PureTech Health plc (PRTC) Earnings Call Transcript & Summary

Greetings, and welcome to the PureTech Health 2021 Annual Report and Year-end Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kana DeLuca, Associate Director of Investor Relations. Thank you, Kana, you may begin.

Thank you for joining us today for PureTech's 2021 Annual Results Webcast. Our annual report was made available this morning, portions of which will also be filed with our Form 20-F today. This information is available on the Investors portion of our website at puretechhealth.com. PureTech is led by a proven and seasoned management team with significant experience in discovering and developing important new medicines, delivering them to market and maximizing shareholder value. Today, I'm pleased to be joined by the senior team, including Daphne Zohar, Founder and Chief Executive Officer; Bharatt Chowrira, President and Chief Business Legal and Operating Officer; George Farmer, Chief Financial Officer; Eric Elenko, Chief Innovation Officer and Strategy Officer; Joe Bolen, Chief Scientific Officer; and Julie Krop, Chief Medical Officer who will all be available for questions after the presentation. I would like to remind you that during today's call, we will be making certain forward-looking statements. These statements are subject to various important risks uncertainties and assumptions that could cause our actual results to differ materially, and we ask that you refer to our annual report in our SEC filings for a complete discussion of these risks, uncertainties and assumptions. We undertake no obligation to revise or update any forward-looking statements or information, except as required by law. I also want to remind you that we will be referring to certain non-IFRS measures in this presentation. The presentation of this non-IFRS financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with IFRS. A reconciliation of the IFRS to non-IFRS measures, that we will be referring to today can be found in this presentation, is also available on our Investor Relations website at investors.puretechhealth.com and in our SEC filings. I will now turn the call over to Daphne Zohar, PureTech's Founder and Chief Executive Officer.

