Protagonist Therapeutics, Inc. (PTGX) Earnings Call Transcript & Summary

Good day, and welcome to the PN-943 Phase II data readout conference call. [Operator Instructions] Please note this event is being recorded. I would like to turn the conference over to Jami Taylor, Vice President of Corporate Affairs. Please go ahead.

Thank you, Matt. Good afternoon, everyone, and welcome to the Protagonist Therapeutics conference call and webcast to discuss top line data from the Phase II idea of study of PN-943 in moderate-to-severe ulcerative colitis. Turning now to Slide 2. We are joined today by Dinesh Patel, Ph.D., President and Chief Executive Officer; Scott Plevy, MD, Executive Vice President and Head of Gastroenterology at Protagonist; and Bruce Sands, MD MS; the Dr. Burrill B. Crohn, Professor of Medicine of the Icahn School of Medicine at Mount Sinai. Dr. Sands is a principal investigator of the Phase II IDEAL study, the topic of our discussion today and a consultant to Protagonist. Also with us on the call today are David Liu, Ph.D., Chief R&D Strategy Officer; Suneel Gupta, Chief Development Officer; Sam Saks, MD, Clinical Development Adviser; Paula O'Connor, MD, Senior Vice President of Clinical Development; and Asif Ali, Protagonist, Chief Financial Officer. Earlier today, we issued a press release outlining new data from the Phase II IDEAL study of PN-943 in moderate to severe ulcerative colitis. This release as well as this webcast presentation will be available in the Investors and News section on our website at protagonist-inc.com. The slides for this presentation today are also posted to our website. We'll now turn to Slide 3 in the presentation deck. Before we begin our formal comments, I'll remind you that various remarks we will make today constitute forward-looking statements for purposes of federal securities laws, they include statements about our plans and expectations regarding various programs. Actual results may differ materially from those indicated by our forward-looking statements. So we encourage you to review the Risk Factors section of our most recent periodic report filed with the SEC. Next slide, please. I'll now turn the call over to Dinesh Patel, President and CEO of Protagonist. Dinesh?

Thank you, Jami, and thank you all for joining us today. The purpose of today's call is to share the top line data from the IDEAL Phase II study of PN-943. As per our prior guidance of doing this sometime in the first half of the second quarter, and to announce our ambitious and well-justified future plans based on the positive results that we have obtained from this study. It's a momentous day indeed, not just for Protagonist but also for the broader pharmaceutical community, for clinicians and especially for patients. The severity of unmet need in ulcerative colitis, or UC, persist even today despite the introduction of new therapeutic agents over the course of recent decades. Today's announcement represents what we consider could be a leap forward in the potential treatment paradigm for UC on multiple levels. At the outset of our work in UC, we sought to develop what we loosely refer to as an oral ENTYVIO as a safe and effective therapeutic option for patients. Specifically, we refer to PN-943, an orally administered and gut-restricted peptidic entity working through blocking alpha-4-beta-7 integrin, a biological target with robust clinical as well as commercial validation in the arena of inflammatory bowel disease or IBD. Today, the Protagonist team is pleased to announce the results from the Phase II IDEAL study with PN-943 that places us closer than ever before towards achieving this ultimate goal. I'm glad to report that we have now successfully achieved the clinical proof of concept for an oral gut-restricted approach for ulcerative colitis via blockade of the integrin pathway. As noted in our press release, we look forward to expeditiously advancing PN-943 in a Phase III registration study, pending regulatory guidance. This decision is based on the results that the 150-milligram twice daily dose of PN-943 has been found to be both safe and effective and showed efficacy levels similar to vedolizumab in similar studies. What further assures us is the strong concordance we have observed between the primary endpoint of clinical remission, and various secondary endpoints, including histological remission and endoscopic improvements. We believe the results of the IDEAL study may be paradigm-shifting and of broad scientific relevance in understanding IBD pathogenesis and gut-restricted drug development via intervention of the integrin MAdCAM pathway. Based on its convenience of oral administration, the increased optionality of combination therapy that comes with an oral drug and the favorable efficacy and safety results observed to date, we believe that PN-943 has the potential to become a first-in-class foundational oral medicine for individuals living with moderate to severe ulcerative colitis. There are more than 700,000 individuals living with ulcerative colitis in the U.S. alone, and many are not well served by today's treatment options. Current therapies have important limitations and liabilities, including many that require burdensome injectable routes of administration. We believe that PN-943, as an oral therapeutic candidate with a potentially highly favorable efficacy and safety profile, has the potential to provide a significant new treatment option to the UC community. And we believe that our approach may have tremendous commercial opportunity. With that, now let me turn it over to Dr. Scott Plevy, our Executive Vice President and Therapeutic Head of Gastroenterology who will walk us through a top line summary of the Phase II data. Scott?

