Great. good afternoon, everyone. Thanks for joining us here, day one of the Leerink Partners Global Healthcare Conference. My name's Tom Smith. I'm one of the senior biotech analysts here at Leerink, and it's my pleasure to welcome our next company to the stage, Protagonist Therapeutics, represented by CEO Dinesh Patel. Dinesh, thanks for joining us.
It's a real pleasure. Thanks for inviting us. You know, we have had a long affiliation with Leerink. You guys were our lead left when we did the IPO in 2016. Let the partnership continue.
The company has come a long way from 2016. Maybe you could just kick us off. The level of familiarity I feel is quite high among the investors in the audience, but maybe just walk us through 2025 and you have a huge 2026 ahead of you with two potential FDA approvals for partnered products, some data coming from your early pipeline. What are you looking forward to most in 2026?
Yeah. Look, I think, we are privileged to be in a wonderful situation thanks to, you know, one and a half decade plus of hard work, on part of the whole Protagonist team. As you know, we are at the core level a peptide technology platform company. Since 2008, we have focused on creating a differentiation, with peptides, so addressing unmet needs, but with a strong differentiation. With that mantra, now fast-forward, what is it, 18 years or something, and we are at a stage where hopefully two drugs get approved this year. We also have the next wave of R&D assets that are going strong.
Finally, at last but not the least, we have an amazingly fortunate situation of funding all of our new efforts with our own dime, and even after that, being left with a surplus of money, which at some stage in the coming year or so, we'll have to worry more sincerely about how to maximize shareholder value, how to return value to shareholders with the surplus cash that we would have. To get into the specifics, as you know, our oral IL-23 receptor antagonist that has been partnered with J&J since 2017, that the NDA was filed in July of last year, and J&J's statement is that they expect an approval sometime this year.
If you just do the NDA filing math, add 12 months to it would be in the third quarter of this year. With rusfertide, the hepcidin mimetic, that is something we have partnered with Takeda. We got amazing phase III data last year that was presented at ASH, and the NDA was filed by the end of the year. A week or two ago, we got a priority review, the PDUFA date in a way gets accelerated. That would also fall in the third quarter of this year. In the second quarter, you know, with Takeda, we have a very creative partnership, which is a win-win for both companies. Right now it's a 50-50 co-development, co-commercialization partnership.
The idea would be like, hey, we do have an opt-in kind of provision for Protagonist. If we do that, and I have been quite vocal saying we are strongly leaning towards opting up, and that would qualify us for a $400 million milestone payment, out of which the first $200 million tranche cup kicks in as soon as we opt in. That would happen in the second quarter sometime, right? That sort of thing. Then we have the next wave of assets and oral IL-17 and oral hepcidin and oral anti-obesity agents as well in play. A lot of things. Oral IL-17 is already in phase I.
By the middle of the year, we will get a chance to make a decision in terms of, you know, whether we are taking it forward in a phase II study or not. We have a very clear understanding of what kind of PK data we should be achieving, and if we achieve that, then we will go forward with a phase II study. That will be a very important decision. With all the other indications, we are in a very fortunate situation where phase I data in itself is going to give you some sort of a clinical proof of concept, right? The oral hepcidin goes into clinic in clinical development by the end of the year.
Just in a phase I study, we would observe the effect on serum iron levels and, you know, get an understanding of its effectiveness. With the anti-obesity agents, as you know, weight loss could be observed in a phase I study in itself. Our oral, I mean, triple sub-Q, we intend to start the phase I study by the middle of the year. The oral is behind by a quarter or two, but both of those drugs will have important phase I readouts. A lot of catalysts that are either already in play or will be in play pretty soon.
It's great. Lot of news flow coming this year.
Yeah, that's for sure.
I wanna spend kind of a few minutes on each of the partnered products and then talk about the earlier pipeline. On ICO, I think quite compelling data in psoriasis. Surely you guys must have a kind of a view of how the oral kind of next-gen oral landscape shapes up. I guess would love to get your thoughts on kind of launch expectations, J&J resourcing around the launch. They seem quite excited about it, would love to get your thoughts on how this landscape shapes up over the next, you know, 12-36 months.
