most important question and answer that we want to have from the FDA after our end of Phase II meeting. In addition, we have submitted our study design and we want to make sure that the FDA agrees with the powering of our trial and the eligibility criteria. And I think the third and also important point is the totality of our safety data. As Andy Hsieh just brought up, we do have a very large safety database with over 1,000 patients dosed in an inflammatory skin disease. And so we also want alignment with the agency over the safety database for alopecia areata when we file our BLA. So those are 3 of the most important topics that we want to have clarity and alignment with the agency. Thanks for the question. Operator: Thank you. And I'm showing no further questions from our phone lines. I'd now like to pass the conference back to Howard Robin for any closing remarks. Howard W. Robin: Well, before I end the call today, I want to comment that Sandy, our current interim CFO, will be retiring on May 15. And as our interim Chief Financial Officer, Sandy has played an instrumental role in supporting Nektar over the last 3 years and we're very grateful for her contributions and we'll miss her. For continuity, we're bringing in another partner from FLG Partners, Linda Rubinstein, who will take over Sandy's role as interim CFO. Linda has 35 years of experience and has served as interim or permanent CFO leading finance and financial reporting at a number of biotechnology companies including Solexa, Five Prime, True North and most recently, Adverum. Her early career was in M&A banking. And all of us do wish Sandy the very best in her retirement. I want to thank everyone today for joining us and for your continued support. We really appreciate it. I also want to thank our employees who have worked tirelessly to advance our research in pursuit of novel treatment options for patients and together, we've transformed our scientific hypothesis into real and potentially meaningful therapeutic options. We look forward to initiating our Phase III studies in atopic dermatitis in the coming months and advancing alopecia areata into Phase III as well. And we will also be exploring other REZPEG potential in T-cell-mediated diseases. So we thank you very much for joining us today and stay tuned. Operator: Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
Operator: Good day, and thank you for standing by. Welcome to the first quarter 2026 The E.W. Scripps Company Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Becca McCarter, Senior Director, External Communications. Please go ahead. Becca McCarter: Thank you, Didi, and good morning, everyone. Thank you for joining us for a discussion of The E.W. Scripps Company's financial results and business strategies. You can visit scripps.com for more information and a link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements based on management's current outlook and actual results may differ materially. Factors that may cause them to differ are outlined in our SEC filings. We do not intend to update any forward-looking statements we make today. Included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies' uses or formulations. Reconciliations of these measures are included in our earnings release. We will hear this morning from Chief Financial Officer Jason P. Combs, then Scripps President and CEO, Adam P. Symson. Here is Jason. Jason P. Combs: Good morning, everyone, and thank you for joining us. We are coming into this morning's call with strong momentum and good news about our financial performance and other activity. Here are a few of the highlights. We are progressing rapidly on executing our comprehensive transformation strategy, which has helped drive significant improvement in our first quarter net leverage to under four times. Our Local Media division delivered a strong performance with industry-leading 7% core advertising revenue growth, driven by our unique live sports strategy. We launched the Scripps Sports Network, a premium free streaming channel. We are entering a midterm election cycle with strategic market exposure in key battleground states. And we continue to optimize our portfolio through strategic asset transactions, generating $123 million in gross proceeds from recent sales of two stations. We also continue to work towards the closing of our station swaps with Gray and pursue additional M&A activity to support debt reduction and enhance operating performance. In addition to those recent highlights, we are pleased to have just successfully completed a new affiliation agreement with our largest network partner, ABC, covering 17 ABC affiliates. With that overview as a backdrop, I would like to review our first quarter financial results, and then I will discuss second-quarter guidance, followed by details on our improving debt position. I will conclude with a review of our EBITDA improvement plan. I will present our first quarter Local Media division results on a same-station or adjusted combined basis, removing the Q1 2025 results of the two TV stations that we have now sold and reflecting our addition of the Lexington ABC affiliate. During the first quarter, our Local Media division revenue was $331 million, up 5.8% from first quarter 2025. Core advertising increased 7%. Our services, automotive, and gambling categories all grew in the quarter. Local core advertising year-over-year growth was largely driven by advertising sales tied to our National Hockey League telecasts. We saw a strong contribution from the addition of our newest rights agreement with the Tampa Bay Lightning, and beyond this new partnership, we also saw strong growth in our existing NHL deals with the Vegas Golden Knights, Utah Mammoth, and Florida Panthers. Our strategy is designed to drive year-over-year growth across both our existing deals and new partnerships. And last month, we announced a fifth full-season NHL sports rights agreement with the Nashville Predators to start this fall. The Winter Olympics and the Super Bowl also contributed to our Q1 core advertising growth. Political advertising revenue was nearly $9 million as we begin what is expected to be a record-breaking spending cycle for the midterm elections. This year, we forecast strong spending in our markets due to U.S. Senate and gubernatorial races in Arizona, Colorado, Michigan, Nevada, Ohio, and Wisconsin. We also are watching growing competitive situations in Florida and in Montana. Local Media distribution revenue increased 2% again, on a same-station basis. Expenses for the division increased about 2.4% year over year. Excluding the impact of our expenses tied to our new NHL team deal, expenses were flat. Local Media segment profit was $44 million compared to $32 million in Q1 2025. For the second quarter, we expect Local Media division revenue to be up low single digits. We expect core advertising to be down low single digits, without the benefit of live sports for most of the quarter. We expect Q2 Local Media gross distribution revenue to be impacted by our impasse with Comcast, which ran from March 31 to May 5. Based on that timing, we still expect full-year gross distribution revenue to grow in the low single-digit range but now expect net distribution revenue to grow in the low double-digit range, a slight change from our previous guidance. We expect second-quarter Local Media expenses to be flat to 2025. Now let us review the Scripps Networks division first quarter results and second-quarter guidance. Once again, I will be presenting the results on an adjusted combined basis, in this case adjusting for the impact of the Court TV sale. In the first quarter, Scripps Networks revenue was $174 million, down 9.5% from Q1 2025. Connected TV revenue was up 26% from the same quarter last year. The division's expenses for the quarter were $126 million, up 1%. Scripps Networks segment profit was $47.5 million compared to $66.8 million in the year-ago quarter. For the second quarter, we expect Scripps Networks division revenue to be down about 10%. The networks are facing a softer market from macroeconomic conditions impacting the direct response marketplace and external measurement pressure from Nielsen due to recent methodology changes. Adam will talk more about this in a moment. We expect Scripps Networks Q2 expenses to be up in the low single digits. Turning to the segment labeled Other, in the first quarter we reported a loss of $6 million. Shared services and corporate expenses were $26.6 million. In the second quarter, we again expect that line to be about $27 million. Higher medical claims and increased insurance premiums are causing that line to go higher than usual. For the first quarter, the company is reporting a loss of $0.20 per share. The loss included a $30 million gain on the sales of Court TV and two television stations, WFTX in Fort Myers, Florida, and WRTV in Indianapolis. These sale transactions decreased the loss attributable to shareholders by $0.25 per share. In addition, the preferred stock dividend has a negative impact on earnings per share even when we do not pay it. This quarter, it reduced EPS by $0.18. We had $20 million outstanding on our revolving credit facility at the end of the quarter. On April 30, we entered into an agreement to extend the July 7, 2027 maturity date of our revolving credit facility to July 7, 2029 with commitments of $200 million. For the first quarter, cash and cash equivalents totaled $84 million. Net debt was $2.2 billion as defined in our credit agreement. Also during the quarter, we paid down $10.2 million on our B-2 term loan. In addition, we paid down $20.4 million on our B-3 term loan. Since the end of the quarter, we have paid down an additional $30 million on the B-2 term loan, for a total of just over $60 million in term loan paydowns since the beginning of this year. Net leverage at the end of the quarter was 3.9 times, per the calculations in our credit agreement, which includes certain pro forma adjustments relating to our transformation efforts. As we announced in February, our company transformation plan includes growing enterprise EBITDA by $125 million to $150 million. Our EBITDA improvement plan balances rightsizing our current expense structure with implementing new ways to grow revenue and profitability. You will start to see the financial benefits of our plan in the second half of this year. We expect total in-year EBITDA impact of $20 million to $30 million and an annualized run rate of about $75 million as we move into next year. And now here is Adam. Adam P. Symson: Thanks, Jason, and good morning, everybody. At Scripps, we are in the midst of executing a significant transformation, moving now from the detailed planning stage into execution, and I am pleased to report that we are right on track. I like to say that this transformation is a refounding of the company. We are bringing the values, ethics, and mission of our founder, Edward Willis Scripps, forward 150 years to set the company up in a way I would like to think he would were he here today. I have been doing a lot of research on our founder. E.W. was