PureTech Health plc (PRTC) Earnings Call Transcript & Summary

Great. Good afternoon, and welcome to Barclays Global Healthcare Conference Day 1. My name is Carter Gould, Senior Biopharma Analyst here at Barclays. It's my pleasure to welcome PureTech to the stage. Joining us is Bharatt Chowrira, President, CBO, CFO and COO; as well as Eric Elenko, Chief Innovation Officer. Bharatt is going to open up the time here with a brief presentation before we jump into Q&A. Bharatt.

Thanks, Carter, and thanks to the Barclays team for inviting us to present here. For those of you who are not familiar with PureTech, we are based in Boston. We're a biopharmaceutical company. We're fairly unique type of a biopharmaceutical company, and we'll go into a little bit more details as to why we think that way. We are coming off of a very eventful, successful 2022, where we completed 5 clinical trials. And this year is shaping up to be another dynamic year with multiple catalysts from our maturing pipeline, a year of evolution for the company. So before I begin, I do want to remind people that we are a publicly listed company. So please do refer to our SEC filings for up-to-date information regarding our business operations as well as our programs. So PureTech, our mission is to really change the treatment paradigm for some of the serious diseases. We have a unifying theme in terms of how we build our pipeline. It's based on proven efficacy of molecules or modalities that, for one reason or the other, have been held back from reaching its full potential for treating a number of these serious diseases. And we apply innovative solutions to these molecules to overcome some of these challenges, and that's been the unifying theme quite. And we have a pretty successful track record of doing that. And for decades, pharmaceutical companies that devoted time and effort in developing innovative products, and a number of them don't make it to the market or they put on the shelf because they [ haven't ] been able to overcome some of the challenges. And we have been quite successful in unlocking some of those value for some of these molecules. And you'll see some examples of that. We're quite proud of our success rates and track record over the years. We've successfully been able to advance 26 different new therapeutics, therapeutic candidates, 18 of them are clinical stage, 2 of them have gone from discovery at PureTech all the way to FDA clearance and approval through our Founded Entities. We also have a pretty good success rate compared to the industry average, 6x better improved success rate. And this is in no small part due to approach that we take. And our approach is underpinned by really 3 pillars. So we have an impressive network of advisers and collaborators across the academia, industry and the biopharma ecosystem, who actually help us, as we start thinking about new problems, to tackle in a given disease. And we've become aware of some very unpublished data before the rest of the world finds out about them. And we apply novel approaches to unlock the validated efficacy of some these molecules. And then the third pillar really is we do a lot of derisking experiments very earlier on, what we term as killer experiments to essentially kill the project to make sure that at the very early stage, we have full confidence in a program that we advance. And those that survive that early derisking experiments become programs in our pipeline. So this combination of these 3 steps really help us improve our probability of success. And that's been demonstrated over the -- across our pipeline at Founded Entities as well as our Wholly Owned Pipeline that's maturing. So some examples, some case studies of our approach. Karuna Therapeutics was a company that we founded. The lead molecule, KarXT, is a great example of our approach. Years ago, Eli Lilly was developing a [ muscarinic ] clinical receptor agonist called xanomeline. And they have run some large studies and demonstrated its efficacy in schizophrenia as well as in Alzheimer's psychosis, but they were never able to overcome a significant probability issue associated with that molecule. And we applied a very innovative approach to solving this challenge. We went and in-licensed that molecule xanomeline from Eli Lilly, combined it with the peripherally acting antagonist of muscarinic receptor that overcame the tolerability issues associated with the GI tract but did not interfere with the potency of xanomeline in the brain. And that we demonstrated early experiments in -- early studies in humans to demonstrate proof of concept, and then we brought others into the picture and then launched this company Karuna Therapeutics. And that's now the company has gone on to demonstrate very successfully in Phase II as well as Phase III this -- KarXT's potency in overcoming schizophrenia psychosis and demonstrated a really fairly good tolerability profile. And they are on track to filing an NDA for this product by the middle of this year. And that's a good example of how this particular product, for the first time, highly innovative, could be a new mechanism of action for treating schizophrenia in over 50 to 60 years. The other two examples on this slide are our Wholly Owned Pipeline programs, LYT-100 and LYT-300. Both of these programs were originated from well-known molecules. So LYT-100 is a deuterated form of pirfenidone. Pirfenidone is a well-established approved product for treating idiopathic pulmonary fibrosis. And it has been hampered -- its usage has been hampered by significant tolerability issues. And by deuterating this molecule, we have been able to demonstrate in a Phase I study that we are able to significantly decrease the tolerability issue associated with pirfenidone using a deuterated molecule. And that's now advancing in the registration-enabling studies in Phase IIb. Another example is LYT-300, which is an oral form of allopregnanolone. This is a natural neurosteroid that is currently available, has been approved for treating postpartum depression in women, but it's a 60-hour IV infusion. And so we were able to apply a technology at PureTech to make this natural neurosteroid in an oral dosage form. And we've demonstrated that in a Phase I study last year, and we're advancing that into Phase II studies this year. Again, another example of -- we took a natural molecule that was otherwise not orally bioavailable. Now, we can make this orally bioavailable. And that broadens its application across multiple indications in neurology and neuropsychiatric conditions. So these are some of the examples of how we go about thinking about developing programs that takes advantage of a validated pharmacology, but we bring in innovation that opens up the broad potential of these molecules. So this is a snapshot of our pipeline of Wholly Owned Programs. LYT-100, I briefly mentioned, is being advanced for idiopathic pulmonary fibrosis. It's currently in Phase IIb studies. We also have LYT-300 that I mentioned briefly that's going into multiple proof-of-concept studies. We have an immuno-oncology program, LYT-200, that's targeting a very exciting galectin-9 target. That's in combination studies in solid tumors as well as a single-agent study in AML in the clinic. And we have a new program that's going to enter the clinic this year, which is an oral form of a cannabidiol or CBD for treating a range of epilepsies and other neurological conditions. We have a very strong balance sheet, $341.4 million reported in June 30, 2022. And we have guided that this cash runway would be into Q1 2026. And we have a number of other preclinical programs advancing as well. So with that, I would then switch to -- briefly before I hand it back to you, Carter. We have a very unique set of programs that we, over the years, have innovated and initiated their part of our Founded Entities. And these are a source of capital and funding for us and -- as we advance our programs and to fund our internal Wholly Owned Programs. And these have served very well, and our strong balance sheet is a testament to our business model. And we haven't had to raise equity financing in over 5 years, based on the funding sources that we have from the Founded Entities. We have a number of catalysts that are upcoming this year, as I mentioned. And so we'll be happy to talk more about them during the course of this quick fireside chat.

