PureTech Health plc (PRTC) Earnings Call Transcript & Summary

All right. Welcome, everyone, to the 31st Annual Credit Suisse Healthcare Conference. For those of you joining by Zoom and otherwise, welcome. Pleased to be joined here today with PureTech. We have Bharatt, who is the President; and Julie who's the Chief Medical Officer. And this will be a fireside chat format. So we'll be having an interactive discussion about the company. So welcome.

Thank you.

Thank you.

So let me just first start by asking you to briefly introduce yourselves and then give us perhaps a 3- to 5-minute overview of the company, if you will, and then we'll dive into questions.

Okay. Sounds good. Thank you, good afternoon. My name is Bharatt Chowrira. I'm the President of the company, and I've been with the company around 5-plus years.

I'm Julie Krop, I'm the Chief Medical Officer. Been at PureTech a little over a year now.

So thanks, Andy, and for the Credit Suisse team for inviting us to present. And also welcome everyone who's present here as well as those who are listening in through the webcast. So before I dive in to the presentation, I have a few slides. I do want to remind everyone regarding the forward-looking statements that we may be making. And so I do want to refer you to our SEC filings for up-to-date information. So we are a biopharmaceutical company based in Boston, Massachusetts. And we are really dedicated to changing the treatment paradigm for serious diseases that have limited or no treatment options. So we are really proud of the work that we have done to deliver on that mission. And I'm looking forward to really digging into some of these programs that we are advancing with my colleague, Dr. Julie Krop. So we have just a historical perspective on PureTech. We have made tremendous business and clinical progress over the past several years since our inception. When we started PureTech, we would identify and invest -- invent assets and partner them with investors to spin them out as subsidiaries, which we call now founded entities within PureTech. And this created a unique model, which enabled us to generate a significant amount of innovative companies and programs that really form the basis for the PureTech and the company that's created this unique model which enabled us to generate significant amount of value for our shareholders as a part of building these innovative programs. And so through capital monetization, we've been able to fund our innovative engine without having to go into the public equity markets to generate capital to fund these programs. And so for the last 4 plus years, we haven't really done any equity financing. And so it's a really unique and attractive model. So as a result, we are one of the few biotech companies that is clinical stage, but we are generating cash. And because of this model, we have been able to be quite -- take a long view on some of these programs that we initiated. So from a public market perspective, we have seen our founded entities as a source of value, almost like partnered programs. So in this process, we've also built really incredible network of scientific collaborators who would often share with us unpublished data that together with PureTech scientists would co-invent some key intellectual property before the data are published in major journals. So about a few years ago, as our balance sheet was strengthening, we decided to -- instead of spinning out these companies, we decided to keep the innovation engine going, create new programs but instead of spinning them out, we would keep them in-house and develop them and fund them ourselves. And this is part of our growing wholly owned pipeline of programs. So we have a stellar clinical track record that's ongoing our growing pipeline of wholly-owned programs. We have about 3 wholly-owned clinical programs. We have a strong balance sheet, about $341 million last reported June 30 and additional equity in our other founded entities. So looking ahead, we envision driving our wholly-owned pipeline programs towards commercialization, and we believe that we have positioned for efficient product launches, so most of our wholly-owned programs are anchored around orphan indications, which as a small companies, which we believe that we can actually advance them quite a ways into development and potential commercialization. So in terms of our track record, we have been quite successful in our R&D engine in generating about 27 different new therapeutic candidates and therapeutic -- of which 17 of them are clinical stage, 2 have gone from early inception all the way to U.S. FDA and EU clearances. And the third one is expected to go into FDA filing for approval. So our R&D engine has been quite robust, and we have a pretty good track record of clinical success, about sixfold better than the industry average, as shown on this slide on the right-hand side. So in terms of our -- what unifies all of our approach in terms of the innovation engine is the focus on validated biology and validated pharmacology. So we unlock new classes of medicines by enhancing on-target efficacy enabling oral administration and improving tolerability of new medicines that have demonstrated efficacy, but have