PureTech Health plc (PRTC) Earnings Call Transcript & Summary

Good afternoon, everybody. My name is Albert Hwang with Morgan Stanley. Just to read a disclosure quickly. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So thank you all for coming. I have with me -- Bharatt, maybe you can introduce yourself and give a quick overview of PureTech before we get started with questions.

Okay. So good afternoon, everyone. So my name is Bharatt Chowrira. I'm the President at PureTech. And with me today is Dr. Julie Krop, who's our Chief Medical Officer. And so we work with PureTech based in Boston, Massachusetts. We are a biopharma company founded on the principle of developing novel medicines based on this idea of validated pharmacology that has some validation derisking that has already taken place but for one reason or the other have really held back the broad potential of those drugs. And so we come in with an innovation that unlocks the broad potential of those pharmacology and molecules. So we've been very successful with that approach, and we have a growing pipeline currently about -- we've been responsible for about 27 of these programs. 17 of them are clinical programs and a couple of them have made it all the way to approval in the U.S. and Europe. And so we'll -- and we have a strong balance sheet, and we continue to grow our pipeline. So we will be happy to discuss more.

Okay. And maybe just to talk about one of your biggest successes, Karuna. Can you talk about the technology at Karuna and how it ties into the rest of your wholly-owned portfolio?

Yes. So Karuna was born at PureTech several years ago. And again, it highlights -- it's a good case study for the approach that PureTech takes in looking at validated pharmacology. So we were interested in schizophrenia, and there hasn't been a new mechanism of action for treating schizophrenia in 60, 50-plus years. And so we were interested in finding new approaches. And so we got together some experts, who pointed to a molecule that was a muscarinic receptor agonist that Lilly had developed several years ago. And -- but Eli Lilly decided to not continue because it had some tolerability issues. And so we were able to go in and license that molecule from Lilly. We added an innovative step to that molecule, where we combined that muscarinic receptor agonist, xanomeline, with a muscarinic receptor antagonist that was only peripherally acting. And so that allowed the molecule or the compound to be efficacious in the CNS, but not have the GI tolerability issues. So that's an example of how we took a validated with clinical data on the core molecule, added an innovation, that vastly improved its tolerability profile. And today, Karuna, we -- I'm very proud of that accomplishment. They're a very successful company. They recently announced a Phase III data that was quite impressive, and they are on track to file a new drug application soon. And so that could become potentially the first new mechanism for treating schizophrenia in 50 years. So that's a good example. And similarly, we have done a similar approach to our other programs in our pipeline like LYT-300, which is an oral version of a neurosteroid called allopregnanolone, which, until we applied our technology, wasn't being developed as an oral formulation. We were able to come in with a technology that allowed it to be orally bioavailable, and now it can open up the opportunity to treat a range of neurological conditions within a very potent natural neurosteroid. And LYT-100 is another example on a similar win, where you had pirfenidone, which is a very well-established drug that's approved for the treatment of idiopathic pulmonary fibrosis, but it is poorly tolerated. And so half the patients either dropout or dose reduce or have to switch therapies. So we came in with an innovation, which is a deuterated form of pirfenidone that allows this molecule to retain its pharmacology, but vastly improve the tolerability profile. And that's currently in dose-ranging studies in the clinic, and we expect that to have a really good efficacy, but also improve tolerability that could become the frontline therapy. So that's -- those are some of the examples of how we approach building a pipeline.

Okay. Okay. I do see a common theme among this, where there are nuances to improve on known mechanisms or to take something that's lower risk and then add something to improve upon it. Pirfenidone itself, I guess you talked about the tolerability issues as the problem. What is deuterating it actually do? Is it a PK question [indiscernible] window?

Yes. Probably I'll call Julie to respond to that, yes.

