All right. Well, great. Well, welcome to the second day of the Citi Biopharma Back to School Summit. So I'm Geoff Meacham. I'm the Senior Biopharma Analyst, and my team's with me here as well. So we're thrilled to have Protagonist with us. And we have Dinesh Patel, CEO and President. So great to see you. Thanks for joining. So maybe bigger picture, just with respect to the peptide platform. I think a lot of investors are looking for kind of. I think you guys are valued pretty much on the assets themselves. But maybe help us with kind of your investments in the platform itself, how you view this as a renewable resource. And that's something that I think you'll get greater value for going forward.
First of all, thanks for inviting us. It's a pleasure to be here at this conference. In terms of the platform or in general, what's our distinction? We are focused exclusively on peptide therapeutics. And what we try to do is the platform is pretty versatile, and it's agnostic to disease areas or targets. So in theory, we could be working on anything and everything. But of course, we don't want to get into situations where you win the battle and lose the war, right? So you succeeded scientifically, but there is no good utility for your drug. Those are the situations you want to avoid. So we, on purpose, right from the get-go, look for a strong differentiation versus anything that is out there in a similar area.
That is why one of the major focuses we have had is like, hey, let's work on those biological pathways and targets that have been amply validated by very commercially successful injectable antibody drugs. And if we come up with an oral peptide, that will be a very strong, obvious indication and also superior in terms of ultimate utility. With regard to small molecules that will be oral, we will compete in terms of better potency, better specificity, and efficacy, those sort of features and characteristics.
We'll get into rusfertide next. But last one on the platform, has the sort of strategy evolved about how you evaluate, how you allocate capital, what disease areas are unmet, what mechanisms are new and yet underserved, and you could see some differentiation? I'm just trying to think of the thought process of how things pop out of the platform and how that has maybe changed over time, right?
Yeah. So coincidentally, it has landed us in the arena of the heme space and the I&I space, right? And in I&I, I mean, in full admittance early on, we were just focused on IBD. And over there, then the thesis was like we could create gut-restricted peptides to focus them in the GI tissue compartment. That didn't exactly pan out that way. So we had to modify that. And that is one important evolution of the technology platform. We moved from gut-restricted to kind of like peptides that are very potent but are also orally bioavailable. And that has created a broader spectrum of opportunities that we could go after.
Gotcha. Okay. Okay. So let's switch gears to rusfertide. So talk a little bit about the NDA. What are the gating factors to getting that officially filed? Is there any sort of regulatory kind of uncertainty from the current administration that you think could add a little bit of risk to it? It seems to me to be pretty straightforward, but I want to get your view of that.
Yeah. No, I mean, look, the macro environment is changing constantly, right? So we have to be mindful of all those things. But for us, I think, fortunately, rusfertide has been on a good trajectory. As you know, the phase III data is outstandingly positive. And that was presented in the form of a plenary session at ASCO recently. And when a discussant says, and that person has an independent voice, but if they say like, "Gee, this is practice-changing and should be part and parcel of standard of care for polycythemia vera," that goes a long way. More recently, in terms of the regulatory component, as you know, we also got the Breakthrough Therapy Designation based on the phase III data. So if at all, for us, the regulatory agency has been very favorable and is, we believe, looking at rusfertide very correctly, right? It's a rare disease drug.
This is the first drug that is very erythrocytosis-specific in the polycythemia vera arena. So it does address an unmet need. And that all adds up in the form of a breakthrough designation. So our interactions with the agency are very positive and going forward in a smooth and more expedited way.
Okay. That's great. So let's talk a little bit about pre-commercial and your Takeda, your partner. Maybe talk a little bit about the collaborations that you have on the PV market. Are you comfortable with maybe the level of investment that they're making? Is there an opportunity for you to impact that, right, with respect to the first, say, 12-18 months of the launch?
Yeah. Our biggest impact comes from the fact that we have kind of owned rusfertide for the longest period of time, right, from its inception all the way to when we were in phase III studies. So there is just a richness of historical know-how and abundance of knowledge that we have, which is very useful for our partner. Takeda, by the way, they are wonderful partners. So I truly believe we made the right decision by joining hands with them. And then, of course, we are a Nimble Biotech. They are a big pharma. So that kind of, for a lack of better word, the differences in style and those sort of things, that's just part and parcel of the journey, so to speak. But this is a very important drug for them. So they are putting an army of people versus Protagonist having a few number of people.
But like I said, they have the richness of resources. We have the richness of the historical know-how and familiarity with the drug. So both parties are bringing something special to the table, so to speak. And it has been a very collaborative spirit.
