PureTech Health plc (PRTC) Earnings Call Transcript & Summary

All right. Great. Yes. Welcome to UBS Global Healthcare Conference. My name is My name is Ash Verma, I cover SMID-cap, biotech and spec pharma. And with our next company on stage here is PureTech Health. And with me, I have Eric Elenko, who is the Co-Founder and President; and Bharatt Chowrira, who is the CEO. You guys, thank you for joining. Really excited to have you on board. I would love to dive in and understand about PureTech. And I know you have some slides that you want to go over, and then we can sort of dive into the questions.

Okay. Sounds good. Thanks, Ash, and thank you to the UBS team for inviting us to speak today. Also welcome to people who are here in the room as well as those following us on the webcast. So today, I'm joined by my colleague here, Eric Elenko, together, we'll share with you the PureTech story. So we are a Boston-based biotherapeutics company we're pioneering this unique R&D model that has been very successful for us, and we have had tremendous track record of success. That has enabled us to bring life to a new class of medicines for devastating diseases. So before I proceed, I do want to remind everyone that during this presentations today, that we'll probably make some forward-looking statements, so please do refer to our regulatory filings for up-to-date information. So PureTech, as I was mentioning, has a unique R&D model, which we call the hub and spoke. And PureTech really pioneered this model. And essentially, it's -- the hub is PureTech, which is a group of the core group of talented individuals. We have a productive R&D engine track record of success with multiple trial success as well as approvals and we'll talk about those in a minute. And so -- and the capabilities all exist at the hub at the PureTech level, and the spokes are usually the programs and the platforms that we initially identify and advance them at PureTech, and we advance them through some key value inflection points and validation. And those that survive the early derisking experiments then become programs in our spokes. And these spokes, we have the optionality to launch founded entities or wholly-owned subsidiaries around these programs. And initially, we own 100% of equity in these programs. And in many cases, we are also co-inventors on these programs. And so we are eligible for milestones and royalties in addition to equity in these programs. And so it's been a very productive model for us. We've had a tremendous amount of success. We look at some metrics, 80% of the clinical trials, either run by PureTech or through our founded entities over the last 15 years have been successful that has led to 3 approvals, including the most recent one, which is Cobenfy from Bristol-Myers Squibb. And so what's the secret of secret sauce that has enabled us to be successful with our model, it's really around these 3 elements, which is we start with formulating a problem that we're trying to address for a given disease. So -- and this problem that we identify usually associated with high, high patient need. And then once we identify this problem, then we try to find potential solutions for these problems. And they are centered around small molecules or a conventional biologics, that actually have some level of human pharmacology already. So there is some level of derisking with our starting point. And for one reason or the other, these small molecules or biologics have been held back or haven't really lived up to their full potential in addressing a given disease or condition. And we come in with an innovation that opens it up for broad application. And so that has been really important approach for us. And then once we identify these small molecules or biologics, then we do a rigorous set of derisking at very early on for a limited amount of investment to try and validate that approach. And those that survive that derisking, then become programs in our pipeline, and we can launch founded entities around them. So these 3 elements have really been central to everything that we have done over the last 15-plus years that have led to the success that we have had. And so Karuna, again, has been a runaway success for us, the best -- the most successful of our founded entities to date. And it's a great case study to kind of highlight the approach that we take in identifying. And so KarXT, which is now called Cobenfy, was initially invented at PureTech. And so Eric, who's with me here today is the lead inventor on KarXT. And so we start with a blank sheet of paper saying, okay, what can we do in the schizophrenia space in schizophrenia, which has not seen any innovation in over 50 years, and there's a huge patient need. And so that led to this identification of muscarinic receptor agonism as a pathway and identifying a molecule that Eli Lilly had originally advanced into a Phase II trial called Xanomeline, which they had discontinued because of significant adverse event associated with Xanomeline. So we went in acquired that program from Eli Lilly and then combine it -- Xanomeline with a muscarinic receptor antagonist that was peripherally acting. When we did the combination of Xanomeline with this antagonist, and then tested that initially. This is our early derisking experiment, which we call the killer experiment in Phase I human study, we were able to demonstrate that it was that combination alleviated a lot of those cholinergic adverse events. And that then led to formation of Karuna and then we launched financing and IPO. And we're very proud that now it's approved as a new mechanism, it's a landmark approval, new mechanism for treating schizophrenia in adults in, over 50 years. So it's going to help a lot of people around the world. So we're quite proud of that accomplishment. So this, we put in about $18 million into this to date. And then we have so far been able to monetize and bring back over $1.1 billion back into PureTech through monetization of equity stake, the gross proceeds from the Bristol-Myers Squibb acquisition of Karuna as well as a strategic royalty agreement we have with Royalty Pharma for the royalty on the Cobenfy. So we have an additional $400 million that we are eligible for in milestones as well as additional royalties on product sales depending on sales. So this model is scalable and repeatable, and we have done this multiple times now. And the most recent example is we launched a new company called Seaport Therapeutics, which is advancing innovative programs or treatments for depression and anxiety and a whole range of other CNS indications. And they have been able to raise over $325 million in the last 6 months in Series A and B combined. So again, testament to the quality of the programs that we are able to generate through our R&D pipeline and programs. Another great example is LYT-100, which is shown on this slide here, which is wholly owned by PureTech. It's, again, innovative small molecule oral small molecule that is currently in Phase IIb clinical trials for the treatment of idiopathic pulmonary fibrosis. And we expect Phase IIb data, top line results before the end of the year. Again, potential to become the backbone therapy and frontline therapy for IPF, and we're very excited about this program. We have another program, LYT-200, which is also wholly owned by PureTech. It's a an anti-galectin-9 fully human monoclonal antibody. We're advancing that in Phase Ib for heme malignancies, AML as well as head and neck cancer, and we'll have some additional data in December from that study as well. So this pipeline and the other programs in our portfolio, like the programs at Vedanta, which is the lead company in the microbiome space Entrega and so on, continue to build value for us in coming months and years. So we are looking ahead, we're really excited about PureTech how we are positioned, we are poised to really execute on this mission of bringing innovative new medicines forward and in a capital-efficient manner. And these -- this mission that we are on right now at PureTech is centered around multiple factors. We have a proven track record, as I mentioned. We've had tremendous amount of success in the clinic. We are self-funded. So we don't have to raise money in the public markets. We haven't had to raise money in the last 6 years. We have a strong balance sheet to go along with that. Robust portfolio of programs with steady stream of milestones and catalysts coming up recurring capital inflows from existing founded entities and future founded entities, as well as milestones and royalties from those programs. So all of these kind of put together gives us really a strong fundamental basis for the company where the downside for an investor is well protected, and the upside is really not capped. So it's a very unique successful business model that we have. And we have multiple near-term catalysts across the portfolio, and we'd be happy to go into those in any detail for the rest of the session. So with that, I'll just hand it off to you, Ash, and look forward to having a good discussion.

