Well, good afternoon, everybody. Thanks for joining us at day one of the Citizens JMP Life Sciences Conference. We have Protagonist Therapeutics joining us today. My name is John Walton, Senior Analyst here, and we're pleased to have Dinesh Patel, CEO, to tell us a little bit about the company, what they're working on, and they've had, you know, several exciting developments in the past couple of years, and then also, you know, the forward vision for the company. So, Dinesh, thanks for joining us.
Yeah, no, absolutely. It's a pleasure. This is a kind of relationship that we have been in for a few years, and you have seen the phase that the company has gone through. And right now, that's, I can gladly and proudly say that we are at a very good phase of development of the company in itself. As you know, we are focused exclusively on peptide therapeutics, so it's like do one thing, but do it well. And we have been at it for at least 15+ years, so and now the proof is in the two phase III assets, the in late stages of development, very unique from each other, and with two very outstanding partners, J&J and Takeda.
What all that has done also is given us an incredible cash runway, so which is, you know, a rare but a very positive feeling to have, for a biotech company.
Yeah, there's a lot to talk about. Would you wanna start with 2113 or Rusfertide? I'll let you pick.
We can flip a coin. Whatever that works for you.
Let's start with Rusfertide because, you know, you're enrolling a phase III trial, you're gonna have data early next year, and we're gearing up this year to focus, you know, what this could mean for the company. And then, you know, seemingly out of nowhere to us, you have a partnership announced with Takeda. Tell us about, you know, what was going on, why was this the best path forward for Rusfertide versus keeping it in your own hands?
Yeah, no, definitely. I mean, look, as we know.
Well, sorry, maybe to start, you know, what is Rusfertide? It's a phase III for polycythemia vera, and then we can go into the partnership.
Yeah. So Rusfertide is a peptide mimetic of the natural hormone hepcidin, whose job in the body is to control iron homeostasis. So we have sought out a utility of Rusfertide in those disease indications that get influenced by iron imbalance in the body, and polycythemia vera is a prime example. It's a rare disease, but at the same time, there are 100,000 patients in the U.S. alone, so and there is a large unmet need. Now the drug is in phase III stage of development. We completed the enrollment recently, so you know, now the different timelines are almost mathematical by nature, right? So it's a 32-week primary endpoint, so the data will read out in Q1 of first year of next year.
And the study, phase III study designed largely incorporates the same population we had in phase II, and the readouts are also of very similar nature. And as you know, in phase II, we had amazingly positive data with a P-value of 0.0003 in the randomized withdrawal portion of the study. So, of course, we are into this study with a lot of confidence and conviction, and in a way, that is what enabled us to do this remarkable deal with Takeda, which we announced in the first quarter of this year. Nobody was expecting us, and what I can also say is, like, Protagonist was in no level of desperateness to get a deal done. So we were like, "This is a drug that is gonna be totally fine in our hands. We have a phase III study to complete.
We have an NDA filing, and then the results can speak for themselves." So the dealmaking was done, where our stand was like, "We will respect and value and accept a fair deal, that we believe serves our interest and the interest of the opposite partner as well." So it took us a while, but then when the deal was announced, yes, people were surprised, but at the same time, it was so glad to hear everybody congratulating us on the deal, and the deal terms, right? So, as you know, the deal is, we got a $300 million upfront payment. We are still fully in charge of clinical development and NDA filing and approval, but of course, now it's a partnership, so we benefit from their input. And then Takeda is responsible for the commercialization part, and pre-commercial activities, which have already started.
But of course, it's a co-co, so it's a co-development, co-commercialization. Now, the beauty is, though, that, we do have an option to opt out of the U.S. commercialization if we choose to do so, and that is where we get another bolus of $400 million in, as an opt-out fee if we choose to do so. And then the royalty rates are, are significantly better in an opt-out structure, 14%-29%, and even the future milestones are almost 3x larger. So in a way, maybe, the pharma company is incentivizing us to opt out, but the beauty is we don't have to make a decision now. The opt-out thing is, after the NDA is filed, so we will look at what the landscape looks like at that stage and get the deal done.
If we can rewind the tape a little bit, it seemed like just based on timing when the deal was announced, they got pretty excited when they saw the double-blind placebo-controlled phase II data last year, just, you know, timelines, how long these discussions take to, to go on. Can you talk a little bit about the phase II profile you showed for Rusfertide and then what that could mean for a market opportunity, polycythemia vera, where there are drugs approved? You know, what's the profile that you showed that got Takeda excited?
