PureTech Health plc (PRTC) Earnings Call Transcript & Summary

Good morning, everyone. Thanks for joining us here at the SVB Leerink Global Healthcare Conference. My name is Tom Smith. I'm a senior biotech analyst here at SVB Leerink. And really happy to introduce our next company, PureTech Health. And we're joined by their President and Chief of Business and Strategy, Bharatt Chowrira; Chief Financial Officer, George Farmer; and Head of Innovation, Michael Chen. Gentlemen, thanks for joining us.

Thank you, Tom, and thank you to the Leerink Group for inviting us to participate on this virtual conference.

Yes. Just stay -- of course, just a quick reminder for the audience here before we get started. [Operator Instructions] And with that Bharatt, I think you have a few slides you're going to use to kind of walk us through some of the background and overview of the PureTech story, and then we'll transition into some Q&A.

Yes. Let's do that. Thanks, Tom. So good morning, everyone. So at PureTech, we have a very unique story to tell. It's importantly, we have a highly promising therapeutic development pipeline that we are happy to discuss today. We have a number of anticipated milestones and catalysts that are on the docket for 2021, as we pursue our goal of developing novel medicines for serious diseases that currently have no or limited treatment options for patients. But before I jump into additional remarks and discussion, I would like to remind everyone that during the course of the discussion, we may be making some forward-looking statements. I would ask you to refer to our SEC filings for a discussion of potential risks and uncertainties. So PureTech was founded a number of years ago with the vision and goal of advancing novel therapeutics based on breakthrough science. And in the early days, PureTech was founded with limited resources. So we had more ideas than we could actually fund. So the company actually came up with a very innovative R&D model where each one of our programs were set up or housed in a founded entity that then we would partner selectively with external VCs and investors to -- and fund and advance these programs individually through these founded entities. So we have 9 of these that we have founded over the years that are active from -- in different stages from early stage all the way through -- a couple of them have reached FDA EMA approvals, getting ready to launch. So we had established a really good track record during these years of advancing truly innovative new programs. So about 4 years ago, we decided that instead of housing these into separate founded entities and because we had a good track record and also we had a good and a strong -- strengthened our balance sheet, that we would fund these programs, all these new programs, coming out of the R&D engine would be funded internally and advance them so that we can own 100% of these programs coming out of our innovative R&D engine. So as we looked at our wholly-owned therapeutic development pipeline, it's really important to note that it's coming together very nicely. It's highlighted with 3 clinical studies we initiated towards the end of last year, which we expect them to read out over the course of this year. In addition, those catalysts, we're also planning registration-enabling studies for our lead LYT-100 in IPF and related interstitial lung diseases. So this pipeline is underpinned by our founded entities, which you can see the list at the bottom of the slide here. And there are 9 of them. And they are also continuing to benefit. We also continue to benefit from their growth as they have multiple catalysts -- upcoming catalysts. And they also serve as a source of nondilutive funding from events such as M&A transactions, IPOs and royalties. So we also have a strong balance sheet and the capital that we need to advance our programs. Last reported, we had $387 million in cash. That does not include an additional $118 million in proceeds from the sale of Karuna shares earlier this month. So our founded entities are also very well capitalized, having raised collectively approximately about $1 billion in the last few years. So they do not -- most of them don't look to PureTech for a source of funding. So most of our capital is, we are able to deploy on advancing our internal wholly-owned pipeline. Our unique R&D model has been really quite distinctive. It's built around collaboration with the world's leading experts around specific diseases through the lens of the biology of the brain, the immune system, the gut or, what we call, the BIG Axis. Together, we identify, invent and advance scientific breakthroughs. And this model has enabled us to gain early access to data long before they are published in major journals. Another important feature about our R&D model and process is to run early derisking experiments or -- in a small amount of money, to try and derisk the programs earlier on so that we can increase the probability of success as the programs advance. So our R&D focus has really centered around the biology of the Brain, Immune, Gut, Axis and the crosstalk between these 3 systems. And it's becoming clear in the recent years that key components of the BIG Axis, such as the gut epithelial barrier, the microbiome, the lymphatic system, they play important roles in health and diseases. So our internal pipeline is really centered around lymphatic system and the related immunology, underlying number of these diseases. So if you look at our -- in the pipeline, we have 3 programs that are in development. The most advanced is our LYT-100, which is in, currently in 2 clinical trials. Can you go back to the previous slide. And so 2 Phase II studies that we initiated towards the end of last year, we have a third indication that we plan to advance, and we'll talk more about that. We also have LYT-200, that's a fully human novel monoclonal antibody that's in Phase Ib, that's going to read out later this year. And a third program that's going to enter the clinic later this year, which is oral allopregnanolone, which came out of our Glyph technology platform. This is our lymphatic targeting prodrug technology, which we'll talk about more if time permits. And then the Orasome technology is our other technology platform that we are advancing, where we expect to have some preclinical data later this year. Really exciting potential for being quite disruptive in achieving, if we are able to demonstrate, oral administration of