All right. Welcome, everyone in the room and on the webcast as well. My name is Faisal Khurshid. I'm one of the senior biotech analysts at Leerink Partners. Really pleased to have with us today at our Global Healthcare Conference, Bharatt Chowrira and Eric Elenko from PureTech Health. PureTech Health is a super interesting company, kind of pioneering a little bit of a different way to go about things in biotech. I think kind of given the novelty of the company structure and what you guys are doing, Bharatt's going to start with a quick overview, and then we'll go into the Q&A.
Great. Thanks, Faisal, and thank you to Leerink for inviting us. Welcome, everyone who's in the room here, as well as those who are following us on the webcast. PureTech, for those of you who are not familiar, is a Boston-based clinical-stage biotherapeutics company that, as Faisal was mentioning, we pioneered this unique hub-and-spoke R&D model. This model has enabled us to be quite efficient and fuel our R&D engine. Our de-risked approach to drug discovery is centered on molecules with some level of human pharmacology that have fallen short of meeting the patient's needs. This approach has yielded a strong track record of success for us, which we are very proud of, and we'll highlight some of that today. Before I jump in, I do have this cautionary: today, we may be making some forward-looking statements.
Please do refer to our SEC and other regulatory filings for up-to-date information. We have been making tremendous progress across our pipeline, including those that are highlighted on this slide here. 2024 was a remarkable year of success for PureTech across our portfolio. Last year, we announced in December some unprecedented top-line phase II-B clinical trial data with our wholly owned deupirfenidone program in idiopathic pulmonary fibrosis, or IPF. Another major event was one of our Founded Entities, Karuna Therapeutics, was acquired by Bristol Myers Squibb for $14 billion. The FDA also approved COBENFY. This was Karuna's lead program, which was invented at PureTech for the treatment of schizophrenia in adults. This was really a landmark approval for a new mechanism, the first new mechanism in 50 years for treating schizophrenia in adults. Quite exciting there.
We also successfully launched our latest Founded Entity, which is Seaport Therapeutics, to advance our next wave of CNS programs. They were able to attract some really high-quality investors. They raised about $325 million last year across two rounds. All of these catalysts have translated into a strong balance sheet for PureTech. We ended 2024 with about $365 million, which is really a testament to our self-funded R&D model. We have a strong track record of success with our R&D engine. Over 80% of our clinical trials run by PureTech or our Founded Entities over the last 15 years have been successful. COBENFY is the third FDA-approved program coming out of our R&D engine, and that originated at PureTech. This success has really been underpinned by three key factors. We always start with a problem that has significant patient need.
We tackle that problem by identifying small molecules or conventional biologics that have some level of human efficacy as a starting point. For one reason or the other, these molecules have been held back from reaching their full potential. We apply an approach or a technology to overcome the challenges that have really held them back. That is core to everything that we do today. We conduct rigorous de-risking experiments earlier on in our product ideation with pre-specified thresholds for advancement. This disciplined and rigorous R&D model has translated into a robust portfolio of programs that are shown on this slide. These programs fall into two categories. Some are wholly owned, which are highlighted in the top portion of this slide: deupirfenidone and Gallop Oncology.
The second category captures the programs that are in our Founded Entities, which are along the bottom of this slide here. We initially identified and discovered these programs or platforms that are housed in each of these Founded Entities and then advanced through key validation and value inflection points before we seek outside investments. These Founded Entities are a source of capital back to PureTech that we then deploy to continue to fund our R&D engine. These cash back to PureTech can be in the form of equity ownership that we monetize, or in some cases, certain milestones and royalties from the products that are developed in advance by the Founded Entities. Our R&D model is proven, repeatable, and scalable across our portfolio.