Thank you, Kana. Thank you for joining us this morning. We hope all of you and your families are keeping well. At PureTech, we are dedicated to improving lives and inspired by our mission to discover, develop and commercialize new therapies for devastating and often orphan diseases where limited or no treatment options currently exist for patients. I am immensely proud of our team's accomplishments in 2021, and we are so pleased to have a strong cash position and the ability to support our activities. We are also excited to share more with you today about our capital allocation strategy to drive additional value to our shareholders. It was a productive year for PureTech with significant advances, important achievements and further validation of our unique R&D model for developing new medicines. Today, we would like to go over a few clinical and business updates, including the progress we have been making across our pipeline, a review of our strong financial position and how we are building value for our investors, including a discussion of our capital allocation strategy and our environmental, social and governance achievements and progress of which we are very proud. Let's start by looking at our strong track record of clinical success. We have a unique R&D model that has been successful in identifying, inventing and advancing novel candidates through our network of scientists, clinicians and industry leaders before the rest of the world knows about key discoveries. We're proud of our track record, having now generated 27 therapeutics and therapeutic candidates, of which 16 are clinical stage, and 2 have gone from inception at PureTech through successful FDA and EU regulatory clearances for marketing. Notably, our track record of clinical success outperforms industry averages by 5.5x. We think part of that is due to our approach of building on validated biology and bringing an important inventive step that enables key benefits for patients such as significantly improved tolerability or localized targeting, for example, to immune cells or sites of inflammation. So across our pipeline, there are examples where we take an approach that has proof of human efficacy, but the class has been held back from its full potential by some key limitation and then we apply our technology to overcome that key deficit to enable a new class of therapeutics to be unlocked. One of our founded entities, Karuna, is a good example of this. We were struck by the fact that there hadn't been a new mechanism for treating schizophrenia in over 50 years. So we engaged with a group of leading schizophrenia experts, who are most excited about muscarinic agonists, pointing to the powerful data generated by Eli Lilly with xanomeline, which was held back at the time due to tolerability issues. We invented the concept of combining a muscarinic receptor agonist with a peripherally acting antagonist, which improved the AE profile and unlocked a new class of antipsychotics, which may potentially improve the lives of millions of people living with psychosis. As many of you may know, KarXT now represents a potential first-in-class and best-in-class therapy for schizophrenia. Financially, this was also a big success for us, as we had allocated a total of $18.5 million to that program and generated over 40x returns on that capital without even accounting for the fact that we are do royalties and sublicense revenues as a co-inventor of certain underlying intellectual property. We think that our approach has enabled us to have better success rates because one clinical component has been substantially derisked. A second important point is that we set up key experiments to derisk the programs early, and are willing to move resources and shut down programs that have mixed or negative results so that we focus our resources on the programs that have higher chances of success. This is supported by the fact that we are not reliant on any one binary program. That means we have choices about how to spend our time and money, and we are entirely aligned with our shareholders to advance the winners. That is something that is more difficult to do if the company has only one platform or program. I'll note that our network of scientific collaborators, you see pictured here, enables us to identify and co-invent [indiscernible] before it's published in major journals. In fact, there have been around 30 papers published in major journals like science, cell in nature, most of which were published after we in-licensed the key technology. Through this unique approach, we have built a pipeline of novel therapeutic candidates that are being advanced both internally, which you see at the top of this slide and through our founded entities, which you can see across the bottom of the slide. You can think of our founded entities like partnered programs, where we co-invented and advanced them through initial milestones. We hold sizable equity ownership in these 8 founded entities and continue to benefit from their growth, as they have many upcoming catalysts and can serve as a potential source of non-dilutive funding to us over time from events such as M&A transactions, IPOs and royalties. Just last year, for example, we received $218 million from the sales of some of our equity and founded entities. We have been able to use these resources to advance our wholly owned pipeline, which we see as a major value driver going forward. We have a strong balance sheet and ended the year with $418.9 million in cash and cash equivalents at the PureTech level. Our founded entities are also well capitalized having raised $1.9 billion over the last few years, of which 94% came from third parties. 2021 was rich in accomplishments. As we look at the progress across our wholly owned pipeline on the upper half of this slide, it's important to highlight that we initiated 5 clinical studies in 2021, 4 of which read out so far and 1 that is ongoing. Our founded entities have also achieved many value-building milestones in 2021, including Vedanta's positive top line results from the Phase II data of VE303 in C. difficile infections, which led BARDA to exercise its option for the additional funding of $23.8 million. We saw the beginnings of the broad commercial launch of Gelesis' Plenity and the commercial launch preparations of Akili’s EndeavorRx. So far in the 2022 post period, Gelesis has completed a public listing on the New York Stock Exchange, becoming the third PureTech-founded entity to be listed publicly and Akili has announced an upcoming merger with Social Capital Suvretta Holdings valued at $1 billion, expected to close in mid-2022, which would then become our fourth publicly listed founded entity. Our 3 currently public founded entities, Gelesis, Vor and Karuna are valued at a total of around $4.5 billion, with important catalysts that could potentially further impact those values. And we have several other private founded entities who we believe also have substantial value potential. In our wholly owned pipeline, we created significant fundamental value and achieved a number of additional clinical and business milestones towards our mission of developing transformational medicines for millions of people, who have long struggled to find effective treatments. These milestones are highlighted in our annual report, and I'll touch on just a few of them here. We currently have 7 therapeutic candidates in our wholly owned pipeline, including 1 therapeutic candidate that has been licensed out to and is being developed by a partner. LYT-100 is our lead therapeutic candidate, which we believe may have therapeutic potential across a range of conditions involving inflammation and fibrosis. These include lung diseases, such as idiopathic pulmonary fibrosis or IPF, and orphan disease, and Long COVID respiratory complications, as well as disorders of lymphatic flow such as lymphedema. Earlier this year, we announced positive top line results from a crossover study comparing LYT-100, deupirfenidone that showed a 50% reduction in the incidence of GI-related adverse events compared to perfinidone in healthy older adults. And we also outlined our plans to advance LYT-100 into late-stage clinical development for the treatment of IPF. Julie will dig deeper into the data shortly. We have an ongoing Phase II study of LYT-100 in Long COVID-related pulmonary complications, which we expect to read out in the first half of 2022. We're also advancing LYT-100 in lymphedema, for which there are over 1 million patients in the U.S. with no pharmaceutical treatment options. We are in a Phase IIa study, which we'll read out later this year. Importantly, we are one of the only companies advancing novel therapeutic options for lymphedema and for Long COVID. Beyond pulmonary conditions in lymphedema, we are also exploring the potential of LYT-100, in other inflammatory and fibrotic conditions, such as radiation-induced fibrosis, myocardial fibrosis and other organ system fibrosis based on clinical data around the use of pirfenidone in those indications. Outside of LYT-100, we have 2 oncology programs, one of which is LYT-200 for the potential treatment of a range of cancer indications and which has orphan drug designation from the FDA. The Phase I portion of the study is ongoing and a maximum tolerated dose has not yet been reached. We also have a preclinical oncology therapeutic candidate, LYT-210, designed to inactivate a subset of tumor-promoting gamma delta-1 T cell receptors, which we are developing for a range of cancer indications. In December, we initiated a clinical trial for LYT-300, which is an oral version of a clinically validated drug that is currently only administered via a 60-hour IV infusion. We are advancing LYT-300 for a range of neurological and neuropsychological conditions. This program came from our Glyph lymphatic targeting program. We have powerful lymphatic and inflammation technology platforms, which serve as a source for generating potential future candidates for the internal pipeline. Including LYT-300, we have now generated 4 therapeutic units from these platforms. I'm now going to hand over the call to Julie Krop, MD, our Chief Medical Officer, to walk us through our therapeutic development pipeline in depth, starting with LYT-100, which is a perfect case study for our R&D model.