biotherapeutics using this technology. And we also have some early discovery efforts in the brain lymphatics, looking at neurological indications. So jumping quickly to our lead program, which is LYT-100. It is a deuterated form of pirfenidone. So as many of you know, pirfenidone is an antifibrotic, anti-inflammatory molecule that -- drug that has been approved for treatment of idiopathic pulmonary fibrosis in the U.S. and Europe. And it has a well-established pharmacology and efficacy in human trials. But the problem with pirfenidone, and that has limited its wide adoption, is the significant GI tolerability issues as well as pill burden and frequency of dosing and so on. So when you look at the profile of pirfenidone, in about half the patients who start on pirfenidone have to either discontinue, dose reduce or have to switch therapies because of primarily GI-based tolerability issues. So with the deuterium modification, we are able to enhance the -- improve the metabolic stability of pirfenidone, and that translates into improved and differentiated PK profile, increased exposure and that should translate into better tolerable AE profile. And so we acquired this IP and the product from Teva about a year, 1.5 years ago. And we're advancing this now, and we ran a multiple ascending dose study last year and demonstrated the proof-of-concept that the deuterated form of pirfenidone indeed actually was very well tolerated. Even at 1000 milligrams twice a day dosing, we did not see any significant adverse events. And even the ones that we saw were transient, mild. And so it's a very impressive, a profile that we saw with deupirfenidone in healthy subjects. And we also ran a food effect study where we showed very diminished -- significantly diminished food effect. So we have a profile for deupirfenidone where we potentially could administer this twice a day at probably 1000 milligrams of drug and without -- but potentially without regard to food. So that could be a very attractive profile for not only lymphedema, where we initially started this program, but also in other indications. So we're advancing this now into multiple clinical trials. So we have 2 Phase II trials ongoing. If we go to the next slide. So we have 1 Phase II trial ongoing in post-acute sequelae of COVID-19 or what people call lung COVID, related lung complications. That study is going to read out towards end of this year. We also have a Phase IIa proof-of-concept study in lymphedema, in secondary lymphedema associated with breast cancer treatment. And that study is going to read out towards the end of this year as well. And then a third study, we are planning to launch is a registration-enabling study for IPF and related interstitial lung disease, which is -- IPF is a subset of progressive fibrosing interstitial lung disease. So we have an opportunity to pursue a registration-enabling study. And we are planning that. We'll have more to say about it in the coming months. So that's LYT-100. Quickly jumping to LYT-200. It's our second candidate that's in the clinic. It's a really exciting, novel immuno-oncology program targeting a foundational immunosuppressive mechanism, galectin-9. In preclinical models, we have demonstrated single-agent activity of a fully human LYT-200 molecule that's advancing into -- that's in the clinic right now. In the preclinical models, we have demonstrated single-agent activity as well as in combination with checkpoint inhibitors. And so we are targeting difficult-to-treat cancers where the checkpoint inhibitors either don't work or work really poorly. And so the Stage I part of the Phase I study is going to read out towards the end of this year. And depending on the data, then we'll decide on the indications we want to use -- go after in the expansion cohort is -- either as a single agent or in combination with chemotherapeutics or with checkpoint inhibitors. And so that's ongoing. And the third program, I quickly want to jump -- talk about is our LYT-300. It's an oral dosage form of oral allopregnanolone. It's a neurosteroid natural -- neurosteroid implicated in a number of neurological diseases. And unfortunately, these natural neurosteroids are not orally bioavailable. And so there is a product, brexanolone, that's in the market that was approved for post-partum depression. It's an IV -- 60-hour IV infusion, which has really greatly limited its usage, not only in PPD, but in other -- in a neurological indication. So having an oral form of allopregnanolone would be -- would allow you to go after a range of neurological indications. And that's what we have with LYT-300. We have demonstrated in preclinical models, including nonhuman primates, that you can actually have very good oral bioavailability of oral allopregnanolone. And so that opens up the door for going after a number of neurological indications. So we are gearing up to launch that Phase I study towards the end of this year, and we'll have data next year for that. So we have a very catalyst-rich year in 2021, not only from our wholly-owned pipeline that I mentioned, but also our founded entities are going to be a source of significant news flow and value. At least 6 clinical initiations are anticipated, 5 clinical readouts and full commercial rollout of 2 founded entity therapeutics, all anticipated in 2021. In addition, there is a possibility of potential revenue stream from multiple founded entities that also could strengthen our balance sheet in 2021. So I'd like to conclude this initial remarks by saying that we are building on the momentum and growing PureTech into a new form of a biotherapeutics company with multiple programs driving product candidates through clinical development and potential commercialization. We continue to grow and expand our wholly-owned pipeline, focused on the lymphatic system and the related immunology. We expect to drive value and growth of our founded entities, example, we could do additional monetization through our founded entities. We also have an opportunity to partner or spin-out our noncore applications coming out of the wholly-owned pipeline or do some regional deals that also could be a source of funding -- nondilutive funding for us. And so really, we're excited about the potential of the new medicines that we are discovering and developing, and to make a major difference in the lives of the patients as we build a major biotherapeutics company of the future. So with that, I'll hand it back to Tom for any questions.