Awesome. Thank you.
Yeah. I wanted to ask about your joint strategy. The market, you said, could be $1 billion-$2 billion peak sales. So together with Takeda, how are you kind of positioning rusfertide to kind of expand and the treated and diagnosed patients and get those peak sales numbers?
Yeah. So all this starts with increasing awareness of the drug, of the unmet need that it could address in polycythemia vera, right? And it's a continuous journey, beginning with your first clinical study where you engage some investigators, some physicians, and you do some marketing research. You get in touch with the advocacy groups, things like that. So that's something that Protagonist has been doing for a number of years now. And one of the best forums of increasing awareness was when we got selected at the plenary session at ASCO, presenting rusfertide as a very erythrocytosis-specific drug for potential treatment of polycythemia vera. That was an eye-opener for thousands of people who participated in that session. And then, of course, Takeda brings in its expertise in the heme space, that kind of thing.
For the next 12 months, both parties will continue, like we will continue to cement and expand upon our relationships with the KOLs, with the investigators, with the practicing physicians. These are the relationships that we have been able to establish during our journey of phase II study in the U.S. and the phase III study that was global across 14 or 17 countries, something like that. All that comes into play. Then, of course, Takeda also brings in the Japan angle as well, as you can imagine. I think there is a lot of synergy and complementarity in terms of what both parties bring to the table.
Got it. And the partnership you have with Takeda, you still haven't made the opt-in, opt-out decision, right? So how do you evaluate the trade-offs between maintaining the 50/50 kind of profit share versus full kind of opt-out rights for the kind of economics in terms of the partnership?
Correct. So when we announced the partnership, it was very important for us to retain as many choices as possible. And this is one of those wonderful choices. As you know, the opt-out is very incentivizing with a $400 million opt-out fee. And even the NDA approval milestone has a $25 million difference between whether we opt out or stay opted in. So actually, it's like a $425 million money back, so to speak. One way to look at it is like the opt-out is kind of more front-end loaded, whereas the opt-out would be more back-end loaded. And of course, if it's a $1 billion drug, then it's an easy decision. You just opt out. If it's a $5 billion drug, you stay opted in, that kind of thing. The truth may be somewhere in between.
The good news is we have at least about nine to 12 months to make that decision, right? The decision kicks in four months after the NDA filing, and the NDA filing is projected towards the end of the year.
What would be the?
Sorry, one more way to look at it is like with that $425 million, if I opt out, then that's the cash that we have. We have 14%-29% royalty. And the 29% number, it's not like very far-fetched. The current guidance of $1 billion-$2 billion, within that spectrum, we can achieve the 29%. So the royalty numbers are very, very rich. And one way we look at it is like, do we want to invest that $425 million on top of all the investments we have already made in rusfertide? That will be the opt-in. Or as a company, do we find some other use and utility for that $425 million, for example, investing in our other R&D programs down the road, right? That's another way to look at it. But the good news is we have time on our side.
We don't have to make that decision now.
And just on that, I'm assuming that the factors that go into that decision have to do with maybe duration of therapy, persistent rates, awareness, size of population. Is that kind of the context for how you're thinking about? Do you have internal metrics on some of these things? And if you beat those metrics in the first 12 months, then you're more likely to opt in? And if you don't, is that the right way to think about it?
Yeah. So whatever guesswork we have to do, we have to do between now and the middle of next year because that will be the junction when we'll have to make that decision, right? So all those things are in play. But like I said, a simple way to look at it is like if we opt out, then we get this extra $425 million next year. And like I said, the royalty rates of 14%-29%, where the 29% is kind of very achievable. I mean, that's a high number, right? 29% of clean cut of the revenues. That's about as good as it gets.
If you opt out and you choose the $425 million, do you already have pre-identified investments outside of obesity, for example, that you could maybe speed up? I'm just trying to think of the reinvestments in the platform that you could maybe accelerate with that otherwise you wouldn't be able to.
Yeah. So we definitely are spending money and resources on expanding the technology platform, introducing new features into it, features geared more towards oral bioavailability, better exposure, things like that, formulation-centric things. And also, you cannot escape AI, right, when you are working towards optimizing a technology platform. So all those things are in play. But in all honesty, those are not big money sinkers, right? They take time rather than a lot of money. So I think the value proposition is also going to be like early on what we would do. If you look at our J&J deal, that was inked all the way back in 2017 when we just had a preclinical asset in the oral IL-23 program, whereas the Takeda deal was inked last year when we were in a phase III study.
