Good morning. Thanks for joining us for another session at the 43rd JP Morgan Healthcare Conference. I'm Brian Cheng. I'm a senior biotech analyst here at the firm. I'm joined by my associate, Sean Kim, who is in the audience today. On stage, we have Protagonist Therapeutics. I'll now pass the mic to their CEO, Dinesh Patel, for a short presentation followed by a live audience Q&A. Dinesh, the stage is yours.
Good morning, everybody. Thank you, Brian. It's a real privilege for us, the Protagonist team. They are right here in the front row. It's a pleasure for us to be at this conference, fifth year in a row now, I think. Just a cautionary remark that we will be making forward-looking statements during the presentation and throughout the conference. So this is an overview of our peptide technology platform, our programs, and our assets. We work exclusively on peptide therapeutics. We choose to work on those targets that are biologically validated and commercially successful. However, our angle is that through the peptide approach, we would create a strong differentiation and superiority versus existing therapies. And the outcome of this is the five different programs that are outlined over here.
In discovery, we have an anti-obesity program, an oral hepcidin program, and we expect development candidate nominations from both of these programs this year. We have an oral IL-17 antagonist, PN-881, something with the potential of being a best-in-class oral IL-17 blocker. We expect this to move into phase one studies by the end of the year, and then finally, we have two late-stage assets that are eyeing NDA filing by the end of this year. Icotrokinra is a first and only oral IL-23 receptor antagonist blocker. We had success in phase III psoriasis studies. It's partnered with Johnson & Johnson. Rusfertide is our once-weekly hepcidin mimetic. It's in phase III study for polycythemia vera. This is the first RBC-specific option that could be out there for patients, and this is partnered with Takeda Pharmaceuticals, so now let's start with an overview of rusfertide.
Here, the intent is to address the unmet need in polycythemia vera. PV, as you know, is a rare disease. Its characteristics are excessive red blood cell production. And the treatment goal is to maintain hematocrit levels below 45% as per the NCCN guidelines. Serious disease associated with increased mortality and morbidity stemming from thrombotic and cardiovascular risks. And although the disease is rare, the prevalence number in the U.S. alone is about 155,000 patients and an equal number in Europe as well. And the median survival span for the patients is about 14 years. So while hematocrit control is the essence in the treatment of this disease, the real-world data suggests that the majority of these patients, 78%, do not control hematocrit. And of course, no surprise, the thrombotic events are very significant in this disease.
The patients also have burdensome symptoms, and that, of course, affects their quality of life, so all this is really pointing towards the current standard of care is not getting the job done, and we recognized early on that while this is an RBC-centric disease, there are no RBC-specific options available, and that is where we basically hypothesized that if we could come up with a mimetic of hepcidin with better drug-like properties, then hepcidin, by virtue of being the master regulator of iron storage distribution in the body, including the supply of iron into the bone marrow where RBC synthesis occurs, then that could be a new way of treating polycythemia vera, and the good news is our hypothesis has borne out to be true, as illustrated by success in two different clinical studies.
Here is a schematic of our phase II REVIVE study, a very informative and successful study, and the positive results were captured in the New England Journal of Medicine article last year. The main thing I want to point out over here is that this study is now complete, and 80% of the patients have progressed into the THRIVE long-term extension study so they can get two additional years of treatment, so this shows that clearly patients are engaged and interested in continuing with rusfertide therapy. On this slide, I'm showing the data of hematocrit control with rusfertide over an extended time period, and what you will notice on the lower right is the treatment exposure period. Clearly, the drug has amazing durability. More than half the patients have now been treated for over two and a half years, and we have several patients that are nearing the four-year mark.
What you will also notice, if you focus on the brief randomized withdrawal portion of the study, that then in the placebo arm where rusfertide treatment is withdrawn, we see loss of control of hematocrit almost immediately. The good news, though, is when the control is restored back, when you engage retreatment with rusfertide again. So it is this 24/7 type of hematocrit control that our drug exercises, which has then, practically speaking, led to essentially elimination of phlebotomy in these patients. They were getting more than five phlebotomies per year before being on treatment with the drug. And now the rate is less than one phlebotomy per year. And this robust efficacy is observed across all patient categories: patients on phlebotomy alone, as well as patients who are on cytoreductive therapy.