Hey, thanks so much, Bharatt. Really nice comprehensive overview. Certainly a lot going on at the company. I picked up research coverage of the company in January. And one of the things I liked about it was the breadth of the programs that you have. Also, the foundational value, I think, you see in the founded entities, but also a focus on building out your own wholly-owned pipeline, as you've shown on the slide there. I want to spend a little bit of time talking about LYT-100, the deuterated pirfenidone. I thought you did a really nice job of framing up the pharmacology and potential benefits and some of the initial clinical data you generated there. You've talked about engaging regulatory agencies in the near term to explore potentially accelerated registrational path towards indications like IPF, the progressive fibrosing interstitial lung diseases. Maybe if you could just give us a little more color around how you envision that program? Obviously, this is all subject to regulatory feedback and gaining alignment with regulators. But what do you think a potential program could look like? There, to me, would seem to be kind of a low-hanging fruit situation where you have pirfenidone already established as standard of care. You know there are numerous shortcomings with pirfenidone. In the profile there, you look to have a potentially better profile than pirfenidone. So maybe just walk us through how you're thinking about tapping into that IPF opportunity?

Yes. Sure. I'll start off, and then I'll invite Michael to chime in as well. So as you know, that the deuterium substitution and based on some of the precedents that we have with the only approved deuterium product that's in the market, which is deutetrabenazine from my previous company aspects. Really, the deuterium modification allows you to take advantage of a regulatory path, relying on the safety of the parent molecule, so from a 505(b)(2) perspective. So that helps with speeding up some of the regulatory path. It also makes you eligible for NCE designation with the regulators because it's considered a separate new molecule. And also from an orphan indication perspective, such as IPF, we should -- we would be eligible for an orphan designation as part of this. And in addition, I did mention we have a composition of matter patent and -- which extends, gives you additional periods of exclusivity. So with all of these in mind and because deuterium substitution does not change the pharmacology of the drug, so we should expect to see comparable pharmacology to pirfenidone, but with a greatly improved safety tolerability profile. So we are advancing this and having dialogue with experts and key opinion leaders, as well as with the regulatory agencies to see what that path would look like and what the trial design could look like, not only for IPF, but this broader class of PF-ILD. And then so we should have more clarity on that in the coming months, and we should be able to share that with you. So Michael, I don't know if you wanted to add to the program?

Yes. I'll just briefly add that I think the effects -- the unique effects of deuteration can help address some of the main limitations of pirfenidone, which is still the standard of care, 1 of 2 drugs as standard of care for IPF. And we think that by addressing some of the limitations of pirfenidone, but as Bharatt said, retaining the pharmacology, really has the potential to become backbone standard of care, and the standard of care that is more tolerable could be the basis of new combination therapies in IPF and also this broader PF-ILD bucket as well.