So it's only natural now that with the flurry of new targets and projects that we are working on and with the strong cash position that we have and even more cash coming into the near future, we would feel obligated to at least take our assets towards clinical POC and then look for some inflection point or an optimal time period when we may want to join hands with the pharma. Because pharma partnering, it's not just about getting some money for them. The breadth of experience and expertise that they bring and the scale at which they can do things is unmatchable. Look at what, for example, J&J has done with icotrokinra in terms of the spectrum of studies they have done and the aggressiveness with which they have conducted all these studies.
Maybe one last question before we can move to icotrokinra. Do you place any strategic value on keeping some commercial control on rusfertide in your opt-in opt-out decision? Is there any thought process behind that decision?
Yeah. No, I think that's a great question. And in all honesty, the answer is like at this stage, we don't see that much attractiveness in retaining the quote-unquote "commercial rights" or the opportunity to build our own commercial infrastructure. Because keep in mind, we can stay opted in even without building the commercial infrastructure. We can just participate with our checkbook. The other thing is, if you look at our pipeline, we don't necessarily have any late-stage heme assets that could be bundled up in a commercial setting. Now, those sort of things could change down the road, but that's a matter of number of years from now rather than now.
Got it. So maybe move to icotrokinra. The NDA has filed by J&J. So how do you assess kind of the next steps with icotrokinra, the approval, and then the market penetration in place? We have already oral available in the market. So how do you think the launch or approval could go in psoriasis?
Yeah. So I mean, as you know, IL-23 blockers, their claim to fame is like every IL-23 blocker that is out there has had positive results in not just psoriasis, but also psoriatic arthritis, ulcerative colitis, and Crohn's disease, right? Whether it is Stelara or Skyrizi or Tremfya. Now, of course, those are all injectables. This is the oral one. And if you look at J&J's guidance, clearly, this drug is being evaluated in all four indications. Psoriasis, we already have the data behind us. The NDA is filed. Psoriatic arthritis, phase III studies are ongoing. Just a few weeks ago, the guideline towards completion of the phase III study was October of last year. Now it is May. I mean, October of next year. Now it is May of next year. And by the way, this is a very common trend.
Like every clinical study with icotrokinra, the enrollment has been completed significantly ahead of the initial projected timeline. It speaks volumes for the J&J clinical team in terms of their execution, and I think it also speaks very favorably for icotrokinra and its appeal to both the investigators as well as the patients that are participating in the study, and as you know, our phase II UC data has been Stellar, and J&J has already committed to phase III initiation both in UC as well as in Crohn's, so in Crohn's, they are going directly into patients with a phase III study, and by the way, we shared the phase II UC results, just top-line results a few months ago, but what we can comfortably say is like, hey, stay tuned for more detailed presentation at upcoming medical conferences.
There's a lot of indications that you mentioned. There's a lot more to come, and the mechanism, I think, supports that. What's the level of analysis or internal investments on peripheral indications? I think if you look at a lot of the I&I drugs today, they've added some of these more orphaned, sort of more rare. I mean, atopic derm used to be deemed to be a rare disease, and now it's obviously pretty well addressed. Same thing with the HS, so what's that? How much does that play a role in kind of the longer-term NPV of the product?
Yeah. No, I think that's a great question. My rating is that with IL-23 blockers, you probably will be focused on this big four indication: psoriasis, psoriatic arthritis, UC, and Crohn's. And it's with the IL-17 blockers that you're going to go after not just psoriasis, but also HS and spondyloarthritis and those sort of things, right? I mean, if you look at Cosentyx or Bimzelx, those are wonderful injectable antibody drug examples of how they are making a difference in those other indications. And that is where, as you know, we have our own PN-881. It's the only oral IL-17 blocker that has activity both against the A as well as F isoforms. And the Bimzelx data reaffirms that it's critical to have the F activity as well. And I believe 881, our guidance is that it goes into phase I studies in the fourth quarter of this year.
Yep. Clearly, J&J has given peak sales projections and just the core indications. But what's Protagonist's role in your dialogue with J&J to kind of inform the market view? Are you guys comfortable with that? Is there meaningful upside to that? Is there optionality? Just trying to get a sense for the range of royalties going forward that what could be the delta?
Yeah. So the royalties span from 6%-10%, and it's staggered royalties from 6% moving on to 10%. And the 10% kicks in, in my opinion, at a low bar of $4 billion +. I mean, if you look at the forecast for Skyrizi and Tremfya, Skyrizi is around $20 billion. Tremfya itself is around $10 billion already in terms of guidance. And by the way, J&J in one of their earnings call, not the most recent one, but before that, the consensus estimate for sales of icotrokinra for 2027 was around $700 million. And they guided it towards $1.4 billion. They said it would be twice that. So they are quite optimistic about the drug. And if history is any guidance, then such a one and only oral IL-23 blocker could be a game changer in this space.