For example, Karuna is a hallmark of how we create value both for the patients as well as to our stakeholders, as seen on this left side of this slide. We invented and initially developed KarXT, which is now being marketed as COBENFY, for the treatment of schizophrenia in adults. This was invented at PureTech. We allocated about $18.5 million to the program and so far have generated approximately $1.1 billion to date through equity sales, milestones, and strategic royalty agreement with Royalty Pharma. We continue to hold additional milestones and royalty payments under that royalty agreement. We applied the same blueprint as Karuna, leveraging clinically validated molecules with significant patient need to launch Seaport Therapeutics. This was launched last year to house our next wave of CNS programs and the underlying technology that resulted in this platform.
Within a year of the launch, as I mentioned earlier, Seaport has garnered significant investment from top-tier healthcare investors, being able to raise $325 million. Our lead wholly owned program, deupirfenidone, which is shown at the bottom right of this slide here, which we are advancing for the treatment of idiopathic pulmonary fibrosis, or IPF, has been developed using the same R&D model. With the strategic tweak to the molecule of deupirfenidone, we believe we can overcome the challenges with current standard of care and have a profound impact on the patients. We have shown this in our phase II-B clinical trial, which we'll discuss shortly. We are confident in the differentiated and de-risked profile of deupirfenidone and think it has the potential to become the next standard of care.
For those of you who are not familiar with IPF, it's a rare, progressive, and fatal disease characterized by the scarring of the lungs, with median survival of just two to five years from diagnosis. IPF has long impacted many people and communities and celebrities, including some of those renowned individuals shown on this slide, and continued to devastate people living with the disease, significantly impacting their quality of life. While there are two approved FDA treatments for IPF, the efficacy has been suboptimal, and there have been no new therapeutics for IPF approved in over a decade. This highlights the continued unmet need and significant challenges developing novel approaches to treating this devastating disease. Our program, deupirfenidone, is designed to leverage the well-established efficacy of pirfenidone while addressing the key limitations that have restricted its broader use.
We believe that the ultimate treatment goal for IPF should be not just aiming for a marginal improvement over the current standard of care treatments, but aiming for a significant improvement in efficacy involving lung function stabilization without compromising safety and tolerability of the treatment. We think we can achieve this with our deupirfenidone program. Our robust phase II-B data demonstrated an unprecedented efficacy, including the stabilization of the lung function decline at 26 weeks with favorable tolerability, and which we have also shown in an open-label extension study to be durable across at least 52 weeks. Deupirfenidone has a broad and layered IP protection with exclusivity well into 2043, which bolsters its blockbuster potential. We expect to initiate phase III clinical trial for IPF by the end of 2025, and I'm looking forward to discussing that program in more detail today.
We are excited for the future that holds for the programs across our pipeline, and we are expecting to deliver another momentous year across our portfolio. Our wholly owned oncology program, LYT-200, remains on track to have final phase II-B, sorry, phase I-B data later this year. As you look across this slide, our Founded Entities are poised to accomplish additional milestones, and we've maintained substantial equity stakes in most of them. Coming off of an incredibly exciting year, we are energized more than ever to further our mission to serve the patients most in need. We also continue to be committed to unlocking and crystallizing value for our shareholders through at least six key elements.
Of course, our exceptional talent who power our R&D engine and are integral to our success, our strong balance sheet, our internal programs, our equity stake in our Founded Entities, both public and private, future revenue streams such as royalties and milestones and sub-license income from the Founded Entity programs as they advance, and potential future capital returns to our shareholders. These key components of value, we believe, offer a compelling investment opportunity with significant growth potential in the coming months and years. With that, I'll hand this call back to.
Yeah, sure. Let's transition to the thank you for that introduction to the company. So we'll do a kind of quick Q&A fireside chat. I think I kind of want to drill a little bit further into the data that you had in December for LYT-100 or deupirfenidone.
I think you kind of laid out the concept pretty interestingly that you guys take these clinically validated molecules, like in this case, pirfenidone, degrade it to get kind of better pharmacology out of it. So can you explain a little bit like the key efficacy findings from this study? You had a kind of higher dose, you had a lower dose, you had a pirfenidone reference arm. What were the takeaways on the efficacy side?
Eric, do you want to?
