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

Good morning. Thanks for joining us for a session at the 42nd JPMorgan Healthcare Conference. I'm Brian Cheng, one of the senior biotech analyst here. My associate, [ Sean Kimbo ] is in the audience. On stage, we have Protagonist CEO, Dinesh Patel. I'll pass the mic to Dinesh for a short presentation followed by a live audience Q&A. If you're joining us live, you can submit the questions for the team through our conference portal. Dinesh, the stage is yours.

Thank you, Brian. Good morning, everybody. Thanks for the kind intro. It's always a pleasure to be at the JPMorgan Healthcare Conference. Just a quick reminder that we'll be making forward-looking statements in today's presentation and Q&A. So at the core level, Protagonist is a peptide therapeutics based company. We have a platform. We have 2 late-stage clinical assets, rusfertide and JNJ-2113, which are completing clinical studies and eyeing over the coming years NDA filing and commercialization. And the genesis of these mature assets is our core technology platform, which has the wonderful ability to discover peptides in a de novo fashion against almost any biological target of interest, including the protein-protein interaction targets, which typically, as you know, are not amenable by small molecule approaches. Today, the new thing that we are announcing is that through the use of our platform, we now are acknowledging our presence in the oral IL-17 program. And as you know, this is a very validated target with a huge commercial opportunity and an oral peptide antagonist of IL-17 could be creating a huge differentiation from anything and everything that is out there. So our product pipeline, as you see, has multiple assets. We believe each asset has a multibillion-dollar potential in its own right. rusfertide is a mimetic of hepcidin that is being evaluated for polycythemia vera. The Phase III pivotal study, the VERIFY study is ongoing, and we expect enrollment completion by the end of the quarter. We have completed numerous Phase II studies, including the Phase II REVIVE study where based on the outstanding data that we achieved recently, we have had a very constructive dialogue with the FDA, and we are of the belief that cumulative data package that we will have from these Phase II studies and the Phase III VERIFY study upon its completion is going to be an adequate data package for NDA filing. JNJ-2113 is our oral IL-23 receptor antagonist. This has been partnered with Janssen last year, and Janssen is now renamed as JNJ Innovative Medicine. Last year, they reported the Phase II data from the FRONTIER psoriasis study. And based on the outstanding data that was achieved over there, they have launched a very comprehensive psoriasis clinical program comprised of 4 different Phase III studies. In addition, we also have a Phase IIb ulcerative colitis study that is ongoing with 2113 as well. So now inspired by the success of these 2 assets, clearly, we are inclined to do more in the HEME space and the I&I space as well. And in that context, Oral IL-17 is the new announcement right now. Hopefully, during the year, we have -- we'll have something to say in the [indiscernible] as well, but we are super excited about oral IL-17 peptide antagonist program. It's a first-in-class kind of approach, and we believe we should have a development candidate by the end of the year. So now talking about rusfertide for polycythemia vera. Polycythemia vera as you know, it's a myeloproliferative neoplasm and its characteristics is excessive red blood cell production. It's a rare disease, but it is a serious chronic disease. It's associated with increased mortality rates, largely stemming from increased thrombotic and cardiovascular risks. Around 100,000 patients treated in the U.S. alone with almost an equal number in Europe as well. The average population is 50 -- age is 50 to 70 years for these patients, and they do survive with the disease for almost 2 decades. We believe that PV is very underserved. The current standard of care is suboptimal at best and there is a very significant unmet need that could be filled by an agent like rusfertide. So I would like to make 4 points. One is that this is a disease where maintaining hematocrit below 45% is very critical, and it is as per the NCCN Guidelines. And if you do not control hematocrit, that has serious consequences including increased mortality from these cardiovascular events. And then, of course, the primary treatment is phlebotomy. If you're struggling to control your hematocrit, you have excessive phlebotomies then you become iron deficient and then you have the symptom burden, and that's really a quality of life issue. So clearly, there are those consequences as well. So in spite of this importance of controlling hematocrit, the real-world data shows that the majority of patients, over 75% of them, do not control the hematocrit and that's just a reflection of the suboptimal standard of care that is out there. I mean if you think about it, this is a disease where controlling hematocrit is sort of the mainstay, but there is no RBC treatment, specific treatment option that is out there. So in that context, rusfertide, which is a mimetic of the natural hormone hepciden and hepciden is the -- our natural iron homeostasis regulator in charge of erythrocytosis, right? So it's just logical to see then how rusfertide could be an RBC specific agent that could come to the rescue of these patients. We have done numerous studies, but we will highlight the Phase II REVIVE study very quickly over here. The inclusion criteria has been those patients who require excessive phlebotomies in spite of the current standard of care, reflecting that hematocrit is not being controlled. The 12-week randomization part of the study is the blinded portion of the study, but the patients are distributed equally between a placebo arm or a treatment arm and that data was presented as a late breaker at EHA last year. I'll share some of the highlights of that data. And obviously, we achieved wonderful efficacy over there. But the second outcome that we get from the study is the durability of response with our drug. And that data is sort of summarized over here. What you can see is that this is really impressive durability, 37 out of 70 patients, meaning more than 50% of the patients, they are continuing with the drug for over 2 years now. In fact, initially when we had the study planned, we had only one year of open-label extension. But then based on the level of interest that we saw from the patients and the investigators, we increased that time period to 3 years. And now