Great. Yes. Excellent. Yes. Thanks for doing that. I mean, Karuna definitely a huge success story. I guess like does that become sort of like a case study and sometimes you can have a draw of luck in certain instances, right? How do you sort of like replicate and scale that type of success?

Yes. So look, people ask us, was Karuna a fluke, right? So I mean, look, Karuna has been tremendous success. I mean you don't see that very often in the industry. And I've been doing this over 30 years, right? And rarely do you come across programs that from an idea stage all the way to commercial approval and then launch and creating so much excitement in a patient population that hasn't seen a new innovation in such a long time. And so those things -- and we have to celebrate that and we're very proud of that. But we have been able to actually scale this and reproduce this multiple times. And as I mentioned, the latest example is Seaport Therapeutics. We had been developing a group of [Audio Gap] within PureTech for the last 4, 5 years, centered around a unique platform called Glyph, which has generated multiple programs and those reached a point of validation that we said together would benefit from a dedicated effort. And so we're able to launch Seaport Therapeutics with a really good solid foundation of clinical data and programs and pipeline, but also now has attracted some really well-known investors into that company. And so LYT-100 is another great example of a program that we think could have huge potential in terms of patient impact, but also addressing a large commercial opportunity that has, again, not seen a new approval in 10 years in that patient population. So we are quite excited about that. LYT-100 will have data later this year, that could really be quite dramatic in terms of the overall when you look at the patient care in that population. And so we have been able to do this on a multiple times, and we are able to scale this. We can do up to about 2 new programs per year, and that's been our scale, and we can certainly scale that up. But I think that is sort of currently our sweet spot based on the resources and the effort that we.