Yeah, so that's exactly right. Multi-centered global study, 257 people, the four arms that you mentioned, randomized evenly between those arms. Takeaways were that we showed clear dose-dependent efficacy for pirfenidone or LYT-100 between our two different doses. It kind of made sense because if you look at the literature and what's historically known about the drug, it's a drug where there has been dose-dependent efficacy. In fact, the challenge with the approved drug pirfenidone is that it hasn't been able to dose up higher to higher exposures due to tolerability. Even though it was known that more is more, that's always been the limitation. What we were able to do with our higher dose, which is 825 mg 3x a day of pirfenidone, is really have a drug that gives greater exposure. We're able to have that greater exposure without sacrificing tolerability.
In fact, the tolerability with regards to key GI adverse events actually looked good. What we saw is overall, looking at the four arms, the placebo behaved the way one would expect placebo to behave in a well-run six-month study. Patients were dosed for six months and then had the opportunity to enter an open-label extension, which is still ongoing. Over 26 weeks, a decline of about 112.5 mL. You'd expect between 100 and 120 mL. Our pirfenidone arm, you'd expect to do about half of that decline. We're just slightly better than that. Our pirfenidone arm, if anything, behaved a little bit on the higher side. Again, it's good. Our negative control was negative. Our positive control was positive.
With regards to the 825, that gave a decline that was really in the realm of the type of decline in lung function one would expect to see in healthy older adults without IPF. It is about 21.5 mL decline over six months. If you look at what one would expect to lose, unfortunately, as we're aging, we all lose lung function, it would be in that range. We were very happy to see that. Again, trial behaved the way one would expect based on the two, the placebo and the pirfenidone. We had this really what looks like stabilization of lung function and about a 50% bigger effect compared to pirfenidone at that highest commercially used dose of pirfenidone when comparing the 825. Overall, we were very happy with the results that we saw.
At your high dose, that 825 dose, you had a nice margin of benefit versus the pirfenidone reference arm on efficacy. Get the conclusion there. On the safety side, at this point, is the conclusion that you are better or more tolerable than pirfenidone or kind of in line with pirfenidone where we kind of draw the line there?
Yeah. What we had done, and this is pretty typical for PureTech, we like to keep things intellectually honest. While the data was all blinded, before we had the readout, we actually defined what are the key gastrointestinal adverse events. We defined these based on talking to key opinion leaders, community physicians, just really kind of doing market research. A few GI adverse events kind of rose to the top. The most prominent one is nausea. Nausea in this context is often used as a catch-all for people who say, "I'm nauseous," meaning I just don't feel well. There's something wrong, GI upset. That was probably the most important. In the pirfenidone arm, we saw, I believe it was about 27%. We're about 20.3% with the 825. That was good.
We were looking for about a 25% difference, relative difference to be meaningful. We were very happy. Across these predefined GI adverse events, through most of them, we actually trended in a favorable direction. We do recognize, though, and want to be clear that, of course, when you're taking 20% of something and there are like 60-something people in that arm, you get to pretty small numbers in these various arms. We do recognize that the number of adverse events on an absolute number are relatively small. As a percentage, you look and, yeah, it looks pretty good. That's why our overall conclusion with regards to these key GI adverse events was that it was actually favorable tolerability overall.
Got it. So basically, your chemical tweak let you dose your drug at a close to the same per mg basis.
A higher exposure.
Yes. You're getting better efficacy with at least as good safety.
Right. We're not sacrificing. Exactly. That's very well said.
I think some investors were a little bit confused on the lower dose. Because the lower dose, from a pharmacology perspective, I guess the idea was AUC equivalent, lower Cmax. People were thinking that should be just safer pirfenidone, like in line on efficacy, better on safety. It performed a little bit differently than kind of that ingoing expectation that some people had. Could you just kind of briefly explain how we should think about that? I get that it doesn't matter as much given you have something that's better, but just to kind of explain it.