Yeah. I mean, look, for ICO, I mean it's fair to say that the official spokesperson or the party is J&J, right? Listen carefully to what they are saying. That would be my recommendation. This is the first of its kind oral IL-23 blocker ever, right? It's a first in class story, it's an only in class story. We don't see much in the rear view mirror, if at all anything, so there is also going to be huge scarcity value. IL-23 blockers are pro one entities, right? Skyrizi, Tremfya, Stelara, and they have scored all across the board in all four indications. I mean, these are assets where the projections for Skyrizi are north of $20 billion, even for Tremfya it is north of $10 billion, that sort of thing.
These are big numbers that we are talking about. With our asset being the only oral, then you can expect like how there could be a scenario where the oral asset is not just taking away the market share from the injectables, because there is no scarcity of patients who would want to switch from an injectable to an oral if a good option was available. Also creating new market of its own with an oral IL-23. The marketing research data done by J&J suggests that 75+% of the patients on injectables will switch to an oral. There are more than half of the I&I patients that are qualified for targeted therapy but are not choosing anything because they don't like the current options that are out there.
They don't like injections and they don't like the oral options that are out there right now. That could be a new market opportunity creation for ICO as well that is not available currently to any of the injectables. We believe the sky is the limit.
Yep. That makes sense to me. Then we've also seen quite compelling data in ulcerative colitis.
Yeah. Over there, I mean, as you know, we are at the top of the chart, right? 30% clinical remission is something to write home about. We admit it's a phase II study and all that, but it was J&J that did the study, so, we need to give them extra credit for that as well.
Yep. Just biologically or kind of structure of the compound, is there a, I guess, a mechanistic rationale behind why you might be seeing greater clinical response and remission rates with the oral?
Absolutely. And that's a great point. Again, this is all theoretical, but it seems to be kind of falling in place. With our oral peptide, we are targeting IL-23, the receptor, whereas the antibodies are targeting the ligand. We chose to target the receptor, and this is a decision we made all the way back in 2013, because we found literature evidence that the receptor is overexpressed in the GI tissue compartment of IBD patients. Even pre-clinically, the minimal dose of efficacy that was required for colitis models was an order of magnitude lower compared to the minimal efficacy dose that was required for skin inflammation models. We had a pre-clinical hint that this could actually be a better performer in GI indications compared to, you know, psoriasis and psoriatic arthritis. Once again, phase II, it's a UC study.
We have to keep that in mind. We don't want to get carried away. Who knows? With ICO, maybe the best is yet to come in UC and Crohn's.
Yep. Strong results in UC. J&J has indicated a desire to obviously move into Crohn's.
Yeah. Crohn's, they mowed into a phase III study directly.
Yep
W ithout evaluating the drug previously in any single Crohn's patient.
I wanna switch gears and talk about rusfertide for a couple minutes, and you've already alluded to.
We love both kids, so go ahead.
You've alluded to very vocally saying, very likely to opt out. You reminded us on the $400 million that comes with that and $200 million kind of upfront that's associated with it.
Yeah.
I guess like strategically, you know, it's obviously a substantial amount of capital that comes in. I guess how do you weigh that versus like an opt-in sort of co-promote situation where you can start to, you know, you scale the organization I think a little bit differently with an opt-in?
Yeah. You know, if you allow me to take a step back, we were already in a phase III study with rusfertide on our own when we inked the deal. We were in a position of shaking out a fair deal. As you can imagine, like any big pharma, Takeda wanted an outright licensing deal. We resisted that. This optionality was created. It's like, hey, it's a focal, but we will create this structure where you could opt out and then practically speaking, it means we have outlicensed the asset. And the financial terms are very attractive, especially for a biotech that doesn't have any commercial infrastructure. As you may recall, the royalty rates are 14%-29%.
The beauty is, and this is something we have started sharing more recently, right? At the $1.5 billion sales, the weighted average royalty rate is 21%. Anything above $1.5 is 29%. What is the biggest risk in opting out? Oh, this becomes a huge drug, and we give away the 50/50 scenario. I would argue no. With a 29% royalty rate, I think we are in a very good position. We will get good share of the economics, no matter how big the drug becomes. Net, net, we thought that this is something where we could be opting out and let the champions do what they are great at doing, right?