Yes. So deuterating the molecule actually slows down the metabolism to some degree. It lowers the amount of metabolites, if you will, so there's a lower amount of metabolites. And what it enables us to do is actually match the concentration or the overall far end of the curve or exposure of pirfenidone, but with a lower peak concentration. And with that lower peak concentration, we're actually able to, as Bharatt mentioned, significantly improve the tolerability, which is a really big deal, I think, in this condition. IPF is a -- idiopathic pulmonary fibrosis is a really serious lung disorder with a mortality that's almost worse than lung cancer, median survival, 3 to 5 years. So if patients, as Bharatt said, if they can't stay on their medication or have to lower their dose below the approved dose, they're not getting benefit from the drug. And so keeping them -- getting a better tolerability profile means keeping them on drugs longer and at the approved dose, will improve their overall outcome. So pirfenidone in real-world trials has actually shown that there's about a 3-year improved survival. So on top of a median survival of 3 to 5 years, that's a big deal. So I think it's not just tolerability. The other thing that's really interesting is that we -- because of this improved tolerability, we've been able to actually escalate and get exposure levels even higher than pirfenidone. And we believe that, that will translate potentially into even better efficacy in addition to the improved tolerability. So lots of ways, I think, to improve the care of patients with this condition.

And you said you're in dose-ranging studies right now. What are -- can you describe the trial and when we would expect to see data?

Yes. So it's a multinational trial, a randomized controlled trial. We have 2 doses of LYT-100, both a dose that matches the exposure of pirfenidone. But as I mentioned, a higher dose with a greater exposure compared to placebo and compared to pirfenidone as a benchmark. So the trial will actually look at -- it's a 6-month trial, will look at the rate of the decline in FVC over that 6-month period and compare LYT-100 to placebo, but also compare it to -- look at the relative efficacy compared to pirfenidone. So I think it will be a very informative trial, will help us establish the dose for our Phase III program. And we initiated that study a few months ago, and we will have data by the end of 2025 -- yes, end of...

End of '23. Okay. And I guess in that trial, if you have a dose that's equivalent to pirfenidone, what do you expect to see in something like that? Or how would you think about what that data is going to look like given that it's matching pirfenidone?

Yes. So I think that's a good question. We are going to be focused a lot on endpoints that will measure the effectiveness of the drug. So we'll be looking at how long patients can stay on drug, rates of discontinuation, are they able to stay on the full dose of the therapy. We'll obviously be looking at survival and hospitalizations. And then as I mentioned, at this higher dose, we potentially will see even better efficacy as well. In a short-term trial, we may be able to see improved FVC -- or reductions -- better reduction and FVC decline.

Okay. So I guess in terms of design, you have endpoints that address the tolerability. And then with a higher dose, you'll see even better potential...

Potentially better efficacy.

Okay. Great. And you said, just for the investors here, end of next year is when you would expect to see data. Okay. Any other trials that you're running with 100 or indications?

We're evaluating a whole host of conditions now with LYT-100. I think the interesting piece of this is, of course, we know that it has a potent effect, LYT-100, and pirfenidone on -- it's an anti-inflammatory as well as an antifibrotic. So that could potentially allow it to be used in a host of different indications. So we're evaluating right now conditions where pirfenidone is already shown in some trials to be efficacious, things like myocardial fibrosis, where we know that -- there was a recent trial that had shown that pirfinidone was effective in reducing collagen formation. And this is a high output cardiac failure, HF people call it. So we are evaluating other -- radiation-induced fibrosis is another one. So I think it will all be based on sort of an evaluation of what we think would be the most -- put the best into our pipeline.

Okay. Great. And Bharatt, you also touched quickly on LYT-300, which is allopregnanolone, but oral. Is that right?

Correct.

And can you describe again -- I know you touched on this, but the benefits of oral over IV besides convenience?

Yes. Do you want to take that, Julie?

Yes, sure. So I think, clearly, being able to give the drug orally will allow it to be used in a whole host of indications that will -- much broader indications, as Bharatt said, neuropsychiatric conditions, neuropsychological. And it's really difficult for women who are postpartum depression to come into the hospital and be on a 60-hour IV infusion right after they have given birth to a baby. It's very disruptive. So clearly, I think that's an important advantage. And right now, there's other synthetic forms of allopregnanolone, but we believe that they've had variable success. We believe there's a lot of room potentially for improvement around dosing and dosing schedules and potentially better potency of the natural steroid compared to synthetic forms. So I think that really will in many ways unleash the potential for this drug by allowing it to be oral, just like Bharatt talked about, unleashing the potential of the other drugs that we've seen previously that we've been able to improve upon.

