All right. Welcome, everyone, to 2025 Jefferies Global Healthcare Conference. My name is Roger Song, one of the Senior Analysts covering MedCap Biotech in the U.S. It's my pleasure to have the fireside chat with our next presenting company, Protagonist Therapeutics. Welcome, Dinesh Patel.
Thank you. It has always been a pleasure.
Awesome.
Have we even stopped counting the number of years we have been at your conference now?
All right. Let's keep counting this. Awesome. I think we should just write off the press and talk about ASCO because I went to ASCO. A lot of the majority of the reasons for you to attend the plenary session, which is well received and the biggest venue you can ever hope for our presentation. Why not, Dinesh, you tell us a little bit about the key highlights from the ASCO? What are the key feedback you are getting from the physician, clinician? Then we can drill down some details.
Yeah, no, I think ASCO was a wonderful event for Protagonist and for the PV community in general. There were five plenary sessions. Ours was one of them. These five, we understand, were chosen out of some 7,500 abstracts that were submitted. That was in itself very great. In a way, we had shared our top-line results in a qualitative fashion a few months ago. I would say in the ASCO presentation, we were able to dwell into some details that were very useful. Along the lines of efficacy, now this drug has always shown amazing efficacy in the phase II studies as well. That was not a surprise, scoring p-values of less than 0.0001. We also provided fairly detailed subgroup analysis.
It is like whichever way you slice it, whether it's according to treatment paradigms on phlebotomies alone or cytos, whether it is low risk, high risk, age differences, those kind of things, the drug scores very well. It is many different ways of saying that this is a very effective drug all across the spectrum of the treatment paradigm. The next thing, and I think we had shared in a qualitative manner, and which is now a huge positive for the drug, is the symptom improvements, which is where you are talking about now improving the quality of life of patients. In a way, probably this is the first PV study where in a clinical setting, a drug has been able to show such clear statistical significance in the symptom improvement category.
One of the questions that was asked to the presenter about the drug and the response of Dr. Kuykendall, who was the presenter, was like, "This is a disease experience-modifying drug based on the symptom improvement." PV is kind of an interesting kind of myeloproliferative neoplasm. It is not as acute or drastic as, let's say, pancreatic cancer. At the same time, patients do live a long life on an average of about 20 years. All along the spectrum, they are burdened with these horrible symptoms, which impacts their quality of life. Over here, symptom improvement carries even a bigger meaning. It is like if you can have normalized 20 years rather than disease-focused 20 years, that is going to make a huge difference. Finally, at last but not least, about safety.
The phase II study, for the most part, was an open-label study. The cancer occurrences that you observe, you could look at it as whichever way you want to. It could be because of the drug. It could be because of the underlying nature of the disease or the treatments that they have. We have known historically that in PV, the occurrences of cancer are higher. If they are on cytoreductives, the events are even higher compared to the normal population. This is the first time where we had the placebo versus treatment arm right from the get-go. You could then clearly make a comparison of the two groups. Based on that, it's fair to say that this is a well-tolerated drug. At this stage, we do not see any safety concerns out of the ordinary.
All these three messages now being conveyed with full data, I guess that is what caught everybody's attention. One of the other things that happened, which was a very nice pleasant surprise for us, was like not many of us are used to dealing with plenary sessions at ASCO. This was a first-time experience for us. After the formal presentation, that is the discussant, an independent person that is just chosen by the ASCO committee. We did not even know Dr. Walsh before. Her comments were, and I want to be accurate. This is the first time ever I am using a cheat sheet at a fireside. She said something to the effect of like, what was it? "This study is practice-changing." That speaks volumes right there.
Then the second statement was like, "rusfertide should become part of standard of care for patients." Very, very profound statement. No wonder. I mean, everybody has been excited about it, the KOLs and all that. While previously, there may have been some lack of clarity or confusion about where will the drug find utility. If you look at the treatment paradigm, like I said before, this is on an average of a 20-year journey. Folks mostly will start with a phlebotomy, and then they may migrate towards cytoreductives, whether it's hydroxyurea, then, let's say, interferons, and then ultimately Jakafi when they get into edge refractory stage. What we are finding is that the primary goal per NCCN guidelines is to maintain constant hematocrit levels below 45%.