Thanks, Dinesh. It is my pleasure, and I'm very excited to share these data from the Phase II IDEAL study of PN-943 in moderate to severe ulcerative colitis. We'll begin on Slide 5, and I'd like to start by level setting. As a reminder, in our previous small Phase II PROPEL study with the first generation oral peptide, alpha-4-beta-7 antagonist, PTG-100, we reported a delta versus placebo for clinical remission up 11% at the 900-milligram QD dose supported by a dose-dependent increase in histological remission in this study These results compare favorably to results from the registrational vedolizumab trial as well as studies from other approved drugs in ulcerative colitis, including tofacitinib and ozanimod. I'll ask you to remember this important point. See, low dose of PN-943 of 150 milligrams BID in the IDEAL study was modeled to replicate the 900-milligram QD dose of PTG-100 as PN-943 is 3x more potent compound. Slide 6, please. Now for a successful Phase II proof-of-concept study, there are three major goals. Number one, to make a decisive decision, a go, no-go decision to move into a large Phase III registrational program based on efficacy and safety; two, to execute the Phase II study so that the results can power registrational endpoints in Phase III; and three, to drive critical information on dosing for Phase III. On this slide, we give three examples of successes in this Phase II to Phase III transition in ulcerative colitis. For vedolizumab, ozanimod and recently upadacitinib, Phase II deltas for clinical remission of 10% to 20% versus placebo were used to initiate and power successful Phase III programs. We will now show you data from IDEAL that unequivocally supports all of these metrics for advancement into Phase III with PN-943. Slide 7, please. To review the study design, IDEAL is a Phase II trial of PN-943 that was conducted at 122 sites. In the 12-week double-blind placebo-controlled treatment period, which we'll focus on today, participants were randomized in a 1:1:1 ratio to PN-943 at 450 milligrams BID, 150 milligrams BID, or placebo BID. Key inclusion criteria were moderate to severe ulcerative colitis, defined as a three-component Mayo score comprised of stool frequency score, rectal bleeding score and centrally read Mayo endoscopic score of 5 to 9 and prior inadequate response to at least one conventional medical therapy or a biologic, excluding vedolizumab. The primary outcome measure, which is on the bottom of the slide, is the proportion of subjects receiving three PN-943, 450 milligrams BID, achieving clinical remission defined as stool frequency score of less than or equal to 1; rectal bleeding score of 0; Mayo endoscopic score of less than or equal to 1 at week 12 compared to placebo. The secondary outcome measures include clinical remission at the 150-milligram BID dose and then comparison to both doses for endoscopic and histologic improvement and remission. 358 patients were -- subjects were screened in this study, of which 169 were randomized between June 20, 2020, and January 19, 2022. As we previously disclosed, sites in Russia and Ukraine were closed. Patients from these countries who completed the week 12 evaluation are included what we call, and I'll keep on referring to, as our modified intention to treat analysis, or mITT, which comprises 159 subjects. This, at that time, was prespecified as our primary population for efficacy analysis. Slide 8, please. The overall geographic distribution of patients was predominantly from Eastern Europe, reflecting the consequence predominance of bio-naive patients that I'll show you on the next slide. Slide 9, please. Looking at baseline demographics and disease characteristic results, 86% of the subjects enrolled in the study were naive to biologic therapies. There were qualitative imbalances amongst the treatment groups for baseline biologic and corticosteroid use, neither of which affect the overall interpretation of efficacy. Slide 10, please. Now we're getting into the important data results. Although the prespecified primary endpoint, clinical remission 450 milligrams BID versus placebo, was not met and there was minimal differentiation from placebo in this high-dose group, a consistent treatment effect was observed in the low-dose group 150 milligrams BID versus placebo across multiple endpoints. Shown on the left side of this slide, in the modified intention to treat, or mITT group, the placebo clinical remission rate was 14.5%, which was slightly higher than we predicted, but is consistent with most expectations in the predominant biologic-naive population. For clinical remission at the 150-milligram BID dose is the mITT population, an absolute remission rate of 27.5% was seen compared to this 14.5% in the placebo group, for a delta of 13% and the p-value of 0.08. On the right side of this slide, we show you that in the bio-naive population, which again was predominant in this study, an absolute remission rate of 30.2% was seen at the 150-milligram BID dose with a statistically significant delta of 16.2% versus placebo. Slide 11, please. Moving to key secondary outcome measures, we'll start with histology. This is an important correlative endpoint as it is a quantitative measure which is centrally read and completely independent of the Mayo score components. For histologic remission in the modified intent-to-treat population, there is a 23% delta for the 150-milligram treatment group versus placebo with a significant p-value. For histologic improvement, there is a 20% delta for 150 milligrams versus placebo with again, a significant p-value. Let's go to Slide 12. On Slide 12, here are the secondary endpoints for the centrally read endoscopic results in the mITT population. Starting on the right, endoscopic improvement was defined as a Mayo endoscopic score of 0 or 1 at week 12. Of note, some publications define this as endoscopic remission. In this analysis, we see a 26.7% difference in endoscopic improvement between 150 milligrams BID and placebo with a highly significant p-value. On the right-hand side of the slide, we look at a very stringent definition of endoscopic remission of a Mayo endoscopic score of 0 at week 12. Here, we see a notable numeric difference favoring 150 milligrams over placebo that did not reach statistical significance. Slide 13, please. To summarize our efficacy results, PN-943 at 150 milligrams BID demonstrated concordant treatment effects across multiple key primary and secondary endpoints with statistically significant differences in clinical remission in the bio-naive population as well as histologic remission and improvement as well as endoscopic improvement in the modified intent-to-treat analysis. Comparing our results to the induction data for vedolizumab in the registrational trial for bio-naive patients, we conclude that we are well within the vicinity of vedolizumab-like efficacy in an oral drug as we plan for Phase III. There are many caveats of this comparison in that our primary endpoint was at week 12, while vedolizumab was at week 6. Also, though, vedolizumab used a more lenient definition of remission, where a rectal bleeding score of 1 could be considered remission as well as the presence of friability on endoscopy. Overall, we find our efficacy results to be highly encouraging. Based on these robust and concordant clinical histologic and endoscopic outcomes, we are excited to rapidly advance PN-943 into Phase III registrational studies, and we have found our dose of 150 milligrams BID. Slide 14, please. That's the safety component -- the efficacy component. Now let's move on to a top line summary of our safety analysis. There were no drug discontinuations in either treatment arms in either treatment arm related to adverse events, which were infrequent. There were no serious