Perfect. All right. So we're going to enter sort of the Q&A portion now. And maybe to start on LYT-100, I think a lot of the drawbacks of pirfenidone are pretty well appreciated, somebody who used to cover [ InterMune ]. It's sort of scarred in the -- inside of my forehead. But I guess the -- can you talk about how you think about the deuterated version and differentiation there? And sort of where is that hurdle you need to kind of improve upon in terms of tolerability to drive adoption and integration in the [ paradigm ]?

Sure. So deuterium substitution fundamentally preserves the pharmacology of the molecule, but it alters the pharmacokinetics. And that's what leads to the better tolerability that we've observed in the Phase I trials we've done. So in particular, we did a crossover study in healthy older adults because IPF is a disease that tends to affect older adults, comparing LYT-100 with pirfenidone. And what we saw was about 50% fewer subjects got GI adverse events. And that's really been the main adverse event that's been problematic with regards to pirfenidone. In fact, if you look, about half of patients on the drug end up dosing down or discontinuing. And so if you had something that was better tolerated, that, of course, would not only be better for patients, but if someone's on the drug longer, that could lead to better efficacy. And that number that we saw of 50% was one that we think is very viable from a commercial viewpoint as well as very clinically meaningful. So we advanced LYT-100 into a trial we're doing right now. And it's a 6-month trial with different doses of LYT-100, one that's equivalent to the same exposure of the pirfenidone [ 801 ] TID, which is the highest used dose of pirfenidone commercially, as well as LYT-100 dose that has an exposure that's even higher than that pirfenidone dose. And we're going to be comparing our drug to placebo. It also includes the pirfenidone arm, but that's really to look at the adverse events of LYT-100 compared to the pirfenidone arm from the primary endpoint, what we're looking at is [ adjacency ] compared to placebo.