fiercely protective of his newsroom journalism and editorial independence. He was entirely committed to serving the people in the communities where he operated, and he was well known, maybe even notorious, for his dedication to operating with efficiency to ensure he would have the margin to carry out the mission. A hundred and fifty years ago, E.W. focused on his consumers' problems and commercialized the solution. The assets that make up our company may be different today, but our transformation is grounded in the same customer-first focus. Here is an example of what this is looking like. In our newsrooms, we have already been changing the model. We are moving from a broadcast-centric operation that has historically served our audiences during defined time periods to news operations that leverage automation, AI, and technology to serve consumers when and where they expect to get their local news, especially as they have moved to streaming. Leveraging technology has allowed us to deepen our commitment to local news, getting more of our teams out of the newsroom and into the community, putting more reporters in the field to live in the geographic areas where they cover. All of it is in service to our vision: we create connection. This is not incremental change. It is a complete realignment of our newsroom operations, our business models, and our culture around the opportunities we see clearly: streaming platforms, productivity-enabling technologies, and our unrivaled ability to create connection for the people and the businesses in the communities we serve. This is just one example at Scripps of how we are upending what needs to be changed, fueling the fire where we see top-line growth, as we see in streaming, and going farther and faster with what is working well, like our sports strategy. Let us talk about sports. In Local Media, our live sports helped Scripps deliver an industry-leading core advertising performance in the first quarter, up 7%. As Jason said, this came from new partnerships and from organic growth in every one of the markets where we are executing the strategy. And we are far from done. Just a few weeks ago, we announced the new full-season local broadcast agreement with the NHL's Nashville Predators, and I expect more core growth-fueling opportunity to come. Now for the second quarter, the live sports action shifts to our Scripps Networks and the WNBA and the NWSL. The WNBA's preseason game between the Indiana Fever and the New York Liberty on April 25 was ION's most watched preseason game ever. Tonight, the WNBA regular season tips off with a doubleheader on ION, with tremendous excitement about the return of Caitlin Clark and this year's class of exceptionally talented draft picks. Scripps Sports will once again broadcast the most WNBA games of any network, bringing a WNBA doubleheader every Friday night all season long to fans nationwide. Advertiser demand is high for women's basketball, as well as for our full slate of women's sports. It is now clear that Scripps is the leader in women's sports, showcasing women's athletic achievement with rights for the WNBA, NWSL professional soccer, PWHL hockey, MLV volleyball, Athlos track, college basketball, pro cheer, and our newest partner, PBR's premier women's rodeo, which we will be bringing to our network GRYT and ION. We recognized early that Americans were embracing the quality and professionalism of women's sports, and we are pleased to have become the go-to platform for the brands that want to connect with fans. Next week, the Professional Women's Hockey League's Walter Cup finals will begin on ION. We are very pleased to bring this to national television for the first time and to have Amica serving as our presenting sponsor and Discover as an additional sponsor. They are just two of the hundreds of blue-chip advertisers we have brought onto our platform through our sports strategy. In March, to capitalize on the marketplace growth and our success in connected TV revenue, we launched the Scripps Sports Network, a new streaming channel that leverages our existing sports rights, some efficiently acquired new rights, and sports-themed programming. We are streaming more than 100 live games a year along with original sports programming, documentaries, and talk shows. And we have secured broad distribution across the major streaming platforms, including Roku, LG, and Samsung, making it easy for fans to find the sports, teams, and players they love. Connected TV continues to be a growth driver for Scripps, up 26% in the first quarter, and I expect we will continue to leverage our premium programming and live sports to make this a differentiator for us among our peers and competitors. While we expect to capitalize on live sports on ION in Q2 just as we have with our Local division in Q1, we are navigating some external challenges with national advertising revenue. As Jason mentioned, we are seeing some market softness due to the volatile economy. Networks' direct response ad spending, in particular, has been impacted as consumers feel the pain of higher prices, especially now at the pump. We have also been affected by a recent Nielsen audience measurement change that has artificially shifted household viewership weighting in favor of cable networks. Because all Scripps networks are distributed over the air, this change has negatively impacted audience delivery. Nielsen's new methodology is inexplicably resulting in frustratingly inaccurate reports of ratings declines for over-the-air viewing and streaming. This disproportionately impacts the measurement of our multicast network viewers who are most vulnerable to affordability issues, including those in rural communities, people of color, and older Americans. The fact is that we have seen no let-up in the demand for our advertising products in the general market, and sales execution is on point. But Nielsen's overnight change suddenly impacted our supply of impressions, impacting our revenue. We began seeing a revenue impact from Nielsen's methodology change in March, and since then, our team has been advocating aggressively for Nielsen to make a public disclosure outlining the magnitude of the discrepancy in their data. Of course, I cannot end the discussion on advertising without at least a nod to what we expect to be this year's political revenue windfall as a result of our excellent station footprint, our focus on sales execution, and the record amount of money expected to be spent on the upcoming midterms. We are off to a good start and expect political to be a great story on top of this year's industry-leading core revenue performance we are putting up this year. I would like to take a moment now to celebrate some important recognition of the work we do on behalf of our viewers and communities. Scripps has received recent awards and recognitions from three important national organizations. We were honored with six nominations for national News and Documentary Emmy Awards, including five for Scripps News and one for WEWS in Cleveland. Scripps News also was recognized with three prestigious National Headliner Awards, including a Best in Show honor, and two Deadline Club finalist nominations. Our local station KNXV in Phoenix also received three National Headliner Awards and WTMJ in Milwaukee received one. We are proud of the recognition of our commitment to journalism that improves the lives of those we serve, holds the powerful accountable, and upholds the tenets of our democracy. Serving our democracy is one of the things Scripps has done best for nearly 150 years. There is a lot of uncertainty in the world today, from macroeconomic to the media sector. At Scripps, we are acting with urgency on what we can control by employing new technologies to create operational efficiencies, capitalizing on accessible growth areas such as sports and CTV, and improving our balance sheet. This is the essence of our transformation plan, and you are beginning to see how this plan will carry us into the next bountiful chapter of our long history. We will now open the call for questions. Operator: As a reminder, to ask a question, please press 11 on your telephone. Our first question comes from Daniel Louis Kurnos of Stifel. Your line is open. Daniel Louis Kurnos: First and foremost, Jason, thanks for the recast; super helpful. Just a couple of housekeeping questions. The guide that you gave for Q2, that is relative to the adjusted combined recast, not the as-reported from February last year, correct? And then, Adam, on Scripps Sports Network—super smart—you have been leading the charge in CTV. You had your upfront in late March and launched the network before then. You picked up PWHL, PBR, and now women’s PBR. You have got a real leadership position on the women's side. Can you give us your thoughts on advertiser feedback and commits as we look ahead? And you have been very clever with rights acquisition in an inexpensive manner. Sometimes there is confusion between what you can show on streaming and what you can show on traditional broadcast, so help us think through that equation too. Jason P. Combs: That is off of the adjusted combined recast that we provided. Adam P. Symson: First and foremost, Dan, I like to think that we have embraced women's sports, not put it into a stranglehold, but I appreciate what you are getting at. We have been very intentional in the way we have been acquiring sports, both on the local side and the national side, and see our opportunity as recognizing the value of the distribution we bring to the table. Whether it was with our initial deal with the WNBA, the NWSL, or any of these other sports deals we have done, we have been looking for partners who recognize that we bring the opportunity to showcase their league, their games, their athletes, on the most ubiquitous platform available, because ION is uniquely positioned to be available on OTA, on pay TV, and on streaming. The launch of Scripps Sports Network is a continuation of that strategy because it not only positions certain parts of our broadcasts in additional new real estate in the streaming space through simulcasts—allowing us to take some of ION's most premium time periods and now simulcast them on streaming platforms, essentially expanding the reach of those games and our network—it also allows us to carefully and efficiently acquire new rights for insurgent or ascendant leagues looking to get distribution for their games and allows us to test and learn. For example, many of the PWHL games and Major League Volleyball are available on the Scripps Sports Network, and then the finals end up being broadcast on ION. Our move to put all of that on ION has been about really serving the advertising environment. We see significant demand from advertisers looking to invest behind women's sports, and we went to the marketplace knowing there was already demand for the assets we were acquiring. That will benefit us in linear and in the streaming space. We will continue to be careful and efficient in the way we acquire rights but also really aggressive in the way we demonstrate the value