Thank you, Daphne. I'm thrilled to be part of the PureTech team. Having worked at a number of outstanding companies over the course of my career in drug development, PureTech really stands out as the best placement worked. In my opinion, PureTech uniquely possesses all 3 critical ingredients for a successful biotech, an uncommon trifecta that includes an experienced CEO and leadership team with a proven track record of success, a broad and innovative pipeline, and last but not least, the internal capital to efficiently execute on it. LYT-100 is our lead candidate, which we believe may have therapeutic benefit across a range of conditions involving inflammation and fibrosis. We initially discovered this program through our focus on evaluating therapies for treating lymphedema, a serious disorder associated with [indiscernible] lymphatic flow and no approved therapeutics. Lymphedema is a chronic and painful condition that affects 1 million people in the United States alone, and is characterized by severe swelling in effective parts of the body due to the buildup of lymph, which over time leads to chronic inflammation and eventually fibrosis. As is typical for us, unique insights and unpublished data from our collaborators and business network enabled us to identify LYT-100 and acquire the related IP. LYT-100 is a derated form of pirfenidone that is designed to retain the potent and clinically validated anti-inflammatory and antifibrotic activity of pirfenidone with a differentiated pharmacokinetic profile. Pirfenidone has been approved for the treatment of idiopathic pulmonary fibrosis, condition characterized by progressive irreversible scarring of the lungs that is associated with a significantly reduced life span with a median survival between 3 to 5 years. The current standard of care includes pirfenidone and nintedanib, both of which are efficacious therapies for patients who have IPF. Despite their proven efficacy, their clinical benefit has been significantly limited by gastrointestinal-related adverse events, which include nausea, abdominal discomfort and diarrhea. Approximately half of the patients on pirfenidone discontinue treatment, dose adjust or switch to an alternative treatment due to tolerability issues with pirfenidone. And according to one study, only about 26% of IPF patients are treated with the current standard of care treatment despite their proven efficacy. This suggests that the vast majority of IPF patients are not currently being treated and supports the significant unmet need for new, more tolerable treatment options that would enable patients to stay on treatment for this deadly condition. We believe that this represents a substantial opportunity for LYT-100 that we believe could really make a meaningful difference for patients with IPF by improving the tolerability profile of pirfenidone. For these reasons, we believe the LYT-100 profile has the potential to replace the current standard of care. LYT-100 maintains the pharmacology of pirfenidone with a differentiated PK profile, enabling an improved tolerability profile. LYT-100 demonstrated comparable total exposure to pirfenidone based on PK modeling from prior studies while improving on the gastrointestinal-related adverse events. Because of LYT-100's potential tolerability advantage, there is also the opportunity to test the dose with higher drug exposure than the currently approved dose of pirfenidone, which would have the potential for even better efficacy. I'll touch more on this on the next slide. Importantly, we have a composition of matter patents with exclusivity up to 2033 and additional IP that covers dosing, formulation and method of treatment that would further extend the period of exclusivity to 2040. LYT-100 also has the potential for NCE designation and orphan drug exclusivity for IPF and other indications. This is important because there is demonstrated clinical efficacy data with pirfenidone in a range of indications in addition to IPF, but those have not been pursued commercially with pirfenidone. What we really like about the LYT-100 is its derisked clinical profile due to its close chemical similarity to pirfenidone. This is reminiscent of Karuna's KarXT, which Daphne noted earlier, was a program PureTech coinvented. Our team knew a lot about the parent compound efficacy and created an improvement to address the tolerability issues that has the potential to significantly improve the lives of patients with schizophrenia. LYT-100's value proposition is very similar. As Daphne mentioned, we were excited to announce the results from our randomized double-blind crossover study in healthy older adults earlier this year. The study evaluated the tolerability of LYT-100 at 550 milligrams TID dosing, which based on prior studies, achieved similar exposure levels as FDA-approved dosing of pirfenidone for the treatment of IPF, but with a lower Cmax. This is important because we believe that higher Cmax levels correlate with an increased incidence of adverse events. The data demonstrated approximately 50% fewer subjects treated with LYT-100 experienced gastrointestinal-related adverse events compared to subjects treated with pirfenidone while maintaining similar exposure levels. We also saw a clinically meaningful reduction in the incidence of neurologic adverse events. Based on these data and data from our multiple extending dose studies, we believe LYT-100's differentiated profile will have reduced gastrointestinal and other adverse events and as a result, potentially improve patient compliance. The longer patients can stay on the drug at the approved dose exposure, the more efficacious we believe the drug will be. We also completed additional Phase I studies, which have demonstrated that LYT-100 was well tolerated at higher doses with low rates of gastrointestinal adverse events that were comparable to placebo. Based on these results, we will proceed with the dose ranging study in treatment-naive IPF patients with 4 treatment arms as seen in this slide. There will be 2 arms of LYT-100, a dose that matches pirfenidone exposure and a dose that has higher exposure as well as the placebo arm in a pirfenidone arm is a benchmark. A previous clinical study comparing a lower dose of pirfenidone than the FDA-approved dose noted a dose efficacy response, but whether a dose higher than the marketed dose can achieve increased efficacy has not yet been explored in patients with IPF. In the upcoming dose ranging study, we plan to investigate LYT-100 in IPF patients at a dose with a higher total drug exposure than the currently approved dose of pirfenidone to see if higher exposure results in improved efficacy. Guided by our clinical advisory board that includes many of the world's experts in IPF clinical development and our data generated to date as well as recent regulatory feedback, we will advance LYT-100 into late-stage clinical development for the treatment of IPF, beginning with a dose-ranging study initiating in the first half of 2022, with top line results expected by the end of 2023. The dose-ranging study will enroll approximately 250 treatment-naive IPF patients to evaluate LYT-100 efficacy relative to placebo. The study will also compare LYT-100 tolerability and efficacy with pirfenidone. The primary endpoint will measure the rate of decline in FVC for LYT-100 compared to placebo over 6 months. We intend to capitalize on efficiencies of the 505(b)(2) pathway for our IPF development plan, and we believe that compelling efficacy data from the upcoming dose-ranging study, together with a Phase III study could serve as the basis for us to file for FDA approval for the treatment of IPF in the United States. We also have 2 ongoing Phase II studies with LYT-100, one in Long COVID related pulmonary complications, which we expect to read out in the first half of 2022 and a Phase IIa study in lymphedema, which we'll read out in 2022. As previously mentioned, we will be initiating our dose-ranging study in IPF in the first half of 2022 and expect top line results by the end of 2023. Beyond the pulmonary conditions in lymphedema, we are also exploring the potential LYT-100 in other inflammatory and fibrotic conditions, such as radiation-induced fibrosis, myocardiofibrosis and other organ system fibrosis based on validated clinical data generated with pirfenidone in these indications. Our second wholly owned therapeutic candidate is LYT-200, which targets a foundational immunosuppressor, Galectin-9, for the potential treatment of a range of cancer indications. Our preclinical data suggests that Galectin-9 could be an important therapeutic target for a range of cancers and also has the potential to serve as a cancer biomarker for those that may benefit from treatment. Galectin-9 is a particularly interesting immuno-oncology target, given that it is a tumor secretive factor that affects multiple immunosuppressive signaling pathways simultaneously to interaction with a number of different immune cell receptors. Such receptors include validated targets like PD-1, for example, as well as others. LYT-200 is currently being evaluated as a single agent in the first stage of an adaptive Phase I/II clinical trial as seen on this slide, which is expected to read out in the first half of 2022. Pending these results, we intend to initiate Phase II expansion cohort portion of the trial, which is designed to evaluate LYT-200, both alone and in combination with BeiGene's tislelizumab for chemotherapy. We also have a second oncology program, LYT-210, a preclinical candidate targeting immunomodulatory gamma-delta-1 T cells, which we are developing for a range of cancer indications. Our third clinical stage therapeutic candidate is borne out of one of our technology platform's, Glyph. Glyph is a synthetic lymphatic targeting estate platform designed to employ the lymphatic systems natural lipid absorption and transport process to allow absorption of drug candidates directly into the lymphatics, bypassing first-pass liver metabolism and enabling oral delivery of certain drugs that currently can only be given intravenously. LYT-300 is an oral version of allopregnanolone in development for a range of neurological and neuropsychological conditions. An injectable formulation of allopregnanolone is currently approved by the FDA as a 60-hour IV infusion for the treatment of postpartum depression, though the method of administration has significant limitations. Using our proprietary Glyph technology platform, LYT-300 is designed to capitalize on the validated biology of allopregnanolone to potentially offer a new oral treatment option for a range of conditions where there is significant patient need. LYT-300 is currently in the Phase I trial, which results expected in the second half of 2022. In addition to our Glyph platform, we have 2 other powerful drug targeting platforms that can enable oral administration of therapeutic agents with known efficacy but limiting dosing options currently. We believe that these platforms will create many derisked therapeutic candidates for our internal pipeline similar to the 4 therapeutic candidates generated to date as well as offer opportunities for nondilutive funding to partnering noncore pieces of the platform, which we have done and expect to do more. In summary, as you look across our fully owned programs and our founded entities, we believe this is going to be another exceedingly catalyst-rich year. Across our wholly owned programs, we anticipate at least 6 clinical trial readouts and 1 clinical trial initiation in 2022. Across our founded entities, we anticipate at least 5 expected readouts and 4 clinical trial initiation in 2022. I would now like to welcome George Farmer, PureTech's Chief Financial Officer to the call, so he can provide a recap of our 2021 financial results that were announced earlier this morning.

