Protagonist Therapeutics, Inc. ($PTGX)

Hello again, everyone. I'm Etzer Darout, senior biotech analyst at Barclays. It's my pleasure to welcome Protagonist Therapeutics to our fireside. With me today, I have Dinesh Patel, the Chief Executive Officer and President at Protagonist. Dinesh, maybe just to start off, for those maybe less familiar with the story, if you could just provide an overview of Protagonist, and then we'll move into Q&A.

Sounds like a plan. First and foremost, thanks for inviting us. And I have to mention that this does take me down memory lane. Protagonist, we did our IPO back in 2016, and Barclays was one of the bank that helped us achieve that component of going public. So thanks for that as well to Barclays. So yes, right from the get-go, we have focused on creating innovation through novel peptides. So that's our bread and butter, and we have expertise both for injectable peptides, but also for oral peptides, and we have been able to put it to good use over a period of time. Maybe over a period of time is a bit of an understatement because we have been doing this since 2008 when nobody cared about peptides. It was an unknown entity. Of course, now over the past few years, the landscape has changed, and we are glad that it has changed. But fast forwarding from 2008 to now, what has then happened is like we have 2 wonderful assets, which showed outstanding Phase III data last year. And on the heels of that, we are assuming, hoping that they get approved this year. So the first drug I'm talking about is icotrokinra or icotyde. This is an oral IL-23 blocker, and this is the first and only. So there is amazing scarcity value as well. And this is a journey that we started with J&J all the way back in 2017 when it was just a preclinical program. So we have come a long way and now the first indication for which approval will be seek is for psoriasis. And then the drug is also in Phase III studies in all the other 3 indications where IL-23 blockers have had 100% success, right, namely psoriatic arthritis, UC and Crohn's. The other asset then is rusfertide. This is a weekly injectable metric of the natural hormone hepcidin that is in charge of iron homeostasis. And we felt that, hey, polycythemia vera, that's a disease. It's characterized by excessive red blood cell production, right, excessive erythrocytosis. So it made sense to come up with an erythrocytosis specific agent. And again, there is no such thing that is out there right now. So we are the first and only over there as well. And that is something unlike the J&J deal, which was partnered at a preclinical stage here, we partnered with Takeda in January of 2024 when we were already in a Phase III setting on our own. It's a rare disease indication, right? So it is something we could take forward further. Takeda is an amazing partner. They have a focus in the heme space, and we are so glad we have joined hands with them as well. And about a week ago or so, we announced that we received priority review. So that is going to hopefully accelerate the approval by a few months. And so -- and with ICO, the NDA was filed in July of last year. So it would be an amazing coincidence if both drugs get approved, let's say, sometime in the third quarter of this year. So we are looking forward to that. So that's the outcome of 16, 18 years, whatever you want to call it, or at least 12-plus years of efforts in these programs. And now what we have -- since we believe we are validated, we have proven ourselves multiple times. We are going for the second act like a rapid performance, right? And the next wave of assets is, again, continuing in the I&I space with an oral IL-17 program. The drug is in a Phase I study in healthy volunteers. We also have preclinical studies going on in the IL-4 program. And it's like, hey, if you can create an oral, ico is like whatever you want to call it, it's an oral equivalent to a Skyrizi or TREMFYA big one. So similarly with there be an oral BIMZELX, right? That's the idea with the IL-17. And then over the last few years, as we all know, the anti-obesity space gets a lot of attention. And chemically speaking, the two approved drugs are injectable peptides. So that was like an invitation for us. It's like, okay, can we create some solid differentiation through oral peptides. And the first thing that we have is an oral GGG. It's the one of its kind. And over there, we will get into clinical studies in the second half of the year, that sort of thing. And we also have an oral GLP/GIP, a dual. We have acknowledged our presence in the amylin agonist program as well. So we want to create a whole portfolio of different assets. And then last but not least, in the heme space, the second act is the oral hepcidin. So that's basically the story in a nutshell.

Great. As you think about the preclinical evaluation of all of these assets, prior to moving them into the clinic. How are you measuring sort of success and then the ability for those assets to translate to the clinic, looking at exposure, particularly it's peptides. And so that presents a challenge in and of itself. So how are you measuring what success looks like prior to going into?