we have several patients moving beyond 3 years. So we have decided to add on this a separate long-term extension study, the THRIVE study but the patients are now going to get the drug available for an additional 2 years. So talking about the randomization data, basically, rusfertide met its primary endpoint with just excellent statistical significance with a p-value of 0.0003. In the treatment arm, we had 26 patients, about 70% of them were responders by the technical definition. We had 8 nonresponders out of the total of 26, but if you look at the data more carefully, only 3 patients fulfill the phlebotomy eligibility criteria. The other 5 patients, they just discontinued the treatment per patient investigator discretion and then immediately went into the open-label extension arm of the study and 7 out of these 8 patients are continuing the open-label extension. So the big highlight over here is that besides achieving an excellent p-value, I mean we are keeping the patients essentially phlebotomy free with our drug. And that is very important because that is kind of like the cornerstone of our primary endpoint in the Phase III study. In terms of safety, the drug is very well tolerated and there are no new safety signals even with the longer duration of follow-up. In fact, now the median duration of exposure with rusfertide per patient is over 2 years. The majority of adverse events are grade 1 or 2 nature, the most common one being injection site reactions, which is localized and transient. And it also decreases both in severity and frequency over a period of time. There were 14 SAEs reported, but most of these were assessed as being unrelated to rusfertide by the investigators. Keep in mind that PV is a disease where the prevalence of secondary cancers, including skin cancers and the prevalence of thromboembolic events is just higher, significantly higher than what you would normally find. So then the nature and extent of the SAEs that we are observing that is very consistent with the comorbidities that exist for this patient population. The Phase III study design is sketched out over here. The primary end point is at the 30-week time period. And as you can see, the primary endpoint is freedom from phlebotomy, very similar to what we had in the Phase II study, where we got outstanding results. The Phase II study was a 70-patient study, and we got excellent p-value. So of course, this 250-patient study is kind of overpowered for efficacy, but the idea over here is like maybe this will allow us to have a good score in the symptom improvement as well, which is one of the key secondary end point. So now as we start completing the Phase III studies and we go towards NDA filing and those sort of things, this is the right time to come up with the commercial strategy for our drug. So in that context, what we would like to propose is that this is a drug that would be ideally suited for patients with moderate treatment burden. So what is the definition of moderate treatment burden? Well, these are the patients who require too many phlebotomies to control their hematocrit and to control the disease and irrespective of like whether they are on other concurrent therapy like HU or not. And we have done our own homework in terms of looking very carefully at the real-world patients databases that are out there. And we believe that almost 60% of the patients fall in this moderate treatment burden category. So clearly, this is a rare disease. Our drug has orphan drug status, fast-track status and we believe being an RBC specific agent, this could have a very prominent role to play in the future in the potential treatment of the PV patients. So now let's switch to JNJ-2113, our oral IL-23 receptor antagonist peptide. So this is a drug that is being developed in partnership with JN. This is a partnership that's 7 years old, but still going very strong. The drug is jointly discovered by the 2 companies. In general, in the collaboration, there has been a division of labor and efforts, so to speak. So we are responsible primarily for discovery, the preclinical activities, the Phase I activities. And then Janssen takes over and does the heavy lifting of the Phase II studies, Phase III studies, the regulatory filings and ultimately the commercialization. Now it was a positive data from the FRONTIER 2 psoriasis study that was really an inflection point over here in the program. And I'll talk about some of the data in the next few slides. But the big outcome is like what is happening going into the future? Well, there is a bold comprehensive Phase III registrational program with not 1 or 2, but 4 different Phase III studies in psoriasis. The idea over here is really to make a claim that this is the best oral psoriasis treatment that could possibly be out there. And of course, in parallel, the Phase IIb UC study is going on also, as you know, with IL-23 intervention, you can combat not just psoriasis, but psoriatic arthritis, ulcerative colitis and Crohn's disease. In fact, at the recent Enterprise Review Day that was hosted by JNJ, they described 2113 as a first and best-in-class targeted oral IL-23 antagonist with unprecedented potential across multiple indications. So no surprise that this has been now placed in the category of promising drug candidates. They have their pipeline with potential peak sales of over $5 billion. And of course, that JNJ has the injectable antibody STELARA and TREMFYA franchise, which in 2022 alone generated over $12 billion in revenues for them. 2113, the magic in 2113 is that it's an oral peptide with some oral bioavailability that works in an indication like psoriasis. It's a compound with -- peptide with outstanding potency, picomolar level similar or better too than the antibodies that are out there. Extremely orally stable, preclinical PoC with amazing data, both in the skin inflammation model and the Rat TNBS colitis model colitis model, PD-based PoC studies in Phase I and, of course, ultimately, the Phase IIb FRONTIER study psoriasis results. So this is the study design. There are 5 different dosing regimens over here comprised of both once daily and twice a day dosing and then, of course, the placebo arm. And here are the results. And there are kind of multiple key takeaways over here. The primary endpoint was the PASI 75 at week 16 and statistical significance in the context of primary endpoint was achieved at all 5 doses. The second thing is you can see that it's a very clean, clear and linear dose response. The higher the dose, the higher the efficacy, the best efficacy being achieved at 100 mg BID dosing. However, the study was designed in such a way that you are also allowed