PureTech Health plc (PRTC) Earnings Call Transcript & Summary

Hi, everyone, and welcome to the 41st Annual JPMorgan Healthcare Conference. My name is Natalie Collins, and I'm an associate in the JPMorgan Healthcare Investment Banking team. Just a reminder, we'll have 20 minutes presentation format, followed by 20 minutes of Q&A. And with that, I'm thrilled to introduce the CEO, Daphne Zohar, and the CMO, Julie Krop of PureTech Health.

Thanks so much, Natalie. Thank you to JPMorgan for inviting us to present here today, and welcome to all of you who are joining us here in person. It's great to see so many friends and colleagues this week. Also welcome to everyone who's joining via webcast. For those of you who are not familiar with PureTech, we're a new kind of biopharmaceutical company. And we're coming off of the back of a very successful 2022, where we had 5 clinical readouts. We're on the cusp of a major evolution in our company. And this year, we're going to have a number of important milestones, including the results of a late-stage study in IPF or idiopathic pulmonary fibrosis. We will be making some forward-looking statements today. So I ask you to look at our filings on sec.gov for a full list of risks and disclosures. The information that we're going to be discussing is accurate as of today, and we undertake no duty to update this information. At PureTech, our mission is to advance new therapeutics and to change the treatment paradigm for patients by applying 21st century thinking to bring forward new medicines that had previously shown efficacy but were held back by some issue that didn't enable them to move forward to patients. The reason this is important is for decades, the biopharmaceutical industry spent many years working to advance new modalities. And first of all, discovering them, then bringing them forward and some of them actually had human efficacy, but they had some issue that held back their development. And that issue seemed insurmountable with the technology that existed at the time. At PureTech, we're experts in applying new technologies and new thinking to really unlock these new medicines and bring them forward to patients. Let's move to Slide 4. I am enormously proud of the data that you see here. So on the left-hand side, you see that from our R&D engine, we've now advanced 26 new therapeutics and therapeutic candidates, of which, 18 are in the clinic and 2 were taken from inception at PureTech through FDA and EU regulatory clearances with the third KarXT filing for approval very shortly. If you look at the right-hand side of this slide, this is really important. Our track record of clinical success is approximately 6x the industry average. This is due in no small part to our distinctive model, which I'll talk about on the next slide. The model that we use to develop new medicine is underpinned by 3 pillars. The first of which is at the top here, where you see our network of collaborators. This network enables us to get access to new information before the rest of the world knows about it. So for example, there have now been 30 papers published in Nature, Science and Cell, all of which -- or almost all of which were published after we had secured or filed the key intellectual property. The second pillar is in the middle, the technologies that we've developed at PureTech and the new thinking, and we'll talk about some of those technologies in a moment. And then the third equally important is what we like to call our killer experiments. So before we do an experiment, we like to predefine what we will view as a success. And then if the new medicine that we're developing doesn't meet that bar, we can move our resources to other programs. Now this is enabled by our strong financial position, but also the breadth of our pipeline. We can make choices. We can choose to advance the programs that are most promising. And what I'd like to say is that all of this is enabled by the strength of our financial position. So if you go to the next slide, Slide 6. Here is real-world data supporting our approach and showing that it works. So let's start with the top row here with Karuna's KarXT program. Now some of you might be familiar with Karuna,and it's a company that we cofounded and the KarXT program was actually invented by members of our team here at PureTech. So what -- the way we became interested in this is that we knew that xanomeline had proof of efficacy in treating psychosis and schizophrenia. But xanomeline was actually sitting on a shelf at Eli Lilly because both Eli Lilly and other pharma companies that try to apply chemistry to address the GI tolerability of xanomeline were not successful. Members of our team came up with this idea of coupling xanomeline which is a muscarinic agonist with trospium chloride, which is a muscarinic receptor antagonist that doesn't cross the blood brain barrier. So what this enables was the efficacy to reach the CNS without the side effects in the rest of the body. So we did a tolerability proof-of-concept study and then Karuna advanced it. They just reported STELLAR Phase III data, and they're going to be filing soon. It's important to note that we have equity still as a coinventor. We also have royalties and milestone payments that are due to us. So that has been enormously successful for us. And I would like to say, if this is approved, this will be the first new mechanism for treating schizophrenia in over 50 years. So we're very proud of this. We're taking the same approach across our wholly owned pipeline with LYT-100, which is a deuterated form of pirfenidone and LYT-300, which is an oral form of allopregnanolone, both of these therapeutics. Pirfenidone in an IV form of allopregnanolone are actually FDA approved and efficacious, but each of them have issues that hold back -- have held back their -- reaching their full potential. And we've addressed those issues, and we'll talk about those in a moment. Here is a look on Slide 7 at our wholly-owned therapeutic development