PYC Therapeutics Limited (PYC) Earnings Call Transcript & Summary

All right, everybody. We'll get kicked off. I welcome shareholders and visitors to the General Meeting of PYC Therapeutics Limited. It's past the appointed time of 1:00 p.m. I've noted that we have a quorum, and the meeting is properly constituted, so I declare the meeting open. My name is Peter Coleman. I'm the Chair of PYC Therapeutics Limited. I'll be chairing the meeting today. I'd like to introduce my fellow Board members. To my left, Rohan Hockings, Executive Director is here in person and online is Professor Ian Constable, Non-Executive Director. We also have Mr. Steve Ledger, Joint Company Secretary in attendance as well. I'll now proceed with the formal part of the meeting. Now as Chair, I have 421,981,321 valid proxy votes from 112 shareholders representing approximately 43% of the issued capital of the company. A summary of how these proxies have voted for each of the resolutions have been tabled and are available for inspection. I will refer you to this summary as I address each of the resolutions. The results will also be presented on your screen for convenience. I'll just put those results up here in a moment. If I can operate this correct, which obviously I cannot, there we go. Now where discretionary votes have been directed to the Chairman and are able to be validly cast for a particular resolution. I intend to direct these votes or these proxies in favor of each of the resolutions. To ensure accuracy of the results for all resolutions, I will exercise my right pursuant to Section 250L(1)(c) of the Corporations Act to call for a poll on each resolution. There will be an opportunity for discussion of each resolution. I will conduct a poll at the end of each resolution. In order to keep the meeting moving, we will tabulate the results and report the results for these resolutions only after all resolutions have been considered. Now in the Notice of Meeting, as there was a link for the Notice of Meeting was sent to all shareholders, and if there's no objection from the meeting, I will take the notice of meeting having been read. Any objections? I have no objections. No objections online. The first resolution. I'll now consider the first resolution, which is approval of the PYC Therapeutics Limited Rights Plan. The results of the proxies received is shown in summary on the screen. I will be voting -- as I mentioned, I'll be voting for the motion in relation to the proxies provided for my discretion. I now put the following resolution as an ordinary resolution that for the purposes of the Listing Rule 7.2 Exception 13 and for all other purposes, the PYC Therapeutics Limited Rights Plan or the Plan and the issue of up to 49,175,522 Securities under the plan be approved. I now invite any discussion anybody has on that resolution. This is the summary that we have. I can't see any questions coming through online. Is that correct? Okay. The poll on this resolution will be undertaken by placing a mark in respect to Resolution 1 on the voting sheet members received when you entered the room. Please complete this now. Is there anybody who's filling out a paper poll today? No, I will move on then. We have all of that in. Resolution 2. I'll now consider Resolution 2, which is the approval to increase the constitutional cap on non-executive director remuneration. The results of the proxies received are shown in the summary on the screen. I'll be voting for the motion in relation to proxies provided for my discretion. I now put the following resolution as an ordinary resolution. That for the purposes of Clause 26.2 of the Company's Constitution and ASX Listing Rule 10.17 and for all other purposes, the maximum aggregate amount of directors' fees that may be paid to the company's non-executive directors per annum is increased by $700,000 from $300,000 per annum to $1 million per annum. Now I invite discussion on this. Before I do so, I just want to clarify. This is the entire director pool. So this means the sum of all of the monies that can be paid to non-executive directors will be capped at $1 million. The intent of the Board is to build out the Board as PYC Therapeutics itself expands as the company becomes a larger company. The previous directed pool was set at $300,000 that had been not increased for more than 10 years. It was on the basis of 3 directors being on that pool. And of course, at the time that pool was approved the company was a much smaller company than it is today. So to be able to build out the Board to a total of 6 directors, which is our ultimate target. We need 5 non-executive directors. The 6 directors will include Dr. Hockings, who does not receive remuneration from the director pool. And so we benchmarked this. We put this in the notes. It's benchmarked, and we believe this is appropriate. So this is the vote that's being put to shareholders. Are there any questions in the room or online on that. Nothing. Steve, do we have anybody in the room who's filling out a paper poll today? All right. Guys, thanks for filling that out before you arrived. I will now move on to Resolution 3. Resolution 3 is the approval to issue options to Dr. Rohan Hockings. The results of the proxies received are shown in summary on the screen. I'll be voting for the motion in relation to proxies provided for my discretion. I now put the following resolution as an ordinary resolution, that for the purposes of Listing Rule 10.14 and for all other purposes, approval was given the LTI value at target by the issue of options in relation to long-term incentive to the Executive Director and Chief Executive Officer, Dr. Rohan Hockings, or their nominees under the PYC Therapeutics plan being the plan on the terms and conditions described in the explanatory notes to this Notice of Meeting for the following financial years. Now for