Thank you, Julie. I'm pleased to report that PureTech's cash position remained strong. At the PureTech level, we ended the year ending December 31, 2021, with cash and cash equivalents of $418.9 million compared to $349.4 million at the end of 2020. On a consolidated basis, our cash and cash equivalents were $465.7 million at the end of 2021 compared with $403.9 million at the end of 2020. This strong cash position was augmented last year following the sale of shares of one of our founded entities, which generated nondilutive proceeds of $218.1 million. Backed by the strong financial position and conservative budget projections, we are pleased to reiterate our cash runway guidance into the first quarter of 2025. Our revenues are mostly driven by upfront and milestone-based payments from collaborations as well as brand and are expected to continue to fluctuate from year-to-year. On a consolidated basis, our revenues in 2021 were $17.4 million compared with $11.8 million in 2020, an increase of $5.6 million or 47.8%. Our 2021 operating loss increased to $150.3 million from $119.5 million in 2020, largely due to the successful progression of our wholly owned programs into more advanced stages of development. On a consolidated basis, we reported a net loss of $52.7 million for 2021 compared to a net income of $4.6 million for 2020, which is partly the result of the earlier mentioned increased research and development costs. 2021 was a productive year for PureTech and our founded entities. We look forward to the number of significant potentially value-driving catalysts expected later this year. I will now turn the call back over to Daphne.