adverse events that were related to drug. The safety signal was overall similar for the 150-milligram BID dose group compared to placebo. On the right-hand side of this slide, I want to comment on frequent treatment emergent adverse events that occur in greater than 10% for the infection and infestation category. This is a bit of an eye chart. But here, there is a potential signal for increased upper respiratory and mucosal infections in the ineffective 450-milligram BID treatment group, which for efficacy reasons will not be moving forward. We believe that 150 milligrams BID is a safe dose to study in registrational studies. The take-home message is that adverse events at 150 milligrams BID are infrequent and have not affected dosing in these patients. We believe this is a safe dose to study in Phase III. Furthermore, we believe that the favorable safety profile that we have seen with PN-943 is an important advantage with our approach. Safety is an extremely important consideration in the treatment of ulcerative colitis where a chronic disease where patients require many years of treatment, and we believe our safety profile may be a key point of differentiation to other available drugs. Slide 15, please. On this slide, we are going to take you through our data on PK and receptor occupancy. On the left side of this slide, we show dose-dependent increase in serum levels of PN-943, noting that PN-943 is minimally absorbed. On the right side, we show peripheral blood T cell alpha-4-beta-7 receptor occupancy. There is a general trend towards slightly higher receptor occupancy at the higher dose with large and overlapping error bars consistent with wide inter-patient variation. Interestingly, receptor occupancy was in the 30% to 40% range for the effective 150-milligram BID group. These results demonstrate that for the gut-restricted locally acting mechanism of integrin blockade of PN-943, there are no correlations between clinical efficacy and dose-related serum PK or blood T cell receptor occupancy. Next slide, please. So next, let's review our dose response results that we just presented to you. In the IDEAL study, the 150-milligram BID dose of PN-943 was superior to placebo across all measures. By contrast, the higher 450-milligram BID dose showed limited effectiveness, roughly comparable to placebo. An inverse dose response or bell-shaped dose response in Phase II ulcerative colitis studies has actually been a frequent occurrence across multiple therapies that block the alpha-4-beta-7 integrin MAdCAM pathway as well as anti-cytokine based therapeutics such as the IL-23 pathway. This phenomenon has actually been observed as early as 1997 in the original Remicade Phase II Crohn's disease study, but still not fully understood mechanistically. Decisions were justifiably made to move into Phase III trials based on the identification of effective dose from these Phase II programs. Specifically, this has been observed with antibodies targeting anti-alpha-4-beta-7 integrin such as vedolizumab and etrolizumab and one that targets the counter-receptor MAdCAM-1 ontamalimab. Furthermore, the anti-IL-23 antibody, mirikizumab, also exhibited the bell-shaped response in Phase II. One possible scientific explanation is based on the role of regulatory T cells that dampen inflammatory responses. In fact, the authors of two publications for etrolizumab and ontamalimab have specifically described Treg involvement as a potential biologic mechanism to explain the observed bell shape responses seen in Phase II. In chronic inflammatory diseases like UC, the objective is to block inflammatory affected T cells but not anti-inflammatory Treg function. Slide 17, please. To illustrate specific examples, I'm showing you a recently published exposure-response relationship between serum vedolizumab levels and clinical remission from the pivotal Phase III programs in Crohn's disease and ulcerative colitis. In large numbers of samples, these data show that there are, in fact, diminishing returns with greater drug exposure in terms of clinical efficacy. In essence, what we're seeing at high serum concentrations of vedolizumab, a bell-shaped exposure response curve. In the same study, the investigators also demonstrate that T regulatory cells are less sensitive to the effects of inhibitors of the alpha-4-beta-7 integrin MAdCAM pathway suggesting that higher drug concentrations will begin to block these anti-inflammatory Treg functions. Importantly, the confluence of data and information suggests that PN-943 is uniquely active in the local GI tissue. And it's interesting to speculate that local concentrations may affect activation, trafficking of inflammatory cells and at higher doses, immunoregulatory cells as well. Next slide, please. Here's another example of a dose response in Phase II that was advanced into Phase III. These are results from an extensive dose-finding Phase II study of the anti-MadCAM-1 antibody ontamalimab in ulcerative colitis showing a clear bell-shaped dose response. Next slide. On Slide 19, here is a bell-shaped dose response curve determined in the Phase II study of the anti-IL-23 antibody mirikizumab. Notably, Lilly, who makes mirikizumab, recently reported positive Phase III data in ulcerative colitis, achieving the primary endpoint of clinical remission in all key secondary endpoints with statistical significance. In conclusion, the history of the IBD field illustrated by the data I just presented gives us confidence that our demonstration of unequivocal clinical efficacy of PN-943 at the 150-milligram BID dose is a robust signal for advancement into Phase III. Slide 20, please. Let me make a few preliminary conclusions here and begin to discuss next steps. PN-943 at 150 milligrams BID appears to be a safe and effective dose. There was 27.5% absolute clinical remission in this group versus 14.5% in placebo for a delta of 13% in our modified intent-to-treat analysis. There was a 16% delta in the bio-naive population, which was statistically significant. There was strong concordance with efficacy across multiple key secondary endpoints with statistically significant differences in histologic remission and improvement as well as endoscopic improvement at the 150-milligram BID dose. This data serves as confirmation of the clinical effect with the bioequivalent dose of PTG-100, 900 milligrams QD in PROPEL. And essentially, we have shown that the bioequivalent dose PN-943 of 150 milligrams BID is clinically effective in two separate human experiments now. Taken together, these results show that PN-943 exerts a gut-restricted mechanism of action in the local tissue environment and the data is confirmatory of our original TPP of vedolizumab in a pill-like efficacy. The safety analysis was similar for the 150-milligram BID dose of PN-943 versus the placebo group. There was not a correlation between clinical efficacy for the gut-restricted PN-943 and blood PK as well as blood T cell receptor occupancy. We had demonstrated an inverse dose response consistent with several other modalities in the integrin pathway as well as anti-cytokine pathways. In final conclusion, the IDEAL study supports further development of PN-943 in UC registrational trials. I would like to finally comment that as a long-time researcher in gastroenterology drug development and as a clinician, I am extremely enthusiastic for these impactful study results. And my excitement is unqualified to move PN-943 forward as a much-needed oral therapy for IBD patients. At this point, it is my great pleasure to introduce my colleague, Dr. Bruce Sands from Mount Sinai, who is a leading expert in the IBD field and someone who is well positioned to comment further on what we have presented today and put this in the context of unmet needs in ulcerative colitis. Bruce?