Let the pharma commercialize the drugs, and we will get back to the drawing board and try to create the second act in the Protagonist play.
Yep. Let's talk about the second act on the hepcidin mimetic side, which you've nominated PN-8047.
Correct.
I guess how do you see these kind of playing together? It's the case, you know, I guess in the deal with Takeda, they don't have any optionality around future hepcidin mimetic product candidates. Do you have a sense of, I guess, how they view you advancing like an oral hepcidin mimetic and I guess like how do you see these two playing together in something like possible?
No, I think it's a fair question, and sure, the oral hepcidin, it's fully owned by us, but Takeda does have the right of first negotiation. In a way, I'm being repetitive in my analogy, but rusfertide is kind of like a kid that has already moved on to college, and the oral hepcidin that's like the young little second child. There is enough separation between the two in a way. So it's a non-overlapping scenario. rusfertide is gonna have its play for a number of years, right? At least five plus years, things like that, before anything comes out of the oral hepcidin effort at a serious level.
That makes sense. The fact that it's orally administered, you alluded to the ability to get a good read early on in the competitive profile for this compound. Maybe just elaborate on that a little bit, and like what are you looking for explicitly? Like, does it have to match what you saw out of the early data for rusfertide?
Yeah. It in a broad sense, that will be the case. Now, rusfertide, I mean, it's a weekly sub-Q injectable. This is going to be a once daily oral pill, so the PK profiles could be different. Pre-clinically, we have seen a very nice overlap in the data in terms of the different PD readouts of, you know, serum iron levels and related biomarkers. We would like to see a repetition of that in the healthy volunteers, which would give us then all the confidence in the world that this is working the way it is supposed to work.
Yep. Okay. Would the idea here be to basically like mirror the rusfertide clinical playbook? Like, is that how we should think about a potential phase II? Or are there learnings from the rusfertide experience that could actually streamline that?
Yeah, with rusfertide, I mean, we took the scenic route. We did a beta thalassemia study, that sort of thing. I think it's fair to say that we will skip a beta thalassemia study over here with the oral hepcidin, right? Focus on polycythemia vera as a starting point.
Okay. I wanna switch gears to a program that's already in the clinic, which is your oral IL-17 PN-881, and you're generating data in healthy volunteers. Just I guess help frame for us how you're thinking about the phase I healthy volunteer readout you alluded to. If we see the right PK parameters, we would feel good. Are there other biomarkers that we're kind of tuned into? What is the TPP for this?
I think, with the success we have had with Icotinib or Icotyde, with the IL-23 pathway blockade, right? Here we are trying to go for a repeat performance in the I&I space, with the IL-17 blockade. With the peptide, what you can do is, at least the way we are approaching it's like, hey, first and foremost, create amazing potency, picomolar levels, equivalent to the antibodies, that kind of thing. That in itself brings in a very high level of specificity. We don't have to worry about off-target effects. In particular, with the oral IL-17 881, as you know, we have activity against both the A and F isoforms, and the BIMZELX performance has showcased the importance of activity against the F isoform.
I believe we are the only oral IL-17 that is in play with activity against the both A and F isoforms. That will be the one of the main thing that we hope will translate nicely into a clinical setting. The antibodies, you know, BIMZELX, COSENTYX, others, they have really given us a very good roadmap of like, hey, what should the drug levels be? What % of inhibition of the target should be in order to achieve efficacy? We are following that rule book and then translating it to like what drug levels we should be seeing with our 881 when it is orally administered. That is what we want to achieve, right? How many fold above EC50? Is it above EC90? Those sort of things. It's really PK mathematics.
What we are not factoring in, and this is something that could work in our favor, but I'm making it very clear, we are not factoring it in yet, is that our peptide, if you look at the size of our peptide, it's like 100x smaller in size compared to the typical IL-17 antibody. As you know, when you go into this psoriatic and psoriatic arthritic conditions, the challenge to get your drug to the tissue level becomes more important and more critical. Now, whether that is gonna work in our favor or not, I don't know. Right now, what we are focused on is like with an oral IL-17 administration with PN-881, we want to achieve satisfactory drug levels that would, in theory, give us the comfort that, yes, it should do what the antibodies did.