Okay. And maybe that sort of -- maybe going back to the historical experience with pirfenidone, can you maybe put into context some of those patients that were able to stay on the highest dose with sort of the differential efficacy? Maybe help give us a flavor on how this improved tolerability may lead to [ efficacy ]?

So there was a study that was on -- I think it was about what has the dose of pirfenidone. People are doing kind of some dose ranging. And what you saw was a clear effect on efficacy. The thought is there is likely efficacy [ dependence ] in terms of what you see with regards to therapeutic outcome. And there are probably 2 components. One is the dose, and the other is this is a progressive disease. So if the thought is the longer someone stays on the drug, then that, of course, would have an impact on efficacy.

For the Phase IIb data that we're going to get at the end of the year, how should we think about that in opening of a path to registrational study or what have you?

Yes. So the way we're thinking about this from a regulatory viewpoint is in addition to the Phase IIb, we're doing that. We think that combined with one more pivotal study would be enough for a [ registration ]. The path we're using is the 505(b)(2) pathway, which relies on uses and gives us the opportunity to cite data associated with pirfenidone. We're going to go see the data coming out of the current study, [ use that to design the pivotal ] study.

Okay. While you've been working on pirfenidone, there's obviously been a lot of advancements in the IPF landscape and clients. [ FibroGen ] is in the news. There's going to be some data from Bristol coming relatively shortly. How does that play in here? Does that complicate your life? Does that complicate your life? Or is that going to potentially be complementary? How do you think about that and particularly, as you think about the path to regulatory?

Yes. So if you look at all of those programs, nearly all of them are going on top of standard of care. And what we want to do is be that standard of care. And so we you look at these other programs as complementary. And if anything, as these new programs come to market and you -- there's some really exciting ones. It might [Technical Difficulty] even more patients to start on therapy, which would actually end up helping in terms of adoption for LYT-100 if it's approved or when it's approved. So we actually have a plus.

And I guess, final one on LYT-100, just you will be -- I mean, pirfenidone's generic now, right? How does that kind of complicate your potential for pricing, acknowledging it's a little bit early to get any specifics here?

Yes. It's interesting, right, because when you look at -- there are 2 drugs approved for treating IPF, [indiscernible] and pirfenidone. Combined, they address about 25% of all of IPF's patient population. And primarily, the reason why is 75% of the patients are not on either of those 2 drugs is because of tolerability issues. And so just because you have a [ generic ] drug in the market, not going to dramatically increase the prescription because of tolerability issues that are going to be there. So we feel like if we come into a marketplace with a better tolerated drug and even if it is a comparable efficacy that allows the patients to stay on the drug longer that we could actually not only take market share away from existing standard of care but also expand into that 75% who are currently not being treated. And we think LYT-100 has the potential to become that frontline therapy, on top of which all the other new therapies are going to come. So from -- again, it's early to talk about pricing. But we see this as being a significant value add to the overall treatment paradigm.

And I guess as you're entering this period, then how do you think about how active you want to be in terms of running combination studies or you just sort of sit back and wait for them to come to you and you think about the strategic interest there?

Yes. I mean, we're going to develop this for approval for IPF and as well as expand into other forms of interstitial lung disease, [indiscernible] and such. And then over time, [ we see how to ] manage that life cycle of the program. But yes, there's a possibility of doing a bunch of these combinations. But first half is we need to get this product through the approval process.

Okay. Great. Maybe switching gears to LYT-200. Galectin has been difficult to target. Can you talk for a second around this program and exactly kind of what got you excited and maybe that insight that drove this program forward?