Yes, Scott. Thank you very much. It's a pleasure to be here. And I think it's worth sort of just looking backward at the journey that we've been through in treating our patients with ulcerative colitis. If you think about the days when I was training in the '80s and '90s, really, we had conventional medications. We had five aminosalicylates. We know they work fine for patients with mild to moderate UC, but there's so many patients who, in actuality, don't achieve mucosal healing on those agents and lose response. We know the downfall of steroids and their side effects. We know that the [ biopurins ] are largely not very effective in ulcerative colitis and had a great number of side effects, including malignancy. And so obviously, the field was very happy when we had biologic therapies, namely the anti-TNF, which clearly brought the field forward for the treatment of patients with moderate to severe UC. But then the field also recognized a few things about these agents, their safety profile being a little bit off putting to both clinicians and patients with risk of malignancy and infection certainly; loss of response because of immunogenicity over time; the need for some patients, at least for therapeutic drug monitoring to adjust dosing and lots of complexity and explaining all that to patients. Subsequent iterations of biologics with other mechanisms really did present a lot of progress. And namely with ENTYVIO, we finally had a safer biologic therapy, maybe not quite the equal efficacy of anti-TNF although in ulcerative colitis when compared to HUMIRA, ENTYVIO seemed to be superior to HUMIRA in the VARSITY study that we published just a couple of years ago and clearly has a better safety profile, but still suffers from the need for parenteral dosing. We have STELARA, of course, that's also parenterally dosed, seems to have a good safety profile. We have tofacitinib, XELJANZ, and that has black box warnings. And I would note that all these agents really do not have effect sizes that exceed 10% to 15%. By and large, we're seeing these sorts of effect sizes in approvable drugs. More recently, of course, we have the example of RINVOQ just approved and that is more effective than any of these agents, but also bears this black box warning. And finally, another oral therapy, we have ozanimod or ZEPOSIA. And that would seem to be a somewhat safer oral agent. It does in a different mechanism of action affect trafficking. But it still comes with a lot of safety baggage in terms of cardiac conduction risk, use in older patients, drug interactions that clearly people have to be aware of and very important in our ulcerative colitis patients not clear safety in women who wish to become pregnant because we have a younger patient population. So the way I'd summarize it is the agents that are -- have the convenience of oral dosing, by and large don't have the safety profile that we would like and what we most like is the safety profile of ENTYVIO. So I think there really is an important niche for -- in our armamentarium for an agent that looks like the safety profile of ENTYVIO but can be dosed effectively orally. So when I look at the data from the IDEAL study, I note a few things. One is it, to me, seems to replicate the data from the PROPEL study. So we now have two proof of principles, demonstrating that this orally dosed agent can achieve the outcomes that we expect in terms of efficacy. There seems to be good safety. We're seeing effect sizes that really seem quite similar to ENTYVIO. And we're seeing the convenience of oral dosing. I find it believable that the lower dose is, the more effective dose. Scott outlined for you very nicely all the different agents that we've explored over the years that seem to have a bell-shaped dose response curve and a plausible immunologic explanation for this. In fact, I think, Scott, you may have missed one, which was the example of abatacept, a completely different mechanism, which really also seem to have lesser efficacy and didn't seem to work. And again, the explanation was potentially differentially affecting T regulatory cells that could down-regulate inflammation. So I think when I put it all together, I'm also enthusiastic about moving this forward into the next phase of study and understanding that you found an effective dose that looks very much like ENTYVIO, but is orally dosed and also seems to be quite safe. So from all these perspectives, I think this could be a very important contribution to the treatment of patients with ulcerative colitis. And I'll stop there and pause.