to do a comparison of QD versus BID dosing. So when you look at the 50 mg QD versus 25 BID, you would conclude that the QD dosing is more effective. So combine these 2 observations and then you would conclude that instead of 100 BID, you would take a 200 mg daily dose, and that is what Janssen is doing and they are moving at those 200 mg QD dosing regimen in all the 4 Phase III studies. The other thing is like when you look at the efficacy data, the PASI 75 is like an understatement. Instead, why not to raise the bar to a higher efficacy level. The drug does very well even under the more stringent criteria of PASI 90 and 100. So no surprise that now going forward, JNJ is opting for PASI 90 as the primary endpoint in most of these Phase III studies. Here, what we have done is like we have taken the liberty of doing cross-trial comparison of the Phase II data of the various drugs that are out there. And what you see on the left is our drug, JNJ-2113, the 3 bars next to it are the various oral psoriasis agents that are out there, including the 2 TYK2 inhibitors, one approved, the one in orange is Sotyktu and the gray is TAK-279 and then on the left are STELARA and TREMFYA, the injectable antibody drugs. And just at a visual level, you will see that when you look at the PASI 75, our drug is very much out there, with efficacy easily in the range of the antibodies that STELARA and TREMFYA. But this is an oral drug. This is a first of its kind oral targeted therapy, so it stands on its own in our opinion and especially in the oral agent space. And that is where you can start seeing the superiority of our drug versus other things that are out there. And especially now when you look at the PASI 90 or the PASI 100, that is where the differentiation is even bigger. So no surprise PASI 90 is the primary endpoint of choice over here. And of course, out of the 4 Phase III studies, the 2 studies are ones where the JNJ is opting to do head-to-head comparison with the only approved oral TYK2, which could be considered as the best-in-class oral for now, so the head-to-head comparison with Sotyktu is there in the 2 Phase III studies. Now of course, it is always great when you can see a nice translation of excellent R&D performance into some dollars and cents. So here we are. We have already received over $170 million in different form of payments. There is another close to $800 million that could be fetching from future milestones. We believe that out of this $800, at least $215 million, which are sketched in the table here, are achievable over the next 12 to 36 months, and those are listed over here. And then ultimately, the big piece of the pie is the royalty component, 6% to 10% royalty, which is upward tiered and the 10% kicking in at sales over $4 billion. You can do the math, and I'm sure you will come up with numbers that you like. So that's basically around JNJ-2113. And as I mentioned before, inspired by our own success, we said, "Hey, if you have done something well, then the simplest thing to do is go for repeat performance." So here, we are. Oral IL-17, it's a very proven target. The commercial appeal is huge. If you look at the IL-17 antagonist, I mean, over here, you can reach out to indications like HS, spondyloarthritis, psoriasis, psoriatic arthritis. In 2021 alone, these indications that could be treated with IL-17 agents, the global sales were around $29 billion, and the market is supposed to grow very significantly. So by 2031, the anticipation is that it would be over $50 billion. Of course, what we are doing over here is like we are leveraging our oral peptide technology platform. And that's why we are going for a very ambitious and very well-differentiated target product profile. With the overall approach, the peptide approach, we believe we are the first in class in that category. From the preliminary results that we have had, we believe that we have at least similar, most likely better, potency than versus the approved antibody drugs like Cosentyx and Taltz. And we are aiming for trispecificity because the data that is out there with the antibodies and the nanobody suggests that the trispecificity may play an important role in terms of overall best efficacy and safety, right? So we have been working on this for a while. This is a very high priority project. You can expect more to hear from us during the year about this program, and we are predicting that we should have a development candidate here by the end of the year. In terms of cash runway, we are fortunate to have a cash runway through Q1 of 2026. I would like to point out that this does not include the $215 million in potential milestones that we expect from Janssen that I showcased on the table a few slides ago over the next 12 to 36 months. So where the cash runway is up to Q1 2026, plus potentially the $200 million plus we could be getting from Janssen. So then in terms of the summing up the major catalysts that lie ahead, I mean the big picture scenario is that we have 2 drugs, rusfertide fully owned by us and JNJ in partnerships with a wonderful partner like JNJ-2113, these are the drugs that are moving towards commercialization by 2026 or early 2027 time period. And for these drugs to be stemming from our nascent de novo discovery peptide technology platform, it's really a very satisfying outcome. But if you focus on 2024, then, I mean, clearly, we'll continue with our habit of highlighting the rusfertide data at major medical conferences. We will also have the completion of the 2-year carcinogenicity study. We are completing the enrollment in the Phase III study by the end of this quarter. With JNJ-2113, there are 4 studies that will kick off, 2 have already started. And the first 2 Phase III studies based on the information on clinicaltrials.gov, the primary endpoint phase of the study will be completed by the end of the year, by November of this year. So clearly, after that, the data and the news flow will be there in terms of what was the outcome of those studies. And then, of course, last but not least, this is also the year where we hope to -- that before the year ends, we will have our own overall first-in-class peptide antagonist IL-17 as a development candidate. So with this, I would like to thank the broad Protagonist team, which comprises of the excellent employees at Protagonist. I'm ever so grateful to their dedication and commitment to excellent science and creating wonderful assets. And we would also be thanking the investigators and patients who are collaborating with us to give us these wonderful results. And of course, thank you all for your attention, and we will be happy to answer any questions.