been held back by one reason or the other due to one or more of these challenges that we've been able to overcome. So Karuna Therapeutics, their KarXT program is a great example of this validated biology approach. KarXT was invented by PureTech. One of the components of KarXT is xanomeline, which is a potent muscarinic receptor antagonist, which Eli Lilly was developing for treating, improving cognition in Alzheimer's patients. But what they saw was it had a potent effect on improving psychosis and other symptoms of schizophrenia. So it's development, unfortunately, was hampered by GI tolerability issues. So Lilly discontinued that program. So we at PureTech looked at that and in-licensed that program from Eli Lilly combined xanomeline with a muscarinic receptor antagonist that was peripherally acting that really formed the basis for KarXT program, which Karuna Therapeutics has been very successful in advancing that into Phase III studies, they recently announced spectacular Phase III data. So we spun out Karuna Therapeutics a few years ago after the initial Phase I studies. And that has been a really good success story for us. So that's a good example where we still own about 3% of the equity. We have generated significant amount of return on the initial investment. And we also are eligible for a 3% royalty on the product potential in the future sales as well as some sublicense income. So another example on this theme of validated biology is our lead program in the wholly-owned pipeline, which is LYT-100, which is a deuterated form of pirfenidone. So as you all know, pirfenidone is a well-established potent antifibrotic anti-inflammatory that has been approved for treating idiopathic pulmonary fibrosis. So Roche are selling this product for treating IPF, and it generates about $1 billion in sales. But the challenge with pirfenidone is that it's used as limited by significant GI-based tolerability issues, about half the patients who start on pirfenidone or the other approved IPF drug, nintedanib has significant GI-based tolerability issues. And so as a result, it's usage and its clinical benefit have been overshadowed by the GI-based tolerability issues. And half the patients' dose reduced or discontinued or switched between therapies. So what's happened is that only 25% of all of IPF patients are currently on either of these 2 standard of care drugs, primarily driven by the GI tolerability issues. So we have an opportunity with LYT-100 with a deuterated form of pirfenidone that has superior tolerability that we have demonstrated in a head-to-head studies so far that could potentially not only allow us to become the front-line therapy for treating IPF, but also other related interstitial lung disease and other antifibrotic conditions. So we'll talk more about it later this afternoon. Another good example of this validated pharmacology is LYT-300, which is an oral form of allopregnanolone, which is a natural neurosteroid. So it's a potent GABA A agonist that has been approved for treating postpartum depression, but since it is not orally bioavailable, the formulation that has been approved is a 60-hour IV infusion, so which has really hampered its compliance and adoption in the marketplace. So we have used a technology, which we call Glyph to really convert this natural allopregnanolone into an oral dosage form. And we have demonstrated that in a Phase I clinical trial. We are completing the Phase I study. We'll have the data at end of this year, and that could then really change the way we can actually apply oral allopregnanolone for treating range of neuropsychological and neurological conditions. So those are some of the examples of how a validated pharmacology and taking advantage of that using our innovation to really unlock the full potential of these well-established molecules. So these are some of the examples that are part of our wholly-owned pipeline. And through this unique approach, we have built a fully robust novel therapeutic candidates in different stages of development, and we're advancing them. We have a strong balance sheet, as I mentioned, $341 million last reported June 30, about $115 million additional capital that we have been able to generate through sale of equity in 1 of our founded entities. So we are very well capitalized. We guided a runway about first quarter of 2026. So with that, we are well poised to deliver on the pipeline as well as with the founded entities forming the support to continue to develop and advance our wholly-owned pipeline. So these are some of the examples that are part of our wholly-owned pipeline. And through this unique approach, we have built a fully robust novel therapeutic candidates in different stages of development, and we're advancing them. We have a strong balance sheet, as I mentioned, $341 million last reported June 30, about $115 million additional capital that we have been able to generate through sale of equity in 1 of our founded entities. So we are very well capitalized. We guided a runway about first quarter of 2026. So -- with that, we are well poised to deliver on the pipeline as well as with the founded entities forming the support to continue to develop and advance our wholly-owned pipeline.