Yes, right. Right, yes, I appreciate those comments, Michael. And I think that you brought up an important point. Especially as we think about some of the agents that are being studied currently in IPF, they're being studied on top of standard of care. I guess what's your sense -- thinking about commercial opportunity here and also, I guess, clinical development pathway as well. But what's your sense for the data that you would need to generate to become that backbone as you allude to? Do you think you would need to generate data in combination with some of the other investigational agents to really cement yourself as that backbone? Or do you think it's good enough to just show benefits over pirfenidone and then perhaps clinicians themselves will extrapolate that and say, this is the new backbone standard of care, and they'll feel comfortable adding agents on top of that?

So Michael, do you want to address that?

Yes. So I think there's a remarkably, I would say, low adoption of pirfenidone and nintedanib as standard of care in IPF and PF-ILD. So we think there's a tremendous opportunity to bring forward LYT-100 in these indications based on that tremendous unmet need. So the goal really is to have a direct effect of those. I think in future combinations, it will really be based on what is truly standard of care. But our goal right now is to focus on becoming standard of care therapy for IPF and potentially PF-ILD as well.

Yes. And I'll just add to that, Tom, is that a number of, that we are aware of, studies that are ongoing in the field, the pipeline of products that others are developing, vast majority of them, I believe, are on standard -- on top of the current standard of care, which is pirfenidone or nintedanib. And so we have an opportunity that if we become the standard of care that the future products are going to be on top of us. So it would be complementary to all of those programs that are being developed to really enhance the overall management -- optimal disease management in IPF, as well as this broader PF-ILD indication. And so -- and to the point about adoption, there was a paper that came out a few weeks ago of this independent study, where they actually followed and looked at the adoption rate of the 2 drugs that were approved in 2014, pirfenidone and nintedanib, and how is the adoption rate? In it, we were quite surprised to see very low, like 25% adoption. So vast majority of the patients are really not on current standard of care. And they're roughly 50-50 in terms of the usage. So when you think about that, it's like 12%, 13%, 14% for pirfenidone. There is a significant room for not only switching from existing usage of pirfenidone, but also expanding to this large number of patients who are currently not on any standard of care.

Right, right. Yes, certainly, an opportunity there to expand the market. I think, Bharatt, I want to shift gears a little bit and just talk a little bit about the program in lymphedema, because I feel like it's an area you guys are really kind of blazing the trail here, in terms of pharmacotherapy in lymphedema. I think it's an area where investors may be a little bit less familiar overall with the patient population. You are going to have some data here by year-end, proof-of-concept data. Maybe you could just walk us through a little bit of that opportunity, the scientific rationale? And then how you view the expectations here into this proof-of-concept data set?

Great. Yes. So I mean Michael has really spearheaded this, and so I'll have him address that, so...

sure, thanks. So we were surprised when we looked at lymphatics in general and the unmet need that there was an indication in lymphedema that had, in our estimates, 0.5 million patients just from the breast cancer surviving patients as well as up to 1 million or more total lymphedema patients, and yet there are no approved drugs in the space. It was very surprising. And one of the key insights for us going back to PureTech's unique R&D model was to have access to unpublished data that really showed that lymphedema was not a mechanical disease, but one that involved inflammation and fibrosis, and this inflammation and fibrotic cycle that truly impairs lymphatic flow. And so as part of that, we looked at the potential therapeutics that could interrupt all these mechanisms, both the inflammation and the fibrosis. And LYT-100 really had that potential to reduce inflammation, to reduce and prevent fibrosis and restore lymphatic flow. And so going from there, we were able to generate preclinical data that showed that LYT-100 halted progression of lymphedema, reduced swelling in the tail model, and this really led, in combination with the Phase I data that Bharatt described, to this proof-of-concept study in lymphedema, where we'll be looking at safety and tolerability of LYT-100 in breast cancer-related lymphedema, but also looking at endpoints -- secondary endpoints that would inform efficacy studies for lymphedema. As Bharatt mentioned, there are no approved drugs in this space. So it really is a new space. And so part of that trial will be generating unique new data for us to better inform future studies.

Yes. And if we look at this slide here in the middle, maybe you can walk through -- Michael, quickly, in terms of what we are planning to achieve in this study in there.

Yes, absolutely. So towards the end of the year, we hope to have results looking at the safety and tolerability of LYT-100 in breast cancer-related secondary lymphedema. But some of the other endpoints that we'll be measuring include bioimpedance spectroscopy, skin tonometry, serum biomarkers. These are all things that contribute to the swelling, the fibrosis that ultimately impairs the quality of life for patients with lymphedema and contributes to the disfiguring and disabling disease. And so we hope to be measuring these and getting a sense of how LYT-100 may be impacting these secondary end points, in addition to the safety and tolerability in this patient population.