And while not shown in any detail over here, we do see meaningful symptom improvements in patients who have moderate to severe symptoms at baseline. And our drug normalized serum ferritin levels over the course of time as well. In terms of safety, this is the safety summary. This was presented at ASH last month. There are no surprises. The rate of malignancies are similar in nature and number to what you would otherwise see in this PV population. In terms of the thrombotic events, we have about 10% patients with thrombotic events. Incidentally, they are all in high-risk PV patients. And we don't observe any of these events so far in low-risk patients. And this 10% number is, in a way, significantly lower than what you historically observe in the PV patient population. And of course, the long-term assessment continues with the extension studies.
Now, this is the phase III design. The inclusion criteria is very similar to what we have had in the phase II REVIVE study. One main difference is unlike REVIVE, here we are engaging, spreading the patients between placebo and treatment arm one to one right from day one. The U.S. primary endpoint is based on the clinical response that one would achieve during the week 20 to 32 time period, and the definition of clinical response is, once again, very similar to what we had in the phase II study, so obviously, we are very optimistic. Now, we do have a number of key secondary endpoints around phlebotomies, hematocrit control, and some of the symptom scores. The first key secondary endpoint of number of phlebotomies over this 32-week of the double-blind portion of the study. It's also the primary endpoint agreed upon with the European agency.
What I would like to report today is the study up to the 32-week primary endpoint portion has been completed. Now, if you look at the upcoming key milestones, then we are very anxious to share the phase III VERIFY topline results with you all sometime in the month of March. If positive, then this is going to lead towards the biggest moment in the history of the company, meaning we'll be moving towards our first NDA filing by the end of the year. We would also like to point out that yesterday, we announced a PV Day. We are hosting a PV Day in New York City on February 6th. Everybody is welcome to attend. Last but not least, we completed the rat two-year carcinogenicity study in the last quarter. The draft audited pathology report from the CRO suggests no rusfertide-related findings.
We have shared this with our partner. We are sharing this with you, and of course, the final study report will be submitted in this quarter, and more data from our studies will be shared in more detail at upcoming conferences. Now, of course, Takeda and Protagonist have started working towards pre-commercial preparation ahead of the commercial launch, and if you just revisit the treatment paradigm that exists in PV therapy, you will note that patients are often on polytherapy, and they oscillate through different treatments. Now, what we also pointed out early on is uncontrolled hematocrit is observed in the majority of patients. What I can specifically point out is this lack of control is not just restricted to patients with phlebotomy, but it's a phenomenon that is observed all across. Now, let's bring rusfertide into the picture, right?
With its RBC-specific mechanism and with rapid, robust, consistent, and sustained hematocrit control, it has the opportunity to then be a treatment for patients all across the spectrum. And based on these observations and this kind of findings, we and our partner, Takeda, are estimating $1 billion-$2 billion in peak revenue potential for rusfertide down the road. Talking about Takeda and the partnership, we inked the partnership with Takeda in January of last year. So about a year ago, it came with a nice $300 million dowry. And we have shared these numbers before, so I won't dwell into the details. But I just want to remind that this is a co-co partnership, 50/50 U.S. split. That's the current scenario. There is a provision where Protagonist has the option to opt out if it chooses to do so.
Now, the good news is we don't have to worry about that now. Our model tells us that that decision is about 15 months- 18 months away from here. So we will make an informed decision after the phase III study results and after doing additional market research and demand studies. So that concludes the overview of rusfertide. Now, let's turn to icotrokinra. This is a drug candidate with a first and only in class kind of attribute as an oral IL-23 receptor antagonist. We believe this also has the potential to be the best-in-class oral psoriasis agent. This is all an outcome of the partnership that we initiated with J&J all the way back in 2017 when this was just a preclinical program in our shop. Last year, we announced the successful phase III studies.