Great. So yes, let's talk about the IPF program. So this basically, LYT-100. So you have like 100% economics like wholly-owned asset. Can you talk about like just mechanistically, I know like IPF, a huge market mechanistically, like what appeals to you in terms of like a deuterated version of Esbriet, right? -- effectively, like what can LYT-100 achieve from an efficacy or safety standpoint versus what Esbriet hasn't been able to?

Right. Yes. So IPF is a really serious condition, devastating condition with over 250,000 people in the U.S. and Europe with that serious devastating lung condition with a life expectancy of 2 to 5 years, right? So -- and we're really excited about LYT-100 program, which is on the verge of top line results later this year. And there are 2 approved drugs. You mentioned one, Esbriet or Pirfenidone, and there's a second drug called Ofev or Nintedanib that both of them were approved about 10 years ago. And they are effective, they double the life expectancy in the IPF patients. So we know that they work. but they're really poorly tolerated. So 3 out of 4 patients with IPF are not on either of these 2 treatments. And that is really quite remarkable when you think about the devastating nature of this, right? It's as serious as, let's say, breast cancer or pancreatic cancer. So -- it really is a deadly condition. And for that, in such a condition, when there are 2 drugs approved that slowed the decline of your lung function to have only 1 out of 4 patients actually on these 2 drugs, is quite remarkable because, again, primarily, the low adoption is because of the poor tolerability. And so there is a tremendous amount of need in terms of coming up with an efficacious treatment that actually is better tolerated and patients can stay on the drug and treatment longer to have better disease outcome. And so LYT-100 attempts to do that. And so we are advancing that in Phase IIb. And so LYT-100 is a deuterated form of Pirfenidone. And so what that does is essentially you replace strategically hydrogen in the Pirfenidone molecule with heavy form of hydrogen or deuterium. And so this subtle change improves the metabolic stability of the molecule -- and so you get a -- because of better stability, get a differentiated PK profile that translates into better tolerability. And so what we have been able to show in clinical trials, and Eric can talk about it more, is a 50% improvement in the safety profile. And so this simple set of changes from regular hydrogen to heavy hydrogen has the potential to have a profound impact on the patients and the treatment of IPF, and so we're quite excited about that prospect. And so the Phase IIb clinical trial is currently ongoing in IPF patients, and we'll have the data before the end of the year. Yes. I don't know, Eric, if you wanted to add. Yes.

Yes. Just 2 things to add on. I think a central challenge with regards to IPF has really been the eye part, right? When you don't know what causes the disease, it's, of course, hard to judge how a novel mechanism will fare in the clinic. And here, as Bharatt was talking about and mentioning with regards to our approach, it's really taking a drug that's already been shown to work in solving a problem, and we like that strategy. Bharatt was mentioning data. We were able to show in a Phase I study that 550 milligrams 3 times a day or TID gave about the same exposure as 801 milligrams TID of Pirfenidone, and that's the highest commercially used dose of Pirfenidone. And then in a crossover study of healthy older adults and IPF, it is a disease of older adults. We were able to show that about half of the participants had GI side effects with that 550 dose compared to the 801 of Pirfenidone. In another Phase I trial, we were actually able to dose up higher going up to about 825 mgs TID and that was tolerated. And so we're actually taking both the 550 and that higher dose forward into the Phase II.

Yes. I mean, it's pretty impressive data, right. I think on an efficacy side as well, just like safety is a huge component of this market that hasn't been solved for. So looking forward to seeing the results, I guess, like in this upcoming study, right, have you shared like the powering assumption with these -- I think you have like 240 patients in total. And effectively, like, are you trying to drive like a efficacy differential versus Esbriet? Or is it more sort of like you think that efficacy at this dose is where it is, and it's more about like safety.

Yes. I'll let Eric kind of expand on this if you want to.