Keep in mind that the marketing research that was done has provided a lot of good evidence. For example, more than half of the patients, I&I patients that are eligible for targeted therapy right now are not seeking any treatment because they just don't like the current options. This is where Ico, which is an oral drug, and for a chronic indication, oral is the most preferred option, right? Ico could very well go after patients who are on the sidelines right now that are currently not treated by Bimzelx or Skyrizi or Stelara or anything, right? Even those who are on treatment, the marketing research results showed that 75% of them will be willing to switch to an oral if a good option was available.
So icotrokinra is really a much bigger story, in our opinion, than just being like the only oral IL-23 blocker, right? If you look at what J&J is doing, they have already done a head-to-head study with Sotyktu, the TYK2 inhibitor, right, and shown superiority. They already published adolescent data where icotrokinra 's data is just phenomenal. They have already announced a head-to-head comparison study with Stelara. And all this is, if you think about it, taking us towards like icotrokinra could be a very earlier option in the treatment paradigm. It could be an option as a first-line therapy, right? An adolescent would definitely prefer an oral versus injectables, that sort of thing.
So I think getting icotrokinra earlier in the treatment option paradigm, being an oral, being a very attractive feature for chronic conditions that we are talking about over here, going after a very significant patient population that is currently on the sidelines, not seeking any treatment, add all that up, and this is like, "Oh my God, this is a huge drug or a drug with a huge potential.
Yeah. And by the way, we had a Noubar from Flagship yesterday talk about the value of partnerships and how now a lot of investors want wholly owned assets. But he was like, "Look, share the risk and benefit from the commercial leverage that you get with a pharma partner." And you guys are doing that. So I guess that's a bigger picture question. And we can get to obesity in a second. But do you think about the value of partnerships any differently now that you have sort of two amazing partnerships and good commercial plans in place? Do you think about, "We want to bias slightly more towards wholly owned going forward," or is it the same kind of analysis process that you've always had?
No, we are still grounded. We haven't developed an attitude. But jokes aside, pharma partnerships are incredibly valuable, as I said before, not just for the financing component. If at all anything, we don't need the money, right? We are cash rich. But the other things they bring to the table, like validation and the amazing resources and expertise and the skill set, I mean, the way J&J has done justice to icotrokinra, I doubt it if a small biotech company like Protagonist would have been able to do that. So that is the value proposition there. Having said that, though, just continuing to talk specifically about J&J and icotrokinra, we did that deal in 2017 when it was a preclinical stage program. But those days were different. And as you know, now we are in a very different situation.
So certainly, one significant change we are envisioning is like we will not partner that early. We can afford to hold on to things at least up to clinical proof of concept, if not further, and then seek for better terms, better ownership, all of those kind of things, and better optionality. It's like down the road, we can co-share the risks and the rewards that will be more favorable to Protagonist and its shareholders in the long run.
Maybe one last question on icotrokinra before moving to obesity. So you mentioned J&J is very optimistic with 2027, like $1.4 billion peak sales. Sotyktu launched by Bristol. Of course, your potency and efficacy and profile is much better than Sotyktu. Initially, you had some struggles getting to sales were slow and progressive. What gives you confidence in being able to capture a larger share of the market from, of course, now you have two competitors in the oral market as well? And how do you see the market after the drug is launched could really ramp up fast and you don't have to use free drugs and other kind of ways to?
I think there are two things, right? One is like, and look, I'm a scientist and a chemist by training. But if you look at Sotyktu in general, so TYK2, these are JAK inhibitors. And we know the history with JAK inhibitors. There is always this quote unquote safety concerns, right? So that is probably quite dominant. And it's a new mechanism, so to speak, in the treatment paradigm. Whereas IL-23, the combination of efficacy and safety is unmatched. And this is a path that has been traveled before quite extensively, but via injectables, right? Such as Skyrizi and Tremfya and even Stelara, which is an IL-23 blocker. So that familiarity and the historical track record, amazing track record of both efficacy and safety of IL-23 blockers. So here, you just are changing the route of administration, if you will. It's an oral.
It's more convenient and more attractive, and so far, everything has matched very well, right? Whatever an injectable IL-23 has been able to do, we have been able to show that both in psoriasis as well as in ulcerative colitis as well. In fact, if you look at the UC data, I mean, 30% clinical remission at the highest dose, that's about as good as it gets, so yeah, there is nothing but very positive sentiment for this drug all along.