pipeline. We have 3 clinical stage programs that are wholly owned and a fourth that's entering the clinic this year, and we're going to be diving deep into all of these programs in this talk today. Before we do that, we're going to zoom out and we're going to look at the other components that make up our value. One of those is our very strong cash position. We had $341 million last reported cash, and we've guided to operational runway into the first quarter of 2026. The other -- one of the components that makes up our value that some of you might be familiar with is our founded entities. You can think of these like partnered programs. So these are programs that we invented and advanced through key milestones at PureTech. And then we now benefit from equity cash and equity royalties milestone payments and sublicense revenues from these entities, and they're advancing first in their class medicine. So for example, 4 of these are public, Karuna, Akili, Gelesis, and Vor. Akili and Gelesis have FDA-cleared first of their kind therapeutics that are launching now. So these founded entities are a source of non-dilutive cash for us or have been and something that I'm really proud of is, I think something that not many biotech companies can say. We have not had to raise money from the public markets in over 5 years. So that's something that I think is very important to note. And also, these founded entities have -- they have a significant amount of cash, they've raised about $3.1 billion, 95% of that came from third party. So we're not supporting them. They're actually supporting us in some ways. I would like to now dive into our therapeutic development pipeline starting with LYT-100, which is in the late-stage study in IPF or idiopathic pulmonary fibrosis. For those of you who are not familiar with IPF, it's a fatal progressive disease. iT has a median survival of 3 to 5 years. It's a lung disease. There are actually 2 standard of care treatments that are available to patients that have been proven to slow disease progression, but they have very serious GI-related AEs. And when I mean -- when I say serious, I mean, they're serious because they don't enable patients to stay on either the right dose or on the medicine at all. And therefore, the patients cannot get access to their efficacy. As a result of this, 3 out of every 4 patients in the U.S. is not on a standard of care therapy. Pirfenidone is one of those standard of care therapies for idiopathic pulmonary fibrosis. And as you can see here, it's got proven efficacy. It actually extends life in patients with IPF by 3 years. Now that is very meaningful for -- in a disease where patients -- the median survival is 3 to 5 years. It's really important, but these GI-related tolerability issues don't enable patients to stay on the drug. So what we've done is we are developing LYT-100, which is a deuterated form of pirfenidone. So if you look at the structure of pirfenidone on the left, we've made a simple substitution on the right with LYT-100, which enables LYT-100 to basically keep the pharmacology, which enables the activity, while having a differentiated PK profile, which really is what enables the improved tolerability, and we've shown a 50% reduction in the GI tolerability issues in a head-to-head study versus pirfenidone. And here are the results of that study. So what I'd like to point you to is the GI-related tolerability issues on the left. In particular, nausea, nausea is important because it's what affects quality of life for patients, and it doesn't enable patients to stay on the drug. So we've shown a 50% reduction in the GI tolerability issues and in the tolerability issues in general. To give you some context, before we ran this study, we did what we always do. We went to a group of opinion-leading physicians, and we ask them, what would be clinically meaningful? And what they told us was 25% to 30% reduction would be clinically meaningful. So we basically saw almost double that, and we're absolutely thrilled with those results. So the next stage for us is to now do further studies to confirm this. And that is what we're going to be doing next. On Slide 13, we're describing the first of 2 potentially registration-enabling studies. This one is underway, and we're going to have data at the end of this year. It's a Phase IIb study. Following this study, we'll run another study in Phase III. We think those 2 would be potentially sufficient for registration. So for this study, what we're going to be looking at. It's a global study designed to explore the efficacy, safety, tolerability and dosing regimen, which can then inform our Phase III next study. We're also going to be looking -- and that's going to be compared to placebo. We're also going to be looking at pirfenidone and comparing the efficacy to pirfenidone looking at the slope of decline, for example, and seeing how it compares to pirfenidone. Now what's important here is because of the tolerability issues and the fact that we're able to improve on that so much, we're actually able to go to a higher dose than the approved exposure of pirfenidone. So we have both a dose that's equivalent to the pirfenidone exposure and then a higher dose, which may result in improved efficacy. We know that there is a dose response based on clinical studies from the past. We're going to have these data at the end of this year. And what's enabled by this unique program is we can explore other indications. The first of which is IPF, a very closely related condition to IPF is PF-ILD, a progressive fibrosing and interstitial lung diseases. These are a group of diseases that are very similar and they also have a clear development path. Both PF-ILD and then also other fibrotic conditions, there's some human clinical efficacy that is indicative that this -- that pirfenidone has benefit in those conditions. So obviously, we have to repeat and do bigger studies, but we think that there's many ways that we can help patients with LYT-100. I mentioned before