Thank you, Bruce, for that excellent summary and overview. This is Dinesh Patel again. So thanks for putting things in perspective both for us and everyone else on this call. So in closing, I want to emphasize how pleased we are with the outcome of this Phase II dose-finding study with PN-943. Turning to Slide #22. So to summarize the points that have already been made here today. First and foremost, we believe we have oral ENTYVIO-like efficacy in hand. And second, we believe we are well justified to move forward with a Phase III registrational study. Third, Protagonist, as a company, will continue to innovate novel medicine to address unmet need of patients driving the advancement of paradigm shifting, cutting-edge science and leading the development of first-in-class oral drugs for IBD with clinically proven and well-established biological targets like alpha-4-beta-7 integrin and also Interleukin-23. I'll also add that what we have announced today is further validation of our proprietary peptide technology platform. This platform and the experienced R&D team that innovates it and develops it have proven to be among the most prolific drug discoverers in this industry today. We now have, as a company, three different maturing assets, all emerging from our platform, two of which are fully owned by us, and the third one is partnered with Janssen. The hepcidin mimetic Rusfertide has moved into a registrational study for polycythemia vera and the oral gut-restricted integrin blocker, PN-943, as we are announcing today, we intend to move it into a Phase III registrational study for ulcerative colitis after our dialogue with the regulatory agencies. And finally, the oral IL-23 asset, PN-235 is partnered with Janssen, and they are currently evaluating it into a 240-patient Phase IIb psoriasis study. As we prepare now for the Phase III study with PN-943, we will expeditiously assess, determine and pursue the best of many options that are available to us to support the financing of this offer -- of this effort, including potential partnerships and collaborations. Our cash position remains strong with cash and cash equivalent securities totaling $305 million as of March 31 of this year. In addition, in April this month, we received a $25 million milestone payment from Janssen Biotech in connection with the initiation of the Phase II trial evaluating 235 psoriasis. So in closing, we are sincerely grateful to the clinical investigators who have participated in this study and to the patients who have made this scientific insights and this outcome possible. I want to extend my personal thanks to the truly world-class drug development and discovery team at Protagonist and more broadly to all those who have shared and supported our vision for a safe and effective oral therapeutic agent that would ultimately transform the treatment landscape for IBD. We are committed to the mission of --, impacting and significantly improving the quality of lives of those individuals who can benefit from an approved therapy such as PN-943. And the results we have shared today further strengthens both our conviction and commitment. So this now concludes our formal remarks, and we will now open the line for questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Anupam Rama with JPMorgan.