Whereas the reality is our real-world patient data survey from various databases suggests that more than 75% of the patients, irrespective of what treatment they are on, they do not control hematocrit in a consistent manner below 45%. This is a drug that will find utility throughout the treatment paradigm. It's a drug for ineffective standard of care. Ineffective standard of care may mean ineffective phlebotomy, ineffective hydroxyurea response, ineffective interferon or Jakafi response. Wherever your hematocrit is out of control, and you need excessive phlebotomies to treat that. Look at it whichever way. This is the first erythrocytosis-specific agent. Everything else, if you think about it, in an indiscriminate fashion, would lower RBCs, platelets, WBCs, everything. This is very RBC-specific. This is the first of its kind. It really kind of addresses the unmet need, which is pretty large currently. That's the ASCO story.
Yeah, no, I think I totally agree. I was there for the plenary session. I do not want to repeat anything you said, but I think that is basically the profile physicians are looking at, and they made a conclusion. They already made a conclusion saying this is practice-changing and it should be part of the future standard of care. That is loud and clear. Now I just see, okay, what is next? I think this is definitely supporting the NDA submission for the approval. A lot of the good things are going to happen from there. We will see how the drug will be used. They understand this is a partnership with.
Takeda.
Takeda. Maybe just tell us what's the key consideration right now for the opt-in, opt-out decision, and then how this will affect your strategy with this data profile.
Yeah, no, absolutely. People ask us, what are the next steps or what is the next thing? I said, look, once we got the phase III data and we learned that the drug works wonderfully, of course, our partner Takeda got even—they have been excellent partners, and they were always super engaged. Now even more so. They are even more enthusiastic and participatory. One of the first order of business is to increase awareness in two categories: about the unmet need in polycythemia vera and about the effectiveness of this drug towards addressing that unmet need. I told a reporter, I said, we are off to an excellent start. He's like, what do you mean? I said, a plenary presentation at ASCO is the best way of increasing awareness.
10,000 plus people in the audience, in total, 40,000 plus people in attendance. This is all the cancer community-centric group of people. I think we are off to a great start that way. Now, when we inked the original contract, the way the deal has been structured is like we, Protagonist, will complete the phase III study. We will do the regulatory, meaning the NDA filing with the U.S. FDA. Again, we thank our lucky stars that our partner is super enthusiastic. They have enthusiastically volunteered to take over the regulatory responsibility. As you can imagine, it is not just a handoff. We are working very closely together. I am so glad that when we go in front of the FDA now, it is not just Protagonist. It is both Protagonist and Takeda joining hands together. Officially, formally, Takeda will be the front face going forward.
That's another piece of good news. Now, the next thing that happens is like let's talk about dollars and cents. When we inked the deal, we said, look, we are already in phase III. This needs to be a co-deal, co-development, co-commercialization. They agreed to that. What they also did is like they said, we are going to create an opt-out scenario where you can opt out of the co-commercialization rights. We are going to make it very attractive for you. To give you an example of that, if we opt out, there is a special $400 million opt-out fee. That's number one. Number two is the milestones that we get if we opt out are like three times higher, $900 million plus, versus if we stay opted in, which is around $300 million plus.
If we opt out, the royalties are a staggering 17%-29%, 17%-29% worldwide, including the U.S., obviously. As some of you may know, the guidance that Takeda has provided and Protagonist agrees with currently is like, hey, this is a $1 billion-$2 billion peak market potential drug. Now, Protagonist is going to make a statement. We think we'll stay within that range, but we truly believe we are at the higher end of that spectrum. The second thing I would add is like the 17%-29% range is tiered in such a way that we believe that the higher end of that range is very achievable within this $1 billion-$2 billion guidance. In many different ways, I guess what I'm saying is like the opt-out scenario is a very attractive one.