Thank you, George. Before I move into providing updates on our ESG progress, I would like to take a moment to note our recognition that many of our successes especially those related to the development of our wholly owned pipeline may not yet be fully appreciated by the market. As such, we have been considering various approaches to drive additional value for our shareholders, including through the implementation of a capital deployment strategy that balances investment in the continued growth of our business with potential returns of capital to shareholders. Our strategy includes maintaining a minimum of 3 years of cash on hand to fund the continued development and expansion of our business. Beyond that, we will target distributing a portion of the proceeds we may generate from the monetization of equity interest in our founded entities, receipt of potential royalty and sublicense income and/or other sources such as strategic partnerships to shareholders through various distribution mechanisms, including potentially share buybacks or special dividends. We may revise this plan should opportunities arise to use available funds for strategic growth opportunities, such as in-licensing of therapeutic candidates or intellectual property, asset purchases or strategic M&A, to the extent such opportunities are aligned with our long-term strategic growth. Any plan to return capital to shareholders will be subject to our review of market and industry conditions at the time, the approval of our Board of Directors, legal restrictions and other corporate considerations. We intend to engage with shareholders to understand preferences and market perspectives with respect to the potential near-term activities related to the implementation of this capital allocation strategy. Shifting gears. On the operational side, I would like to highlight our ongoing ESG efforts. The second addition of our environmental, social and governance report has been published as part of the annual report, which can be accessed through our newly created ESG page on our website. In the 2021 ESG report, we have implemented 3 new ESG metrics, the TCFD disclosures, the SASB standard for the biotech and pharmaceutical sector and the United Nations sustainable development goals to inform our general sustainability framework. As you can see on this slide, our ESG framework is built around 3 focus areas: patients, people and planet, addressing areas such as R&D policies, GHG emissions and human capital management. We are pleased to note that our ESG program is rated positively by several sustainability rating agencies which can be found on our ESG web page, and such performance reflects our commitment to building a sustainable business so that we can deliver on our mission to treat patients with underserved disease. Notably, we are proud to be ranked the top 14 FTSE 250 company to surpass the FTSE Women Leader Reviews Board and leadership gender balance target and continue to harness the diversity within our company, including the recently announced appointment of Ms. Sharon Barber-Lui to our Board of Directors, who will also chair the Audit Committee as of today. We have made great progress this year and have a lot to look forward to over the coming months and beyond. I would like to thank the entire PureTech outstanding team for their dedication, collaboration and contributions this year, as we accomplished significant milestones as an organization. I would also like to extend my gratitude to our tremendous Board and R&D committee for their engagement, advice and strategic oversight to our shareholders, thank you for your continued trust that you have placed in our team. Maximizing shareholder returns is our utmost priority as we continue to build on our successes in discovering and developing new life-changing therapies for devastating diseases where limited or no treatment options currently exist for patients. I'd also like to take this opportunity to thank the patients, volunteers and clinicians working alongside us in our clinical trials. We are inspired by our courage and inspired to make a difference in the lives of patients who would benefit from this work. We look forward to a transformational year and to building on all the value and momentum we've generated as an organization. Thank you, everyone. We will now take questions.