Great. Yes. Thank you, Michael, for the additional color there. And then I do want to -- just -- I know we only have a few minutes left, but I do want to make sure that we touch on the long COVID program. I feel like this is something where a lot of people have heard of the concept of long COVID. They're familiar with patients having kind of prolonged ramifications from COVID-19 infection. But maybe if you could just walk us through how you guys are defining that patient population? Again, you're going to have a Phase II data readout here later in the year. Maybe just help frame some expectations for what we should be looking for -- from that data set?

Yes. Michael, go ahead with that.

Sure. And so I think it's been pretty sterling that this post-acute COVID syndrome has been gaining attention and even mild and moderate patients are showing these long-term side effects of having COVID-19. For us, it's really focusing on the respiratory complications of post-acute COVID. And the Phase II proof-of-concept study that we've launched and we'll be reading out by the end of the year, will be looking at improvements in some of the respiratory symptoms, and we'll be looking at noncritical COVID-19 patients. Patients who are at the highest risk of these respiratory complications as part of their post-acute COVID syndrome, especially patients who have shortness of breath, who may have had a mechanical ventilation or other intensive respiratory intervention. And this is based on data from SARS and MERS, and also emerging data from COVID that suggests that these patients will be the ones at highest risk for this really persistent respiratory complications of COVID-19.

Okay. Yes, that's great, Michael. Thank you for walking us through that. And I guess just one last kind of commercial question on LYT-100. I mean, when we think about the potential addressable populations here across things like lymphedema or IPF or PF-ILD, especially in something like lymphedema, where you're still -- you're trying to define exactly what the right patient population looks like, you can end up in areas with, I guess, potentially pretty disparate pricing dynamics. Just -- and it's still early days. You're still looking to generate proof-of-concept across each of these indications. But just give us kind of an early sense of your thoughts on some of the commercial dynamics there and, I guess, potential to price, but maybe even more importantly, differentially price across indications?

Yes, Tom, so again, it's early days, right, from that perspective. But one way to think about this is, for example, IPF and PF-ILD are usually seen by a different set of physicians. And so -- and the dosing that will go into, for example -- those lung fibrosis indications, for example, may be quite different from the dosing and the regimen for lymphedema, for example. And so there could be 2 separate products that one can envision developing. So we're looking into all of those kind of dynamics to think about -- think through. And obviously, we want to make any of these products as affordable as we can to these patients. And so that's -- we are committed to doing that. And also, our model allows you to have that flexibility from a pricing perspective, because we are doing this -- running these studies in a very capital-efficient manner. So we would have that flexibility to price it so that it's across different indications, so.

Right, right. Okay. No, I appreciate those comments, Bharatt. And maybe just in the last 30 seconds we have, and you mentioned capital-efficient development. Can you talk a little bit, just high-level strategy, how you're thinking about the wholly-owned assets here? Are these things that we should expect to remain in-house and you're going to try to take them forward yourselves all the way through commercialization? Or could they be the basis for future founded entities? Or just how are you thinking strategically about the focus of the company right now?

Yes. Look, I mean, we are building a biotherapeutics company, right? So we plan to advance these programs into late-stage development and potential commercialization, depending on the indications that we can handle. So there are a lot of different ways to think about commercializing these products. Maybe in some instance or some indications, we keep focus on the U.S. and partner selectively in other geographies and use that money to fund the U.S. launch. In some cases, it may make sense to actually partner with someone who actually has already built in some of those commercial capabilities and still be able to participate in the upside. So it really depends on the indication and whether we have to do combination studies. For example, in some of the immuno-oncology program, you may want to have to end up doing combination studies, in which case, it may make sense to partner with some of those companies who bring in the combination products. So we have the flexibility in developing. But we do, over time, want to have products that we could take potentially all the way, in -- through late-stage development and into commercial.

Right, right. Okay. Great. Well look, certainly an exciting time for the company. Unfortunately, we're up against the time here. We'll have to leave it there. But really appreciate the team joining us. Thank you to Bharatt, Michael and George for the insights. And thank you to the audience for joining us as well. And we'll stay tuned. Hope everyone has a great rest of the day.

Great. Thanks, Tom.

Thank you, Tom.

Thank you.