of our distribution. Relative to the ad marketplace, there has been no let-up in demand for live sports. When you look at our performance relative to general market cable and broadcast networks, you see the benefit of our sports strategy. We are just now moving into the second quarter where we have that benefit going into the summertime; we did not see that in the first quarter. Nevertheless, there has been some softness in the national ad market, and I think Jason can provide a little more color on the national ad marketplace and even a midterm view of what we expect from Networks margins. Jason P. Combs: We guided to down 10% for Scripps Networks in Q2, and that is driven by a couple of things: ratings declines tied to changes in Nielsen methodology that Adam talked about, as well as macroeconomic and geopolitical conditions that are driving uncertainty and have created a weaker marketplace for national advertising. Networks that over-index on over-the-air carriage are seeing pressure versus cable networks that are generally seeing significant ratings increases under the new methodology, and we will continue to engage because we believe that methodology is flawed. Beyond that, the current macroeconomic environment is impacting performance-driven advertisers in the direct response space. Inflationary pressure and higher fuel costs continue to weigh on the American consumer, and geopolitical instability has created some hesitation and ripple effects. In the short term, that has created a drag on revenue and margin in our segment. We worked hard to get Networks back to a 30% margin business. As you look at the implied guide for Q2 and our results for Q1, I would expect our second-half margin to be higher than our first half. Q3 is the heaviest sports quarter in terms of inventory, and Adam talked about the excitement we continue to see for premium sports inventory. Q4 also brings in seasonal healthcare ad dollars, and you will start to see some impact from the transformation efforts in the second half as well. We remain committed to the Networks business as a 30% margin business. Daniel Louis Kurnos: Understood. On monetization, we are seeing more live sports move towards programmatic, especially in CTV. How do you think about pushing deeper into DSP relationships, leaning into the ad tech ecosystem, and getting better fill—even if CPMs come under pressure—to ultimately improve monetization? Adam P. Symson: I would argue we are operating a best-in-class CTV platform. Going back to the earliest years of digital and CTV, we have been focused on maximizing the opportunity with direct sales and programmatic. The leadership we have at the Networks level focused on monetizing our CTV across the enterprise is second to none, and we are well invested. You can see that in the 26% growth, following significant growth in prior years. We have not just been riding market growth; we have been catalyzing our own opportunity—improving our programmatic stack, strengthening ad tech relationships, and leveraging our significant position with distributors. We represent some of the most watched premium channels in the CTV marketplace, which gives us leverage to negotiate terms and partnerships that benefit us and the platforms. There is incremental opportunity ahead, including leveraging technology to improve monetization in CTV and local CTV, and significant opportunity with political in CTV. We are already seeing that this year, allowing us to sell connected TV advertising out of our political office outside of the markets where we have local stations. Today, we sell nationwide, and a fair amount of the connected TV political advertising we saw in the first quarter came from outside our markets. We are off to a really good start there and will keep the pressure on. Operator: Thanks, Dan. Our next question comes from Craig Anthony Huber of Huber Research Partners. Your line is open. Craig Anthony Huber: Thank you. Can you give us an update on the $125 million to $150 million transformation program—specifically where you think the annualized run rate will be at year-end and any changes on that front? Jason P. Combs: Last quarter, we gave an annualized run rate of $60 million to $75 million for this year. We adjusted that this earnings cycle up to about $75 million, and we would say we are making good progress. I will also point out the move we had in leverage this quarter and explain that a bit. When we announced the transformation initiative, we did a lot of work to lock down our bankable plan of initiatives expected to be implemented over the next 12 months. Per the terms of our credit agreement, we are able to reflect those retroactively back into our trailing eight-quarter EBITDA for purposes of leverage calculation. That is the driver behind the move in leverage this quarter down to 3.9 times, tied to initiatives we expect to have fully implemented by the end of Q1 next year. Adam can talk a bit more about the bigger picture. Adam P. Symson: We are executing a comprehensive plan that allows us to rethink everything about how we deliver service to our customers—both audiences and advertisers. We spent months examining the opportunity to remake the company across every corner of the business, front office and back office, and now we are in implementation. I received a lot of comments about how confident I sounded last quarter when I said “take it to the bank.” I am as confident today that we are going to improve EBITDA by more than 30% to emerge a stronger, more nimble, and more aggressive company oriented for growth. It is all about our customer, and it is being done through the lens of our vision: we create connection. Much of it involves technology, AI, and automation and is oriented toward growth. Importantly, we are on track to achieve exactly what we set out to do. Craig Anthony Huber: On AI, can you give a bit more flavor on how you are using it for services and efficiency? Is it possible to quantify how much of the $125 million to $150 million improvement comes from AI? Adam P. Symson: I cannot quantify that yet. As we roll out different initiatives, when they are in the rearview mirror, we can provide more color. Broadly, technology has opened the door for all companies to be more effective and efficient. Traditionally, the broadcast industry has been too slow to adopt these technologies. We are now stepping back and rebuilding the company in both the front office and back office. Several years ago, we pioneered a new way of producing newscasts that leveraged technology to reallocate resources—putting more reporters in the field and paying higher wages. That became the basis for our neighborhood news strategy and geographic beats. We continue to have more reporters in the field than competitors, which is what consumers care about, and we are leveraging AI and automation to facilitate that. We also see significant top-line upside from technology in revenue yield management and account executive productivity—tools that let AEs spend more time prospecting and closing and less on administrative work. These are not themes; they are plans with real business cases developed by our employees. Even the cost savings opportunities will improve our product—both content and advertising—improving service to audiences and advertisers and generating additional top- and bottom-line value. Craig Anthony Huber: Lastly, on the macro environment, is it letting up or getting worse? Any categories beyond direct response that you would call out? And in Q1, did you see changes tied to geopolitical events, and has that continued? Jason P. Combs: On the Networks side, the impact is tied to macroeconomic conditions and geopolitical conditions—inflation, gas prices, all those things—which are creating headwinds in national advertising. We have not really talked about the Local ad marketplace yet. In Q1, Local core was up 7%, the best in the industry. For Q2, we guided to down low single digits, which is better than our peers. Unlike Q1, Q2 does not have the same level of premium sports inventory, and we are seeing a little noise in some categories, but all in all, from a Local core perspective, things are pretty stable. Operator: Thank you. Our next question comes from Avi Steiner of J.P. Morgan. Your line is open. Avi Steiner: A couple of questions on the ad environment. Can you refresh us on your exposure to direct response advertising and how quickly it typically snaps back in prior down cycles? Is it leading or lagging? Jason P. Combs: It varies by network, but we do have a material portion of Networks revenue tied to direct response advertising. DRA is tied to broader macro trends and can both downturn quickly and bounce back quickly as well. We are seeing some noise now tied to macroeconomic and geopolitical factors and the Nielsen methodology changes impacting ratings. Adam P. Symson: From a speed perspective, it snaps around quickly. A good example is what we saw in the fourth quarter: at the beginning, we were a little soft with DRA due to the government shutdown’s impact on employment and Medicare enrollment. When the shutdown ended, it snapped back. Uncertainty is not good for the American consumer; the greater the certainty, the easier things will be in the ad marketplace. Avi Steiner: On the enterprise value growth via cost savings and revenue growth initiatives, what is the cost to achieve for the transformation initiatives and timing? Jason P. Combs: We guided to EBITDA lift of $125 million to $150 million. We estimate $40 million to $50 million of cost to achieve, with the largest portion falling in the back half of this year. Avi Steiner: The recast financials in the supplemental disclosure were helpful. Could you provide the LQ8 EBITDA for the same base of assets underlying that disclosure? And what is left to close, and dollars in and out? Jason P. Combs: The LQ8 that supports the 3.9x leverage calculation is $568 million. We are awaiting closure of our swaps with Gray and also have a transaction with Inyo before the FCC and DOJ. On dollars, I do not have the specific number readily available on this call. The transformation-related cost savings embedded into that LQ8 are a little over $100 million annualized; in our most recent announcement, we cited $53 million, with the exact contribution dependent on timing. Operator: Thank you. Our next question comes from Shanna Qiu of Barclays. Your line is open. Shanna Qiu: Thanks for taking my questions. Could you give us a sense of how much of the Scripps Networks top-line guide decline in Q2 is related to the overall macro and ad environment versus the Nielsen methodology change? Jason P. Combs: We are not breaking it down specifically, but both are driving a material impact to the revenue guide. Adam P. Symson: On the Networks side, we sell impressions, and the impressions are determined by your currency. In mid-February, overnight, Nielsen's methodology change did not impact sales execution or demand; it impacted how many impressions we had to sell. We are working with Nielsen to right that ship and making changes on the marketing and programming