As you know, this is the IL-23 category of blockbuster drugs. Now, these are all injectable antibodies, but they generate big numbers. For J&J, the combined Stelara, Tremfya, Skyrizi sales for 2023 were over $14 billion. So I think it's a good, humble, conservative estimate when potential peak sales for icotrokinra are being estimated at $5 billion +. But that's a good number to begin with. Very productive partnership, very rewarding, more than $300 million already. More than double the amount is possible down the road. And 6%-10% royalty rates when 10% number kicks in at sales over $4 billion is something to write home about, right? I want to point out that last quarter, based on the success of the phase III study, we earned a $165 million milestone.
Our CFO will remind me that this is actually money in the bank as of last week. What is interesting over here is that the $165 million number is comprised of not just the $115 million that we qualified for on the success of phase III outcome, but J&J also chose to pay us $35 million in accelerated payment, which was otherwise due on NDA filing. They also chose to pay us an additional $15 million that was otherwise due upon initiation of a second indication in a phase III study. So clearly, there is a lot of conviction and confidence from our partner. And we agree with them in terms of the future potential of the asset. Now, this is our J&J's icotrokinra clinically led development program.
The FRONTIER phase II studies, the success of these studies in psoriasis, the positive results were captured in the New England Journal of Medicine article last year. And it is this positive results that form the basis of this expansive phase III psoriasis program. And ICONIC-LEAD and ICONIC-TOTAL results are positive. And it is these results that form the foundation for moving towards an NDA filing towards the end of the year by our partner. And there are, of course, superiority studies against the other oral targeted therapy, the TYK2 inhibitor, SOTYKTU And then at last but not least, we are all waiting for the phase II UC results. If those are positive, then, of course, that leads to further expansion of the commercial opportunity of our drug. This is a brief schematic of the ICONIC phase III study.
The co-primary endpoints at week 16 are the PASI 90 and the IGA 0/1 scores. What is peculiar here is that the patient population is comprised of not just the adults, but also the adolescent population. And here is a cross-trial comparison that we have done with the two approved oral therapies in psoriasis, Otezla and SOTYKTU. And ICO is the blue bar on the left. So just visually, you can see that our drug has significant superiority over the existing oral therapies, whether you measure it by PASI 90 or IGA 0/1, and whether at week 16 or over extended period of week 24. Now, the good news is we don't have to rely too much on cross-trial comparisons. The head-to-head study results with SOTYKTU should be available by the second quarter of this year. And ICO has great blockbuster potential.
If you look at the patient population in general, more than half the patients who are eligible for targeted therapy do not choose any. And then in terms of those who choose the therapy, and the major choices are largely injectables, 75% of them would want to switch to an oral if such an option was available. So I think there are multiple kind of opportunities in terms of market expansion with a first and only and best-in-class agent like icotrokinra. All right. So that's kind of the present. Let's move to the future, meaning our discovery pipeline starting with 881. And so this is an oral IL-17 peptide antagonist with a best-in-class potential. IL-17, as you know, is a clinically very validated target. There are blockbuster category of injectable antibody drugs. There is no approved oral targeted therapy.
IL-17 is really expected to capture almost one-third of the psoriasis market. There is going to be further growth anticipated by the utility in other conditions besides psoriasis. PN-881, we believe it has a best-in-class potential through its amazing potency against the IL-17A and also the diverse spectrum of potency displayed against all the three relevant isoforms. The drug is in our enabling studies. We have made the aggressive move of skipping the 28-day tox study and moving directly into three-month tox studies. The idea here is, like down the road, this should enable us to save at least one year in clinical development timelines. We look forward to initiating phase one studies by year-end. The results of these studies will dictate the design of phase II. If that looks promising, we will have full preparedness for rapid expansion into other IL-17-mediated indications.
I just want to take a minute to highlight the extraordinary potency of 881, and what we are doing over here is we are comparing with both oral small molecules as well as the approved injectable antibody drugs, so in terms of the main isoform AA, you will see that we have picomolar levels of potency. We are sort of thousand-fold more potent than the oral small molecule analog that we could get our hands on. We are 100 times more potent than COSENTYX, and in fact, the only true comparator for us is the most potent antibody, BIMZELX. This is the only one that also has meaningful spectrum of activity against the other isoforms, which from comparative studies, it has been concluded, contributes towards superior efficacy, so 881 has a similar activity profile. There is no such thing that comes close to us in the oral camp.