[Operator Instructions] Our first question today comes from Lucy Codrington of Jefferies.

Just a couple. Starting with LYT-100, for the dose-ranging trial, is 6 months likely to be long enough to see an efficacy benefit versus pirfenidone? And will the Phase III -- and I appreciate this will somewhat depend on the data from the dose-ranging trial, but are you likely to try and seek non-inferiority? Or will you aim to path a superiority? And could there be an option to explore less frequent dosing for LYT-100? Then just on the cash way -- cash runway, given that's maintained into 1Q 2025, despite the additional funds from Karuna, what's been factored into spend since your last guide? And then finally, what are the next steps for LYT-210 beyond the additional biomarker data and when could clinical study start?

Thank you, Lucy. So I'll start with your first -- your question about cash guidance. So in terms of the cash guidance, we've maintained 2025, but we leave ourselves a lot of flexibility with regard to turning over cards in clinical development. So we are budgeting in a very conservative way. And then your questions on LYT-100 and LYT-210, I'll hand over to Julie. Just as a reminder, Julie, the first question was on 6 months being enough. And then the next question was on non-inferiority versus superiority. And then the third was on less frequent dosing. And then we had a question on LYT-210. So Julie, over to you.

Thanks, Daphne. The -- we believe that the 6-month time period will be adequate to be able to demonstrate superiority of placebo as well as be able to gauge the effect compared to pirfenidone. Of course, for the Phase III trial, we will be looking at the standard 1 year, but for dose-ranging purposes, we believe the 6-month time point will be variance formative. And then I think your question was on Phase III. I think at this point, given that we have not completed the Phase II and looked at the results, it's hard to comment on the design, but we are likely going to be looking for comparable benefit, not superior unless we decide to go with a higher dose. So that's one of the purposes of our dose ranging is to be able to look at a higher dose given the better tolerability that we've seen compared to the approved dose of pirfenidone. We believe that we can go to a higher dose. We've done -- I think we've announced results from our higher dose study where we showed comparable benefit or comparable tolerability to placebo at the 824 dose -- 824-milligram dose TID. And so we plan combined with -- that combined with our multiple ascending dose data to inform our Phase II dose, which will be a combination, as I've mentioned, a higher dose than the approved dose of pirfenidone as well as a dose that has comparable exposure. So if we move forward with a higher dose, potentially, it would be superiority. So it depends on, I think, the results of the Phase II dose ranging study. And then obviously, we need to have discussions with the FDA on that as well once we have the data. And then I think your next question, had to do with less frequent dosing. Our aim here is really to maximize tolerability so that patients can stay on this drug and receive the life-saving benefit. And we have found that by TID dosing, we can lower the Cmax optimally compared to pirfenidone. And that is why we're choosing that TID dosing. I think to physicians and patients, the most important is really not 2 times a day versus 3 times a day, but really being able to tolerate the medication and stay on it. So that's why we're doing that. And of course, it's the same as pirfenidone, both being given 3 times a day with food. And I think your next question had to do with LYT-210. And I -- what specifically was the question was it -- when it's going to be in the clinic or...

Yes. So just you mentioned additional biomarker data this year, but I guess, what are the steps to get this into clinic and when that might be?

So we're completing preclinical studies right now. And I don't think we've guided yet to an exact time that we'll be in the clinic...

The next question comes from Thomas Smith from SVB Securities.

Congrats on the progress. A couple of questions on our end. First of all, on LYT-100, I appreciate the update on the plans in IPF. Just wondering if you could talk a little bit about the Phase II dose ranging plans? How are you thinking about those selections from a higher dose LYT-100 arm? And then we've seen and heard from some of the other companies enrolling mid- to late-stage studies in IPF about some of the enrollment difficulties in this population. Can you just talk about maybe some of the actions you're taking to drive faster enrollment and your level of confidence in achieving the projected time lines here? And then maybe a question on the Long COVID program. As we're getting closer to the top line data readout here, what are some of the gating steps to reporting the top line? And how are you thinking about expectations for this data set?

Great. Thank you so much, Tom. So on the question, I'm going to have Julie answer these questions, but on enrollment difficulties, it's been an area that we've thought a lot about, and we're actually very encouraged by the design that we have. And I'll let Julie answer that. So Julie, enrollment difficulties, dose ranging, and then Long COVID.

