Rani Therapeutics Holdings, Inc. (RANI) Earnings Call Transcript & Summary

Great. All right. Good day, everybody. My name is Ash Verma. I cover SMID cap biotech and spec pharma, and our next company at the conference here is Rani Therapeutics. And with me, I have Kate McKinley, who is the Chief Business Officer. Kate, thanks for joining us.

Good morning, Ash. Great to see you. Looking forward to the discussion.

Yes, absolutely. So I guess like maybe just for the benefit of the audience, if you can sort of like give a high level overview of the platform, where Rani has been and just like some of the pipeline opportunities, if you can start with an overview, and then I'll get into more questions.

Yes, absolutely. So Rani Therapeutics is a clinical-stage biopharmaceutical company. Our mission is to end the issue that continues to plague biologics, and that is delivery via a painful injection. So we do that through our proprietary technology, which is called the RaniPill. And the RaniPill is a capsule that is intended to replace the subcu and IV injectables. We've been able to demonstrate bioavailability comparable to subcu and IV in 15 preclinical studies and now 3 studies in the clinic. Also, a hallmark of our corporate strategy is our very strong patent protection, with nearly 500 patents that have been granted and filed.

Great. Maybe I know like this has been a topic of discussion just in terms of like unmet need, right, that patients prefer orals over injectables, and the data is like really staggering on that, the last time I looked at it. But do you think there's certain like drug classes or indications where the, let's say, the side effects experience, the patients would rather have, let's say, once a week or monthly injection as opposed to like taking an oral pill, so that they only experience a side effect on like a delayed frequency versus daily? So just wanted to get your thoughts. And I think that might have some repercussions on how you're thinking about your pipeline?

Yes, absolutely. So we, as you can imagine, have spent a lot of time looking into this as well. And what we sought to do was really understand and test out this long-standing assumption that orals are, in fact, the preferred delivery. So we went out and partnered with a company called Frost & Sullivan, which is a global health care and research organization, to speak directly with patients that are on injectable regimens. And we always talk about this internally. We're in the business of oral biologics and even were surprised at how strong the preference is for orals, and what the of needles is for these patients. So a couple of insights from our research when we spoke to these patients. 76% of patients that are on a twice yearly injection regimen. So they're only injecting every 6 months. Yet 76% of those patients told us they would prefer a daily oral pill. 80% of patients that are on an every 2-week regimen also said they would prefer a daily oral pill. Now we know adherence is a huge issue in our industry and nearly 40% of the patients that we surveyed admitted to us that they are frequently skipping their injection regimen due to this needle aversion. We also talk with physicians and wanted to understand how oral delivery impacts their prescribing habits. Just talking to endocrinologists, specific to insulin, 81% told us they would initiate therapy sooner if an oral is available. So we believe this is really a market expansion opportunity. So what it appears based on the data is regardless of how frequent the oral is and how infrequent the injection is, the patient will pick the oral every time as will the physicians. Now as we look at the direction that the RaniPill is headed, we're moving away from a daily dosing regimen. We now have our RaniPill platform that has the ability to carry 200 microliters of aqueous liquid solution. So many of our programs are moving away from a daily pill and could be as infrequent as weekly or a few pills in the beginning of the month.

Got it. Okay. That's great. And I guess like another sort of broader question just about the strategy in the space, right? Like if you look at the drug delivery sort of like subsector, some of the platforms have been very successful, like if you talk about Halozyme, whereas there have been some challenging ones as well. There are therapeutics comes to my mind. From your vantage point, like what determines ultimately, like how a drug delivery platform is valued and is successful over time?