Thereby, our hope and conviction that this could be a best-in-class oral IL-17-mediated therapy. Here is a tabulation of all the different preclinical rigor that we went through before nominating the candidate. So this is our benchmark. We hold ourselves to such high standards. The drug is not only potent, it's very stable in GI. It has metabolic stability. We have conducted in vivo PK studies in almost all the species one could think of and are concluding that our drug has the potential of being once daily administered drug in a clinical setting. We have studied distribution in relevant tissues like the skin. We have obtained preclinical POC, both pharmacodynamic-based POC as well as disease skin inflammation model-based POC. We have also embarked on new discovery programs.
The common thesis all along for us has been, like, let's work in areas where we can use our expertise with oral peptides and find utility in areas where that would address an unmet need. Obesity is probably the largest pharmaceutical opportunity we are witnessing in our lifetime. The two major approved agents are injectables. More specifically, I would point out these are injectable peptides, semaglutide and tirzepatide, so this is right up our alley, so to speak, use our oral peptide expertise and come up with oral agents. We already have lead peptides that will lower glucose levels and lower weight in diet-induced obesity models, so we are on track in terms of development candidate nomination this year. Oral hepcidin, you could view this as rusfertide lifecycle management. As you know, rusfertide is a once weekly sub-Q injectable.
This approach will then address the general patient preference for oral medications. We have advanced leads and expect candidate nomination here as well. Now, let's talk about the cash runway. We started last year with the objective that we want to have cash runway up to the end of 2026. But thanks to the wonderful partnership that we did with Takeda, as well as the accelerated payments that we received from J&J to the tune of like $165 million in total, now we have cash runway at least through the end of 2028. I do want to clarify that we do not include the future potential milestones that we could be earning over this time period to the tune of $200 million-$600 million +.
Of course, we also do not include in this forecast the royalty earnouts that we could be having from our two late-stage assets beginning in 2027 and beyond. So then let's conclude by summarizing the major upcoming catalysts this year. So with rusfertide, we look forward to hosting the PV Day on February 6th in New York City. It might be the coldest day, but we will see. We look forward to sharing top-line results from the phase III VERIFY study, big moment for Protagonist. And if this is positive, then we and our partner, Takeda, we look forward to moving towards NDA filing by year-end. In icotrokinra, on the heels of positive phase III studies, ICONIC-LEAD, ICONIC-TOTAL, J&J is marching towards NDA filing. We shared some preliminary results last year, but you can expect more disclosure at medical conferences.
The phase II UC study, we hope to share the results this quarter. If positive, that can lead to further expansion into other indications. Psoriatic arthritis study should be initiated soon. The comparative head-to-head superiority study against SOTYKTU, those results should be available in Q2, real opportunity for label expansion if those studies are positive. In discovery, we have started the year with one development candidate. We hope to end the year with a total of three development candidates. Finally, then let me take a moment to thank my excellent Protagonist team and the Protagonist employees. Just like rusfertide 24/7 hematocrit control, I would say that our employees, they exercise 24/7 dedication to their work. We feel like we are a team with a mission.
And of course, we want to thank our partners, Takeda and J&J, and the investigators and the patients and advisors without whom our assets wouldn't be where they are today. And finally, thank you all for your attention.
All right. Let's begin the Q&A. Dinesh, do you want to join me here?
Of course.
For those of you who are in the audience, if you have any questions, you can raise your hand. We have a runner on the floor. And for those joining us virtually, you can also submit questions on the conference portal. Lots of kits that we can talk about in the portfolio now compared to, I would say, two years ago. I think let's just touch on ICO. I think that's the key inbound that we've been getting at our desk in the recent weeks. I guess, how do you think about just what to expect around the ulcerative colitis trial that's upcoming, especially around just based on what we saw in psoriasis, the profile seems to be more in the ballpark of kind of like a Stelara-like profile. So do you think that is a good base case to assume that will also translate in UC?