One of the advantages of using a natural form of allopregnanolone -- it's a neurosteroid -- the GABAA, a positive allosteric modulator is that the onset of action is very rapid compared to a lot of the SSRIs and other antidepressants that are out there, it takes a long time for it to start having benefit. And the efficacy is mixed with those antidepressants and there are side effects. So I think with something like allopregnanolone, if it's available orally, administered, then you would potentially get a rapid onset of action, a pretty good efficacy based on what's known about the biology and potentially also an improved safety, tolerability profile. So it could open up a new way of treating major depressive disorders, or as Julie was mentioning, PPD and other neuropsychiatric conditions.

So the indication that you're going after first, what phase of development are you...

So right now, we are in our Phase I evaluation. There's 3 parts to the study. The first was really just to demonstrate oral bioavailability, which I think is a huge -- that was a huge impact in our program, because this is from a technology platform called Glyph. And the way that it works actually is try to mimic the way we absorb fats in the body. So it's not a typical oral drug absorption through the liver. One of the reason allopregnanolone had to be given intravenously is that it had very high first-pass liver metabolism. So we were able to, with the Glyph technology, make a prodrug that actually makes the molecule look like a like triglyceride, like a chylomicron that gets directly into the lymphatic system, bypassing the liver and allowing oral bioavailability, if you will. So it's a -- the first part of this trial was really focused on just showing can we do that. And we showed a ninefold elevated or elevation in bioavailability compared to Sage when they did their studies with oral allopregnanolone. And then the second part -- second and third part of the study are really dose escalation to look at safety, tolerability and then looking at some PD markers to help us identify the dose to take forward into Phase II. And with all that data, we'll then determine which indication that we plan to go to. Yes.

Okay.

And we'll have that data by the end of the year.

End of this year?

This year.

Okay. Great. And the Glyph technology, that's something that is proprietary to PureTech and something that you guys came up with or developed or found?

Yes, it was originally developed by a professor at the Monash University in Australia, Chris Porter. And so we licensed that technology exclusively. And we've been developing it now. Subsequently, we have generated our own internal IP, intellectual property, to kind of -- on our products and all the improvements that we have made to that core technology. So we have multiple layers of intellectual property around it, both in licensed and internally developed.

And each drug will have its own...

Proprietary -- yes.

Proprietary -- yes.

So just if you think about that as a platform, what other, well, either compounds or indications or programs do you think will come out of this?

I mean we see a broad potential for this kind of a platform. Because you can imagine, any drug that has significant first-pass metabolism challenges that otherwise cannot be orally administered, we have a potential way of approaching those molecules that, again, would be potentially derisked because you know how the pharmacology works because it's been established by others. Then if we can take that -- advantage of that and then make that in oral dosage form and allowing it to be not only convenience, but also broad applications and in indications where you couldn't go before with an injectable one, for example.

And the other advantage is you could even directly target the immune system too because you're going right into the lymphatics, which have a high concentration of immune cells, so potentially immuno-oncology and...

So we see Glyph and a couple of other platforms that we have in our research engine that will be a source of new molecules coming into our pipeline. So we had this approach of organic growth through these 3 platforms, generating molecules to add to the pipeline, but also an active external sourcing effort to bring in molecules that may be at clinical stage to complement our growing pipeline. So that's sort of how we're thinking about building our internal pipeline.

Got it. Okay. And so again, just Phase I data by the end of this year?

Right.

Okay. Great. LYT-200. I know you talked about oncology a little bit with the lymphatic system. But this is different. Can you talk about gal-9 and the target and your foray, I guess, into immuno-oncology?

Yes. So gal-9, I think, is a really interesting target. It has an effect on multiple arms of the immune system. And it is secreted by many tumors. And basically, the objective, I guess, of the secretion of gal-9 is really to dampen the immune system and shield the tumor from being destroyed by the immune system, much in the same way really that PD-1 is a similar target. And actually, gal-9 is a ligand for PD-1. That was shown recently in a study. So it's a similar pathway. And we developed an antibody to galectin-9, which is very specific to galectin-9, and obviously, with the attempt then to shield or to block this effect and allow the immune system to be activated again, if you will, against the tumor. So this is a really exciting program. It's very novel. We have -- right now, in Phase I, we're treating patients who have failed other treatment options. And we will -- we're right now in -- we've completed the bimonthly dosing portion of it. We're now in weekly dosing. And we will be getting data by the end of this year on that. And then we'll be looking to go into combination therapy, because we think there's a big potential, of course, to combine agents much in the same way we do in many diseases where we've not fully sort of unlocked the potential for these medications. And so that's our next step, will be combining with chemotherapy. So we're looking to take this into potentially a variety of different solid tumors, including potentially pancreatic cholangiocarcinoma. We're also looking at leukemia, which is a really interesting potential because there it seems that we have a dual mechanism of action. So in addition -- in the preclinical work, in addition to just activating the T cells, we've also been able to show apoptosis of the leukemia cells in this patient population. So -- I mean, this was in an animal. So we see applying this in humans. By the end of this year, we'll be starting a study in acute myeloid leukemia. But there's potential for other forms of leukemia. So we see this as an exciting play in the immuno-oncology space for PureTech.