I invite the Protagonist team to join us on the table. We have their CMO, Arturo Molina; Clinical Development Adviser, Samuel Saks, and Chief Scientific Officer, Scott Plevy. I'll kick off with 1 or 2 questions, if I may, and then I'll turn it over to the audience if they have any questions. Maybe focusing on your new oral IL-17 program. How do you view your oral trispecific IL-17 antagonists differentiate from some of the competitors out there, [indiscernible], they all have seen some proof of concept early in some of the autoimmune indications. How do you view the differentiation? And -- why those specific indications that you listed out on the slide?

Yes. I mean our big differentiation at the end of the day is going to be that we are oral and even with an oral approach, we would like to fetch all the specificity and the potency that the injectable antibodies or the nanobodies are achieving. I guess that's the simplest answer. Scott, would you like to add anything?

Yes. And there's IL-17 small molecule programs there. And just to reiterate what Dinesh said, we have exquisite potency and exquisite specificity like a monoclonal antibody. So we are absolutely not concerned about off-target effects.

Any questions from the audience? Do you expect this program to be partnered off? How do you think about IL-17 in your portfolio given how well you have done with IL-23 receptor antagonist?

Yes. I think look, it's an excellent question. And the way I would answer this is like when we did the partnership with JNJ, that was in 2017, Protagonist was a different company at that time. And it just made so much sense to do a preclinical stage deal at that time. And as you can see, the outcome has been wonderful. But I would like to claim we are a little bit grown up now, and we have the luxury of continuing the development of IL-17 in our own shop a little bit longer. So over here under one scenario, you could envision us developing an oral IL-17 peptide antagonist up to Phase II clinical PoC on our own.