Just two quick ones for me. So can you remind us of the rationale for dose selection criteria here for Phase II? Why did you choose 450 mg at the higher end? I know you talked about that -- the rationale for inverse dose response, but how do you know that you're not leaving some efficacy on the table with the dose kind of in between 150 and 450? And do you think you'll study multiple doses in Phase III? And then, Dinesh, just a quick clarification point on your final closing comments. To be clear, you are going to be looking for a partner to help potentially fund a registration study? Or would you be willing to take this on yourself as well?

Thanks, Anupam. Both are great questions. First of all, in terms of the rationale for 150 BID versus 450 BID, the thought process was that 150 BID, as Scott explained, is kind of equivalent to the 900 mg effective dose of the first-generation drug 100. And then the question remained, hey, could we achieve higher efficacy by going to higher doses? And today, we know that, that will not be the case if you went threefold higher. Now if there is a sweet spot in between or at a slightly lower dose, all that remains to be seen and those could be the subject matter of future studies. But right now, as they say, the bird in hand is the 150 mg BID dose. As I and Scott and Bruce have narrated, we believe that we are staring at ENTYVIO-like efficacy with an oral alternative. So the intent would be to run towards the Phase III registration study as fast as we can with the 150 mg BID dosing. And as far as the financing is concerned, keep in mind that we have constantly provided guidance that we are ready for a successful outcome in terms of the initiation activities of a Phase III study, largely the CMC-related activities. So in the short term, there is no interruption or any change in plans. We move forward. And over the course of time, we will obviously be evaluating all different non-dilutive as well as the regular financing options that may come our way.

Our next question will come from Chris Howerton with Jefferies.

This is [ Combi ] on for Chris. A couple of questions from me. Could you identify any reasons for the high placebo remission rate? And can you remind us of the powering assumptions heading into the trial for the different dosing regimens? And then second question, mechanistically, it was hypothesized that dosing at levels greater than receptor saturation may be required for clinical efficacy. How do these results affect that hypothesis? And then as a last question, are any of the next steps, Phase III development or meeting with the FDA, capital dependent?

So, all very good questions. So let's get to your first question about the slightly higher placebo with Scott Plevy?

Yes. So we saw a placebo remission rate of 14.5%. We were conceiving and hoping that it would be somewhere in the range of 10% to 12%, and I think that was a general consensus amongst KOLs in the field. Having said that, nobody is really going to bat an eye in terms of KOLs in the field and clinical trials at a 14.5% placebo remission rate in a bio-naive population. Why exactly it was a little higher than we expected to see? My prediction is as we dive deeper and dice and slice up the data, there's not going to be a very clear reason for it. But I would think of this more within the range of what we would expect to see in the bio-naive population. And consistent with some of the recent clinical trials in UC in bio-naive patients rather than something that stands as an extreme outlier.

Very good. And Combi, sorry, can you repeat about your question about the blood receptor occupancy?

Yes. I mean, mechanistically, it was hypothesized that dosing at levels greater than receptor saturation may be required for clinical efficacy. So how do these results affect the hypothesis?

Yes. So we'll have David Liu take that question.

Combi, the assumption that you just made was really based on a discussion we've been having with everyone about the systemic drugs that for them, the super saturation is required at trough levels that were far and above that, that was required for minimal 100% receptor occupancy. So that was a condition we felt that was an important to be understanding how one thinks about receptor occupancy and systemic drug efficacy. In a sense, all bets are off for a gut-restricted approach where, indeed, we are using receptor occupancy in the blood as we've always said, as a surrogate for whatever happens in the gut tissue, both target engagement and potentially trafficking back through the compartments back and forth as well as local activation of cells that are now being inhibited by PN-943. So I hope that separates the issues of the systemic drugs and receptor occupancy versus receptor occupancy for us being a surrogate for exactly what we needed to do, which was to try to define a dose range that would be effective and meaningful for the Phase II, and I think we've accomplished that.

Yes. And I think that probably your last question about partnering/financing is similar to what Anupam asked. And look, I mean the reality is that this is an asset that, at the end of the day, at a commercial level, belongs in the hands of a large pharma or a company with much larger and bigger capabilities than Protagonist. So at some stage, we do need to join hands and we'll be just as opportunistic and do a balancing act between what is in the best interest of the stakeholders at any given time. And that will dictate the financing outcome. As I also mentioned, we are not starved for cash. $300-plus million in the bank right now. And in addition, the $25 million we received from Janssen gives us a pretty good watch list. And our budgeting assumptions had already baked in a success scenario, so we are good as far as initiating the activities of concern. I think the next step right now are like having a dialogue with the FDA, benefiting from their input, structuring the proper study and we are seasoned drug developers. We know what 13% delta means. As Bruce, I think, might have mentioned, HUMIRA had a delta of 9%, and that happens to be the largest drug on planet Earth last time I checked. So we are good, I think, at this stage. And the next steps will reveal themselves over a course of time. But we are not going to do anything, anything out of desperation.

Our next question will come from Yasmeen Rahimi with Piper Sandler.

I have a number of them. I'm just going to go one by one, so we can get some clear answers. Maybe the first one is a clarification question. So the study enrolled 169 patients, but then the mITT had 159. You mentioned something that 10 patients, I guess, didn't complete 12 weeks due to European sites. So that's why the mITT was 159. Is that correct? Can you clarify what the mITT was -- what happened with the -- Yes. Let's start there.