So Rani Therapeutics, we look at the space very closely as well and do have a perspective on really ultimately what is going to determine success. So the first thing is the delivery platform has to consistently perform. It also has to consistently deliver the drug at a very high bioavailability compared to the other products that the oral is trying to overcome. So when you look at the RaniPill platform, again, we've been able to do that, we establish that high bioavailability compared to subcu and IV in 15 preclinical studies and now 3 studies in the clinic. Ultimately, though, FDA will make decisions about drug approval based on safety and efficacy. So where we've seen these products really fail, some of the failures that you referenced is that ability to consistently perform, consistently deliver drug, which ultimately impacts their ability to deliver that efficacy. As we're looking, particularly in the obesity space, you're seeing these oral small molecules in development, and they really struggle in this chemistry-based approach to deliver and get the drug absorption. So what companies are doing is significantly increasing the API. 100s times over, 100 to 300x more API in the oral compared to the injectable. So what's so notable and unique about the RaniPill technology is our -- we have the ability to deliver that consistent drug at that very high bioavailability at the exact same dose or very similar dose as the subcu and IV.

Great. All right. That's for -- so I guess when you think about that, right, is the opportunity set from your perspective, like limited to the drugs that may have gone off pattern and thus you can only bring something in RaniPill if it has been genericized? Am I thinking about it the right way?

No. So I'm glad you asked the question. It's a really simple answer, no. But actually, in fact, there's very few limits on where the RaniPill technology can go. So as I said, we now have the ability to deliver 200 microliters of aqueous liquid solution. This expands our ability to house over 90 drug candidates. The RaniPill is drug agnostic and therapeutic agnostic. So as you can imagine, we're in a number of discussions with both very large pharma companies as well as emerging companies that are looking to innovate their molecules with the RaniPill technology. So the discussion span everywhere from NCEs in early-stage development, all the way to on-market products. Company is saying, let's look at loss of exclusivity strategies with the RaniPill. And then, of course, biosimilars looking to gain a competitive advantage. So the RaniPill is absolutely not exclusive genericized products.

Yes. I guess the 3 programs that you mentioned, right, like in your pipeline, to the -- like what narrative do they fit? Is it -- like, I know like RT-111 is STELARA. So that's a biosimilar, RT-114. We've started to see like new data. And just if you can quickly mention like what are the base molecules for the 3 programs that you're looking at?

Yes. So great example of really what I just shared. So when we look at RT-114, that's going to be the biosimilar approach, and it's really a way, and we can talk a little bit about that program, but it's really a way to really innovate and potentially create an even better product in this biosimilar market. RT-114, which, of course, we'll talk about, is our newly-announced obesity program. That's an NCE. That is currently in Phase I, moving into a Phase II for the subcu version. And then within our pipeline, we have other examples of products that are on market and then certainly in the biosimilar space.

Yes. Okay. All right. So yes, let's talk about like RT-114. I mean it seems like a pretty exciting opportunity for a weekly obesity pill. Can you just like share what have -- what's the data that you've shown so far? And what are you trying to achieve in the long run?

So we're excited about RT-114 as well. The RaniPill is now in obesity. So we had our big announcement back in June. And I'll step back a little bit and talk to you about why we immediately saw this great strategic fit for this particular molecule? So Rani has entered into a strategic partnership with ProGen. And this is a 50-50 co-development and a co-commercial agreement. Rani has the exclusive rights in U.S., Europe, Australia, U.K., North America; and ProGen has rest of world. And so all the costs and revenue will be equally split. So when we first started meeting with ProGen and understanding this molecule, that is the molecule in RT-114, PG-102, we got very excited and really saw that it has the potential to be a highly differentiated molecule. So PG-102 is a GLP-1, GLP-2 dual agonist. And ProGen has this unique platform. It's an Fc fusion platform called NTIG. And they've utilized this platform to innovate and create PG-102, now -- which is this GLP-1, GLP-2 dual agonist that is fused to their platform. Now what's really unique and how ProGen has been able to leverage their technology is really perfect the ratio of GLP-1 to GLP-2. And they tried many molecules prior to landing on PG-102. And so what we see with PG-102 is an 80-fold higher GLP-1 receptivity to the GLP-2. And that's why we're seeing some of these potential best-in-class, certainly weight loss. But also lean body mass preservation, potential tolerability benefits over all the other products. So RT-114 has the potential to be this best-in-class obesity molecule combined with the innovation and dosing flexibility of the RaniPill.