When you were optimizing this peptide, was BIMZELX basically the roadmap? Like, were you trying to optimize it and tune it into activity on you know, AA, AF, FF
Absolutely
To match BIMZELX.
Yeah. In a way, our thesis was very simple. It's like, you know, we looked at one of the clinical study where BB had like, superior clinical efficacy compared to COSENTYX, I believe. That got our attention. Slowly the whole industry started catching up on that, right? It's like the importance of the F activity. I have come across the numerous individuals who have stated that, yeah, just a few years ago, they thought they didn't want it, the F activity because of the Candida infections, which are easily manageable. Now it's just the opposite. It's like they really want the F activity.
Maybe coming back to the expectations around the healthy volunteer data, it sounds like you're kinda positioning this almost like a go, no-go decision. Like, should we expect to see data points from this readout, or is it a decision to advance this into a proof of concept indication like psoriasis?
Yeah. I think, basically what we have conveyed to the street is like we will be not sharing the data right away. There are two primary reasons, we want to keep our data intact and confidential. Why to teach so much to the competition when you don't have to? We don't have to. We don't have the necessity to go out and raise money right away. We have. We are able to support our own clinical studies. I think we will share the data ultimately at some stage at medical conferences, but it won't be, you know, like right away as soon as we get the data, we are gonna spit it out. What the street will learn is what is the decision we are making, right?
That would happen sometime, I believe, in the third quarter of the year.
Got it. That makes sense. There have been a number of other attempts to drug this pathway orally. As you said, I think you are the first one to incorporate-
The F.
Explicitly FF.
Right.
Do we have a sense for, I guess, why the other programs failed at? Like, is it exclusively, they failed to hit F?
Yeah.
Do we think it's a separate PK/PD?
In general, what we are finding, and this is no criticism to the oral small molecule efforts. By training, I'm a small molecule medicinal chemist, right? Our oral hepcidin, it is a small molecule. It's not a peptide. In that instance, we did a side-by-side comparison, and we thought a small molecule did a better job. In general, what we are finding is like in more demanding situations, whether it is in the obesity space, or in the I and I thing, with a peptide, you are able to engineer much higher levels of potency and specificity and also the spectrum of activity, right? With the peptide, for example, in the obesity space, we have an oral Triple G agonist. It will be very difficult, if not impossible, to do that with a small molecule.
I think with the small molecule, and it's understandable, you have fewer points of binding interactions. You only get to certain level of potency or certain level of spectrum of activity or specificity. That's why sometimes the ugly off-target side effects with small molecules, you learn about that in phase II, phase III when you are deep into the studies and commitment, that kind of thing. I think with peptides, we really have that advantage of outstanding potency and specificity and spectrum of activity.
That makes sense. You have the success on the oral IL-23 side, and now we're advancing an oral IL-17, I guess, how do you think about the potential to build out sort of like a franchise vertical around these in I&I? Like, are there other IL-17 compounds that you're working on? I can envision taking one into psoriasis, one into maybe a more specialty indication like a hidradenitis. Like, just give us a sense of kind of where the discovery efforts are, and then strategically, is that how you're kind of thinking about it as like a vertical like that?
I mean, it's a very interesting point. Right now we are keeping it simple, meaning if we could create a portfolio within a single product, then that's like an attractive value proposition. Having said that, you know, I started my career in big pharma, having a plan B or a second molecule or something, that's all part and parcel of what we do for a living. So in any program at any stage. As time goes by, you learn more new things about the target and all that bring in some new nuances. So we are always on that refinement process, so to speak, right, with the backup molecules in any program.
Understood. Last question on the IL-17 proof of concept here. Pretty set on psoriasis, moderate to severe psoriasis. I guess like any learnings from some of those other small molecule programs. I'm thinking like a DICE Therapeutics, for example, that ran sort of a early phase I-B proof of concept cohort but has a very wide spectrum of disease severity. Are you guys pretty set on psoriasis, moderate to severe?