Great. Thank you, Bharatt. It's a great overview of the company. And what I'd like to suggest is that we use our remaining time to dig into LYT-100 and LYT-300 a little more. Obviously, there's -- it's a very deep pipeline. And I can't get through it all today, so maybe we'll just focus on those 2 programs with the time that we have. So my first question is on 100, which is the deuterated pirfenidone. I think most investors are, I imagine quite familiar with the IPF indication medical need just because we've had pirfenidone now approved and used for a long time and intended in it as well, a little bit more recent, but also in use. But can you frame the unmet medical need given these 2 medicines that are available and what you see as the opportunity for the deuterated pirfenidone to improve upon standard of care.

Yes, that is a great question. I think it's a remarkable how efficacious pirfenidone has been in terms of -- we've got IPF is a deadly condition, median survival 3 to 5 years and multiple clinical trials have shown significant benefit to patients with pirfenidone, not only in terms of efficacy and reducing -- decline in lung function, but also survival benefit of about 3 years, which has been on top of a condition that is only -- has a survival of 3 to 5 years, that's quite a significant benefit. The problem, as Bharatt explained, is only 25% of patients are benefiting from either of the approved agents. And that is such a crime in a condition that serious. And so really what's held the class back is both agents have suffered from GI tolerability issues, which sound rather benign, but these GI tolerability issues, primarily nausea, have led patients to not be able to continue on the medication and lose their appetite, lose weight. And either as Bharatt said, dose reduce or come off the medication altogether about 50%. Some never even start because they're afraid and have heard of the side effects and are afraid of reducing their quality of life, whatever time they have left. So it's been a real barrier, and I think there and I think there's enormous unmet medical need for a drug that is already been shown to work from an efficacy standpoint, but we've now been able to improve upon the tolerability. And the way we've done that, we as Bharatt mentioned, it's a deuterated form and what that does is allow us to preserve the structure of the molecule and preserve the efficacy, but we'll have a differentiated pharmacokinetic profile such that we're able to reduce the amount or the level of C-max, the maximal blood concentration of the drug that's required to get the same exposure as perfenidone. And in that process, we've some that we can improve tolerability significantly. So we did a head-to-head trial against pirfenidone, a blinded, randomized trial and crossover study. And we're able -- was able to show really about a 50% reduction, which is quite significant in the most common adverse events associated with pirfenidone. So we see this as a derisked program with enormous benefit -- potential benefit for patients.

As you compare the curves, you believe that reducing C-max will -- is the driver for reducing side effects. And can you preserve efficacy? And if you're preserving efficacy is it through the AUC and not C-max or some other aspect of the drug exposure.

So in our pharmacokinetic studies, we really started off foundationally to better understand just PK profile in general. What's the C-max, how does it compare to pirfenidone? How is our area into the curve compare. And so we figured out a dose where we could match that area under the curve, which is really, as you say, most indicative of what you would consider efficacy in a chronically administered medication. And C-max is really what you see in terms of driving safety or tolerability problems. So by being able to match that at a level where you can get the same exposure, but with less overall C-max. We believe that's definitely what's driving the tolerability benefit.

Okay. So what's next in development? What's the next step to drive this product forward towards a registration?