The 10 patients were patients all from Russia and Ukraine. On March 3, we closed those sites. At that time, we said that any patient from Russia, Ukraine who had completed 12 weeks would be included in our primary efficacy analysis. The ones who are not -- who have not reached week 12 because of inaccessibility and inability to verify the data would not. So we randomized 169 patients. At the time we closed the sites, we prespecified and it's in our statistical analysis plan that our primary efficacy analysis would be on this modified intent to treat. So the 159 patients who are in the modified intent to treat do not include these 10 patients who had not completed week 12 from Russia or Ukraine.

Yes, I hope that part is very clear. There is no suspense there, right? We know what happened and what is happening in Russia and Ukraine and the challenges of continuing with the clinical studies there. So that's all that is about those...

No, that's super helpful. You went way back during the call, so I might have missed it.

We had so much to cover. keep going about it.

I get it. I get it. Okay. Second question is actually to Dr. Sander. Thank you. Your busy man for making yourself available. So obviously, you've seen a lot of Phase IIbs and you've seen Phase III. So the fundamental next question that investors are going to ask is what's the treatment effect going to be in a Phase III study? So -- and typically, they tend to [ weak ] it. So Dr. Sander, given the data that you just saw from IDEAL, like how confident can we be around what the Phase III results could look like and how this could fit into that current treatment? So if you could just provide some commentary, please.

Sure, I can. My expectation is that the Phase III is going to look very similar in terms of delta, assuming that the population is designed in a similar way. And the reason I can be assured of that is because this also looks like what they showed in the PROPEL study. And more importantly, it looks like what we see with ENTYVIO in this population. So I'm not sure that anyone could expect much more of this particular mechanism than what we see with ENTYVIO. I think we're matching what we're seeing with that mechanism. And I think that's what -- that's the kind of effect size that we'll see in Phase III with the understanding that you'll have more power and more precision of that estimate. But that's what I think it will be. And I look to the consistency of the data here. They're all aligned. I don't see imbalances and the randomization that explain the effect. I think there's alignment among objective and subjective outcomes, and that's what we like to see in Phase II that predict success in Phase III.

And then the one data point that doesn't align at least for the 150 mg dose group is the data from endoscopy remission. So were you shocked that it didn't achieve stat sig? Is it just 12 leases too short? Was the placebo aligned with what we expected? Like what is that? That seemed a little bit of an outlier.

Remissions...

Go ahead. Scott, I'm sorry.

Bruce, go ahead.

You go, Bruce, I'm sorry.

Yes. It's okay. You have to understand that endoscopic remission is 0. And that isn't really the primary outcome that's incorporated into the primary outcome expected by the FDA. And so I think it's -- these endoscopic outcomes, even though they're centrally read, there's a little bit of squishiness to it. And I'm convinced by the fact that you see endoscopic improvement. And I think you will also see or you did see histologic that may be similar. So in other words, those concordance between what you see endoscopically and histologically, that makes it real for me. So I think in such a small study, you can see some variations like this, and it is not very meaningful. All the other things do align.

Bruce, I'd like to add to that. And yes, we'll go over this slide with the data with you in more detail for sure. But on that slide, we showed our definition of endoscopic improvement, which is defined as a Mayo score of 0 or 1 at week 12. Other groups have called this endoscopic remission and the deltas of the absolute numbers we see for that category are, quite frankly, as good as it gets, if you want to compare this to other studies. What we showed that did not hit statistical significance on the left side of the slide, which we're...

Slide number 12.

Which we're trying to get, which we could get up there, as Bruce mentioned, is this extremely stringent definition of endoscopic remission, which is just the score of 0 at week 12. And once again, this data is going to be comparable to everything else that you're going to see in Phase II and Phase III.

And the p-value is 0.002 if you look at the endoscopic improvement definition as a score of 0 or 1.

Our next question will come from Douglas Tsao with H.C. Wainwright.

I'm just curious, going back to the dosing issue I think you noted that the 150 mg was modeled to replicate what we saw with the 900 mg from PROPEL. Could you just walk through exactly in what way it replicates the 900 mg? In what ways there might be some differences?

Yes. So Doug, as you remember, our second gen drug 943 is threefold more potent than the first generation drug PTG-100. And 150 mg BID, meaning 150 mg twice a day with 300 mg daily dose. So when you multiply that by the threefold more potency, you get to the 900 mg equivalent of the first-generation drug, PTG-100, which was the most efficacious and effective dose in the first study, the PROPEL study.

And I could just add that this was all verified in the Phase I comparisons using both PK as well as pharmacodynamic markers show that a threefold lower dose of 943, we would see an equivalent response in those parameters to the PTG-100 at 900 milligrams. .

Yes. And the threefold more potency has played out in all measures of in vitro, in vivo potency measurements.