I don't know if there's anything that you can kind of help us to better understand what the profile could look like in UC.
Yeah. I think I can answer that question. And my team will chime in if there is additional information to be shared. So first of all, I mean, if you look at the historical record of IL-23 blockers, that is almost 100% translation in terms of if you have success in psoriasis, you're going to have success in IBD. So that works in our favor. And if preclinical studies are any guidance, then I would say, as you know, our preclinical data in colitis has been excellent. So that bodes well for us as well. But I think at some level, our attitude right now is like, look, we are so close to the data. The data will be the data. And I think there are two specific things. phase II studies are small studies.
And just by sheer luck, you can get a little bit lucky or a little bit unlucky, right? So I think what is going to matter more is to look at the totality of the data. And what is going to matter even more is what J&J thinks about the data, right? So if they decide to take the drug forward based on the results, both in UC and Crohn's, I would say the data is outstanding. And if they don't do any of that, then the data is kind of miserable. So that's how we are looking at it. But I think the general remark that you made, it's like Stelara-like activity, I would say, yeah, that's maybe a fair assumption, right? I mean, that's what has been observed so far with injectables, so.
Out of the first half, there are a couple of catalysts that are related to psoriasis. I think you pointed out there are medical conferences where we can potentially see more data from the ICONIC-LEAD and TOTAL. Also, there's a head-to-head comparison against SOTYKTU. Which one do you think is more important for investors who are trying to better understand the profile and specifically psoriasis?
I would say it's not a very clear answer, but it's a fair answer. I would say both of those things. And the good thing is, like, it's not like there is an abundance of conferences, but there are several conferences, right? And then there are late breakers and all that kind of thing. So you can expect, I mean, with such a wonderful drug, I'm sure our partner would like to talk about it whenever it's possible.
Let's switch gear into rusfertide and PV. Outside of the primary endpoint, I mean, just based on historically what you have shown in phase II, it seems that is a pretty easy bar for you to cross for the primary endpoint. But just how do we think about what else are important measures to hit for you to build a case for, especially for PV, where there really isn't a whole lot other than hydroxyurea for patients that are kind of right in the middle between phlebotomy and also Jakafi on the more extreme end. So how do you think about just building a more complete profile to showcase the full profile of rusfertide?
And the good news here is now there are two companies working towards a common goal, right? Both Protagonist and Takeda. But maybe, Sam, can I bother you with what do we expect in the phase III PV study? What else besides efficacy?
Certainly, the be-all and end-all of the study is hematocrit control. As Dinesh said earlier, 24/7 hematocrit control is in all the guidelines. As you saw in the endpoint slide, the primary endpoint, as well as some of the first few key secondaries, all relate to hematocrit control, which is related to phlebotomy. There's a high correlation there because phlebotomy is dictated by having a hematocrit above 45%. That is the key part of the study. Additionally, we're looking at symptoms. This is our first time to look in a blinded fashion at symptom control. Remember, we looked at symptoms in the phase II. In that experience, we saw improvement in the moderate to severe population and some of the cardinal symptoms of PV.
We have the promised fatigue, as well as a standard MPN symptom tool that's been used by others to look at symptoms in a blinded fashion versus placebo. It's the first time we get to do that.
Arturo, would you like to add anything?
No, I think Sam covered it. But I want to emphasize that the duration of comparison between placebo and rusfertide is quite a bit longer. In the phase II study, all patients started on rusfertide, and then they were randomized to continue rusfertide versus placebo for a 12-week period. And whereas in Verify, from the beginning, patients get randomized to placebo versus rusfertide and are followed for 32 weeks. So we have 32 weeks that we can see the comparison between placebo and rusfertide. And we have a very robust patient-reported outcome program that we've discussed with the FDA. So we're very excited about unblinding the 32-week data. Just as a reminder, we will file on 52-week data. So we are following the patients for another 20 weeks to measure the durability of response. And that's something we agreed to with the FDA.