Okay. And so the trial there, what's the design for that? And when would we expect to see data?

So the -- so right now, we are in single monotherapy studies. We should have data by the end of the year. And then we'll be starting the leukemia trial by the end of this year and the combination trials either later this year or next year. So we'll probably have data -- some data coming out in 2023.

Okay. Efficacy data, you mean? Or...

Yes, on the combination.

Efficacy on the combination by...

By sometime the end of...

End of 2023. Okay. Great. So maybe we can switch gears here to capital needs. I mean you have a lot of founded entities stakes. Obviously, Karuna has been very successful. What are the general capital needs?

So we are in a very fortunate situation to have a strong balance sheet. So the last reported number at end of June, I think June 30, was $341 million. That does not include additional $115 million or so from monetization since then from one of our founded entities. So we have enough capital to pursue some of the studies that Julie was talking about with the run rate into first quarter of 2026. And so we see founded entities as a source of value for us. And because we have a strong balance sheet, we can be very thoughtful about how we monetize some of those stakes in the founded entities because we're not in a rush to -- from a capital need perspective.

Okay. Before we kind of move off of the 3 programs, I forgot. Are there any other programs that you wanted to highlight?

I mean, as I said, we continue to grow the pipeline. So we have 3 platforms that are going to be generating molecules for us, and we expect to have additional molecules entering the clinic in the coming months and year, so.

In the programs that you -- we did talk about the 3. Some of those have very large indications. Is there any interest in partnering in those or maybe getting somebody to help develop some of the indications?

Yes. So from a strategic perspective, we have the balance sheet to kind of continue progressing these molecules as far as we can take them. And again, we'll be very selective in terms of how we advance them. And so some of the rare disease indications, for example, we can take it quite far ourselves without having to rely on partnerships. But large indications, as you mentioned, could benefit from partnerships, whether it's a regional or geography-based partnerships to help advance these molecules in large indications. But it all depends on the program how we advance indications that we are pursuing.

Okay. Great. So we have a couple of minutes left. Maybe if you could just recap the catalysts that we should be thinking about for driving value? A lot of end of the year stuff that we...

Yes. So we have -- so the lead program is LYT-100. It's in dose ranging studies. We expect data from that study to read out towards the end of 2023. We have LYT-200, which is our immuno-oncology program, with single-agent solid tumor data by, I think, towards the end of this year. We start leukemia study later this year. And then combination study is starting late this year, early next year with data in 2023 and 2024. LYT-300 is in Phase I, multiple Phase I studies. We expect data from that top line by the end of this year. And then depending on the indication we choose, to have some additional studies starting [indiscernible] year. And so those are 3 major programs. And then we have catalysts from our founded entities that are also going to be potentially value driving for us as we go forward.

Okay. Great. Any questions from the audience? Yes.

[indiscernible].

Yes. So the question is, how do we look at the R&D spend to fund our pipeline? So we have a strong balance sheet, as I mentioned. And the studies that we have currently ongoing, we have those -- the funds necessary to support those studies, and also the operations and starting -- supporting the research efforts and the engine into first quarter of 2026. And all depends on how these programs progress in the next stage. And we usually fund them to the next milestone. And we'll -- and one of the beauty of this model is that we have multiple programs. We're not dependent on the success of one program or one trial. And so we can actually be quite thoughtful in terms of how we deploy capital in a disciplined way.

Any others? Okay. Bharatt, Julie, thank you for your time, and thanks for coming to our conference.

Yes. Thanks, Albert.

Thank you, Albert.