It's a fantastic question, and it's fair to admit that we almost torture ourselves with exhaustive preclinical evaluation. And to your point, it's like, hey, is it going to work as an oral because let's face it, with peptides, you're going to be limited with the oral bioavailability component. Now we make up for that with just outstanding picomolar-like potency, which also gives us amazing specificity, right? And now advances are being made in terms of enhancing oral bioavailability. But one thing that we do is we go through a lot of preclinical models where our drug will be administered orally. And then we would like to see that preclinical proof of concept being achieved in animal studies when our drug is administered orally. So that's kind of a generic way of describing it. And it's fair to say that we take at least 3 to 4 months longer than what a typical preclinical assessment would look like because we want to make sure that we pick the right candidate.

Yes. Great. And maybe on icotrokinra in psoriasis, we've seen at least one successful superiority study. We also have ICONIC ASCEND comparator, ustekinumab. How do you plan to leverage those, again, studies as you think about initial launch in psoriasis, as you think about the types of physicians that you're going to want to target, how do you ultimately want to leverage those data sets?

I mean these are extremely important questions, but I have to be very upfront about it. J&J is the best entity to be answering these questions. They are the ones doing the heavy lifting. But as you can imagine, they have done some amazing things, right? They -- like you pointed out, went for a head-to-head superiority study with the only approved TYK2 inhibitor deucra. And our data is fantastic. The primary endpoints were achieved. And whether that makes it to the label or not, that's between J&J and the regulatory agency. They also went ahead and kind of did a subpopulation analysis and presented amazing data in the adolescent population. And as you know, now by the end of the month, they are completing this head-to-head study with their own injectable STELARA. To me, what all that is telling me is like, obviously, they are big believers of icotrokinra or icotyde now. And they could be gearing this towards like first-line therapy, something like that. Right.

Right. Maybe a question on rusfertide but not necessarily on the injectable program. But again, when you think about the potential for an oral hepcidin functional mimetic, how should we think about the positioning relative to rusfertide in terms of cannibalization is always something that people are going to talk about. Could they be complementary? How do you think about an oral agent versus sort of the injectable agent?

Rusfertide is like a kid that is completing college and is pretty soon going to have a job and have his or her income, whereas the oral is like still maybe in junior high or something like that, right, that kind of thing. But jokes apart, it's like there is enough time delta between the 2 drugs and rusfertide is an outstanding drug. It's the first drug of its own kind, erythrocytosis-specific mechanism. Takeda is a fantastic partner. So we don't see any overlap or that kind of -- yes, overlap or one thing taking away the market from the other. If not, I think it's a continuity of dominance first with rusfertide and then hopefully with the oral icotrokinra.

Right. No, that makes sense. We've had questions around the competitive landscape or evolving competitive landscape for rusfertide. People have talked about some upcoming data sets from Silence Therapeutics. Maybe your thoughts around the competitive landscape just broadly in PV and then your thinking around like what that ultimately -- that space evolves to?

Yes. And I mean, in a way, we are flattered that people. Other companies are also embracing the core mechanism of hepcidin, right, as a way to offer treatment in polycythemia vera and whether it is Silence or whether it is Disc Medicine, and these are great companies, and we wish them all the best of luck. What I would say, though, is like let's pick the TREMYA 6 mechanism and other mechanisms of that type. Those are mechanisms whereby you are trying to really enhance the production of endogenous hepcidin. And that could have its pluses, minuses, limitations, things to watch out for, that kind of thing, whereas our approach is very clear. We use hepcidin as a starting point rather than as a drug because I'm a medicinal chemist by training. So for me, hepcidin is a great starting point. And then it's like, okay, what do we fix? Let's create a mimetic that is a more potent, more stable, has drug-like properties, and that is what we achieved with rusfertide, and it is titration to affect things like that, right? So one of the things to watch out for "longer-acting drugs" would be like keep in mind, this is the biggest side effects that one should be concerned about over here is exaggerated pharmacology, right? Because now you are making the patient anemic and that is not desirable. So I think with a weekly injectable that we have, we are in a very balanced position, if you will, and we titrate from low to high and then find the balancing act of like which is the right dose, that kind of thing. And measuring whether your drug is continuing to have the effect or not is a very simple blood test. You measure the hematocrit level. So I think we are happy with where we are. And the other component is, of course, we are years ahead of everyone else. So we're going to have for a number of years, right, the Phase II ourselves.