For the opt-out option, it seems that you still have quite a bit of time to kind of think through your economics and also the market opportunity. I think you said 15-18 months away from today. What other factors are you also considering? And what should our base case be when it comes to opting in versus opting out? I mean, the opt-out seems very attractive upfront, right? So what's going to be the ultimate factor in deciding which way to go?
Yeah, truly. The opt-out does appear attractive on the surface, but it's all going to depend on what our true estimate is going to be about the future potential of rusfertide, and the phase III study results are around the corner, so that will be a good piece of information as well, right, that we'll factor in, but maybe Asif, I mean, our CFO is here. Do you want to add anything?
Morning, everyone. Obviously, it's an NPV model that we're looking at here. With phase III data coming out soon, our inputs are going to be based on what that data looks like, demand studies based off of that. Once we've updated that, it gives us a good sense of what economically makes the most sense, whether we stay opted in or opting out.
Yeah, so the short answer is it will be NPV math.
Then just to touch base on obesity, you had one slide where we are starting to get a glimpse of the targets. I want to push a little bit more on it.
Of course.
The targets, I think you said incretin and non-incretin targets. I know that we will learn more later in the year, right, in the second quarter. So what does that mean exactly in terms of target? Are we thinking about multi-pronged peptide? Because I remember that in our early conversation last year, I think it's hard from a peptide platform to have multi-targets just from a development standpoint, right? So how should we think about your first DC coming out in the second quarter?
Yeah. I mean, I don't want to get too carried away. But look, it's hard for the industry to come up with an oral IL-23 blocker. But we have cracked that code. It's hard for people to come up with an oral IL-17 with picomolar potency. We have done that. So I think we wouldn't shy away from taking on something that has not been done before if we believe that is the best profile. And I would want our CSO, Newman Yeilding, to chime in a bit to make comments on the obesity program without sharing any details.
So as Brian asked, we certainly are targeting multiple different targets. From a biologic perspective, this is a very complex system that affects obesity. And I think as we start to explore in this area, we're recognizing how complex it is. We do believe that it'll be important to have a differentiation strategy when we nominate a development candidate. But we believe that there's obviously a huge opportunity here. So our focus is on differentiation and then multiple different shots on goal as well. Those are kind of the two things that we're really working on.
I think that's important to stress. This is a program. So we may announce one candidate this year, but that is just the beginning and not the end. So I think you can envision Protagonist to roll out multiple development candidates in this program over the years.
Okay. Any questions from the audience? I guess just to wrap up, as we think through your peptide platform, definitely from the IL-23 side, you now are in phase III, and we're also very close to the finish line. Rusfertide is also the same, and now you have a new wave of new assets that you're rolling out, new kits, I think, as you said on the last call. How do you think about just which one to move forward with, and I think as you think about also, some of these indications are also not easy for a biotech to charge ahead by itself? And I mean, funding is not an issue today. Just so how do you think about prioritizing, and then as you think about, let's say, next year, you're sitting on quite a lot of cash. What would you be doing with that cash?
Yeah. So I think it's an excellent question. Since you mentioned the kids analogy, I would say the three kids we have right now, they are incredibly bright. They all deserve to go to top-notch schools and get a great education and a great life for themselves. So we are at least committing funding for them up to clinical proof of concept. I think so that way, a few years from now, we will have to decide about, and you are right, the obesity program, the IL-17 program in I&I , things like that. Although now biotechs are taking the next step, right? So there are companies that are taking IL-17 nanobody in phase III on their own. There are companies that are taking on phase III programs on their own in the obesity program as well.
But we are going to keep an open mind to all of these things. And at the end of the day, do what is the best thing in the interest of all the stakeholders. In terms of prioritization, like I said, no, all three kids are equal. But there is a natural hierarchy in terms of timing, right? So they are not triplets. So PN-881 is going first, and then that will be followed by the oral obesity agent, and then finally by the oral hepcidin agent. So they're kind of spaced apart at least by six months, if not more.
Great. Well, I think that's all the time we have. Dinesh and team, really appreciate you spending time with us today. Thank you.
Thank you.