Thanks. Sure. We are -- as Daphne said, I think we have spent a lot of time thinking about this because obviously, there are companies that have had significant challenges with enrollment. I think one of the things that makes our study so attractive is that we are being compared against a standard of care medication. And there's a lot of belief that LYT-100 being so similar in composition, will also work. And so we have basically a 3 -- 4-arm study, and you have 3 out of 4 chance of being on active therapy is very compelling as well as having it be 6 months with an ability to extend it into a long-term safety study. So I think all those elements are very reassuring. I think patients and physicians are excited about the opportunity to work on a compound that has some more potential efficacy, but can address some of the GI adverse events that have been so challenging and have caused patients to discontinue or just lower their dose, which we know, has suboptimal benefit to patients. So we are also pushing ahead with multiple countries, multiple sites. So all those things that you would typically do to optimize enrollment. We also have, as I think we've announced previously, Dr. Paul Ford, who has joined us. And he has run multiple IPF studies and enrolled them successfully. So that also, I think, is a huge benefit to have on our team, those who really know the investigators. So that's for LYT-100 for IPF. And then I think the second question was around COVID. We are soon going to be announcing results, as you know, around the Long COVID program. We're particularly excited because there's no therapy for these millions of patients right now that have been suffering from the respiratory complications. As far as expectations, we're focusing -- our primary endpoint is on the 6-minute walk test, which is a clinically validated endpoint really used to support approvals of a number of cardiopulmonary conditions, including pulmonary hypertension and others. And so we feel that we have a really strong set of data that will see the results. I can't tell you what the results will be, but we're hopeful that this drug, that clearly has an impact on both inflammation and fibrosis, could have potential benefit in this patient population. So yes, that's it for that.

The next question is from Miles Dixon of Peel Hunt.

Firstly, it was more -- I wondered if you had anything to say really on the -- I better seem to, in light of the current macro, have a conversation with our investors concerned over the capital requirements of biotech. And I just wondered if you care to comment on the difference that you find, particularly with your founded entities given the large stake that you have in your health balance sheet? And then second question, I think probably on the Glyph platform, if I could. You very recently disclosed an interesting article about the opioid replacement buff. And I wondered if that was something that you might be interested in pursuing at some stage.

Thanks so much, Miles. So we are in a very fortunate position that we, unlike most biotechs, are actually generating cash. And that is building on the success that we've had with the founded entities where we've been able to generate a significant amount of cash from the sale of equity in some of our founded entities. They are also a source of value to us from potential M&A transactions, actually royalties, which we do as co-inventors on some of them, licensing payments. And then, of course, we've been able to generate nondilutive cash through partnerships both on a PureTech level and then we anticipate that, that could be relevant from the founded entity. So we are very fortunate to be in a strong cash position, and we've guided, as we've said, to the first quarter of 2025. In general, the retrenchment in biotech has been felt very strongly in the industry over the last 6 to 8 months, but we have many reasons to believe that the sector is poised for a rebound and there's some really positive things that we've been seeing lately in terms of pharma companies really needing to engage with the biotech community and also less significant government regulation being applied than what I think other people were expecting. So in general, we feel really positive about the sector and absolutely very positive about where we are. Regarding the Glyph platform, we are not planning on pursuing this non-opioid -- this opioid replacement strategy for Glyph, but we were very excited to see additional proof of concept from this platform, which is now actually in the clinic with the Glyph or allopregnanolone, which is LYT-300. So we're really excited that we're seeing proof of concept, both preclinically as was noted in that publication, but also we now have a clinical program that came out of that with platform. So -- yes, thank you so much, Miles, for the question.

The next question comes from Alistair Campbell from Liberum.

I was actually hoping to learn a bit more about LYT-510, if that's okay. The first thing is, obviously, you're hoping that the reduced systemic exposure could have a big impact in side effects. And just looking through side effects that seem to crop up with tacrolimus, obviously, it's got a black box or a lymphoma risk and infection risk. But in other trials, we've also seen neurotoxicity, nephrotoxicity flag up. So can you just give an indication of where specifically you're hoping to see a difference or at least an improvement in any or all of those? And then secondly, I'd like to try and understand a bit more about sort of positioning. There's actually quite a lot in the literature about tacrolimus in ulcerative colitis, basically seems to be a very effective agent in terms of inducing remission in steroid-refractory patients. Do you think that's kind of going to be the starting point, but with the hope that you can then extend the therapy into maintenance phase in most patients?