Great. Maybe switch gears to PN-881 or IL-17. You have a healthy volunteer study that we'll get an update on this year. How are we thinking about what success looks like for that study and how that study ultimately helps inform what a Phase II program would look like for an oral IL-17?

Yes. Oral IL-17 and 881, that's like our second act, if you will, right? As my kids have been telling me all my life, anybody can get lucky once. Can you do it again? Whether it's creating another successful company or another asset or we'll have 881. The preclinical data has been outstanding. Like we were talking other -- we went through like a very exhaustive evaluation. And you're asking that great question, what would success look like because we are doing just a Phase I study in healthy volunteers. Very comprehensive study, though. And the idea would be like we want to get definitive ideas about the dosing regimen, what is the ideal dosing regimen, right? So if we believe the drug is working, then that would enable us to go for a full-fledged Phase II study in psoriasis patients. Now what we are looking for, the antibodies, oral -- I mean, injectable antibodies have taught us a lot, right? It's like what should be the level of target inhibition that you should be achieving that would translate into efficacy. So what we have done is like based on that, and we have achieved amazing [indiscernible] potency, right, picomolar kind of potency against the target. And another characteristic we have, which is [indiscernible] is we have activity against both A and F isoforms. We don't know of anybody with an oral approach that has that right. So we have made it as full proof of possible. But getting back to your question, this has given us an understanding of what are the drug levels we need to achieve through oral administration that would give us the confidence at a translational level that, okay, this should lead to efficacy in patients. And so that is what we are striving for in a Phase I study. Now the other thing to keep in mind is like our peptide, it's almost like 100x smaller in size compared to the big antibodies. And so in theory, one could assume we may have better tissue penetration, skin penetration, that sort of thing. And that could give us an extra advantage in terms of overall efficacy scores down the road. Having said that, we are not counting that in our "mathematical model" of like what are the drug levels we need to achieve based on what the antibodies have taught us in order to feel pretty assured of efficacy.

Right. And one of the questions that we get around the oral IL-17 program is how much of this does Protagonist want to execute on their own versus ultimately finding a partner for a large indication. How are you thinking about business development around oral IL-17? Is this an asset that you can take to the finish line yourself? Or do you ultimately view sort of maybe the same road map as we've seen with...

Another fantastic question, and I'll give a slightly detailed answer. So as you know, with the money we have in the bank and then we have also kind of admitted that we will be most likely opting out, let's say that out of the Takeda thing, which is going to bring an influx of another $400 million and the $75 million upon approval as a milestone payment and another $50 million from J&J, if ICO gets approved, right? And then the revenue streams, we are not even -- and revenues are perennial. So there is a lot of money, will the company Protagonist have the financial capability to fund its own studies, not just up to clinical POC, but even in Phase III studies, even for larger indications, the answer is yes. Are we going to do that? The answer is no. Here is the reason why. It's not only about money, right? It's look at the amazing strength that a pharma brings to the table, right? It's like ICO, by the end of the day, counting all the 4 indications, it's being evaluated in 7,000-plus patients. What an amazing job, right? Think big. Pharma can do that. As long as we get our cut a fair cut, we will be okay. So our approach would be, in simple terms, it is like we will take all of our assets to clinical POC. But after that, I'm a big believer of pharma partnerships because of the things I mentioned about. Now we may have a higher participation. With J&J, when we did the deal, it was at a preclinical stage. The arrangement was we discover, we do the preclinical and IND-enabling and Phase I studies. And after that, Phase II and beyond, they take care of it. Now we may say, you know what, no, Phase II, let's do a 50-50 cost sharing. Phase III, let's do a 30-70 cost sharing. So we could get more creative so that we can retain more back-end economics. But at the end of the day, for big indications, yes, we would love to have a pharma partner. For the niche indications, the rare disease indications like our oral hepcidin, that is where we definitely can have a mindset of like, let's do it alone all the way through the finish line. So it's those kind of things. But the beauty is we envision we'll be doing all these things without -- never say never, but most likely never having to raise money from outside, right? So we are not going to dilute away the shareholders for the foreseeable future.