Yeah. So Rusfertide, as you know, it's almost like precision medicine for polycythemia vera. It does one thing, and it does it very well. That is control hematocrit or erythrocytosis, excessive red blood cell production. And PV is a disease which is largely dominated by that particular characteristics. And until now, there have been no agents of this kind of erythrocytosis-specific agents, right? The treatment options that are out there are phlebotomy, hydroxyurea, and then Jakafi and interferons, but they indiscriminately will lower all blood counts, meaning platelets, WBCs, RBCs, that sort of thing. So this is the first and only RBC-specific agent, so to speak.
Now, I just narrated the different treatment choices, and the reality is, like, majority of the patients, in real life, while they may be taking different treatments, they do not control hematocrit in an adequate manner, and that is not without consequences. There is data out there that shows that your mortality rates could be 4x higher if you do not control hematocrit levels properly, right? So I think this could be then a wonderful medicine, for, for a large majority of the PV patients. And more specifically, we believe that, about 60% of the patients, they have, what we refer to as a moderate disease burden. What, what we mean by that is, like, in spite of different treatments or, or without any treatment, they need excessive phlebotomy, and you need a phlebotomy when your hematocrit is above 45.
If you need too many phlebotomies, it means you are not able to control your hematocrit by that mechanism. That is where that's a kind of unmet need that this, our drug could fulfill. And as I said, about 60% of the patients, according to our math and our market research, will fall into that category. Now, this is a rare disease, and it's a chronic disease. So if you look at Jakafi, it treats 5,000 patients, but Incyte is generating north of $700 million just by treating 5,000 patients. So, the opportunity is huge, and it is, unexplored, and largely because there has been no such, erythrocytosis-specific agent out there. And that is what brings a lot of excitement for Protagonist as well as Takeda.
In phase II, you showed efficacy on top of ruxolitinib/Jakafi. Can you remind us, you know, in phase III, are you stratifying at all, background meds, or how are you thinking about, you know, in combination or ahead of ruxolitinib? What do you think the paradigm looks like?
The phase III is almost similar to phase II in terms of the nature of patients that we are enrolling into the study, so they could be in all-comers.
All-comers, yes.
Any treatment, all-comers, as long as they are having too many phlebotomies. And what we mean by that is six or five or more per year or three or more over a six-month time period. And as you know, in phase II, we had all-comers, and we were able to show amazingly positive data both in the phlebotomy group alone as well as the group that was on concurrent treatments.
In the primary endpoint, reduction in phlebotomies and.
Exactly, yeah. Or freedom from phlebotomy, or not qualifying for phlebotomy eligibility, so.
Okay.
from week 20 through week 32.
Okay. And data's coming first quarter of 2025?
That is correct because we completed the enrollment last month, so 32 weeks, and then give us a few weeks for data analysis and unblinding and all that kind of stuff.
Really interesting deal structure with Takeda. When I see this, it makes me think that you have a lot of flexibility at the bargaining table on your side because it seems like a very favorable transaction. You mentioned the opt-out ability you have in the deal. Can you talk us through, you know, what goes through that decision matrix on your end? You know, you mentioned, is it during NDA filing or after NDA filing? Like, when is the window when you have to make that decision, and why would you wanna stay in the deal as you are now, or why would you wanna leave?
Yeah. And even before I answer that, it's like, you know, why did we do this?
Do you want chocolate or vanilla ice cream?
Yeah, exactly. Why did you even do this deal? That's a question we get as well, and it is like, look, the last time we did a significant deal was in 2016, and that was with J&J when we just had a preclinical asset in the IL-23 program, and the Protagonist was a very early-stage company at that time, and the deal made a lot of sense, and it's paying off its dividends now, as you know. We can talk about that later. So now it's 2023, 2024, and we have a drug in phase III, so it's like, okay, before we know, this would move towards commercialization. Then the idea is, are you better off doing it all on your own or joining hands with a credible partner? So that is what we found in Takeda.
The beauty is, like, we are not even making that final choice yet. I mean, certainly, there will be co-commercialization, but whether we want to get completely out of it, what would make sense? That will be influenced by two things. One is the phase III data, right, which comes out in Q1 of next year. Then, a lot of market research and pre-commercial work that gets conducted, done by Takeda, we do our own market research as well. It gives us an idea about, like, hey, whether this is a billion-dollar drug or whether this is a $3 billion-$5 billion drug.
So the combination of real data plus what is the true market potential, guesswork of this drug, those two factors will then determine whether the math is more favorable with an opt-out structure, which is very lucrative, or it could be even more beneficial if we decided to stay in as a co-commercial partner. So.
Okay. How close or dissimilar were your market projections for Rusfertide at this stage between you and Takeda?
It's, of course, I'm not gonna share any details, but we were very pleased with the similarity and the overlap in the projections that we have at the two companies.
Okay. So the next update we'll probably get is gonna be the data 'cause completed enrollment.
Correct.