And I guess, just given what you saw with the 150 and the 300 from PROPEL, that's why you didn't necessarily see utility in testing lower doses in the IDEAL study?

You got it. Yes. Yes. And that is the beauty, if you think about it. Again, all this is going to be pending our regulatory dialogue. But in a way, we have found the sweet spot, the effective dose. You go higher, we don't want to do that. You get into the bell shape response curve. You go lower from the first study, we know that, that is going to get us to a point of diminishing returns, if you will. So now there is always room for fine-tuning in between those three different blocks, if you will, but we can do that separately. The intent right now is to have a dialogue with the FDA about the 150 mg BID dose as the anchoring dose for a registrational study.

Okay. Great. That's really helpful. And then just one final question. And I know obviously, you're well resourced. Do you have an initial sense of how much the Phase III study may cost?

Yes. I think -- again, we have to -- all that becomes more apparent after we finalize the study design, which again will be pending the FDA dialogue. So I think it will be best to visit -- revisit that question and provide clarity on that at that particular stage. Right now, what we do know is that we are geared up, both in terms of having a preparedness of initiating a Phase III study. So I'm referring to the API, the drug substance, the drug product, those things of that nature and with the intent of getting going with a registration study as soon as we can.

Our next question will come from Julian Harrison with BTIG.

We're starting to see ENTYVIO become more frequently prescribed in the first-line biologic setting. So I'm wondering how important the signal you saw in biologic-naive patients was in your decision to proceed to registrational development? And I guess along similar lines to what extent do you think you can enrich for biologic-naive patients in your next studies here?

Great questions and great point. So first off, we are fully cognizant that an efficacy and safety profile like we're showing and our TPP could make this absolutely intriguing option as a first-line option in bio-naive patients. In the registrational trial, a lot of what we will have to do is dependent on regulatory precedent, and we also have to acknowledge that there is tremendous unmet need in the majority of patients. So at this point, particularly, let's say, in the G7 countries with ulcerative colitis, have been already treated with biologics. What we believe in thinking at a high level about the Phase III study, it will be a mix of bio-naive and bio-experienced patients. Bruce kind of alluded to this before when we think about powering a Phase III study. What has been shown across most of the drugs we have in IBD is that although the absolute response rates are less in the bio-experience population, so were the placebo rate. So the deltas are relatively preserved. So to really extract the most unmet need that we can address with PN-943, it would be a mix of bio-naive and bio-experienced population in Phase III. How much we would enrich for one or the other? We'll see. It's certainly possible that we do more bio-naive than bio-experienced.

Our next question come will come from Joseph Schwartz with SVB Securities.

So will you be rerandomizing patients who achieved your remission and evaluate their ability to maintain a response on 150 milligrams of PN-943? And when should we expect some maintenance data from IDEAL? And then I have a follow-up.

Yes. So the maintenance portion of IDEAL is relatively small. It is double-blinded. And it's looking at both the 150 mg and 450 mg doses. Patients on placebo who are nonresponders go on to 150 mg. Patients on 150 mg who were nonresponders will get dose escalated. And patients on 450 mg who are nonresponders will continue on 450 mg. The problem is it's a relatively small study. We have three groups with all these combinations and permutations. I want to manage expectations, although I think we could get some interesting subanalyses out of these. It's going to be relatively small numbers of patients. And I feel confident in saying that nothing we will learn in this part is going to mitigate our enthusiasm and speed for moving into Phase III, where we could really rigorously test what a maintenance dose will look like.

Okay. Makes sense. And then I'm intrigued by the very plausible hypothesis on Slide 16 that says that the objective is to block effector T cell but not Treg function. Will you be analyzing any data on this front from IDEAL? I think that would be very helpful to close the loop on that biology and convince the community that we understand the mechanism and can reproduce the results in Phase III. So did you measure Tregs in effector T cell levels so that you can characterize this phenomenon in each of the doses?

Joe, this is David Liu. It's a very important question. And I think Suffice to say, first, is that we -- this is only a hypothesis at this point. We will be developing more information as time goes by, both preclinically as well as clinically, particularly gathering and mining any data that we already have, but analyzed in this light of potentially having effects on immunoregulatory cells. Treg is one of them. There are other immunoregulatory cells that have alpha-4-beta-7. So those are all under our intent to study, but we'll see how that all evolves. But that's definitely an important focus for us.

I mean in general terms, one thing we are basically learning over here is for integrin as a target. For our approach, clearly, the center of action is the GI tissue vasculature and not the blood compartment. And of course, with the commitment we have for 943, it will be our intent to do some preclinical and exploratory studies to develop a better understanding of the whole mechanistic aspects of the behavior of 943.

But you don't have the actual samples from this -- the patient studied in IDEAL to analyze?

Yes. Not from blood. We will be -- so we really don't -- that's going to be a future interest of us, not from blood.

This concludes our question-and-answer session, which also concludes our conference for today. Thank you for attending today's presentation. You may now disconnect. .