financial year 2024, $1,580 million; for the financial year 2025, $1,580 million and for financial year 2026, $3,600 million. Just as background, when the Board first raised this, this was something we thought was very important to align Dr. Hockings' total remuneration and also his incentive remuneration to the growth that shareholders are expecting from PYC over the coming years. We felt there were 2 things that needed to be adjusted. One was the total remuneration package, which had not been adjusted for more than 7 years and consisted of a cash component only with the short-term incentives at the discretion of the Board. And during that period, short-term incentives were granted, but were periodic and not predictable in nature. We wanted to develop a remuneration package that was predictable for Dr. Hockings and that investors understood was driving performance and aligning the outcomes of Dr. Hockings' remuneration with investor returns. We chose options for the long-term incentive program. Those options will vest at a strike price roughly 35% to 40% in excess of the price that we will issue them at. We believe this then also aligns with shareholders' growth. So these are -- whilst they're 0 price with respect to the issuance of them, they are not in the money. To put it simply, they're not in the money until the share price that they're issued at increases by more than 35% or thereabouts. And so we thought that would very much aligned with shareholder growth expectations and so forth. Of course, those options lapse after a defined period of time. And so again, just as they're not an indeterminate amount of time. There are options where performance needs to be achieved. And again, we felt this aligned. So I understand when people look at some of these numbers from time to time, the remuneration, I'll be honest with is one of the more difficult things to try and understand, particularly as you look at annual reports and so forth. The Board has considered this fully over many months now and has worked with appropriate consultants. We think we've got the right balance here for shareholders with where PYC is at the moment in its own growth path. Obviously, as the company becomes more mature, we'll look at the long-term incentive plan and decide whether options are still appropriate. But we believe at this point in time that options are the most appropriate mechanism for rewarding Dr. Hockings. Okay. With that background, I'll invite any discussion on anything that you've seen that we've sent to you or anything I've mentioned today. Anything online? All right. Thank you. Okay. The poll on this resolution gets being undertaken in respect to Resolution 3 on the voting sheet members received when you entered the room. Is there anybody who is filling out a voting sheet. No. Thank you very much. We'll move on then. As there are no voting slips in the room, we won't be collecting it. Thank you for voting online prior to the meeting. The poll now is actually complete. Is that correct because we have no hard copy voting at all. And we don't have to calculate the results because you've seen the results. So a lot of this now becomes mute. We were going to adjourn the meeting at this point. We don't believe there's no reason to adjourn. We can move this through. Before we finish, are there any matters from the Corporate Secretary that we need to address. All resolutions are passed. I'll just take you back, if I can. With that, all resolutions are passed. Thank you very much. I'll just go back to the summary again so everybody can see the summary. And you can see then for Resolution 1, votes in favor are 93.79%; Resolution 2, 94.47%; Resolution 3, 86.95%. Look, we do understand if you have a look at the numbers of shareholders and so forth who voted for and against each resolution, we do understand people have varying views on this. But we do very much appreciate the support we've received from the vast majority of shareholders in this regard. As a Board, we committed when we joined the company that we would get governance back to where shareholders expected governance to be. These are more administrative, but really important, how we remunerate our people, and reward our people is the way that our people behave and it drives their behaviors and their KPIs and make sure that we're aligned in how we believe value is going to be created. So this was a very important thing for the Board. Building out the Board, particularly as we become more complex and we move into the more complex phases of our journey. It's very important to us in building out that skill set on the Board is very important. You will have seen some announcements in recent times about executive appointments that we've made. So welcome Thomas to our new CFO; Steve, as our new Corporate Secretary, we will continue to build out our executive team, particularly in the U.S., and Rohan has just returned from the U.S. yesterday. So you can see we're moving on these things while we're continuing to move on the programs themselves. Of course, shareholders supported us tremendously early in the year with the capital raise and that's put us in great stead, and I hope you enjoyed reading the recent sell-side research report that came out of the U.S., and I'm sure it's vindicated many of your personal investment decisions or giving you the confidence that you've made the right choice when you invest with PYC. So with that, I will formally close the meeting. That concludes the formal business of the meeting. Thank you very much for your participation and attendance. I'm going to call Rohan up here and Rohan, if there's an opportunity, maybe a 5-minute update for shareholders on just what's happening if you could do that, that would be great. And I warn shareholders, Rohan hasn't been warned about this, but he's great at this. So Rohan, thanks very much.