Okay. 2113, the other partnership you have with J&J, tell us a little bit about that asset and that partnership structure?
Yeah. So, you know, with a peptide technology platform, the question becomes, what do you do if you have the ability to discover peptides against any target of interest? And the first thing that comes to mind in differentiation. So very early on, the mindset was like, hey, if we focus on oral peptides, then we can go after all those validated biological pathways that are now being intervened by blockbuster, multibillion-dollar injectable antibody drugs. And that is what landed us in the IL space, right? And, IL-23 was one of the prime programs over there. It's wonderfully validated by, you know, STELERA and TREMFYA and SKYRIZI now, those kind of drugs. So we thought that that was an easy target to choose, and we took on an oral peptide approach. So, of course, J&J got very interested, and we inked the partnership about seven years ago.
So now, fast forward to the present, and as you know, we have a total of six different clinical studies going on, all done by J&J. Our job was to discover, do the preclinical development, do the phase I studies, and after that, we hand off to J&J for phase II and beyond. So we have four phase III studies in psoriasis. A fifth phase III study has started recently in pustular psoriasis, and then, of course, there is a phase II-B study in UC as well, right? As we know, with IL-23, you can go after Crohn's, UC, psoriasis, psoriatic arthritis. Those are the main indications.
You know, I think typically, the belief would be that an oral peptide would have less efficacy than an injectable peptide. Can you talk a little about the profile 2113 showed in psoriasis so far?
Yeah. So one of the important learnings was, like, if you have the ability to come up with a very, very potent peptide, meaning truly matching or even exceeding the potency of antibodies, then you can do wonders. And that is what we have been able to engineer into JNJ-2113. Now, of course, if you want to deliver it orally, you have to make it orally stable, so we have been able to do that as well. And then you need a little bit of oral exposure so that way the drug gets into the rest of the body and, and basically gets to, to, to the site of action and get the job done. So those are the characteristics we have been able to engineer in, in JNJ-2113. And, and the phase II data, the psoriasis data, as you know, that has been outstanding.
There were five doses that were evaluated. Each dose, even the lowest dose, achieved statistical significance. And then, of course, in the phase III, we have gone with the highest dose, 200 mEq/d. So our level of confidence and conviction in the phase III studies is very strong.
I think also J&J's investment, to your point, all the trials and their confidence going head-to-head to SOTYKTU is also interesting. There was a lot of, I think, discussion last year about how yours would compare to the SOTYKTU, and it seems, you know, J&J's at least confident in the first generation, not being as competitive.
Yeah. And I mean, if we look at the phase II data, right, and PASI 75, PASI 90, PASI 100, we can, very proudly and confidently make the claim even in a public forum like this saying, 2113 has true potential to be the best oral psoriasis drug, and the data speaks for itself. So that's basically, the opportunity that J&J and Protagonist are going after.
Always said the same thing, so it's safe. Can you talk?
Of course, you know, ultimately, as you know, there are four studies, out of which two studies are the superiority studies against the SOTYKTU.
Can you talk about read-through from psoriasis to ulcerative colitis 'cause we haven't seen data there quite yet, but either mechanistically from other drugs, what do you expect to see?
Yeah. I think the most convincing example over here is the antibodies that are already out there. So if you look at STELERA and now if you look at TREMFYA, right, so psoriasis, psoriatic arthritis, UC, and Crohn's, that's basically the domain in which they are very successful. So it's a very validated pathway, and our drug is so potent and so specific, as I said, as potent as the antibody. So that brings the biggest conviction of, like, hey, whatever you see in psoriasis, you should be able to see it in psoriatic arthritis and in UC and Crohn's. Having said that, though, it's a phase II-B data that is gonna make the most convincing noise, so to speak. But preclinically, what we observed was very interesting.
I mean, you know, in a preclinical setting, you have models of skin ear inflammation, which then translates to psoriasis, so psoriatic arthritis, so to speak. And then we also have the colitis models, which then extend out to the IBD indications. And if at all anything, the minimum dose at which we could see efficacy was almost an order of magnitude lower in the colitis model compared to the ear inflammation model. But if you think about it, it's an oral approach, right? And then so the drug is going to have highest concentration into the GI tissue compartment, and that is where IBD is most prominent. So from that viewpoint, it makes sense and provides even more conviction about, like, you know, what could be the outcome of this drug in the UC system.
But perhaps some questions about finding the right dose or at least lowest effective dose, perhaps. But you haven't seen anything safety-wise either, though.
Yeah, exactly, right? So, one of the beauties with IL-23 as a target, let's say, even in comparison to the SOTYKTU blockers and things like that, is, like, this is the, sort of like the safest, and most efficacious mechanism that is out there.
A more traditional deal structure with J&J, can you remind us of, you know, high-level economics terms?