Sure. Yes, absolutely, Ash. So what we're doing is we have 4 arms of the study and the distribution between the arms of the study is even across the 4 arms. We have placebo that Pirfenidone dose of the highest commercially used dose. The 550 dose equivalent to the currently used highest commercially used dose of Pirfenidone and this higher dose of LYT-100, the 825. What we're going to be doing is pulling the 550 and the 825 doses together and comparing that to placebo, and that's the primary endpoint. We're looking at forced vital capacity, FVC, and the slope of the decline. So really the rate of decline over time, and the treatment period per patient is 6 months. So the primary endpoint is efficacy against placebo. We do see 2 ways to demonstrate patient benefit to your question. So in addition to hitting the primary endpoint, if that 550 dose, since it's essentially giving the same exposure as a Pirfenidone dose has better tolerability, we would really consider that an important demonstration of the potential to help patients given the adverse events that Bharatt was outlining. Now no one actually have been able to dose up as high as we're going with the equivalent dose of Pirfenidone. And so if, in fact, we can see trends in terms of greater efficacy with that 825 dose compared to Pirfenidone, that would also be something that we would consider an important potential demonstration of benefit.

So the 825 that you're pursuing, right? So the idea is to like go above the efficacy versus the 550.

Right.

Do you lose some safety advantage a little bit like when you try to do that? Or like eventually, are you trying to solve for like 2 doses when you come to the market? Or is it just going to be like a determination of which one to take forward?

Yes. So as Eric was mentioning, so the -- when we talk to the treating pulmonologists and docs, and we've done one-to-market research on this. And the primary thing, #1 thing that people identify is efficacy, right? That is primary in their minds. The second is tolerability of these treatments. And so people feel like if you're able to provide a treatment that is as efficacious as the current standard of care, but are better tolerated then that will allow patients to stay on the treatment longer that will then translate into better disease outcome for these patients. So that is certainly one way of having improved a better more favorable patient impact. And then the second way is that if you're able to then increase the dose and potentially have a better efficacy without increasing the overall adverse events significantly, and that could be a real added advantage to that. So we have 2 different ways to improve the overall patient impact. And we think either of those, or both of those have huge impact. And not only in IPF, we can also think about a broader set of interstitial lung disease, what we call progressive fibrosing interstitial lung disease, which is twice the number of patients than IPF. And -- so we see this as really a significant patient benefit opportunity as well as commercial opportunity.

Great. Yes. So I guess the -- just looking beyond the Phase IIb update, any thoughts that you would provide on like potentially like the registrational study what might that look like? And then just sort of like related to that commercial question, do you think ultimately, like the use of LYT-100 would happen more in like naive patients or more of sort of like the Esbriet or Ofev experienced patients?

Yes, in terms of the trial, it's just too early to say because we have the 2 different doses. We really want to see the data coming on this Phase IIb to really understand what the right design would be for the Phase III. So there's a question of dose. And also because no one has been able to dose up this high with the equivalent dose of Pirfenidone, we don't have a precedent data set to point you to say what happens when you go up this high. We know there is dose dependency. So when you give less, you have less of an effect. But what we'd want to see is the effect size with that higher dose to be able to really understand the right design and how to take forward LYT-100 in a phase III.

Yes. And in terms of your commercial side of it, we see this as a potential to become the frontline therapy as a new standard of care for treating IPF and other interstitial lung diseases. And so -- and there are a number of other mechanisms that are being evaluated in the IPF patient population. And those are all being studied on top of the current standard of care. So we see those as potential opportunities for a combination. And I think what we're going to potentially see in the treatment of IPF is combination treatment. And so if we become the big backbone of choice for those future combinations, then that is the opportunity set for us right now with LYT-100 with an efficacious, better tolerated treatment that then can be combined with these new mechanisms that could overall improve the overall treatment and disease outcome for these patients. So that's sort of how we are looking at the treatment landscape.

Perfect. So let's just switch to a couple of other pipeline programs that you have. So just LYT-200, so this is Gallop oncology where you own like 100% of equity, right? Just talk to us about like what are we expecting in terms of the data for 4Q. And ultimately, like with this program, is the goal to like try to go after like both the solid tumor and the HemOnc setting?