side to bolster our programming strategy and increase impressions. That is separate from some of the macro softness in DRA. The general market has held up nicely, likely due to our sports strategy and strong sales execution. Shanna Qiu: You mentioned you expect full-year gross distribution revenue growth of low single digits. Any thoughts on the pending Charter–Cox merger, and is that reflected in your gross distribution guide? Jason P. Combs: We do not generally talk about specific contracts, but we feel good about that guide. We went through an impasse in the second quarter with Comcast and were able to maintain our guide on gross and make only a small change in our net guide from low teens to low double digits. While it creates a short-term blip in Q2 financials, we are pleased with what that deal means in the midterm and long term for us. Operator: We have a follow-up from Craig Anthony Huber of Huber Research Partners. Your line is open. Craig Anthony Huber: On the Nielsen change, are you willing or able to talk about the percent hit to impressions and how you view it? And has Nielsen provided any recast numbers? Adam P. Symson: I do not think quantifying it publicly benefits us. You have heard similar references from other companies with national broadcast network exposure. This is something all the broadcast networks and streamers are dealing with. We are working with Nielsen to address this so the ad marketplace can make decisions with a methodology that reflects what is actually happening. It is obviously not the case that cable is growing while streaming and OTA are declining. Everyone recognizes changes have to be made to improve accuracy. As for recasts, I cannot speak for Nielsen. The changes went into effect in mid to late February, and we have not seen public recasts. Operator: Thank you. Our next question comes from Steven Lee Cahall of Wells Fargo. Your line is open. Steven Lee Cahall: Thanks for fitting me in. Jason, can you help us understand the sequential change in Local core ad growth going from plus 7% to down low single digits? There is the change in local sports and the Comcast blackout. What does the underlying core look like within that—how much of the deceleration is sports versus underlying trends? Jason P. Combs: Q1’s up 7% had a significant benefit tied to our NHL deals and also the Olympics in the marketplace. If you take out the sports impact, the overall core marketplace is pretty consistent and not significantly impacted by broader economic factors. The down low singles we guided to for Q2 is better than most in our industry, which have guided down low to mid singles. From that standpoint, core is a strength right now. Adam P. Symson: I hope investors and analysts recognize that our first quarter performance is cause to celebrate because we are executing a strategy that creates significant growth opportunity—cyclical as it may be. As we move to Networks in Q2 and Q3, we will see that benefit there. Running a strategy that allows you to vacuum up more core revenue in a local market comes with cyclical dynamics tied to sports windows. Steven Lee Cahall: On Networks growth, Q3 is the biggest for sports, but sequentially 1Q to 2Q has more sports as well with WNBA restarting. If the market has not changed as we get past Q3, do we see a big drop-off in the rate of decline, or are there other levers—programming or pricing with the upfront—you will pull in the back half? Jason P. Combs: From a margin perspective, we expect the second half to be higher than the first half. We have some sports in Q2, yes, but they ramp to a full quarter in Q3. I would expect year-over-year changes to improve in the back half. You also pull in healthcare in Q4, and transformation benefits will start to roll through. Even though we are trending below the 30% target now, we remain committed to making the decisions needed to get Networks back to a 30% margin. Adam P. Symson: It is too early to talk about upfront volume or pricing. While Nielsen’s change may have negatively impacted impressions for OTA and streaming, the ad marketplace is responding very well to our upfront message: our distribution platform that grows OTA and streaming and our differentiated programming—live sports, specifically women’s sports. Advertisers recognize what is going on in cable and are shifting dollars into more premium products. That is behind significant new advertisers coming onto our platform, like Amica as presenting sponsor for the Walter Cup finals on ION, historically not an advertiser on our platform but now moving spend to reach their audience with our product and distribution. Steven Lee Cahall: Lastly, on leverage and preferreds: you are able to take advantage in your credit agreements of the transformation initiatives, which gives you some breathing room. Does that mean you can start to devote this year’s free cash flow toward the accumulated pref dividends or otherwise negotiating the pref? How are you thinking about it? Jason P. Combs: We were already well under our covenants, so while the transformation provides a benefit to our leverage calculation, there was already significant cushion. On the Berkshire preferred dividend, based on last year’s refinancings, we cannot pay the dividend until 2027 unless our leverage is below 4.25x—which we are—and we have less than $50 million outstanding on the B-2 term loan. Think of it this way: those are the requirements to begin paying the dividend. Once we meet them, we would intend to start paying the dividend again. Once we get leverage into the low to mid 3x, we would begin looking to address principal, not all at once but likely in $60 million increments. Operator: This concludes our question-and-answer session and today’s conference call. Thank you for participating, and you may now disconnect.
Operator: Good afternoon. My name is John, and I will be your conference call operator today. [Operator Instructions] As a reminder, this call is being recorded. And I would now like to turn the conference call over to Mariann Ohanesian, Senior Director of IR for Puma Biotechnology. Thank you. You may begin your conference. Mariann Ohanesian: Thank you, John. Good afternoon, and welcome to Puma's conference call to discuss our results for the first quarter of 2026. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma Biotechnology; Maximo Nougues, Chief Financial Officer; Heather Blaber, Senior Vice President of Marketing; and Roger Storms, Senior Vice President of Sales. After the close today, Puma issued a news release detailing results for the first quarter of 2026. That news release, the slides that Alan and Roger will refer to and a webcast of this call are accessible via the homepage and Investors sections of our website at pumabiotechnology.com. The webcast and presentation slides will be archived on our website and available for replay for the next 90 days. Today's conference call will include statements about Puma's future expectations, plans and prospects that constitute forward-looking statements for purposes of federal securities laws. Such statements are subject to risks and uncertainties, and actual events and results may differ from those expressed in these forward-looking statements. For a full discussion of these risks and uncertainties, please review our periodic and current reports filed with the SEC from time to time, including our annual report on Form 10-K for the year ended December 31, 2025. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this live conference call, May 7, 2026. Puma undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as required by law. During today's call, we may refer to certain non-GAAP financial measures that involve adjustments to our GAAP figures. We believe these non-GAAP metrics may be useful to investors as a supplement to, but not a substitute for, our GAAP financial measures. Please refer to our first quarter 2026 release for a reconciliation of our GAAP to non-GAAP results. I will now turn the call over to Alan. Alan Auerbach: Thank you, Mariann, and thank you all for joining our call today. Today, Puma reported total revenue for the first quarter of 2026 of $44.8 million. Total revenue includes product revenue net, which consists entirely of NERLYNX sales as well as royalties from our sublicensees. Product revenue net was $42 million in the first quarter of 2026, a decline from $59.9 million reported in Q4 2025 and $43.1 million reported in Q1 2025. As a reminder to investors, Puma's reported NERLYNX sales includes both U.S. net sales and product supply revenues of NERLYNX to Puma's ex-U.S. partners. Product revenue for the first quarter of 2026 was impacted by approximately $7.9 million of inventory drawdown at our specialty pharmacies and specialty distributors. Royalty revenue was $2.8 million in the first quarter of 2026 compared to $15.6 million in Q4 2025 and $2.9 million in Q1 of 2025. As noted in our last call, royalty revenue in 2025 -- in Q4 2025 was driven by the shipment of -- to our partner in China. We reported 2,328 bottles of NERLYNX sold in the first quarter of 2026 compared to 3,298 bottles sold in Q4 2025. In Q1 2026, we estimate that inventory decreased by 439 bottles. In Q1 2026, new prescriptions were up approximately 25% compared to Q4 2025 and total prescriptions were down approximately 4% compared to Q4 2025. Roger will provide further details in his comments and slides. I will now present the interim data from Puma's ongoing Phase II trials of alisertib in small cell lung cancer and HER2-negative ER-positive breast cancer, also referred to as the ALISCA-Lung1 and ALISCA-Breast1 trials. Heather Blaber and Roger Storms will add additional color on NERLYNX commercial activity. Maximo Nougues will follow with highlights of the key components of our financial statements for the fourth quarter of 2025. We now move to the ALISCA-Lung1 interim presentation. As a reminder, in clinical trials to date, alisertib has shown single-agent activity and activity in combination with other cancer drugs in the treatment of many different types of cancers, including hormone receptor-positive breast cancer, triple-negative breast cancer, small cell lung cancer and head and neck cancer. The drug has also shown activity in previous clinical trials in peripheral T-cell lymphoma and non-Hodgkin's lymphoma. Takeda's previous clinical development program with alisertib was extensive. And due to this, there is a large well-characterized clinical safety database with over 1,300 patients who were treated across 22 company-sponsored trials. From a preclinical perspective, it has been shown that aurora kinase A and c-Myc upregulate each other, which suggests the existence of a positive feedback loop. c-Myc upregulates the cyclin complex, which leads to cell proliferation. So by inhibiting aurora kinase A with alisertib, it also inhibits c-Myc, which decreases cell proliferation. Additionally, preclinical data has shown that alisertib inhibited growth of cells with c-Myc overexpression and in xenograft models that expressed high levels of c-Myc, tumor growth was inhibited. Puma's