Thank you so much, Alister. So I'm going to have Eric address that. Eric was involved. As you probably know, he's a coinventor on a number of different platforms, and he was very involved in the Alivio platform. So I'm going to have Eric answer those questions. Eric, do you need me to repeat any piece of that? Or did you get it?

No, I think I got it. So the Alivio platform, which LYT-510 came out of is centered around microparticles that preferentially bind to an inflamed tissue and spare the healthy tissue. So the idea is that someone swallows a capsule or a tablet containing LYT-510. And the tacrolimus finds it often goes to the inflamed tissue and some of the healthy tissue. And the goal there is to avoid systemic toxicity and the drug is only happening in effect at the site of the disease. This idea of systemic immunosuppression or systemic side effects is an issue that you see across a number of drugs to treat autoimmune disease. And so we're excited about the potential for the Alivio platform. And as you indicated, tacrolimus does have good evidence in terms of its effectiveness and what's really held it back has been the systemic side effects. In terms of going after steroid refractory, yes, that hopefully -- we haven't guided yet on the exact nature of any trial design. But most likely, that would be the patient population that we would first see in a clinical trial just as a practical manner because if somebody is responding to steroids, they don't tend to seek out a clinical trial. So the goal would be to start with more refractory patients and exactly as you indicated, then think about final move up on the treatment ladder. And...

Go ahead, Eric.

I just say this one of the last comment I'll make is, it's really this idea going back to the theme of validated biology and really trying to go and maximize the potential of the drug and get over its adverse events kind of very similar to the [ Karuna story].

Yes. That's a great point. So thank you so much, Eric, and thanks, Alistair, for the question.

We have a question from the webcast. Ted Tenthoff asks, what do you anticipate from LYT-100 in Long COVID? And how could you seek licensure? How do you envision LYT-100 being used to prevent Long COVID?

Thanks so much, Ted. I'm going to have Julie to take that one.

Yes. Thanks for the question. So we would hope to, assuming good data, pursue emergency use authorization. We have a CTAP designation, which is the coronavirus treatment accelerated program status, which is shared by many of the vaccines that have been granted emergency use authorization. And so that would be the pathway that we would hope to pursue. Of course, all of this is data dependent. And then as far as the -- is it more of the patient population you're interested in, how we would think about it. I mean, I think really, it's the mechanism of action of pirfenidone and/or deupirfenidone really makes sense in this indication with anti-inflammatory effect combined with an antifibrotic. And we know that based on the pathophysiology of both COVID and also SARS and MERS that we -- they also saw inflammation as well as fibrosis in patients and had changes on the 6-minute walk test. So we think there's a lot of similarities there. So we'll be looking at patients similar to the patients that were in our clinical trials who were hospitalized or on either required oxygen or ventilation, and it would be subacute treatment basically.

[indiscernible] asks could you provide more color on the capital allocation strategy that you are reviewing? What stage is it at? How long could it last, et cetera?

Yes, I'll take that one. So we have been, as I mentioned, in the fortunate position of generating cash, and we have a certain amount of cash that we need for our growth of our business and our operations and we also recognize that there are ways that we could drive additional value and returns to our shareholders, should we have cash in excess of that. And so the idea behind this capital allocation strategy is that we drive some of the additional cash to our shareholders through returns such as potential distribution or share buybacks. And that would be in excess of what we need for our growth. So how long will it last? Well, the idea is really that it would be an ongoing strategy that we implement, and it will always be subject to market conditions at the time, our Board view on whether we have opportunities before us. But we're really pleased to be in the position where we can drive additional returns to our shareholders. So that's behind that, and we will be seeking input from our shareholders and providing additional guidance. So I don't know if I think we have a few more questions, but we're almost out of time. So let me just see, is there any other questions that we want to take? Let me see here. Okay. So I think we've answered most of these questions that I'm seeing in front of me, and I think we're very close to time. But we really appreciate the time that everybody has spent today listening to our update. We're really excited about the coming year and about all of the progress that we had and also about the upcoming catalysts. So I'd love to thank you for your time and thanks to the team, and thanks to everyone who has taken the time to listen to this webcast. Thank you very much, everyone. Oh, I'm sorry. Was there another question from Ted that we should take?

We do have a follow-up question from Ted. Is there any concern that pricing of LYT-100 in Long COVID could limit pricing in IPF?

So I don't know, Julie or Bharatt want to take that one?

So -- I would give it to Bharatt. Yes, go ahead, Bharatt.

It's one of those things it's premature to really discuss pricing with respect to Long COVID as well as for IPF. We'll have to wait for the data set and the regulatory path forward and as we advance this program both for Long COVID as well as IPF. So I think it's premature to discuss the pricing.

This concludes today's Q&A, and thus concludes today's call. Thank you all very much for your attendance. You may now disconnect your lines.