LYT-300. Now I want to dig deep into it. So LYT-300 is an oral form of allopregnanolone, and we're advancing it for depression and anxiety. Depression and anxiety are very significant unmet needs where standard of care treatment has mixed efficacy, sometimes no efficacy, delayed onset of action and very poor tolerability. And so there's a huge need. There's millions of patients, millions of people with depression and mood disorders that are looking for new mechanisms. And allopregnanolone is a novel mechanism of action for depression and mood disorders. What we've developed is an oral version of allopregnanolone. It's basically a prodrug. And LYT-300 is basically using a technology platform that we've developed at PureTech. And what it enables is oral bioavailability. And we've shown now, we just recently read out the results of a Phase I study where we showed oral bioavailability in healthy adults, where we showed blood levels of allopregnanolone at or above those associated with therapeutic benefit and 9x greater than orally administered allopregnanolone if you look at third-party published data. What we also showed was target engagement with GABA A receptors, which are known to regulate mood and other neurological conditions, and what that means is that we're able to get allopregnanolone into the system, and this prodrug approach works. I think that it's important to note that this approach of bringing natural allopregnanolone we think has benefits over the synthetic analogs that are being advanced in particular with regard to receptor engagement. We have a proof-of-concept study that we're planning to initiate, and we're going to be saying more about that very shortly. So this approach is enabled by our Glyph technology platform. So a platform that PureTech is -- PureTech scientists have been advancing. It's been published and presented, and we now have proof-of-concept in humans. We have multiple programs that we're developing through it. So basically, what it enables is it enables absorption of drugs that otherwise wouldn't be orally available because they would be basically chewed up by the liver. So what it's doing is enabling oral administration of drugs that up until now could not be orally bioavailable. And we think it has a range of applications specifically what I talked about before. This idea that drugs that were approved but had issues -- sorry, drugs that had efficacy but had issues that you could then unlock those new medicines. And we're doing that. So we have another program, which we just recently announced, LYT-310, we announced it just in December about a month ago. And LYT-310 is using the same Glyph technology to -- it's cannabidiol an oral prodrug of CBD. So there is a marketed CBD product, which is used for epilepsy and seizures, but it's limited in its use primarily because it's administered in a sesame oil-based formulation. And it's both limited in terms of age, but also in terms of the indications that one could pursue. So we believe that by making this change, we're unlocking the potential of this new medicine for a much broader range of patients. And it's important to note that existing treatments for seizures have issues. For example, they cause nausea, stomach pain and a range of other issues, including mood changes and sleep issues. The fourth and final candidate that we're going to talk about is LYT-200, which is an anti-galectin-9 antibody. So we know that cancer immunotherapies have had remarkable efficacy but they're limited in their use and many cancers don't respond or develop resistance. So we're really pleased to be able to bring a new product forward for these patients. And what you see here on the schematic on the right is that Galectin-9 plays a fundamental role in cancer immunology. For example, you can see all of the different factors that it interacts with. And in particular, it binds to, for example, PD-1 and other known targets. We have a lot of data in preclinical models of both solid tumors and hematologic malignancies. And many of those, we see that it outperforms PD-1s, anti-PD-1s. And we also had recent data presented at ASH just last month that showed that there is a very unique dual mechanism of action. This is preclinical data. And one of the things that we've seen in leukemia is that it also has an apoptosis-related mechanism of action in addition to the immune. So we believe that, it's a novel mechanism, but that it builds on the foundational work that was done by the industry. On Slide 21, we highlight the work that has been done so far with LYT-200. For example, we completed bimonthly monotherapy dose escalation portion of our Phase I study, and we also completed a weekly dosing. We're planning to start a combination study with tislelizumab, an anti-PD-1. And we're also -- we announced that we just started a clinical trial in AML, which will have results at the end of this year. And that is one of the many milestones that we have this year. So we will have 5 major milestones this year and many more beyond, and that's really only the start because we're generating new therapies from our platforms, and we have new products that are moving forward all the time. In conclusion, we talked about the fact that we have a very promising wholly-owned therapeutic development pipeline, which is advanced and which has multiple milestones. We have a team with a proven track record of discovery and clinical success, very strong cash position. We're generating cash, so we haven't needed to go to the public markets to raise money. And what's next for us is we're moving forward in a number of both regulatory and development milestones as we bring these new medicines forward to patients that have huge need for these patients -- for these new medicines. So we're really pleased to be able to take all of our capabilities and resources and bring new medicines forward to patients. Thank you very much for your time today. I would like to invite Dr. Julie Krop, our Chief Medical Officer, to join me for Q&A.