As you can imagine, opt-out kind of becomes front-end loaded. We do not have to live with the suspense of uncertainty for years. For example, if we opt out by the end of next year, we could technically be qualified for $475 million, $400 million as the opt-out fee and $75 million as the NDA approval milestone. Things are looking very attractive. The beauty is I do not have to make any decision today. The way the deal is structured, the opt-in, opt-out choice triggers four months after NDA filing. We then have an additional three months to make that decision, so a total of seven months. The NDA filing is by year end. Basically, what I am saying is we have at least up to a year to really make that final decision. Until then, we will keep the suspense going.
Excellent. All right. I think 17%-29% royalty. That's a substantial portion of the process.
It's almost like a cocoa.
Yeah, that's right. Okay, good. As excited we are for rusfertide but we also you have another lead program, which is also in the pivotal stage. And you have a lot of early pipeline. Let's talk about that. Number one is another lead program, ICO. So very interesting. That was the dominant topic I've been having with the investors, probably you as well, because rusfertide used to be relatively under the radar between those two. But ICO is getting a lot more spotlight. I would like to take a step back. Can you let us know what's the history of the ICO? Because the Protagonist is the inventor, but you signed an early partnership with J&J. Can you just let us know how the history happened?
The key thing, the key reason I want to ask this is how much rescue from the ICO success based on your oral peptide platform to your early pipeline, which we will touch in a moment.
I think that's an excellent question. I would like to take a moment to elaborate. ICO and rusfertide for us are like two kids. Both are very capable, competent. At any given time, one gets the limelight versus the other. I think as time goes by, people will realize that both are equally valuable. Now with ICO, I will take a step back. The company started, let's say, around 2008. I have been there since its inception. All along, we have had the focus exclusively on peptides. The early days were the learning days. Our very first partnership was actually with Ironwood Pharmaceuticals in 2011. That was based around injectable peptides. Being a scientist, I'm like, peptides are much smaller in size. We should have better tissue penetration. We should be better than antibodies.
IO6 became a story of like we won the battle and lost the war. What I mean by that is like we had development candidates, but they didn't move any further because there wasn't much differentiation. That is where I had my eureka moment. I said, you know what? Instead of injectable, let's focus on oral peptides. That's what we started creating as the main theme. It got J&J's attention all the way back in 2013. One thing led to the other. It was actually at that time, JJDC, the investment arm of J&J, they participated and led our series B round of financing. Asish Vaidya is the guy to whom I'll give a lot of credit for that, for being so insightful. To date, they have and then they obviously participated in subsequent rounds of financing until the IPO.
I believe they own about 3.5% of Protagonist right now. They are happy campers. We started developing programs around oral peptides. The two obvious candidates for me were Alpha-4 Beta-7 Integrin. Entyvio, as you know, is a wonderful drug. The other was IL-23. That is where Tremfya and Stelara and Skyrizi were the rising stars, so to speak. Eventually with IL-23, we were making very good progress. Pharma was getting interested. For the record, I would say in 2017, I was simultaneously dealing with two serious pharma contracts, very detailed. In the end, we chose J&J versus the other pharma. They are equally great, but because of their experience with Tremfya and Stelara. In a way, I hope you all will agree that that is a decision that has paid off. It has been an amazing, amazing partnership.
We started with PDG-200. It was a preclinical asset. We moved it forward. And all along, we were like, you know, I come from a big pharma background. So even for a biotech, I'm always a believer of plan B, a backup candidate, that kind of thing. That was one thing we were constantly hammering. A few months or a year after the partnership, we agreed. They started funding new discovery at Protagonist. They were funding our scientists and supporting financially the discovery of second-generation assets. Fast forward a few years, and the programs become important. A time comes when their scientists also start participating. My scientists must have made 9,000 plus peptides. We had two backup compounds, PN-232, PN-235. Those are our nomenclatures. PN-235 is eventually what became icotrokinra. We did the preclinical. We did the phase I.