First, so LYT-200 is a monoclonal [ antibody ] against galectin-9. And really what got us excited was two things. The biology in galectin-9 and then the preclinical data that we saw. So galectin-9 is on the surface of a number of solid tumors, the [ predefined ] number of solid tumors. And then what it does is activate several different immunosuppressive pathways simultaneously in the same tumor microenvironment. So the idea is by blocking galectin-9, we can go and have an effect on all those different immunosuppressive pathways that are being activated simultaneously. So we really like that mechanism and biology. And then in terms of preclinical data, we saw some very nice animal data in pancreatic models of cancer using our antibody and in combination with chemotherapy. And much like their human counterparts, this model's checkpoint inhibitors don't work. We also saw nice data in a widely used melanoma model, where we actually had better efficacy than anti-PD-1 in that model. And we also had human tumor organoid models, where we were able to see restoration of T cell activity. So that really kind of gave us the confidence to go into the clinic. What we've done is initiated a common study with [ tislelizumab ] in [ two ] different solids tumors.

Okay. And maybe just update us on sort of the status of that and when will it be or how it's progressing, yes.

So that's an ongoing study, and our guidance is we're looking at results in 2024.

Okay. And when you think [indiscernible]?

Yes. Yes, I think.

But obviously, the program's also in [ communication ] with AML, if I recall.

Yes.

Can you talk about the excitement there or what's in the preclinical data for that decision and how [ do you ] see that progressing?

So we presented data at ASH, where what we showed was efficacy in animal model. And there was an additional mechanism in the context of leukemia that blocking [indiscernible] you had, which was a [indiscernible]. So we initiated a trial in AML that we're looking to have some initial results this year.

This year. Okay. And then how should we think about [ group's ] sort of the decision tree around results? It's -- I guess will that potentially lead to a broader set of heme indications or moving forward, prioritizing AML? How should we think about that?

Yes. I mean if we see good results in AML, first, we'd want to continue on in AML. In the preclinical data, it was [ stressed ] that this could be applicable to a number of other leukemias, then we could consider that. But I think it's going to all depend on data and variable [indiscernible].

Okay. I do want to come back to -- or I do want to touch on allopregnanolone. But maybe first, just as we think about sort of the evolution of the company, can you talk for a second at sort of this stage, how you think about partnering? Clearly, that allowed you to sort of bootstrap up a pretty robust portfolio here. At this point, how do you think about further prioritization or developing further assets and partnering or not?

Yes. I mean, look, our vision is to build an integrated biopharmaceutical company, and we're on our way to that. So we're advancing a number of these programs into late stage, clinical late stage trials. And depending on the indication, there may be opportunities for us to bring one or more of these products into the market at least in the U.S. ourselves and then potentially partner outside the U.S. with other companies in them. But for indication, it all depends on the indication. So there -- for some of the larger indications or some of the oncology indications, we may partner early. So it really depends on indication-by-indication basis. But we are pretty focused on advancing this pipeline and building value so that -- and across the value chain as opposed to just advancing it to a certain stage.

Maybe just in the last minute if we can come back and touch on allopregnanolone. Clearly, the delivery of the preceding molecule led to some commercial challenges. I think the approach you guys have outlined here would address sort of the big hurdle there. But as we think about sort of this initial study, this proof-of-concept study that you might do, just how that -- what you want to see there to really justify moving that program forward?

Yes. So LYT-300, as we were mentioning, is an oral version of allopregnanolone. And we released Phase I data, where we showed oral bioavailability of the molecule that can get into exposure levels that we think will be therapeutic. And so we're happy to see that. We're advancing that, and we're going to be initiating 2 different proof-of-concept studies. One is going to be in postpartum depression. It will be open label, but we're really looking for a kind of proof of concept there. And the other will be in a clinically validated model of anxiety in healthy volunteers. So kind of covering depression and then anxiety and then that could open up for a broader set of anxiety disorders.

Perfect. We're out of time. We'll have to leave it there. Bharatt, Eric, thank you very much for the time. Thanks a lot.

Thank you. Appreciate it.

Thank you.