Excellent. That's great. And then just like so far, why have we not seen this combo to date? I guess, like I don't remember any other company pursuing it given the sort of the fast expansion of the GLP-1 market that we've seen in the last few years. Is there a certain element to this, like, that is like totally novel approach towards this mechanism that others have failed to look at?

Definitely. Thank you for asking, Ash. We get this question a lot. And there really aren't many examples of GLP-1, GLP-2 in development. Probably the best known is Zealand's GLP-1, GLP-2, which is the dapiglutide. And I think the reason why is that GLP-2 on its own is not a weight-loss drug. It certainly has glycemic control properties and nutrient absorption. But earlier attempts and even attempts at obesity products seem to really focus on absolute weight loss. So how do we really push that weight loss up as high as possible? But what we're seeing as it translates into the real world as it translates into later-stage development is really high discontinuation rates that come along with pushing up that weight loss so high. Certainly, significant tolerability issues, patients are dropping off the medication and then a lot of legitimate concerns around body composition. And so what we see as really a unique benefit of this GLP-1, GLP-2 combo in PG-102 is certainly achieving the weight loss efficacy, but then being able to have tolerability benefits that will keep the patient on the product and potentially improve body composition.

Got it. Okay. And how do you picture like RT-114 fitting into this GLP-1 plus, plus landscape for obesity, if approved? Like is it like a subset of patients that eventually you think that might be sort of like focused on? Or is it like the -- you're going after the broader patient population with this?

Yes. So we've done a lot of work on the competitive landscape in obesity, and there's certainly a lot of products in development. There's -- the majority of the products are injectables. And then obviously, there are some orals in development. What we see with the orals in development is some pretty significant challenges that they have ahead, should they get approved. And certainly, if they are on market, to really be competitive. So when you look at the orals in development, they either fall into the small molecule approach or the large peptide approach. When we look at small molecules, this is where you see the super high discontinuation rates. There's been a lot of data that's come out in 2024, and you immediately look at the discontinuation rates of these orals. So a really well-known one is Pfizer with their danuglipron. That program has been put on hold because they had discontinuation rates of over 50%. Also to date, the small molecule approach has been reserved only to GLP-1 single agonist. Now when we look at the large proteins, these are the large peptides. This is where they're really pushing up and having very significant number of API, 100s to 300x the API than what you're seeing in the injectable. Certainly, we already have supply chain issues. So what does that do to the supply chain? How much more pressure can we put on it? What does that mean for COG in a market that most certainly will continue to decrease pricing? So RT-114 is the only obesity product in development, where you will have the dosing scheme of a potential weekly pill compared to these daily and even twice daily orals at the same API as the injectables that are in development. So we believe we actually have the potential to be highly differentiated across the multiple patient segmentation in obesity.

I guess from the -- like the discontinuation rate point that you mentioned, definitely, a big focus in the obesity space. Like when you think about that, right, like even if, let's say, a drug is very well tolerated, right, then do you think that wouldn't have a discontinuation rate? Like from a -- like, let's say, a patient perspective, when they start to realize that these have to be like chronic treatment, is there some level of discontinuation that comes because of that realization? Or do you think that it is like coming more towards because of tolerability issue?

Yes, that's a great question. What the data shows us, and you can look at the clinical trials of tirzepatide, there's some raw data. The discontinuation rate happens with dose escalation. So their escalating dose that was -- the new level of tolerability issues hit and the patients drop off, and payers are paying attention to this as well. So Blue Cross, Blue Shield put out a white paper earlier this year, and the majority of their patients don't even last on the medication for 12 months. So the patients aren't even realizing the benefit of the weight loss, the long-term benefit, because of discontinuation. So I think certainly the flexible dosing scheme that the RaniPill can offer, despite whatever the tolerability looks like in the injectable, having the flexible dosing scheme potentially fractionating out the dosing when you move into dose escalation is another huge benefit of the RaniPill.

So would it like not require titration? Is that what you're effectively saying? Like for patients to figure out, like what's the optimal, let's say, level of dosing for them, right? Like how does the -- like how did they figure that out basically for RaniPill?