Thank you, Peter. I do enjoy the opportunity of a microphone in a captive audience. So happy to give an update at any point in time in relation to where we've got to. We were having a chat offline prior to the meeting with some shareholders in relation to recent progress. And I think very pleased to report that it has been a solid window both from a life sciences macro standpoint. We see a significant improvement in conditions in the U.S. reflected in a material uptick in the XBI or the index over in the U.S. So conditions for life sciences generally, investment appetite, in particular, on the part of generalist investors' interest in the space is growing, has grown very rapidly and continues to be very solid. . And I think on the back of the sentiments that Peter shared, if we focus in on the company's operational performance, it's been a strong window there as well. In the context of having refreshed the balance sheet and given ourselves that cash runway extending into 2030. We're in a very strong position in terms of the ability to then go and focus on execution, which is very much what we need to do over the coming 36 months as we look to push through the critical human safety and efficacy data in each one of the 4 pipeline programs. A lot of the focus in the conversations that we've had over in the U.S. center around the polycystic kidney disease program and I think we're very quickly approaching the turning of the cards there or the window where the rubber meets the road. There will be a lot of attention on the safety and human efficacy data that is going to start to unfold in the current half with the results of the single ascending dose study, which we are set to release at the American Society of Nephrology meeting later in October. And then as we turn our focus to 2027, we'll be looking at the really important data from the multiple dose study, which will hopefully be the precursor to a transition to a Phase III study, looking at an IND submission in late 2027 and the transition to that registrational trial in 2028. So super exciting time in relation to the company's largest program. In the context of the Phelan-McDermid Syndrome program, we'll be providing an update to the market relatively soon. We are just in conversation on the back of having held the pre-IND meeting with the FDA in relation to what that transition to first-in-human study is going to look like. We initially held a view that we'd have a single dose study into a multiple dose study. The FDA have shared a view that they are preferring a pathway to a direct multiple ascending dose study. We'll evaluate the implications of that aligned with the regulator and then look to push that program ahead into clinical development, which we are extremely excited about. And then in relation to the 2 ophthalmology programs, we're continuing the execution in the ongoing open-label studies to define clinical proof of concept and now transition to registrational trials. Similarly, we'll be providing updates in relation to the efficacy data across both of those programs through the current half. So I think we're in a very good position as a company. We've got the additional challenges of them thinking about the platform technology, opportunities to scale with the validation that comes at the individual asset level, where else might we go in programs 5, 6, 7 and 8, it's a very dynamic time in the industry with the emergence of China as a very material contributor to the number of assets that are moving out of the lab into patients. And also the disruption that many of you will be witnessing in the context of the tech sector using artificial intelligence to move into the realm of drug discovery and drug development. So a very, very interesting time for PYC. The fundamental focus for us is on both human efficacy and safety signals that are coming across each one of the clinical assets and the Phelan-McDermid Syndrome program as we move that into clinical development, but we're also starting to turn our minds to where we might go next. So stick with us. And I think in the very near future, in the context of the PKD program, we're on track for some more outcomes there in the next couple of weeks in relation to safety review committee for the Phase Ia study in which dosing is now being completed and evaluation of the safety data from the first patients in the multiple dose study. So that's the near-term milestone that we'll be looking towards and from there, really building out across the clinical proof-of-concept readouts for each one of those programs. Anything else, Peter, that you wanted me to touch on. No. So I think the focus for us now, as Peter alluded to, expansion of the Board is going to be a priority for us. We're also building out the executive team with a focus on clinical development, in particular, regulatory engagement, focus on the U.S. presence of the executive there. And then very much execution in relation to those assets before turning our mind to the longer-term future for the organization. I think a strong window, and we look forward to sharing the results of that execution with you in the very near term. Thank you.

Okay. Thanks, Rohan. And again, thanks, everybody, for joining us today, and thank you for your ongoing support of PYC. Look very much forward to reporting some positive outcomes between now and the end of the year. So as Rohan just outlined, there should be some very interesting and hopefully positive news flow coming our way. So thanks very much for your support. Without you, we couldn't have got to where we are today. And you've really set us up well to be able to really focus on the execution part of what we're doing, which as we know is where the value is created. So thank you very much for today. I'll close the meeting.