Yeah.
with that partnership?
Yeah. A more traditional deal structure done in 2016 based on a preclinical asset. But fortunately, here, the market is huge, the market potential, right? I mean, psoriasis itself affects a few million people, and their market research, and other independent research has suggested that a large number of psoriasis patients do not seek any treatment right now because they are not that much in favor of whatever current choices are. And the one of the findings is, like, if an oral treatment option was available, then that would be they would be welcoming that kind of an alternative option. So I think oral IL-23 could very much be in the limelight over here. But it was a billion-dollar deal even then, and you know, I would like to say that ours was and is a deal where the milestones can actually be materialized.
And so it was not a biotech dollar fluff.
Yeah.
So $170 million-plus have already materialized. In the near term, there are $215 million, which we believe we could be achieving in the next two years, right? A successful phase III outcome, NDA filing, approval, another indication initiation, phase III study, that sort of thing. So that's the $215 million. And then 6%-10% royalty, where the 10% kicks in at $4 billion sales cutoff, so to speak. So,
J&J, I think, has consistently said, you know, they think it's greater than a $5 billion opportunity.
Yeah. We would like to believe that is a very low bar. I mean, if you just look at the STELERA and TREMFYA revenues from last year, that was over $5 billion.
If you know, yeah, do you know how much of that is psoriasis between those drugs?
It's,
I'm guessing it's somewhere around that $5 billion if that's the number that they're putting out there for.
Yeah, that could very well be. Now, I believe for STELERA, Crohn's is where it may be finding most utility, whereas with TREMFYA, psoriasis could be the bigger indication.
Okay, interesting.
that sort of thing.
Can you remind us of timing of readouts then because, you know, I think carefully, you and J&J say completing of trials at certain time points. Do we know when data's actually coming or if you, you can tell us.
Yeah.
Of completing trials and so on?
Yeah. So, at least if you go on clinicaltrials.gov, what you will see is, like, the two phase III studies, the psoriasis studies, the ICONIC LEAD and ICONIC TOTAL , they are not recruiting anymore. So that is, like, enrollment is complete, and it's a 16-week readout. So technically, I mean, you know, the last patient completes the 16-week dosing sometime in August, September. But of course, you need time for data cleanup.
Sure.
And then, of, you know, we are a partner, and they have contractual obligation to share the data with us. And then we have to judge, the materiality of the event and then decide what to disclose when. I mean, this is the same thing we did last year when the phase II data was announced. And of course, if the phase III study is successful, there is a $115 million milestone payment, so this is gonna be material for us. We know that. So roughly speaking then, what we are saying is, like, yeah, in Q4, there is a good possibility that, the data will be out there.
Have you said much about the oral technology to make your peptides orally available, and does that change between your programs?
Yeah. So there are lessons that you learn. And of course, each program is very unique, so you have to develop and invent new things around each program. One of the biggest findings from the oral IL-23 program was, like, hey, especially for indications like psoriasis and that kind of thing, I mean, you have to get out of the gut-restricted campaign and engineer some degree of oral bioavailability into your peptide. And now, of course, we you know, with the success that we are finding with the oral IL-23, we are very encouraged by that and would like to go for repeat performance in other I&I indications and taking a very similar approach, right?
Oral peptide, it gives us the strongest differentiation that one could think of, and at the same time, the luxury to work on the most validated targets that are out there.
So the analogy I was thinking about the other day is you have two kids you just sent off to ivy league colleges. You're like, "Let's have another kid." And that's IL-17 talking to the battery.
Yeah. Age is no barrier.
Yeah. So what, what are you doing now? What's the future growth for Protagonist, and, you know, how do you replicate this again?
Yeah. And we have shared that we are already working on an oral IL-17. We believe it's a wonderful target, and very established target. We are chasing a peptide that is gonna have an outstanding profile activity against the A isof orm as well as the F iso form, and of course, very good oral stability and lots of preclinical POC. The beauty with the validated targets is, like, there are preclinical models that are very well established, right? So if you do the proper study with your drug and a proper positive control, you will get a lot of conviction just out of the preclinical findings. So that's what we are trying to do in oral IL-17.
With the enviable balance sheet you have, maybe the good last question is, you know, next readouts for IL-17 'cause we already talked about Rusfertide and 2113. When, when do we start learning something more about that candidate?
Definitely sometime this year. We would announce a development candidate, and when we do that, we will share enough data, at a high level, to give people an idea about the overall profile, which we believe they will find very impressive because, you know, we are chasing the potency of the antibody and still having the attributes of an oral drug, so it will be one of its kind.
Perfect. All right. Well, Dinesh, congrats on all the success, and we're looking forward to seeing what happens next for you guys.
Excellent. All right. Thank you.