Yes. So when we look at PG-102's data, they actually have no GI side effects in 4 -- 3 of the 4 doses that were tested. So the GI side effects only happen at the highest dose. This is in our Phase I data, and even that is right at 30%. So still significantly lower than many of the products that are in development. And so in and of itself, it appears to be a much more tolerable product. However, that's one thing as we continue to watch. And we have such a benefit at Rani to be able to watch the development of the PG-102 subcu and really watch their dosing and the impact that it has on the patient to determine the best approach for our clinical trials, but that is a potential that we have to be able to even fractionate out the dosing further, if necessary through the RaniPill.

Got it. Okay. Perfect. So I guess, on the lean body mass effect, yes, like do you have any animal data that you would point out to? I know there is a ton of focus on this right now. I think people are sort of going beyond weight reduction element, like you mentioned, and then like focusing on lean body mass effect, it's -- anything that you would highlight there?

Yes. There is a ton of focus on this. And so I'm really glad that you asked about that. A distinguishing feature of PG-102 appears to be its ability to impact body composition. So the diet-induced obesity mouse model, DIO model, which we know is highly translatable into the clinic, PG-102 beat the weight loss of Zealand's GLP-1, GLP-2 dapiglutide. It matched the weight loss, so PG-102 induced the same amount of weight loss as tirzepatide Eli Lilly's product. But then when you look at the fat loss to lean muscle preservation ratio, tirzepatide achieved 2.9 in the DIO mouse model and PG-102 achieved 6.4. So significantly outperformed in terms of body composition in DIO mouse model. Now tirzepatide, when you move forward and look at their Phase III SURMOUNT trial also achieved a fat loss to lean muscle ratio of 2.9%, really showing that translation. So we're very optimistic that as we continue to progress the development further along in the clinic with PG-102 that will see a very similar improvement in body composition, which appears to be currently best-in-class.

Yes. Is that something that would be like an endpoint in one of your upcoming studies, I guess?

Absolutely. And that was -- I will tell you, going back to sort of the strategic fit that we were talking about a huge reason when we saw that data that we thought this was really the great opportunity to be the first obesity molecule in the RaniPill.

So what are the next steps on this program then, like, with the review, do you require any kind of like FDA interaction to start some of these studies? Are you planning them in U.S., outside U.S.? Just any thoughts there.

We're advancing RT-114 rapidly. And so we're doing all the work required to move RT-114 into the clinic, which we'll be doing in 2025 and early 2025. And what you'll see with our Phase I design is very similar to what you see with these other obesity molecules in development. We'll have a Phase Ia in healthy volunteers. We'll have a Phase Ic, where we'll start looking at the healthy obese. We'll be testing out at least 2 dosing schemes in the Phase Ia and then move one or more of those forward into the 1c. Again, we have the benefit of really being able to watch PG-102's development, which is currently in their Phase I. We'll be moving very quickly into their Phase II to really inform us of the direction that we want to take the clinical development of RT-114.

Are they developing the program sort of like independently as well, and you're doing it in RaniPill?

Correct.

Okay. Is there a way to sort of come out with one -- like for both of you companies, right, like do you talk about this that you're sort of like pursuing like 2 parallel streams of clinical development, right? Was that an option that you consider that ultimately, you want to, let's say, focus on RaniPill?

We did consider that. And ultimately, we actually see a lot of benefit in the subcu program for PG-102 staying one step ahead because really that data generated will certainly help us. The insights gleaned will certainly inform our clinical development. I think the ultimate future commercial potential, obviously, will require further discussions. But I think it is notable that ProGen came to Rani because they really see the benefit and what the future is going to demand for oral delivery and just the innovative technology that the RaniPill could add to the PG-102 program.

Great. All right. Perfect. So let's talk about like another program that I know there's a lot of focus on this, RT-111. So this is the biosimilar STELARA. So can you remind us, like, where are you in the process? And I know the biosimilar STELARA market is -- in the U.S. is forming in like basically early 2025. What are you looking for in terms of insights from that market formation if that has any implications in terms of how you look at this program?