That was based on the contract. We were supposed to complete studies up to phase I, after which we hand off and give the drug to J&J. Boy, what a wonderful job they have done since that point. The phase II study in psoriasis was really very positive. They lost no time and finished the phase III study. Now they are in phase III study in psoriatic arthritis. The phase II UC study, we have knocked it out of the park. It's not just about the best oral IO-23. It's like this could be the best UC drug ever. We are openly stating that's the launching pad for our partner to move into both UC as well as in Crohn's disease. Those studies will be announced this year as well. A wonderful, wonderful partnership where a biotech and a big pharma team up together.
Each company does what it is best at doing. We discover, they develop.
Excellent. Yeah, that's a good summary. People should realize this is coming from your platform. We're going to talk about your early pipeline, which is also using the same platform. Before we do that, for ICO, right now you have the positive phase III psoriasis. They are filing the NDA for that. Also moving to the pivotal for psoriatic arthritis. For the UC IBD side, we have the top line phase II for UC. We haven't seen the detailed data, which everyone's looking for, and then some of the detail. Tell us a little bit about the Crohn's disease plan, because it's kind of vague. You just say this year they're going to move into Crohn's. What have you, to the extent you can disclose, right? What's the discussion around the Crohn's?
Because that's Crohn's, to me, is a bigger part of the IBD story.
Yeah, yeah. The good thing over here is like the pathway is validated. And now we have validated it even further orally with both in the derm arena as well as in the IBD arena. So with this asset, where there is co-inventorship from scientists from both sides, it's like there is so much enthusiasm and zeal and time is of essence. I mean, if AbbVie has a forecast of $20 billion for Skyrizi by 2027, and J&J will have its own forecast for Tremfya, now these are all injectables. You can just imagine what is the million-dollar value of each passing day. So things are moving forward in a very rapid fashion. And I would say stay tuned. For the general audience, the best source of information could be clinicaltrials.co when the trials get posted.
As you pointed out, the phase II UC data, we have just shared top line results. One can expect more detailed presentations at upcoming medical conferences this year.
Got it. And then next step for the IBD is potentially phase III for UC and also phase III for Crohn's or.
I'll keep you guessing. Let you keep guessing on that one. J&J will make the right announcements at the right time.
Okay, got it. Okay, all right. I do want to spend enough. Yeah, go ahead.
Just real quick. As an oral peptide, any dietary restrictions or fasting requirements when you're taking the dose?
Yeah, I think there is a 30-minute fasting requirement. So basically just like your thyroid medication.
It is a QD drug.
One step.
Which means you're overnight fasting, you can take the drug. Do you need to before and after or just the before fasting?
The way I look at it is like you get a good sleep, get up in the morning, swallow it, complete your routines in 30 minutes or more with an empty stomach, and then just go about your working day.
Good. All right, sure. Okay, so I do want to spend enough time to, not enough in the sense of the potential, but we talk about the early pipeline because you already announced you will have the OBC, the franchise, and going to upcoming. Also, for the IO-17, you already announced the DC into the IND this year, and the PV side, hep side, and oral drug. What is the sequence of those early pipeline development? What makes you excited about those candidates for the next wave of your internal pipeline?
I mean, touch wood, we have had amazing success with our early discovery efforts. And now we have late-stage assets that are eyeing NDA filing this year, two of them, rusfertide and ICO. In a very humble way, we are just going for repeat performance. The oral IO-17, as you may know, this is the best oral agent of one of its kind. This is the only one that we know of that has activity against the FF isoform. Our drug is 100 times more potent than Cosentyx, 1,000 times more potent than what we assume was the Eli Lilly first-generation oral small molecule. The idea is to be just be very well differentiated, not just with the oral approach, but also with the overall profile. It has Bimzelx potency. We will get into phase I studies in Q4 of this year.