There's a couple of things that in addition to the head-to-head crossover study, we also did some dose-ranging studies. Because of the better tolerability, we wanted to explore whether we could even develop a drug with a bigger or higher exposure than pirfenidone. And so what we've seen is the tolerability profile was such that we can even go to a higher dose. So that has the potential for even better efficacy. So what we planned -- what we are doing right now, and we've already started as a Phase II dose-ranging study, where we are doing about 240 patients study where we will compare -- we'll look at 2 doses of LYT-100, the dose that matches the exposure of pirfenidone and a dose that's even higher than the exposure of pirfenidone, compare that to placebo. And then we also have pirfenidone at the prescribed dose 801 mg TID as the benchmark to compare ourselves to. So it will be a really informative study and will allow us then to either take one or both doses into the Phase III program.

And what's the duration of that study in terms of the active treatment portion of the study? What is going to be the key efficacy measurements. And then will you have a longer-term extension open label or some other extended way to track these patients and look at lung function over a longer period of time?

So it's a 6-month study. And the primary endpoint for the study is looking at forced lung capacity. So forced vital capacity, I should say, FVC. And we look at the decline in the slope of the FVC over time. All patients will then be allowed to roll over into a long-term extension study at the end of the completion of the randomized portion of the study, and that will be very beneficial, not only to enhance enrollment, but to allow us to get longer-term safety. And we started -- we initiated the trial already in the middle of the year, and we plan to have data by the end of 2023.

Okay. And then that will set you up for the pivotal program. And what does that look like? That's pretty well trodden path. Are you following the path of others? Is there -- or there any developments in the regulatory environment that would allow you to do things differently?

Yes. I mean I think we have a 505(b)(2) designation by the FDA, and that is because of the fact that we are so similar to pirfenidone. I think showing this benchmark study in our dose-ranging study, similarities to prefenidone will also be able to, I think, really enhance our ability to design a more streamlined Phase III. I think the Phase III program is still going -- is still obviously under consideration until we get the results of the Phase II study, so I can't speak definitively, but we'll be comparing ourselves to prefenidone most likely. And it could be a superiority combination or non-inferiority.

Superiority combination.

Superior if we go through the higher dose, so we would be able to have both look at superiority at the same time, potentially, if we take the [ 550 mg ] that matches exposure, we'd be comparing noninferiority. We'd be highly focused, of course, on better compliance, which could lead to better efficacy, allowing patients to stay on drug longer, measuring how long patients stay on drug at the dose that's at the approved dose of pirfenidone compared to the same exposure of LYT-100. So all those endpoints will be critical beyond just looking at FVC and determining how we -- how this drug could benefit patients beyond just reducing discontinuations, but actually staying on higher doses. We know that patients who go down in dose, we know from the initial Phase III -- the early Phase III studies on pirfenidone that lower doses don't work as well, and you actually have reductions in efficacy. So that's a critical endpoint to be looking at.

What do we know about dose reductions or more patient compliance or just early terminations in the literature around pirfenidone and nintedanib? How prevalent is that?

So it differs. If you look at the randomized pivotal diagnosis to a pretty much all studies in drug development in the development phase, typically in a clinical trial setting, patients are watched much more closely. They're coached and they stay on medications better than they do in the real world. In the real world, we're seeing discontinuations of about 50% of patients either coming down on the dose or eventually discontinuing. So it's a pretty poor -- poorly tolerated, unfortunately medication.

Right. So with a better safety and tolerability profile, where else can we take this drug? I know there's opportunities in ILD, there's a range of fibrotic indications that are still unsolved, the FSGS, cardiovascular and fibrosis. What are you most excited about in terms of the next potential indication or indications for this molecule?