Yes. So LYT-200 is a fully human monoclonal antibody against galectin-9. And as you indicated, we're currently running a study in both hematological malignancies with a lead focus on AML as well as solid tumors with an initial focus on head and neck. In terms of AML, we're looking at both single agent as well as combination with venetoclax and hypomethylating agent. And we have patients enrolled who are relapsed/refractory. So these are patients who are second line plus. And unfortunately, there really aren't treatments for this patient population that are effective. And so while we're going and doing dosing studies, looking at safety, we'll, of course, be noting anything with regards to efficacy that we see in the population. Similar with head and neck, in addition to single agent going and looking at combination with an anti-PD-1 Tislelizumab in a population that, again, has very few treatment options, unfortunately. And we'll look forward to presenting more data in terms of our AML data at ASH, which is upcoming. And in terms of which population we would pursue, it really just comes down to the data, and we look forward to updating as more data comes in.

Okay. Perfect. So let's talk about like on just Seaport. So a lot of excitement, as we've seen about this. And so just in terms of like the Glyph platform, right? Like if you can outline like what sort of the rationale and the validation behind it that you're pursuing it? And just what is the set of opportunities that you would be looking for?

Yes. Seaport is another great example of this -- our productive R&D model And it is a similar theme as KarXT or Cobenfy approach that we took. But instead of just focusing on a combination of 2 drugs, here, the underlying platform is what you mentioned, Glyph. And the Glyph technology is a prodrug technology that we originally was developed at the Monash University in Australia, and we licensed that in a number of years ago, and we've been optimizing and developing it to come up with a new set of molecules that have well-established human pharmacology, very similar to what we did with Karuna and with LYT-100. And these molecules for one reason or the other have been held back and haven't really lived up to their full potential in indications such as depression, generalized anxiety and a range of other neuropsychiatric conditions, and applied this technology. So this technology Glyph platform allows you to bypass the first pass metabolism and bypasses the liver and goes to the lymphatic system, and gets into circulation. So what that does is to allow for molecules that, for example, otherwise, would not be orally bioavailable, you can convert them into oral bioavailable small molecules through this prodrug approach or those molecules that have potential liver tox issues because of first-pass metabolism, this can bypass that and breathe new life into those molecules. And so we have established clinical data and proof of concept with this platform with the lead program, which is SPT-300, which is a natural form of allopregnanolone, it's a neurosteroid. And a prodrug of that, we have been able to show in human studies that it is actually effective in a biomarker study. So that has been the central theme around the pipeline that we've been building over the last many years. And so there are 3 programs in Seaport and that they've publicly announced that are going into clinic as well and later stage, mid-stage studies. And they have been very successful in attracting really well-known investors into that program and raised about $325 million across Series A and B in the last 6 months, and they're well positioned to kind of advance the pipeline. It's a really exciting kind of set of platforms.

Excellent. So I mean, I guess just a quick question on Seaport. So for like 300 -- SPT-300, I mean MDD is a huge market, lots of opportunity. Like what is the -- is there like a specific area of MDD that you're trying to get into with that program? Or what is the appeal? Is it like adjunctive or any sort of like a subset of MDD patient population. And then I'll just like to add one more just before we run out of time. So for 320, like overall, like what has been the experience of Pyridoxine as an antidepressant in Europe? And how is that informing the development path here?

Yes. So maybe just high-level answers on both. So we do see a lot of unmet need that still exists in the context of depression, quite a few patients who are refractory and SPT- 300 is an oral form of the endogenous neurosteroid allopregnanolone, which does have a record of clinical benefit in the context of certain depression, which we think could further translate to benefit in the context of MDD, realizing that allopregnanolone was used solely as an IV infusion in the context of postpartum depression. And agomelatine, extremely promising data in the context of generalized anxiety disorder, also for a very promising data in the context of depression, held back by the need to do liver function testing. But by avoiding first pass metabolism, the idea really is to negate that need for liver function testing.

Great. Perfect answer. So thanks for taking part in our conference. This is super helpful. Good to know about the story. And yes, looking forward to staying in touch with you. Thanks.

Thank you for having us. I appreciate all the questions.

Yes. All right. Perfect.