In the discovery pipeline, that is the most advanced. Next comes the obesity space. Over there, what we are saying is we are on schedule to share some more information by the end of this month. We are creating a whole program over there. Our story is not going to begin or end with one candidate. I mean, it's such an evolving space. It's such a huge space. One also has to pay attention to comorbidities. There are so many different validated targets. We want to cover it all. We will make an announcement with the first candidate of its kind. One would say it's a very crowded space. You know what? That's injectables. If you get into the oral, all of a sudden, it's not that crowded.
Again, with the kind of profile that we will share, I'm sure we will impress you and you will see the differentiation. Once again, that is the beginning. It's not just the ending. There will be a lot more going on in the obesity space. It's a huge opportunity. It's market changing. With the oral hepcidin, I mean, we have rusfertide. It's only fair that we work on a second gen. With our expertise in the oral category, we can come up with an oral hepcidin mimetic equivalent. That will happen sometime this year as well.
Okay, good. Maybe just a follow-up question for those three pipelines. What is the TPP for your oral peptide versus for each franchise or target? Because IO-17, we do have injectable. And then we have small molecules, although we do not have too much data from there. Maybe start from IO-17 and then we talk about.
Yeah, I think in the IO-17, if you look at the small molecules, I mean, attempts are being made. I haven't seen anything that is impressive yet. If at all anything, I hear things. I don't know if they are right or not. It's like things are falling out of development in the small molecule IO-17 space. Whereas with our approach, it's like the best thing that is out there in the IO-17 space is Bimzelx. We are trying to mimic the profile of Bimzelx with activity against AA, AF, and FF. Even the magnitude of activity. Like we said, we believe our drug is 100 times more potent than Cosentyx in terms of activity against the AA isoform. It's that kind of differentiation that we will always be seeking in all of our programs with the oral approach.
Okay. In terms of the obesity, we tracked the space pretty closely.
Yeah, you write up weekly notes and all that.
Yeah, good or bad, good or bad. We know this space definitely has the role for both injectable and the oral. The oral, we do have peptide, but also you have a small molecule. We do have positive phase III from Lilly. With the oral peptide, what do you really want to achieve compared to the other ones? Because no drug is perfect, but what do you want to achieve there?
Yeah, exactly. Then the question is like, unlike IO-17 or unlike IO-23, where at a practical level, there is no small molecule competition, in the obesity space, there is. What is the differentiation? I would say stay tuned.
Okay, all right. You pique our interest for sure. Okay, good. Maybe how about the hepcidin because you do have rusfertide? Maybe the question becomes, what will be the profile you're looking for? And then how are you going to balance between the oral peptide versus your rusfertide?
Yeah, I mean, with rusfertide, it's already eyeing towards NDA filing and approval. It's well advanced. The oral hepcidin is still preclinical. There is a good delta between the number of years between the two drugs. I think it makes perfect sense how both drugs will lead a good life and have a good ending and all that kind of thing. We don't see much of an overlap between the two. Of course, rusfertide is partnered with Takeda. The oral hepcidin is fully owned by us. They do have the right of first negotiation. As I said before, they are such wonderful partners. We can envision synergetic or symbiotic kind of partnerships with them down the road.
Okay, awesome. You do have a pretty decent size of the cash. Also, with all the upcoming milestone payment or the upfront about decision, what's the current capital allocation strategy and balancing internal or external? I think you recently also mentioned something buyback program.
Yeah, and there is not even a touch of arrogance in what I am about to say. We are so fortunate to be now in a situation where we have to start thinking seriously about cash allocation strategy. In fact, my older kid had to give me a book to read on cash allocation. It is like, dad, you guys in biotech, you almost never do this. Now you will have to do this at some stage. I totally get things like, hey, paying out dividends is the dumbest thing ever. It is double taxation. Share buyback is probably the most tax efficient thing. There are so many scenarios in between. You are absolutely right. I mean, if our assumptions or everybody's assumptions hold true, and if there are no hiccups and things like that, this is a company that is just going to see so much cash coming its way.
We have to start seriously thinking about what is the best way, forum of returning value to shareholders. So we are totally for that.
Excellent. Okay, thank you, Dinesh, for being with us this afternoon. Thank you, everyone, for listening.
Thanks.