Yeah. Right now the way we are thinking is like, I mean, because the clinical response rates are pretty high in psoriasis, over there you are going to get a very clean clinical signal, and you will have an honest answer to whether your molecule or your concept is working or not. That is the first thing we would want to see. Now, we may build in some aggressiveness in our clinical studies and things like that or making some judgment calls of branching into other indications even before we complete the phase II psoriasis study, right? First things first. It's like let's decide whether we are going into further development with 881, and then we are going into a psoriasis study and what are our initial observations over there.
Psoriasis is one of those indication where you could be totally blinded, and you can look at the blinded data, and make assumptions about, like, if your drug is working, then this is what you could be seeing. You can make some judgment calls while the study is going on.
Yeah, that makes sense. All right, let's switch gears and talk about obesity and metabolic disease. You have the Triple G candidate, PN-477, in the clinic this year. You've said sub-Q in the middle of the year, oral in the second half. Just talk about, I guess, the differences, like your approach here to engineering your Triple G candidate relative to other Triple G's, Retatrutide obviously being the most advanced.
Yeah. You know, In the obesity space, the first thing that attracted us is like, hey, there are two approved drugs, these are peptides. These are injectable peptides. We are like, "Oh, this is within our domain." Of course, you know, but hey, you're going to be late to the party with another injectable. The differentiation comes from the oral, and that is something we have been practicing and perfecting since 2008. We have then successfully been able to come up with an oral dual agonist, an oral triple agonist, and we are creating a whole portfolio of assets. We have also announced that we are working on amylin as a target, you know, working on mono agonist, poly agonist, that sort of thing.
Getting back to the triple, so the main focus is on the oral, but in talking to the KOLs, it became evident that, hey, in a real-life setting, there could be value for a sub-Q also, right? We are doing both, so to speak. The sub-Q is a weekly sub-Q, but the preclinical observations point towards significant drug accumulation, so that could, down the road, transition towards a once-monthly. Same thing in the oral. We'll be starting with a once-daily oral, but it could lean towards a once-weekly oral down the road if the drug accumulation pattern continues in a clinical setting.
It's great. How are we thinking about magnitude of weight loss in this increasingly competitive space? It feels like investors are still kind of like laser-focused on driving the greatest amount of weight loss in the shortest period of time. How do you guys view it as this balance between like weight loss, safety tolerability, and actually persistence is really important.
Yeah.
How do you guys think about this space?
Well, I guess we're a bit greedy and aggressive. We want both. both the quantity and the quality, right? If you look at the First of all, the triple agonist, they are the ones that are offering maximal weight loss, right? we are in that camp of maximal weight loss. When we are asked, it's like, "Oh, does it mean this will be a drug only for severe weight loss?" I'm, "No." You know, you dial down the dose, you can control the amount of weight loss. We have paid extra emphasis on the quality of weight loss.
If you look very carefully about the relative potency that we have created with the GLP versus GIP versus GCG, we are focusing on trying to achieve maximal weight loss, a good tolerability with better GIP potency, and also, hopefully preservation of more lean muscle mass, based on the GCG energy expenditure component. We want it all in one entity. It's like full optionality, sub-Q, oral, both of those options should be available.
Makes sense to me. within the oral, I mean, there are some companies who think about they also have a sub-Q and an oral of the same mechanism. They think about the oral as more of a long-term maintenance. Perhaps doesn't drive the same level of weight loss and induction as your injectable. Like, how do you think about, I guess, the positioning?
I think the biggest differentiation here is like maybe we. In this particular case, it is the same drug substance, not two different things that could work from switching from an injectable to an oral, switching from the initial treatment, kind of phenomena to a maintenance setting down the road, that kind of thing. That would be the main difference, I would say. It's the same API, it's the same drug substance. That's something that is very favorable in our sector. We have seen that already in the field of antibiotics, right?
Yep. Makes sense. Last question, we're coming up against time. When are we gonna have more visibility into this? I understand we're in the clinic with both forms this year.
The beauty is, the phase I will teach you, and you will learn everything that you need to learn, so that the actual clinical POC can sneak up on us, very, very quickly.
Yep. Understood. All right. Well, we're up against time. Thank you, Protagonist and Dinesh, for joining us, and we'll stay tuned. Very exciting 26 coming up.
Yeah. Thank you.
Thank you.
Thank you for the opportunity.