Well, I mean, I think our first step given the lowest risk and the highest potential benefit would be in patients with the other half of interstitial lung disease. So there's idiopathic pulmonary fibrosis, which is about 50% of interstitial lung diseases. And then there's PF-ILD that's caused by what we know would be systemic sclerosis or rheumatoid arthritis and other autoimmune inflammatory conditions. And we know that pirfenidone has shown benefit in those patients already. It's not approved in those indications, but that's another 50% of the market. So we would definitely want to go there. We also are looking at some really interesting indications, radiation-induced fibrosis. And this would be sort of a medical countermeasure to radiation exposure. So a stockpiling, if you will. And this allows you to develop a drug under the animal rule, which allows you to actually get an approval by the FDA without having to do clinical trials. Obviously, you can't do clinical trials and something that would be high dose, radiation would be on the ethical, but it allows you to get a voucher as well. So that's a really interesting indication. And then as you mentioned, myocardial fibrosis is another area that we're exploring where recently has -- pirfenidone has shown benefit in clinical trials. So we're looking at all of these indications and the strength really of the clinical data that has been already published and demonstrated with pirfenidone.

Okay. And the last question of this program. What's the IPF situation that will enable you to make all of these additional investments into the molecule?

Yes. So because of duration, LYT-100, it has a composition of meta patents. So we have pretty long coverage. That, together with some additional patents that we have on dosing formulations as well as other aspects of the molecule in terms of the profile, we have a pretty long period of exclusivity extending into 2040. And so that allows us sufficient time to expand into multiple indications, not just IPF and so we're quite excited about that. And it's a very fairly well proven pathway in terms of deuterated products. So there has been -- from our previous company aspects a deuterated product that's in the market [indiscernible] and that's doing quite well, even though there is genetic [ carbamazepine ] in the market.

Right. And one other question. Can you just tell us what is the global annual sales of the 2 approved products for IPF roughly pirfenidone and as you mentioned the market just today with these 2 products as well?

Well, combined sales, I think last year was about $3.5 billion. And that represents only about 25% of all of IPF patients population. So there is a huge opportunity there that 75% of IPF patients are not on any standard of care and physicians don't want to really prescribe pirfenidone [indiscernible] earlier in the disease process. And so they wait until the very last minute in the disease progression to prescribe this. So we have an opportunity to allow something that is more tolerable and have retained the potency of pirfenidone to be able to prescribe sooner and earlier in the disease process. So to not only take existing market share, but also expand into those 75% were currently not on any standard of care.

And that early treatment is really critical because once you've lost lung function, you don't gain it back. So the idea really is to try to catch this and treat it very early and to prevent that decline.

Great. So let's talk about allopregnanolone. If you could summarize the opportunity in postpartum depression, tell us how allopregnanolone is used currently? And then what's the unmet need that you're looking to solve with your program with program number -- with program 300.

So allopregnanolone is neurosteroid. It was developed by Sage Therapeutics and approved several years ago for postpartum depression. The downside of it has been really that it had to be given in intravenous formulation in order to get absorbed. And in a 60-hour of IV infusion, where women had to go into the hospital to be observed and to be administered the medication. So it's a very unappealing, if you will, administration, especially in a woman who has recently given birth and is still breast feeding and bonding with their babies. So we have a -- as Bharatt alluded to, a platform, Glyph, where we are really able to allow the absorption of drugs that are highly metabolized by the first-pass liver metabolism, orally. And the way that we really do that is by capitalize upon the way that we absorb fat in the body. So typically, a drug would be absorbed through the portal vein into circulation into the liver. And it would be undergoing metabolism. If there's high metabolism that can prevent the ability to have oral bioavailability. So what we've done is really attempt to take a prodrug, take a molecule that we know has validated biology and the first of this will be allopregnanolone and actually mimic -- have a linker and attach a fat to it. So it mimics almost a chylomicron that gets absorbed directly into the lymphatic system into the thoracic duct and then into the systemic circulation that prodrug then gets cleaved and the original allopregnanolone, if you will, is in the systemic circulation. So it's a very exciting platform that I think has a lot of potential, not just for allopregnanolone but even for other drugs that suffer from the same issue of difficulty with oral bioavailability.

Okay. Great. Well, unfortunately, we're out of time. But thank you so much for joining the conference today. It's a pleasure having you both here, and we look forward to the continued dialogue. So thank you very much.

Thank you. Thanks, Andrew.

Thanks Andy.