Yeah, I'm happy to give a few thoughts. I think you said it very well. At the end of the day, we're really, first of all, focused on that 825 dose because that's the dose that showed the greater efficacy and really kind of what we're most concerned about. The 550 dose clearly showed that it had a decline in FVC that was different than placebo. We saw a dose response, and we actually wanted to see a dose response. Ideally, that's important clinically, and it's also important from a regulatory point of view. If you look at, I would say there's FVC, and we also had our key secondary, which, by the way, we met both our primary and our key secondary. Our key secondary that we had predefined was FVC % predicted.
The difference between FVC percent predicted or FVC PP and FVC is that FVC PP is relative change and takes into account someone's physical characteristics. So height, age, gender, right? A 6-foot-7 man will have inherently more lung capacity than a 5-foot-8 80-year-old woman. But a 1% change in FVC PP will then give greater amounts of FVC differences. I say if you look at the FVC PP, the 550 looked not quite the same as pirfenidone, but a little more similar, which suggests maybe that measure was smoothing out some of the differences.
Interesting. Yeah, complicated disease. Bro, I want to come to you on this one. So when people think about PureTech, they think about Karuna, KarXT, that amazing success that you had. And then the question is, what can be the next Karuna? What can be the next KarXT? I think you're sitting on some interesting data now here. I want to ask, how are you thinking about the future of this program? Obviously, with KarXT, you put that into Karuna. You had that as a Founded Entity. You collected economics along the way. What does the path forward from a corporate structure perspective look like for this asset?
Yeah, so deupirfenidone, based on the phase II-B data, we are quite bullish on the prospects. Assuming we're able to confirm these data in a phase III study, we should have pretty significant in terms of overall patient impact. Because again, stabilizing the lung function is a big deal. When you talk to the key opinion leaders, and we have talked to a number of them, that's the part that they really, really get excited about. Because that can have real benefit for these patients, and it could translate into longevity and life expectancy. Stabilizing someone's lung function once they're diagnosed with IPF to mimic what a healthy older adult who does not have IPF is actually going to be a huge deal.
If we are able to confirm that in the phase III, I think this could be a very significant patient impact, but also commercial opportunity. We have the potential to become then the standard of care for IPF. As a single agent, it's never been seen before. This is the first study that people have run head-to-head against a standard of care over at least a six-month period. Now with the open-label extension, we're seeing the durable effect. Given the robustness of this data, we're looking at different ways to advance this. We want to start the phase III by the end of this year. We'll go to the FDA by sometime in the middle of the year to get an agreement on the trial design.
Once we have that, we want to then start the phase III by the end of this year. That study is going to be long. I mean, it's going to be, we think, a one-year study, although we're looking at other ways to see if we could do a shorter study. Assuming, following the other precedents in the field, we expect a 12-month study. That 12-month study is going to take about two to three years to read out from the start. It's going to be a long study, and it's going to be a reasonably pricey study. We're looking at different ways to finance this. One approach is we're talking to a number of potential project financing investors who actually are in the business of lending you the money to run a phase III at risk.
If the trial is successful, they get some economics on the back end.
Like a royalty-linked financing?
Like a synthetic royalty type of financing. We may use part of the cost for the study through that. We are also speaking to a number of strategics for regional deals. We would want to keep the US rights and then potentially partner ex-US rights. That could bring in some additional upfront economics that could also help fund the phase III. We always have the option, like we've done historically, of spinning this out into a separate entity and bringing in outside investors into the program. There is a lot of interest from potential investors. It could be a combination of those three things to then really fund our phase III study. We will have more to say as the year progresses. We are on track to do the phase III by the end of this year.
You work your way backwards from there and see when we want to have all of these lined up so that we can start the study.
Got it. Between now and study start, we should expect some clarity on kind of the strategic vision. Okay, interesting. We're getting close on time, but I want to—you mentioned kind of the phase III study start. I want to ask you, obviously, IPF has certain nuances when it comes to study design with respect to control arms. In the real world, there are the standard of care agents available, but they're not commonly used. How are you thinking about kind of what that study design could sort of look like, understanding you might be limited what you could say today versus a few months from now, maybe?