Phase II trial, ALISCA-Lung1, which is also referred to as study PUMA-ALI-4201, was designed to enroll up to 60 patients with small cell lung cancer who had received prior treatment with a platinum-based chemotherapy and immunotherapy. The trial enrolls both second-line and third-line patients. Patients must provide tissue-based biopsies so that biomarkers can be analyzed. Alisertib was initially dosed at 50 milligrams BID on days 1 to 7 of a 21-day cycle. As investors are aware, the trial was then amended to increase the dose to 60-milligram BID, and the company is now in the process of increasing the dose to 70 milligrams BID. The primary endpoint of the trial is to determine whether any biomarker correlates with alisertib response with endpoints of overall response rate, duration of response, disease control rate, progression-free survival and overall survival. The secondary endpoints include investigator-assessed efficacy and survival. Mandatory G-CSF prophylaxis is also given in the trial in an effort to reduce the neutropenia that was shown to be dose-limiting in the previous clinical trials with alisertib. Slide 6 shows the baseline characteristics for the 52 patients treated at 50 milligrams BID and the 27 patients treated at 60-milligram BID that are included in this interim analysis. Slide 7 shows the summary of the prior treatments the patients received prior to entering the study. Of note, all of these patients were treated in either the second line or third line in this trial. To first discuss the safety in the trial. In previous clinical trials of alisertib, the treatment-emergent adverse events seen were those characteristic of a cell cycle inhibitor with neutropenia being the main AE seen in the highest percentage. In this trial, the all-grade neutropenia was 19.2% in the 50-milligram arm and 22% in the 60-milligram arm. Slide 10 shows the rates of grade 3 and 4 AEs seen in the trial. Of note, the grade 3 or higher neutropenia rate was 13.5% in the 50-milligram arm and 11.1% in the 60-milligram arm. Slide 11 compares the Grade 3 and Grade 4 AE rates seen in the ALISCA-Lung1 trial to those that were seen in the previous Phase II trial of alisertib monotherapy in small cell lung cancer referred to as study C14007. C14007 was previously published in Lancet Oncology in 2010. As a reminder, in C14007, G-CSF prophylaxis was not mandated, while ALISCA-Lung1 requires mandatory prophylactic G-CSF. As can be seen on the slide, the use of prophylactic G-CSF appeared to reduce the rates of Grade 3 or higher neutropenia compared to what was seen in the previous trial. We next move to the efficacy seen in the trial. As you can see in Slide 13, in the 52 patients in ALISCA-Lung1 that were treated at 50 milligrams, we have seen 4 ((sic) [ 6 ]) patients or 11.5% with a best response of a partial response and 18 patients or 34.6% with stable disease. The median PFS for the 50-milligram arm was 1.7 months. In the first 15 patients in the 60-milligram arm, we have seen 1 patient or 6.7% with the best response of a partial response and 7 patients or 46.7% with stable disease. The median PFS for the 60-milligram arm is currently 4.2 months. Slide 14 shows the Kaplan-Meier curve for PFS between the 50-milligram and 60-milligram arm of the trial. As previously stated, the median PFS for the 60-milligram arm is currently 4.2 months. However, we caution it is still early, and we await additional patient numbers and additional follow-up. We will now move to the biomarkers in the trial. Slide 16 presents the Kaplan-Meier curve for the patients according to c-Myc H-score. c-Myc H-score is a semi-quantitative immunohistochemical assessment that measures the intensity and percentage of tumor cells staining for the c-Myc protein, typically ranging from 0 to 300. High c-Myc H-scores are believed to be associated with poor prognosis and lower overall survival in various cancers. As you can see on Slide 16, for the combined doses of 50 milligrams and 60 milligrams, patients with c-Myc H-score of between 0 and 100 had a median PFS of 1.68 versus a PFS of 4.17 for the patients with a c-Myc H-score of between 101 and 300. This would suggest that alisertib has better activity in cancers with a higher amount of c-Myc activity. Slide 17 presents the c-Myc -- presents the KM curve for the 50-milligram and 60-milligram dose separately for the patients according to c-Myc H-score. As you can see on the slide, for the 50-milligram dose, patients with H-score of between 0 and 100 had a median PFS of 1.68 months versus a PFS of 2.83 months for the patients with a c-myc H-score of between 101 and 300. While for the 60-milligram dose, patients with H-score of between 0 and 100 had a median PFS of 1.41 months, while the median PFS has not yet been reached for the patients with c-Myc H-score of 101 to 300. We believe that these slides are suggesting that alisertib has greater activity in tumors with higher c-Myc H-score and hence more c-Myc activity, which we believe is due to the inhibition of the aurora kinase pathway by alisertib. Slide 18 presents the KM curve for the patients according to percent of tumor cells that are c-Myc positive. As you can see on Slide 18, for the combined doses of 50-milligram and 60-milligram, for tumors having between 0 and 10% of the cells c-Myc positive, there's a median PFS of 1.68 months versus a PFS of 2.83 months for the patients with tumors having between 11% and 100% of the cells c-Myc positive. Slide 19 presents the KM curve for the 50-milligram and 60-milligram doses separately for the patients according to the percent of tumor cells that are c-Myc positive. As you can see on the slide, for the 50-milligram dose, patients with tumors having between 0% and 10% of the cells c-Myc positive had a median PFS of 1.68 months versus a PFS of 2.73 months for patients with tumors having between 11% and 100% of the tumor cells c-Myc positive. While for the 60-milligram dose, between 0% and 10% of c-Myc positive had a median PFS that has not been reached versus a PFS of 4.17 months for the patients with between 11% to 100% of the tumor cells c-Myc positive. We believe that these slides are suggesting that alisertib has greater activity in the tumors where a higher percentage of the cells are c-Myc positive, which we again believe is due to the inhibition of the aurora kinase pathway by alisertib. We believe that the initial clinical data with alisertib in small cell lung cancer are demonstrating that alisertib is showing better activity in patients where c-Myc is playing a role in driving the tumor, which is indicative of tumors where aurora kinase A is activated. There are currently 32 patients enrolled in the 60-milligram arm of the trial. Based on this preliminary safety seen at this dose, we are continuing to dose escalate to 70 milligrams, and we hope to begin enrollment of the 70-milligram cohort in the second half of 2026. We believe that the data generated thus far in ALISCA-Lung1 is showing that alisertib monotherapy is showing a PFS at higher doses and in certain biomarker-directed populations that is as good or slightly better than the PFS for currently approved drugs in this space. As discussed previously, we are hopeful that with increasing doses of alisertib monotherapy ALISCA-Lung1, we can achieve higher concentrations of alisertib in these biomarker-defined populations and potentially open up the opportunity for a Phase III design that tests alisertib monotherapy in a randomized trial. As investors are aware, alisertib was previously tested in a randomized Phase II trial of paclitaxel plus alisertib versus paclitaxel plus placebo where PFS and OS benefit was seen in patients with tumors with biomarkers that appear to indicate that the aurora kinase A pathway was activated. Based on this data and the data from ALISCA-Lung1, Puma will be looking to a dual approach for the development of alisertib in small cell lung cancer. Therefore, in addition to the monotherapy dose escalation approach in ALISCA-Lung1, Puma will also be looking to initiate ALISCA-Lung2, which will investigate the efficacy of alisertib given in combination with paclitaxel using mandatory G-CSF prophylaxis. We are hoping to initiate this trial in the second half of 2026. We are pleased with the interim data from ALISCA-Lung1, and we believe it is showing an improved tolerability profile for alisertib monotherapy and improved efficacy with dose escalation as well as improved efficacy in a biomarker-directed population that is indicative of the aurora kinase pathway activation. We anticipate additional interim efficacy data from ALISCA-Lung1 in the second half of 2026 or the first half of 2027. I will now move to the ALISCA-Breast1 interim presentation. As a reminder, and as previously stated, in clinical trials to date, alisertib has shown single-agent activity and activity in combination with other cancer drugs in the treatment of many different types of cancer, including hormone receptor-positive breast cancer, triple-negative breast cancer, small cell lung cancer and head and neck cancer. There's also a large well-characterized clinical safety database with over 1,300 patients who were treated across 22 company-sponsored trials. As previously stated, from a preclinical perspective, it has been shown that aurora kinase A and c-Myc upregulate each other, which suggests the existence of a positive feedback loop. Preclinical data has shown that alisertib inhibited growth of cells with c-Myc overexpression and in xenograft models that expressed higher levels of c-Myc, tumor growth was inhibited. Puma's Phase II ALISCA-Breast1, also referred to as study, PUMA-ALI-1201, investigates alisertib in combination with endocrine treatment consisting of either anastrozole, exemestane, letrozole, fulvestrant or tamoxifen in patients with HER2-negative hormone receptor positive recurrent or metastatic breast cancer. Patients must be chemotherapy naive in the recurrent or metastatic setting and have had previous treatment with a CDK4/6 inhibitor and have received at least 2 prior lines of endocrine therapy in the recurrent or metastatic setting to be eligible for the trial. Patients were dosed with alisertib given at either 30 milligrams, 40 milligrams or 50 milligrams BID on days 1 to 3, 8 to 10 and 15 to 17 on a 28-day cycle in combination with the endocrine therapy of investigator's choice. Patients must not have been previously treated with the endocrine treatment in the metastatic setting that will be given in combination with alisertib in the trial. The primary endpoints include objective response rates, duration of response, disease control and progression-free survival. As a secondary objective, the company is evaluating each of these efficacy endpoints within biomarker subgroups in order to determine whether any biomarker subgroup correlates with better efficacy, which might give the company the potential to focus the future clinical development of alisertib in combination with endocrine therapy for patients with HER2-negative hormone receptor-positive breast cancer in these biomarker-specific