Thanks, Daphne. Now I'll pivot to our Q&A portion. So please feel free to raise your hands. We'll have mic circulators around the room.

You mentioned the cash burn or you've got a cash run rate until 2026. I was just wondering if you could touch on some of the kind of assumptions within that? Would they -- in what situations would you potentially need to accelerate the cash spend and which situations would perhaps it could last longer?

When we do our planning, we set aside the cash we need for operations and for all of the studies that are underway. We also have an extra budget for things that we don't allocate. So for example, some future studies and/or if the founded entities would need support, we haven't needed to spend that. But that's the way that we think of it on a high level. So if we have tremendous success and we're moving forward towards the launch of a product, then we would need to generate more cash, but we also feel like we have multiple ways to do that.

Another question to kick things off. What's the market potential for LYT-100? And can you speak more about the differentiation of LYT-100 versus pirfenidone?

Julie, would you like to take that?

Yes, sure. We see this as a really much large potential market. So if you think about right now, pirfenidone sells over $1 billion worth of product, and that's under the setting that it's really underutilized at this point. So only about 25% of patients are being treated with either of the current standard of care medications. And so there's an opportunity not only to switch potential patients from existing therapies, but a very large opportunity, I think, to get patients on therapy that they need. So as you -- as Daphne mentioned, this is a fatal disease, and it's a crime that there's drugs out there that work but that can't be taken. So there's I think we see great opportunity. And in terms of differentiation, I think what -- there are several really important things to focus on. One is the potential to even to go to a higher dose. So right now, we are testing not only the dose of deupirfenidone that matches the exposure of pirfenidone, but we're also testing a higher dose. So that's, I think, a very interesting potential. But even if that was not the case, and we were just able to show -- to demonstrate the efficacy with the 550 dose that currently matches exposure, being able to limit the side effects and allow patients to not only stay on the medication longer but stay on the dose. So what happens now in clinical practice that patients are started on the medication and have adverse events, they're often decreased -- their doses often decreased. And we do know from prior studies that lower doses do not work as well. So time on therapy is critical to the success and the efficacy of the product. So those, I think, are some important differentiators.