Yeah, a little bit limited in terms of what we can say today. We haven't formally gotten about study design. It's something we're thinking about, taking into account various different factors, including looking at this technically from a feasibility perspective, commercially. Of course, we'll need to interact with the agency. We haven't formally gotten, but look forward to doing so in terms of study design.
Got it. Okay, makes sense. I want to talk about COBENFY, COBENFY. You had meaningful economics. You monetized a portion of it. Can you remind us what are the remaining economics that you have on the drug?
Yeah, so under the license agreement with Karuna when we spun this up, we were eligible for certain milestones on development as well as 3% royalty on net sales. We sold the 3% royalty on net sales to Royalty Pharma a couple of years ago. We got $100 million upfront, and we are eligible for up to $400 million in milestones. Those are small milestones for regulatory approval. We got a small one for COBENFY approval. They also have a second indication that they are currently evaluating. When that gets approved, we get a small additional milestone. In addition, the rest of the milestones are going to be based on sales ramp and sales thresholds.
In addition, when the sales cross $2 billion in a given year, we get to keep 2% royalty, and Royalty Pharma keeps 1% royalty. There are analyst projections out there. We think this could be a meaningful revenue stream for us going forward. If it crosses the $2 billion sales annually, we get 2% royalty on that. This could be a pretty significant revenue stream for us.
Helpful. It kind of goes back to what you were saying about the self-funding of the model. I want to talk about just the future vision for the company. You had, obviously, a nice win on COBENFY. LYT-100, deupirfenidone is kind of in the midst of a transformation right now with the data that you had recently. How do you think about the next pipeline opportunities and sort of where you prioritize efforts?
Yeah. Look, I mean, so our Founded Entities continue to mature. Seaport is doing quite well.
I meant to say that.
Right? Yeah.
That's kind of graduated to a small number.
Yeah. They are well funded. They were able to attract some really good investors. Those pipeline programs there could also generate significant catalysts for us. We are also eligible in addition to equity milestones and royalties from there. As they mature, it is cash back to PureTech. The future pipeline programs, Eric Sharp actually is constantly working on some new product concepts. Maybe you can talk about it, Eric.
Yeah. Typically, we only discuss things publicly once a program has matured to a certain point where we feel it's de-risked and a little more ready for prime time. I'd say more generally, if things were interesting, we've really been focused on small molecules, for lack of a better term, traditional biologics. In the past, I think perhaps we've been a little bit wider in our scope. For instance, we're not looking at anything digital. We're not going to look at anything novel medical devices. We're not going to look at gene therapies, cell therapies, and so on. I think we have a focus. While we're open, there are certain areas of higher interest. Now there is, just to give two examples, pulmonary building on our work in IPF and then CNS, where we have quite a bit of experience.
We're continuing to look at things and explore. So a lot under the hood.
Yeah. Our scale is about up to two new programs per year. Some years, we're very selective, of course. Some years, there are no new programs, but other years, maybe one or two. That's our scale, usually.
Great. We are right at time. I just want to end on one last question, then any closing remarks you have. What do you think investors misunderstand most about the PureTech story?
Look, we have had a tremendous amount of success with our execution, with our pipeline programs and across our portfolio. We will continue to, that is our core mission, to bring differentiated treatments to have significant patient impact. We will continue to do that. That is what we can have some level of control over. Look, the macro markets are quite challenging these days. Given all of that, I think one thing that is really great is that we are self-funded. We do not have to depend on the equity markets to raise money to fund our pipeline. We are in control of our destiny, so to speak, from a portfolio progression and positioning the company for growth. We will continue to do that. Hopefully, that will translate into valuation that is reflected on our stock price and others.
Great. I think that's a great way to end it. Thank you so much for joining us, Bharatt. Thank you, Eric.
Thank you.
I appreciate you making the time.