populations. Slide 25 shows the baseline characteristics for the 164 patients included in this interim analysis. As the slide shows, the majority of these patients were treated in the third line or later setting. First, discuss the safety in the trial. As previously mentioned, in previous clinical trials of alisertib, the treatment-emergent adverse events seen were those characteristic of a cell cycle inhibitor with neutropenia being the AE seen in the highest percentage. Slide 27 shows the rates of Grade 3 or 4 AEs seen in the trial. Of note, the grade 3 or higher neutropenia rate was 8% in the 30-milligram arm, 10.2% in the 40-milligram arm and 26.9% in the 50-milligram arm. It is important for investors to note that prophylactic G-CSF was not given in the study. Slide 27 also compares the Grade 3 or 4 AE rates seen in the ALISCA-Breast1 trial to those that were seen in the previously published Phase II of alisertib in HER2-negative ER-positive breast cancer that was published in JAMA Oncology in 2020, referred to as study TBCRC041. As can be seen in the slide, the rates of Grade 3 or higher neutropenia appear to be lower in the ALISCA-Breast1 trials compared to what was seen in TBCRC041. To next move to the efficacy seen in the trial. Slide 29 shows the summary of clinical benefit for the patients with at least 1 post-baseline scan or who ended treatment or died before they got a scan. As you can see in the slide, the best response was 5% in the 30-milligram arm, 20% in the 40-milligram arm and 18.4% in the 50-milligram arm. Slide 30 shows the Kaplan-Meier curve for PFS in the trial. As is seen in the slide, the median PFS of the 30-milligram arm is currently 2.04 months. The median PFS of the 40-milligram arm is 5.45 months and the median PFS of the 50-milligram arm is currently 5.59 months. We will now move to the biomarkers in the trial. Slide 32 presents the KM curve for all the patients in the trial according to c-Myc copy number, also referred to as c-Myc copy number gain. As you can see on the slide, for all of the patients in the trial for which there are tissue results, patients with c-Myc copy number of greater than 2 had a median PFS of 7.29 months versus a median PFS of 2.0 months for the patients with a c-Myc copy number equal to 2. Slide 33 presents the KM curve for all of the patients for which there are tissue results according to percent of tumor cells that are c-Myc positive. As you can see on the slide, for the patients with between 0 and 10% of the cells c-Myc positive. The median PFS was 3.06 months versus a PFS of 5.62 months for the patients with between 11% and 100% of the cells c-Myc positive. Slide 34 presents the KM curve for the 50-milligram and 40-milligram doses separately for the patients according to percent of tumor cells that are c-Myc positive. As you can see on the slide, for the 40-milligram dose, patients with between 0% and 10% of the cells c-Myc positive had a median PFS of 3.9 months versus a PFS of 5.75 months for the patients with between 11% and 100% of the tumor cells c-Myc positive. For the 50-milligram dose for patients with between 0% and 10% of the cells c-Myc positive, there was a median PFS of 3.58 months versus a PFS of 9.3 months for the patients with between 11% and 100% of the tumor cells c-Myc positive. Similar to the data from ALISCA-Lung1, we believe that these slides are suggesting that in patients with alisertib has greater efficacy in ALISCA-Breast1 in tumors where a higher percent of the tumor cells are c-Myc positive, and hence, a greater degree of c-Myc activation. Preclinically, it's been shown that alisertib inhibits c-Myc positive cells. So we believe that this increased efficacy is due to the mechanism of action of alisertib and the inhibition of the aurora kinase pathway. Slide 35 presents the KM curve for all the patients according to ESR1 mutation status. As is seen on the slide, for patients at all 3 dose groups who are ESR1 mutated as measured by ctDNA, a median PFS of 5.62 months was seen versus a PFS of 3.58 months for the people who are ESR1 wild type as measured by ctDNA. For patients at all 3 dose groups who are ESR1 mutated as measured by tissue, a median PFS of 7.23 months was seen versus a PFS of 3.71 months for patients who are ESR1 wild-type as measured by tissue. It is important for investors to remember that these patients are being treated in the third-line setting. So these patients have already received treatment with a selective endocrine receptor degrader or SERD. Since enrollment of this trial was done, while the newer oral SERDs have either been FDA approved or in later stages of clinical development, many of the patients in the ALISCA-Breast1 trial have been previously treated with the new oral SERDs. More specifically, approximately 58% of the ESR1 mutated patients in the trial were previously treated with oral SERDs, including camizestrant, elacestrant, giredestrant, imlunestrant or palazestrant. Slide 36 presents the KM curve for the 50-milligram and 40-milligram dose groups separately for patients according to ESR1 mutation status as measured by ctDNA. For patients in the 40-milligram group who were ESR1 mutated as measured by ctDNA, a median PFS of 3.7 months was seen versus a PFS of 5.75 months for the patients who are ESR1 wild type as measured by ctDNA. For patients at the 50-milligram group who were ESR1 mutated as measured by ctDNA, a median PFS of 9.3 months was seen versus a PFS of 2.76 months for the patients who were ESR1 wild-type as measured by ctDNA. Slide 37 presents the KM curve for the 50-milligram and 60-milligram ((sic) [ 40-milligram ]) dose separately for patients who are ESR1 -- according to ESR1 mutation status as measured by tissue. For the patients at the 40-milligram group who were ESR1 mutated as measured by tissue, a median PFS of 4.86 months was seen versus a PFS of 4.04 months for the patients who were ESR1 wild type as measured by tissue. For the patients at the 50-milligram group who were ESR1 mutated and measured by tissue, a median PFS has not yet been reached versus a PFS of 3.58 months for patients who were ESR1 wild-type as measured by tissue. Slide 38 presents the KM curve for all the patients according to PIK3CA mutation status. As is seen on the slide, for patients at all 3 dose groups who are PIK3CA mutated as measured by ctDNA, a median PFS of 2.1 months was seen versus a PFS of 5.45 months for patients who are PIK3CA wild-type as measured by ctDNA. For the patients at all 3 dose groups who are PIK3CA mutated as measured by tissue, a median PFS of 3.71 months was seen versus a PFS of 4.86 months for patients who are PIK3CA wild-type as measured by tissue. Slide 39 shows the KM curve for the 50-milligram and 40-milligram dose separately for patients according to PIK3CA mutation status as measured by ctDNA. For patients at the 40-milligram group who were PIK3CA mutated as measured by ctDNA, a median PFS of 3.71 months was seen versus PFS of 5.65 for patients who are PIK3CA wild-type as measured by ctDNA. For patients at the 50-milligram group who were PIK3CA mutated as measured by ctDNA, a median PFS of 3.58 months was seen versus a PFS that has not yet been reached for patients who are PIK3CA wild-type as measured by ctDNA. Based on the efficacy seen in the patients who were ESR1 mutated and PIK3CA wild type, the company conducted a subset analysis to specifically focus on these 2 subgroups. Slide 40 presents the KM curve for patients who are PIK3CA wild-type according to ESR1 mutation status. As is seen on the slide, for patients at all 3 dose groups who are PIK3CA wild-type and who had an ESR1 mutation as measured by ctDNA, a median PFS has not yet been reached versus a PFS of 3.48 months for patients who are PIK3CA wild-type and ESR1 wild-type as measured by ctDNA. For patients at all 3 dose groups who are PIK3CA wild-type and who had an ESR1 mutation as measured by tissue, a median PFS has not been reached versus a PFS of 2.79 months for patients who are PIK3CA wild-type and ESR1 wild type as measured by tissue. Slide 41 presents the KM curve according to 50-milligram and 40-milligram doses separately for the patients who are PIK3CA wild-type according to ESR1 mutation status as measured by ctDNA. For PIK3CA wild-type patients at the 40-milligram group who were ESR1 mutated as measured by ctDNA, a median PFS of 4.86 months was seen versus a PFS of 5.75 months for the patients who were ESR1 wild-type as measured by ctDNA. For PIK3CA wild-type patients at the 50-milligram group who were ESR1 mutated, the median PFS has not been reached versus a median PFS of 2.14 months in the patients who were ESR1 wild-type as measured by ctDNA. We are very pleased to see that at the 50-milligram dose group for the patients who were PIK3CA wild-type and ESR1 mutant, no patient has yet progressed, although we caution these numbers here are small and further patient follow-up is needed. Slide 42 presents the KM curve for the 50-milligram and 40-milligram dose separately for patients who are PIK3CA wild-type according to ESR1 mutation status as measured by tissue. For PIK3CA wild-type patients at the 40-milligram group who were ESR1 mutated as measured by tissue, a median PFS of 7.23 months was seen versus a PFS of 3.98 months for the patients who were ESR1 wild type as measured by tissue. For PIK3CA wild-type patients at 50 milligrams who were ESR1 mutated, the median PFS has not been reached versus a median PFS of 2.14 months in the patients who were ESR1 wild-type as measured by tissue. Again, we are very pleased to see that the 50-milligram dose group for the patients who are PIK3CA wild-type and ESR1 mutant, no patient has yet progressed, although we caution these numbers here are small and further patient follow-up is needed. As we've shown in the earlier slides, c-Myc appeared to play a role in the activity of alisertib in HER2-negative ER-positive breast cancer. And more specifically, the analysis on Slides 33 and 34 showed that alisertib had better activity in patients with a higher percent of their cells being c-Myc positive. This analysis also showed that patients with between 11% to 100% of their cells being c-Myc positive showed the best activity with alisertib. We, therefore, conducted an analysis to see whether or not c-Myc had any correlation with the activity of alisertib that we are seeing in the PIK3CA wild-type patients, the ESR1 mutated patients or the patients who are both PIK3CA wild-type and ESR1 mutated. On Slide 43, we present the data that shows the percent of c-Myc positive cells for PIK3CA wild-type ESR1 mutated and patients who are both PIK3CA wild-type and ESR1 mutated. The left-hand side of the slide presents the patients whose mutation status was determined by tissue. The right-hand side of the slide shows the patients whose mutation status was by ctDNA. As you can see on the slide, patients who are PIK3CA wild-type patients who are ESR1 mutated and patients who are both PIK3CA wild-type and ESR1 mutated appear to show an increase in the median percent of c-Myc positive cells. This is seen in both the patients where the