So IL-23 receptor antagonist, your peptide program definitely had its multiple challenges in the past. And you finally got to a really good one with 2113 that's shown success in PSO. When you think about oral IL-17 today, still preclinical. You still haven't selected the DC. Is it going to be harder to get an oral IL-17 peptide antagonist from where you stand today? Or is it easier? And also, is there any learnings from the past as well?

Yes, it's an excellent, excellent question. And what I would say is that, look, there have been a lot of learnings during our 7-year journey in the IL-23 program. As some of you may recall, in the initial years, we were focused on oral gut-restricted peptides and the hard way we learned that it's probably not the best idea in the world to be gut-restricted. So that is where we took on the difficult task of getting some oral bioavailability with our drug. So I think that's just a learning that will go a long way also. So we will clearly -- I mean, our anticipation would be that based on our learnings of this kind of nature and several others, the journey over here should be faster than what it was with the IL-23 program.

Are there going to be 2 different inhibitors that roll out from this program targeting I&I and HEME and do you anticipate that one would move faster than the other, just given where our competitors are today?

So you're talking about the discovery programs in general?

Yes. Because you have a slide that says -- you have -- I think you have 1 slide where you have I&I and HEME underneath. So -- do you anticipate 2 individual programs sort of in assets? Or do you think that one will -- can address both of the indications?

Yes, I would want Scott to elaborate a bit. But the short answer is, yes, 2 different programs, one in the I&! I space, 1 in the HEME space.

Yes. So IL-17 is our initial new foray into the I&I space. With the HEME space, I would just say at this point, stay tuned this year, and we are confident that we should be announcing what that program looks like at some point.

Any questions from the audience? Okay. So maybe we'll move on to 2113. When you think about 2113, I think there's always that potential that you can monetize the royalty stream. I think we spoke a little bit about that last year right when we -- right when we were about to get the FRONTIER 1 data in Singapore. And where do you stand on that today? Do you think that based on your current cash runway, does it make sense to do it now? And also just kind of also the market condition as well. I think it has improved quite a bit since we last spoke on this. So where do you stand on that today?

Yes. I think, look, we are really fortunate to be in a very respectable financial position and so we can pull many different levers. The royalty stream or its monetization or partial monetization is only one of them. Right now, our attitude is that we are in a comfortable financial situation. So the best thing to do is to do nothing. As Charlie Munger said, "In financial investments, don't be lazy, be super lazy." So not doing anything is a difficult thing, but that is what we'll be doing. Don't do anything on the royalty monetization.

How confident are you that your QD dose, the 200 mg QD dose, will perform better than 100 mg BID? That was also in the FRONTIER 1. In your side, you're hinting that you should be able to get there, some delta versus the BID dose. But how confident are you today that you can beat it? And also commercially, how viable is that compare against Sotyktu?

Yes, absolutely. And look, QD dosing is always preferred over BID. So it's as simple as that in any of our Phase II study, the 50 mg QD was better than 25 BID. So that's just the empirical observation which you can translate in theory to 200 mg QD from 100 BID. But Scott, why don't we provide a more scientific explanation for our optimism?

Okay. Well, you were pretty scientific. But just to expand on that, the -- what the Phase IIb data showed us was that since a QD dose is better than a BID dose at the same daily exposure, it's a Cmax-driven phenomenon rather than trough levels. So this is why we would expect or at least hypothesized that 200 QD might be better than 100 BID. The other factor that plays into this is that Janssen has now discussed that, in fact, there is a food effect. It's not an on-off switch, but in the presence of food, there might be some decreased absorption. Now think about this in the context of a clinical trial where patients are taking twice daily doses. What Janssen is going to move forward with is 200 mg QD, the dose to be given in the morning and then nothing by mouth for 30 minutes after. So clinically, for patients, no big deal. But in the context of the clinical trial, imagine a second fast, both before and after for the second daily dose. This sets up a minefield for compliance, patients taking it when there's still food on board. So in the context of the clinical trial, one can also speculate that the 100 BID because of that second daily dose could have minimized the efficacy.

And that is the situation we will not be encountering with the QD dose, right? It's like the -- you take the drug first thing in the morning, and after 30 minutes, you can have your breakfast.

And that's the dosing that you're doing in the Phase III, across all the Phase III?