Great. Another question from the audience. If approved, you would be launching LYT-100 into a generic market. What are the best comps to suggest LYT-100 would be commercially successful?

Yes, there's a few good comps, including Austedo, which was developed by one of our colleagues, Bharatt Chowrira when he was at all specs, but you have a few other examples.

Yes. So deutetrabenazine is the product that Daphne is referring to, and there are generics on the market yet the deuterated form of the product has continued to perform extremely well, is currently selling over $1 billion worth of product, and that's really similar to LYT-100, significantly improved side effects in patients with chorea associated with Huntington's disease. And so that has been, I think, a great success. And then there's another example at Biogen, TECFIDERA has been a very successful MS therapy. And recently, they in-licensed another therapy that just has less adverse events. And that product despite the fact that there's multiple step-throughs and as a higher price has been performing really very well in the marketplace. So when there's serious diseases, I think in summary, when a disease is serious enough and something is holding back efficacious therapies, typically, those can be -- those therapies, those new therapies will perform very well.

Great. Pivoting to the Glyph platform and LYT-300, what's the GABA PAM unmet need in light of Sage, [indiscernible] and Praxis?

So I think that the GABA PAMs have performed variably in the past in synthetic forms, I should say. We know allopregnanolone has been worked very well in PPD. But what held it back, of course, was the IV formulation and prevented it from being applied across other therapeutic areas. We are excited because our oral form of allopregnanolone is a prodrug, and it is basically cleaved in the systemic circulation into the natural pharma allopregnanolone, which we believe has potential to have better target engagement with the GABA A receptor. And in addition, what's important we also feel is the way the drug is developed and we think chronic administration is going to provide a lot of benefit over potential just short-term therapy with some of the existing synthetics are focusing on. So a lot of indications that can be addressed with allopregnanolone and we're very excited about this program.

And what gives you the confidence that LYT-310 will work?

So I think with LYT-310, it basically is, again, a prodrug of CBD, which is absorbed directly into the lymphatic system and bypasses first-pass liver metabolism, and comes out basically as CBD. So we know that CBD, there's an existing CBD on the market that works for epilepsies. There's a lot of other data in other interesting indications that it could also be helpful. And but we know epilepsy is there's already a proof-of-concept for. So we're very confident with the same molecule. There's some great advantages though of being able to give it in this Glyph format as a prodrug, and that's that we can give a lower dose that is hardly being administered. And the reason for that is it's absorbed the bioavailability is greater. So we can get more drug absorbed into the systemic circulation. We're also bypassing the liver of some one of the serious potential side effects of the existing CBD is that it is -- it can cause LFT elevations. So by bypassing the liver, that can reduce that potential issue. And there's also diarrhea associated with it, so less GI exposure can also prevent that. And then the other, I think, is a key differentiator is that we are able to administer it in a capsule like formulation as opposed to a sesame based syringe formulation, allowing it to be given to adults and much broader indications. And our manufacturing process is much simpler because we don't require a plant-based extraction of the CBD. We can actually synthetically have a much more consistent manufacturing process with more consistent product. So there's a lot of potential advantages. We're excited about that program as well.

Just a question about the capsule formulation. When my son was young, we couldn't get him to swallow a pill or a capsule. It was World War III every time we tried to do it. And so for pediatric populations, are you going to have alternate formulations? And will those formulations have any gastrointestinal issues?

We will have an oral solution for pediatric populations.

I think the oral either what you said the oral formulation for children will have also be at a lower dose because of the better bioavailability. So I would see that as a potential game changer on reducing the side effects as well, plus it doesn't get absorbed directly into the liver. There's not a first pass metabolism and that should obviate a lot of the elevations in LFTs that are seeing.

Any additional questions from the audience? Okay. Great. That can conclude our Q&A portion. And thank you, everyone, for coming. And hopefully, you enjoy the rest of the conference.

Thank you.