mutation status is determined by ctDNA and in tissue. It is also seen in this analysis that a high percent of the patients who are PIK3CA wild-type who are ESR1 mutant and who are both PIK3CA wild-type and ESR1 mutant have between 11% to 100% of their cells being c-Myc positive, which is again where the best activity of alisertib has been shown to occur. We believe this analysis is suggesting that better activity being seen with alisertib in the patients who are PIK3CA wild-type, ESR1 mutated or both PIK3CA wild-type and ESR1 mutated may be due to this increased c-Myc activity as it appears to be showing that c-Myc is playing a role in driving the tumor in these subgroups of patients, which is suggestive of tumors with the aurora kinase A is activated and hence, where alisertib's mechanism of action may be playing a role. When Puma licensed alisertib, it had stated that the goal was to enroll ALISCA-Breast1 in order to perform a biomarker analysis to better understand which biomarker subgroups had the best activity and then amend the trial to focus on a more biomarker-focused population. Based on the interim data from ALISCA-Breast1, the company is going to be expanding the enrollment in the trial to obtain more data on the biomarker-focused cohorts with a focus in the patients who are PIK3CA wild-type, ESR1 mutant or both. The company anticipates that this will occur in the second half of 2026. The company also plans to present updated data on the ALISCA-Breast1 trial in the second half of 2026. Similar to the data from ALISCA-Lung1, we believe that the data generated thus far in ALISCA-Breast1 is showing that alisertib in combination with endocrine therapy appears to be active in the third-line setting and more specifically in patients who are PIK3CA wild-type, ESR1 mutant or both PIK3CA wild-type and ESR1 mutant. Similar to ALISCA-Lung1, the activity of alisertib in the trial appears to be driven by c-Myc. To our knowledge, we are not aware of any drugs that have shown this level of activity in these subgroups of patients in the third line, which we believe differentiates the drug from others in development. We believe that this activity is attributable to biomarkers that are indicative of aurora kinase pathway activation, which we believe is in line with the mechanism of action of alisertib. As we've mentioned on prior earnings calls and in response to investor questions, Puma continues to evaluate several commercial stage and development-stage drugs to potentially in-license and acquire that would allow the company to diversify itself and leverage Puma's existing R&D, regulatory or commercial infrastructure. The company will keep investors updated on this as it progresses. I will now turn the call over to Heather Blaber for an update on our marketing initiatives. Roger Storms will follow with a review of our commercial performance during the quarter. Heather Blaber: Thanks, Alan. I appreciate the opportunity to share some additional insights into our marketing strategy. The marketing team is focused on continued awareness of both clinical data for NERLYNX as well as reinforcing the continued unmet need in HER2-positive early-stage breast cancer after adjuvant therapy. We continue to invest in market research to help us understand and validate the most effective ways to communicate our data with health care professionals through both personal and nonpersonal promotion. Our strategy is focused on increasing awareness of our dual indication in HER2-positive breast cancer. We believe NERLYNX plays an important role in the early stage by reducing the risk of recurrence and in the metastatic setting by helping protect against progression. Not only do physicians who have experience with NERLYNX continue to identify appropriate patients that could benefit from additional therapy post adjuvant treatment, but we continue to adopt new prescribers year-over-year who recognize the unmet need in HER2-positive early-stage breast cancer and how NERLYNX can help their patients. In summary, we are excited and committed about the potential to engage with more oncologists and support their patients diagnosed with HER2-positive breast cancer in both the early and metastatic setting. I will now turn the call over to Roger Storms to provide an overview on the commercial performance for the first quarter. Roger Storms: Thank you, Heather, and thanks to everyone for joining our first quarter earnings call. But before I move into the commercial review, just a reminder that I'll be making forward-looking statements. The sales team remains focused on expanding overall HCP reach and frequency with a strong emphasis on driving engagement when treatment decisions are being made. Q1 2026 call activity increased 44% year-over-year and 14% quarter-over-quarter. The year-over-year and quarter-over-quarter increases are a direct result of continued emphasis put on executional excellence and increased field accountability. The commercial team continues to prioritize increasing use of NERLYNX with a main focus on patients at higher risk of recurrence. They are also dedicated to enhancing clinical education and engagement through nonpersonal promotional efforts as well as utilizing patient resources to support persistence and compliance during NERLYNX therapy. Let me now transition to some of the commercial slides where I'll provide some additional specifics around performance. Slide 3 is an illustration of our distribution model, which is broken out into the specialty pharmacy channel and the specialty distributor or in-office dispensing channel. Regarding the overall distribution of our business, in Q1 2026, about 58% of our business was purchased through the SP channel and the remaining 42% was purchased through the SD channel. We continue to see stronger growth in the SD channel, driven mainly by increased sales in the group purchasing organizations or GPO segment. Turning to Slide 4. NERLYNX net product revenue in Q1 '26 was $42 million, which represents a decrease of $17.9 million from the $59.9 million we reported in Q4 2025 and a decrease of $1.1 million from the $43.1 million we reported in Q1 of 2025. As a reminder to investors, Puma's reported NERLYNX sales include both U.S. net sales of NERLYNX and product supply revenues of NERLYNX to Puma's ex-U.S. partners. Please note that in Q1 of 2025, we reported product supply revenue to our international partners of approximately $400,000 versus the $150,000 in Q1 of 2026. Therefore, U.S. net sales of NERLYNX in Q1 2026 were $41.8 million versus the $42.7 million in Q1 of 2025. I'll provide some more details around inventory changes, and Maximo will provide some additional specifics around gross to net expenses during his update. In Q1 2026, we estimate that inventory decreased by about $7.9 million. As a comparator, we estimate that inventory increased by about $5.7 million in Q4 of 2025. Slide 5 shows Q1 2026 ex-factory bottle sales and also provides both a year-over-year and quarter-over-quarter comparison. In Q1 2026, NERLYNX ex-factory bottle sales were 2,328, which represents an approximate 29% decrease quarter-over-quarter while remaining essentially flat at 0.4% year-over-year. Let me specifically call out the inventory changes from a bottle perspective. In Q1 2026, we estimate that inventory decreased by about 439 bottles. As a comparator, we estimate that inventory increased by 343 bottles in Q4 of 2025 and decreased by 251 bottles in Q1 of 2025. Let me take a moment to provide some additional metrics regarding our first quarter performance. In Q1 2026, we saw enrollments increase by about 10% quarter-over-quarter and about 1% year-over-year. Commercial new patient starts or NRxs were even stronger, increasing by about 25% quarter-over-quarter and about 11% year-over-year. Turning to total prescriptions or TRx, we saw TRx decline about 4% quarter-over-quarter and about 1% year-over-year. Finally, let me share some specifics around commercial demand overall. In Q1 2026, we saw demand decrease by about 6% quarter-over-quarter, but increased by about 7% year-over-year. As mentioned, these dynamics are strongly influenced by SD patterns. In Q1 2026, we saw SD demand decrease by about 9% quarter-over-quarter due to Q4 buy-ins while continuing to show strong growth year-over-year at about 28%. Slide 6 highlights the quarterly adoption of dose escalation since the launch of NERLYNX. In Q1 2026, approximately 78% of patients started NERLYNX at a reduced dose. This is higher compared to the 75% we reported in Q4 of 2025. Continued messaging and -- continued messaging and adoption of dose escalation remains an important commercial priority. We believe dose escalation, coupled with patient education resources will give patients better support throughout their NERLYNX therapy and ultimately help to reduce the risk of recurrence. Slide 7 highlights the strategic collaborations we formed across the globe. Most recently, in Q1 2026, NERLYNX was launched in Thailand, also in the extended adjuvant setting. We really appreciate the excellent work being done by our partners around the world and look forward to supporting their continued success moving forward. I'll close by sharing my sincere appreciation for the entire Puma team and their steadfast commitment to supporting patients and families affected by breast cancer. This disease is truly devastating. And while meaningful progress has been made, we know there's still important work ahead and even more we can accomplish together. I will now turn the call over to Maximo for a review of our financial results. Maximo F. Nougues: Thanks, Roger. I will begin with a brief summary of our financial results for the first quarter of 2026. Please note that I will make comparisons to Q4 2025, which we believe is a better indication of our progress as a commercial company than year-over-year comparisons. For more information, I recommend that you refer to our first quarter 2026 10-Q, which will be filed today and includes our consolidated financial statements. For the first quarter of 2026, we reported a net loss based on GAAP of $3.8 million or $0.07 per share. This compares to net income in Q4 2025 of $13.4 million or $0.27 per basic share and $0.26 per diluted share. the fourth quarter of 2025 included a net change in valuation allowance that unfavorably impacted net income by $3.2 million. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation expense, we reported a net loss of $1.9 million or $0.04 per share for the first quarter of 2026. Gross revenue from NERLYNX sales was $57.5 million in Q1 2026 and $82.9 million in Q4 2025. As Alan mentioned it, net product revenue from NERLYNX sales was $42 million, a decrease from the $59.9 million reported in Q4 2025 and the $43.1 million reported in Q1 2025. A reminder to investors, Puma reported NERLYNX sales include both U.S. net sales of NERLYNX and product supply revenues of NERLYNX to Puma ex-U.S. partners. Please note that in Q1 2026, we reported product supply revenue to our international partners of about $0.1 million. Therefore, U.S. net sales of NERLYNX in Q1 2026 were $41.9 million versus $55.2 million in Q4 2025. The decrease in Q1 2026 versus Q4 2025 was driven by lower demand, inventory reduction in Q1 of about $7.9 million versus inventory increase of $5.7 million in Q4 2025. Royalty revenue totaled $2.8 million in the first quarter of 2026 compared to $15.6 million in Q4 2025. The decline in royalty revenue reflects a large Q4 2025 shipment to our partner in China. Our gross to net adjustment in Q1 2026 was about 27% and 27.8% in Q4 2025. The lower gross to net adjustment was driven mostly by lower government chargebacks. Cost of sales for Q1 2026 was $10.4 million and includes $2.4 million for the amortization of intangible assets related to our neratinib license. Cost of sales for Q4 2025 was $23.2 million. Going forward, we will continue to recognize amortization of milestones to the licensor of about $2.4 million per quarter as cost of sales. For fiscal year 2026, Puma anticipates that net NERLYNX product revenue will be in the range of $202 million to $206 million, higher than our prior guidance of $194 million to $198 million. We also anticipate that our gross to net adjustment for the full year 2026 will be between 26.5% and 27.5%, significantly higher than 2025 as we expect higher government chargebacks and Medicare and Medicaid share to maintain the levels we saw in the last 2 quarters of 2025. In addition, for fiscal year 2025 (sic) [ 2026 ]), we anticipate receiving royalties from our partners around the world in the range of $20 million to $23 million. We don't expect any license revenue in 2025 ((sic) [ 2026 ]). We also expect that net income for the full year will be in the range of $16 million to $19 million, also higher than our prior guidance of $10 million to $13 million. Current guidance does not include any potential release of any additional tax asset valuation allowance in our net income estimate. The company is reviewing its deferred tax assets as part of its ongoing tax valuation analysis has not yet determined whether any adjustments would be required, if so, the potential timing or size of such an adjustment. We will continue to keep investors updated on this as it progresses. This time, we do not believe that tariffs imposed or proposed to be imposed by the United States, particularly with other countries, will have a material impact on our product cost or cost or results of operations. However, shifts in the trade policies in the United States and other countries have been rapidly evolving and are difficult to predict. As a point of reference, our manufacturing product cost accounts for a mid- to high single-digit percentage of our total cost of goods sold. We anticipate that for Q2 2026, NERLYNX product revenue will be in the range of $50 million to $52 million. We expect Q2 royalties revenues will be in the range of $2 million to $3 million and no license revenue. We further estimate that the gross to net adjustment in Q2 2026 will be approximately 27% to 28%. Puma anticipates a Q2 net income between $2 million and $4 million. SG&A expenses were $18.4 million in the first quarter of 2026, unchanged from the fourth quarter of 2025. SG&A expenses include noncash charges for stock-based compensation of $1.1 million for Q1 2026 and $1 million in Q4 2025. Research and development expenses were $19.8 million in the first quarter of 2026 and $16.8 million in Q4 2025. R&D expenses included noncash charges for stock-based compensation of $0.8 million in Q1 2026 and $0.7 million in Q4 2025. On the expense side, Puma anticipates higher total operating expenses in 2026 compared to 2025. More specifically, we anticipate SG&A expenses to increase by 1% to 2% and R&D expenses to increase by 34% to 37% year-over-year. The higher R&D expense -- the higher increase in R&D expense is driven by the progress of our clinical trials. In the first quarter of 2026, Puma reported cash burn of approximately $4 million. This compares to cash burn of approximately $3.1 million in Q4. Please note that during Q1 2026, we made our eighth quarterly principal loan payment of $11.1 million related to our obligation with Ethereum. Furthermore, after quarter end, we made our final payment to Ethereum and as a result, Puma is now debt-free. On March 31, 2026, we had approximately $101.5 million in cash, cash equivalents and marketable securities versus about $97.5 million at year-end 2025. Our accounts receivable balance was $26.3 million. Our accounts receivables terms range between 10 and 68 days, while our days sales outstandings are about 46 days. We estimate that as of March 31, 2026, our distribution network maintained approximately 3 weeks of inventory. Overall, we continue to deploy our financial resources to focus on the commercial NERLYNX [indiscernible] controlling our expenses. Alan Auerbach: Thanks, Maximo. On past earnings calls, we have stressed that Puma's senior management in cooperation with the Board of Directors continues to remain focused on NERLYNX sales trends and recognizes its fiscal responsibility to shareholders to continue to maintain positive net income. We believe that this focus has contributed to our commercial execution in a positive way as according to our current projections, 2026 will mark the second year-over-year demand increase for NERLYNX in the United States and the first time in the history of the launch of NERLYNX in the U.S. that we have seen 2 positive consecutive year-over-year increases in demand. We are pleased to report this demand-driven growth in NERLYNX sales in the first quarter of 2026 which has been driven by better-than-expected enrollments and better-than-expected new patient starts as well as strong increases in sales to our specialty distributors. In addition, we believe that the positive net income that the company is guiding to for full year 2026 has resulted from the continued financial discipline across the company over the last few years. The company remains committed to continuing to achieve this positive net income, and we'll continue to reduce expenses if needed in order to achieve this. We look forward to updating investors on this in the future. There continues to remain a significant unmet need for patients battling breast cancer, lung cancer and other solid tumors. We at Puma are committed and passionate about finding more effective ways and helping these patients during their journey, and we will continue to strive to achieve that goal. This concludes today's presentation. We will now turn the floor back to the operator for Q&A. Operator? Operator: [Operator Instructions] And the first question comes from the line of Salvatore Caruso with TD Cowen. Salvatore Caruso: Congrats on the data. I'm looking forward to more mature data sets. This is on behalf of Marc Frahm at TD Cowen. Two quick questions. The first one, given the emerging signal in c-Myc positive patients in both lung and breast that you presented today, how are you thinking about incorporating c-Myc biology going forward into future trial designs? Do you see, like, for example, in your registrational strategy, it evolving to some sort of biomarker enriched program with maybe a more narrow patient selection? And then I'll ask my second one after. Alan Auerbach: Yes, this is Alan. So you're absolutely right. We are seeing a much better signal in the patients where there's a signal of c-Myc positivity, if you will, using that in a broad sense. In small cell lung, you don't have the benefit of a lot of the kind of predetermined disease-driven categories like you do in ER-positive breast. So that likely may require some form of a c-Myc positive. Now is that going to be like a c-Myc positive, which includes copy number or percent of cells. I think we need a little more data to say that. I think we're hopeful that as we increase dose, we may get in the overall population, we may continue to see that signal in c-Myc. But in the overall population, we may see it as well. So we may be able to go for something a little more general. But I think likely that would -- if we went for a biomarker focused in small cell lung, it would be something that's probably going to be inclusive of a number of different categories of c-Myc positivity, if you will. Now in ER-positive breast, HER2-negative ER-positive breast, we've got a very interesting situation because you're absolutely right, it is a c-Myc driven signal. But for whatever reason, we're seeing an enrichment of that signal in the patients who are ESR1 mutated and PIK3CA or PIK3CA wild-type or both, right? So if I remember this correctly, ESR1 wild type is probably 50% to 60% of the patients. I'm sorry, PIK3CA wild-type is probably 50% to 60% of the patients. ESR1 mutated is about 40% to 50%. So that's quite a big number. Now if we look at the patients that are in the both category, which is where we're seeing, especially at the 50-milligram dose, really compelling activity with no patients having progressed, then that's about 20% of the patients there. So it's a 40,000 patient population. If that 8,000 patient population is the one that we focus on, I'm totally okay with that. It could be a fantastic benefit. So I think for right now, it looks like in ER-positive breast, we have the benefit of just having enrichment of c-Myc in categories where the disease is -- it's already being -- the biomarker, if you will, is already being determined. They already know post-CDK4/6 standard of care is to do either tissue-based or ctDNA or both to see are you PIK3CA wild-type, PIK3CA mutated, are you ESR1 wild type or ESR1 mutated. So we kind of have the benefit of that already being done for us. So I think in ER-positive breast, that's probably the path we're going down. Obviously, we got to get more data, but I think that's kind of the initial thoughts on that. Salvatore Caruso: Awesome. That helps a lot. And just, like, a quick second question. Looking ahead to the next updates in both programs, can you maybe help ballpark for us what specific outcomes would give you guys confidence to advance or keep progressing these programs or advance to the next stage of development? Alan Auerbach: Yes. So in terms of investing in the next stage of development, we're all systems go on both. At this juncture, I don't see any data that would tell us we're not continuing this into Phase III. I think the question is just what's the design? And as you referenced in your earlier question, what's the exact patient population to focus on. So I think what we're looking for is going to be more patient numbers and then more duration. Operator: This concludes our question-and-answer session. And I would like to turn the conference back over to Mariann for any closing remarks. Mariann Ohanesian: Thank you all for joining us today. As a reminder, this call may be accessed via replay of the webcast at pumabiotechnology.com beginning later today. Have a good evening. Operator: Thank you, ladies and gentlemen. Thank you for participating in today's conference call. This concludes our program. Everyone, have a great day, and you may now disconnect.
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