Yeah. And then moving on to obesity, you recently disclosed PN-477, some preclinical data and your strategy that you're going to go with oral and injectable. So maybe considering recent data from companies like Lilly and others, how do you position, you think your drug could be positioned versus other drugs and in terms of GI profile and efficacy-wise? Where do you see the profile is moving forward for your drug to achieve good market share?
I think that's a great set of questions, and look, I mean, when we made the decision to work in the obesity space, it really required a change in the mindset. If you think about it, rusfertide is our drug for rare disease, polycythemia vera, right? So it's a drug for, let's say, a few thousand patients. Then Ico, the oral IL-23, it's a drug for a few hundred thousand patients, but now in obesity, you're talking about millions or hundreds of millions of patients, so it's just at a totally different scale. The second thing is like we are kind of late entrants in the obesity space. So for us, the very first thing that we started talking about, right, today, differentiation. What is the differentiation? We start talking to the KOLs, and there are two things that rise to the top.
Number one was like, "Hey, can you come up with an oral triple G?" That would be the most favorable. The second in queue, according to the KOLs, was a dual GLP/amylin. So we decided to focus on the triple G, and we succeeded in achieving all the efficacy that we needed and the differentiation we needed with the oral triple G. Now, and if you look at our preclinical data, it's just outstanding and very, very promising. We have done multiple studies doing head-to-head comparison, of course, in a preclinical setting in cyno and in dogs with retatrutide, and our drug shows amazing profile. In terms of inserting some more desirable features, what we have done is like, and the science is quite deep and extensive and still evolving.
But at the end of the day, the general feeling is like, "Hey, you need the GLP activity for weight loss. With GIP, you will get weight loss as well as you can create some moderation of the GI side effects." It's the GCG component that is more related to metabolic energy expenditure. So that is where you will hopefully inherit the feature of maximizing fat mass loss and reducing the muscle mass loss. And then you also pay attention to the relative ratios of GLP versus GIP versus GCG. And our platform would allow us to come up with any kind of relative potencies we wanted. So the selection that we have made of GLP versus GIP versus GCG, it takes into account all of these factors. So we believe we have created really a good oral triple G.
Now, the final thing was like, "Should it be only an oral?" If you have an oral, you can definitely have a SubQ, right? That's a no-brainer, and in talking to the KOLs and all that kind of thing and looking at even some of the drama that occurs with the Eli Lilly and the Novo drugs in terms of supply and those sort of things, and I said, "You know, why should I take the risk of predicting the future with absolute correctness when I don't have to?" It's simple. Let me develop both an oral and an injectable, so that's the decision we have made, and I'm pretty sure that for majority of patients, for majority of the time, oral will be the choice.
I can also envision conditions and situations and scenarios where some portion of the population for some period of time may want an injectable. This is such a huge, huge market that we didn't want to leave anything at the table. That's why we are developing both a SubQ as well as an oral.
Just on that note, when you think about the latest, there's a lot of assets that are oral as well as injectable. Is there some consideration as you move to phase I studies just to run a much larger phase I trial just to de-risk the program and sort of find out early? I mean,
Absolutely.
Okay, so triple G, I think historically has had tolerability issues, but great efficacy, but you sort of want to know early. Yeah.
Who knows what it will be with an oral triple G, right? Then once again, it's like an oral and a SubQ, and that will be another measure of what may be more favorable, that sort of thing. I think you are absolutely right. See, one of the advantages that we have with our approach of working with discovering and innovating very unique peptides, that's our differentiation. That's our expertise. We don't take the biology risk. We work on validated targets. The advantage of that is like very early on in a clinical study or even in a preclinical setting, we start developing a very good understanding of the potential future performance of the drug. You're absolutely right.
In phase I studies, right, it's like if you look at how anti-obesity agents are being evaluated these days in a four-week phase I study in healthy volunteers, let's say with a BMI index over 29, you will get some understanding of the relative performance of your drug in that shorter time period. So whether it's PN-881 or the anti-obesity agent PN-477 or our oral hepcidin, which is still a preclinical stage asset, although we intend to nominate a development candidate sometime this year. In all of those examples, you will learn a lot in phase I studies. And all those studies will be initiating and unfolding starting from the fourth quarter of this year to throughout next year, 2026.
Okay. Well, that's our time, so Dinesh, thank you so much. Yeah, great dialogue. Appreciate the time.
Excellent. Thank you.