Right. Great. And maybe with that, we could spend the next few minutes on obesity. Obviously, dominated now by the injectable peptides. You've had an opportunity to see all of the commercial dynamics, what's happening in the clinic with different agents. I guess how are you thinking about how the set of molecules that you're developing, where they can ultimately fit in the treatment paradigm for obesity?

Yes. So look, I think in obesity, it checks all the boxes for us, right? The 2 approved drugs are injectable peptides. So we are like, yes, we can make a difference over here. At a very simplistic level, we look for 2 things when we choose a project. It should be an area where there is significant unmet need. And second is through our approach, we should be able to offer some very strong differentiation. So over here, clearly, the area is getting very crowded, but I believe that this is an opportunity of a lifetime of unprecedented level for our industry. It could be what AI is for high tech, the whole obesity and comorbidities could be for pharma sector. And we may just be scrapping the surface. This may just be the humble beginnings. And as usual, so many undertakings are there, that kind of stuff. But even then, we said, you know what, and we consulted a lot with the KOLs. And what came at the top of the chart was like, hey, can you create an oral triple? And the answer was, yes, we can do that. So that is what we have chosen, right, an oral triple GLP, GIP, GCG. But in talking to the KOLs, we also gained an understanding of what could be the relative potencies of GLP, GIP, GCG that could be considered optimal. And could that translate into not just better quantity of weight loss, but also better quality of weight loss. So I'm referring to better tolerability, which could be achieved through better GIP agonism and better lead muscle mass preservation that could be achieved through the GCG component of energy expenditure, that kind of thing. So we have tried to optimize those components also as much as possible. And we believe we are the only or one of the very few oral triples that is out there. And in talking to the KOLs, it also occurred that, hey, some of the markets with some patients for some periods of time may belong to injectables. So we are developing both a weekly subcu and a daily oral. And the PK characteristics are fantastic. We see drug accumulation. So we do believe that down the road, maybe the weekly subcu could transition to monthly subcu in a maintenance setting. And same way, the daily oral pill could be a weekly oral pill or something like that. So we like what we are seeing. But the other thing is like we're not falling in love with just one asset. We want to create a portfolio of assets over here. So we have already announced we have a dual, right? And we have already acknowledged our presence with amylin, mono and polyagonist, that kind of thing. We'll create a portfolio of assets. And I think down the road, it will become more clear which could be preferred in which kind of subpopulations and also within -- when you consider the comorbidities, right? So if it is, let's say, NASH/NASH kind of livercentric indications, maybe the GCG component does become important over there. That's where the field is leaning towards. So I think we are still learning. And we just are taking a very humble approach over here. It's like let's create a portfolio with different kind of characteristics and then let's see where we will land at the end of the day.

Yes. Yes. No, great. And you've talked about potentially achieving maybe early clinical proof of concept with single ascending, multiple ascending dose studies. I guess this is sort of design, right? But is this really based on just what the analog that you've seen in clinical development and being able to assess exposure in an initial -- whether it be 28-day weight loss and then assuming that maybe that would be durable? How long...

Whether it is a 13-week weight loss, that kind of thing. No, exactly. It's like we are observing. We are learning from others, why not, right? Knowledge is free. So -- but that would be the idea. And by the way, that is another general advantage with our approach, like in a Phase I setting, you can get your clinical POC. That is very true in the obesity space. You enroll healthy volunteers with a higher BMI and you will get your readout even with the oral hepcidin, for example, we'll observe the effect on serum iron levels and the related biomarkers, and we will get a good understanding of where we are going. So I think then if you add up everything that's in our R&D pipeline, the clinical POC is just going to sneak up on us. It can come sooner than what most people may be anticipating.

Great. It looks like we're up on our time. Dinesh, thank you so much for a great discussion. Thank you for our listeners as well for listening in.

Yes. Thank you for the wonderful time. Great questions.