Yes. So we're, as you know, have now completed the Phase I of RT-111, which, of course, is the RaniPill delivered biosimilar ustekinumab. And it was really a successful Phase I. All of the patients tolerated the RaniPill delivery. There were no serious adverse events and bioavailability of the Rani route of delivery was 84% compared to the subcu. So obviously, we were very pleased to your point, the market has reacted very positively because we know there's such a high unmet need for oral delivery and immunology. So as we move forward, we're looking at how do we optimize the dosing, particularly that we have the RaniPill expanded abilities. And what we're looking at is a potential dosing scheme that would be 7 to 12 milligrams per RaniPill. And what that could look like is in the loading dose phase, 1 pill a month for the first month of therapy and then the patients move into maintenance therapy, which would be 3 pills at the beginning of the month. So once a patient is chronically on this medication, you're talking about a very small number of pills that they will take on an annual basis. What this dosing scheme could deliver in addition to significant convenience for patients is the potential to actually keep patients' serum concentration levels in tighter bands than the current ustekinumab, current STELARA and potentially have an efficacy and even side effect benefit over STELARA. So as you can see, this would be a significant way to not only take a biosimilar and move it into an oral, but the potential to make a product better. And that's huge in this market that has a multibillion-dollar market, high unmet need. The current sales for STELARA in 2024 are projected to be $10 billion. So we're really excited and looking to rapidly advance this program.

I've heard this from some of the commentary coming out from like J&J calls that they have been trying to shift away the business to TREMFYA. To what extent, like do you think that like having this focus on STELARA like the sort of the market opportunity for you, right? How much is it like contingent on STELARA being like a steady franchise over the time that you're coming to the market? Like if we start to see that there is shifts happening in the I&I space, that patients start to shift more from like STELARA to other biologics and how would that impact the opportunity for you?

That's a great question because when we're looking at any market, whether it's immunology specific to psoriasis indication, whether we're looking at obesity, we're not just looking at that said comparator product. So to us, the opportunity is not exclusively tied to STELARA or even the future STELARA biosimilars. We're looking at the entire immunology space and saying they're still a void for oral therapy. There's certainly a void for oral therapy that has the efficacy benefits that the injectables have. And then many of the orals that are in development harken back to what I was sharing with the small molecule approach, really high APIs, drug absorption issues, daily pills, multi-daily pills. So when we are evaluating the opportunity of where to place our bets and place our focus, we see this regardless of most certainly the STELARA business will shift and regardless of where it goes, we're really confident in the potential behind RT-111 to be a highly differentiated product.

Great. So yes, I guess, on business development front, what can you share about potential partnership opportunities? When can we start to see more progress on that?

So we're really active and especially in business development discussion, especially with our technology being a platform technology, our business strategy is really a partnering model for the future. And being drug agnostic, therapeutic agnostic, having the ability to house over 90 drug candidates, our discussions are spanning, as I said, everywhere from NCEs, earlier stage to on-market products, those multibillion-dollar brands, where companies are looking for a loss of exclusivity strategies, certainly biosimilars where they're looking at the bio better, how do we make a potential better product with the RaniPill delivery. Certainly, we're focused on obesity, as we've been talking about, but also those other really high-value markets where there's a high unmet need. So immunology, as we spoke about, endocrinology, rare disease and obesity. So very active in various stages of discussion and diligence with some very large and emerging pharma companies.

Great. Yes, looking forward to more progress on that. So just quickly, last question before we wrap up. Can you talk about your cash position and runway after the latest round of financing?

Yes. So we recently took advantage of an opportunity to do a $20 million financing. And as you know, in these capital markets, right now, Ash, that's certainly very challenging in those markets. So we'll continue to pursue financing, but also really looking at aggressively pursuing non-dilutive funding certainly through these pharma partners that we've been talking about and potential collaboration agreements. So this $20 million raise that we recently announced extends our cash runway into Q3 of '25 and then obviously aggressively pursuing other opportunities to continue to expand that runway.

Great. Yes, good luck with all the different programs. You have a lot of different pipeline programs coming up and business development as an opportunity as well. So thanks for participating at UBS Healthcare Conference and looking forward to staying in touch.

Thanks so much, Ash. Great to see you today.

Thanks. Take care.

Bye-bye.